Occidental Petroleum 2014 Annual Report Download - page 137

Occidental Petroleum Corporation
January 30, 2015
Page 5
Of the properties reviewed, approximately 94 percent of the proved producing reserves and 42 percent of the proved non-
producing and undeveloped reserve volumes are related to the application of enhanced/improved recovery techniques. These
enhanced/improved recovery techniques include water and CO2 injection and infill drilling.
Occidental uses the latest available production, new well and seismic data in its reserves estimation process. Typically, this
data is from the third quarter of the year for which reserves are estimated, though material data is considered whenever it becomes
available prior to finalization of reserves estimates. The data used by Occidental in their analysis of the proved reserves for the
properties reviewed by us was considered sufficient for the purpose thereof.
Primary Economic Assumptions Employed by Occidental for Estimating Reserves
To estimate economically recoverable proved reserves and related future net cash flows, Occidental considered many
factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and
engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and
forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated
to be economically producible from a given date forward based on existing economic conditions including the prices and costs at
which economic producibility from a reservoir is to be determined. To confirm that the proved reserves reviewed by us meet the
SEC requirements to be economically producible, we have reviewed certain primary economic data utilized by Occidental relating
to hydrocarbon prices and costs as noted herein.
The hydrocarbon prices in effect on December 31, 2014 for the properties reviewed were determined by Occidental using
the unweighted 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the
hydrocarbons are sold and adjustments for differentials as described herein. In certain geographic areas, the price reference and
benchmark prices may be defined by contractual arrangements. For hydrocarbon products sold under contract, the contract prices
including fixed and determinable escalations, exclusive of inflation adjustments, were used until expiration of the contract.
The table below summarizes Occidental’s net volume weighted benchmark prices adjusted for differentials for the
properties reviewed by us and referred to herein as Occidental’s “average realized prices.” The average realized prices shown in
the table below were determined from Occidental’s estimate of the total future gross revenue before production taxes for the
properties reviewed by us and Occidental’s estimate of the total net reserves for the properties reviewed by us for the geographic
area. A summary of average realized prices are not included for properties located in the Middle East because of host
government’s limitations on the disclosure of commercially sensitive information. The data shown in the table below is presented in
accordance with SEC disclosure requirements for each of the geographic areas reviewed by us.
Geographic Area Product
Price
Reference
Average
Benchmark
Prices
Average Realized
Prices
North America
United States Oil/Condensate WTI Cushing $94.99/Bbl $86.79/Bbl
NGLs WTI Cushing $94.99/Bbl $42.33/Bbl
Gas Henry Hub $4.41/MMBTU $4.02/MCF
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