Occidental Petroleum 2008 Annual Report Download - page 36

Dolphin Project
See "Oil and Gas Segment — Business Review — Middle East/North Africa — Dolphin Project" and "Midstream, Marketing and
Other Segment — Business Review — Dolphin Project" for further information about the structure of the Dolphin Project.
In July 2005, Dolphin Energy entered into a bridge loan in an amount of $2.45 billion. The new bridge loan had a term of four years as
a revolving credit facility through April 2008 and was converted to a term loan thereafter. In September 2005, Dolphin Energy entered into an
agreement with banks to provide a $1.0 billion facility to fund the construction of a certain portion of the Dolphin Project. Occidental
guarantees 24.5 percent of both of these obligations. At December 31, 2008, Occidental’s portion of the bridge loan and financing facility was
$845 million. Of this amount, Occidental had recorded $600 million as its proportionately consolidated share on the balance sheet at
December 31, 2008. At December 31, 2008, the remaining $245 million of the bridge loan and financing facility represents a substantial
majority of Occidental's guarantees discussed in the "Guarantees" section.
Ecuador
In Ecuador, Occidental has a 14-percent interest in the Oleoducto de Crudos Pesados Ltd. (OCP) oil export pipeline, which Occidental
records as an equity investment. The project was funded in part by senior project debt, which is to be repaid with the proceeds of ship-or-pay
tariffs of certain upstream producers in Ecuador. In May 2006, Ecuador terminated Occidental's contract for the operation of Block 15, which
comprised all of its oil-producing operations in the country, and seized Occidental's Block 15 assets. As of December 31, 2008, Occidental's
net investment in and advances to the project totaled $66 million and Occidental had accrued $263 million for related obligations, including
all tariffs.
Leases
Occidental has entered into various operating-lease agreements, mainly for railcars, power plants, manufacturing facilities and office
space. Occidental leases assets when leasing offers greater operating flexibility. Lease payments are expensed mainly as cost of sales. For
more information, see "Contractual Obligations."
Guarantees
Occidental has guaranteed equity investees' debt and has entered into various other guarantees including performance bonds, letters
of credit, indemnities, commitments and other forms of guarantees provided by Occidental to third parties, mainly to provide assurance that
OPC or its subsidiaries and affiliates will meet their various obligations (guarantees).
Contractual Obligations
The table below summarizes and cross-references certain contractual obligations that are reflected in the Consolidated Balance Sheets
as of December 31, 2008 and/or disclosed in the accompanying Notes.
Payments Due by Year
Contractual Obligations
(in millions) Total 2009
2010
and
2011
2012
and
2013
2014
and
thereafter
Consolidated
Balance Sheet
Long-term debt
(Note 5) (a) $2,749 $691 $307 $1,368 $383
Capital leases
(Note 6) 32 1 2 2 27
Other liabilities (b) 6,661 4,892 725 266 778
Other Obligations
Operating leases
(Note 6) (c) 1,223 164 237 149 673
Purchase
obligations (d, e) 7,650 1,753 2,525 1,932 1,440
Total $18,315 $7,501 $3,796 $3,717 $3,301
(a) Excludes unamortized debt discount and interest expense on the debt. As of December 31, 2008, interest on long-
term debt totaling $899 million is payable in the following years (in millions): 2009 - $147, 2010 and 2011 - $252,
2012 and 2013 - $187, 2014 and thereafter - $313.
(b) Includes accounts payable, certain accrued liabilities and obligations under postretirement benefit and deferred
compensation plans.
(c) Amounts have not been reduced for sublease rental income.
(d) Amounts represent long-term agreements to purchase goods and services used in the normal course of business
that are enforceable and legally binding. Some of these arrangements involve take-or-pay commitments but they
do not represent debt obligations. Material long-term purchase contracts are discounted at 6.1-percent discount
rate.
(e) Amounts exclude purchase obligations related to oil and gas marketing and trading activities where an offsetting
sales position exists.
LAWSUITS, CLAIMS, COMMITMENTS, CONTINGENCIES AND RELATED MATTERS
OPC or certain of its subsidiaries are named, in the normal course of business, in lawsuits, claims and other legal proceedings that
seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties
or other losses, or injunctive or declaratory relief. OPC or certain of its subsidiaries also have been named in proceedings under the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and similar federal, state, local and foreign
environmental laws. These environmental proceedings seek funding or performance of remediation and, in some cases, compensation for
alleged property damage, punitive damages, civil penalties and injunctive relief; however, Occidental is usually one of many companies in