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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MARCH 7
, 2000
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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As previously reported, on March 7, 2000, Occidental Petroleum Corporation
("Occidental") entered into an agreement to acquire all of the common
partnership interest in Altura Energy Ltd. ("Altura"), the largest oil producer
in the state of Texas. Altura has proved reserves of approximately 850 million
barrels of oil equivalent, which are located in the Permian Basin.
The transaction, valued at approximately $3.6 billion, closed on April 19,
2000. Occidental, through its subsidiaries, paid approximately $1.2 billion to
the sellers, affiliates of BP Amoco plc and Shell Oil Company, to acquire the
common limited partnership interest and control of the general partner which
manages, operates and controls 100 percent of the Altura assets. The partnership
borrowed approximately $2.4 billion, which has recourse only to the Altura
assets. The partnership also loaned approximately $2.0 billion to affiliates of
the sellers, evidenced by two notes, which provide credit support to the
partnership. The sellers retained a preferred limited partnership interest of
approximately $2.0 billion and are entitled to certain distributions from the
partnership. An affiliate of BP Amoco plc also retained a non-controlling
interest in the general partner that manages Altura.
As a result of the acquisition, Occidental's worldwide oil production for
2000 will rise to 480,000 barrels of oil equivalent per day, a 13 percent
increase above the average for 1999. In addition, Occidental's worldwide proved
reserves are expected to increase to approximately 2.2 billion barrels, on an
oil-equivalent basis.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial statements of business acquired.
Altura Energy Ltd. Audited Financial Statements for the years ended
December 31, 1999 and 1998 and for the period from March 1, 1997 to
December 31, 1997 together with the report of Ernst & Young LLP thereon
(the "Altura Financial Statements") (attached as Exhibit 99.1 hereto).
(b) Pro forma financial information.
The following unaudited pro forma financial information has been prepared
in accordance with the rules and regulations of the Securities and Exchange
Commission. This transaction has been reflected as if it had occurred for
financial position purposes on December 31, 1999 and for results of operations
purposes on January 1, 1999. These pro forma financial statements do not reflect
anticipated cost savings, synergies, changes in realized prices or production
rates or certain other adjustments that may result from the acquisition of the
Altura interest. The historical financial information for Occidental has been
derived from Occidental's audited financial statements for the year ended
December 31, 1999, incorporated by reference in Occidental's Annual Report on
Form 10-K for the year ended December 31, 1999 (the "Form 10-K"). The historical
financial information for Altura has been derived from the audited Altura
historical financial statements included in this filing. The unaudited pro forma
financial information should be read in conjunction with Occidental's historical
financial statements incorporated by reference in the Form 10-K, and the Altura
historical financial statements. The pro forma information is not necessarily
indicative of the results or the financial position that would have been
obtained had the transaction actually occurred on the dates specified above. In
addition, such pro forma information does not purport to project Occidental's
results of operations or financial position as of any future date or for any
future period.
A preliminary allocation of the purchase price has been made to major
categories of assets and liabilities in the accompanying pro forma financial
statements based on available information. The actual allocation of the purchase
price and the resulting effect on income from operations may differ from the pro
forma amounts included herein. These pro forma adjustments represent
Occidental's preliminary determination of purchase accounting adjustments and
are based upon available information and certain assumptions that the Company
believes to be reasonable. Consequently, the amounts reflected in the pro forma
financial statements are subject to change.
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1. Unaudited Pro Forma Results of Operations of Occidental for the year
ended December 31, 1999, reflecting the acquisition of the Altura interest.
UNAUDITED PRO FORMA RESULTS OF OPERATIONS *
(IN MILLIONS, EXCEPT PER-SHARE DATA)
Occidental Altura Occidental*
Historical Historical Pro Forma
For the For the For the
Year Ended Year Ended Pro Forma Year Ended
12/31/99 12/31/99 Adjustments 12/31/99
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Revenues $ 8,552 $ 845 -- $ 9,397
Costs and other deductions
Cost of sales 5,059 321 -- 5,380
Selling, general and administrative,
and exploration expense 720 43 -- 763
Write-down of assets 212 -- -- 212
Depreciation, depletion and
amortization of assets 805 145 $ 69 (1) 1,019
Minority interest 58 -- 129 (2) 187
Interest and debt expense, net 499 -- 94 (3) 593
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7,353 509 292 8,154
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Income(loss) from continuing operations
before taxes 1,199 336 (292) 1,243
Provision for domestic and foreign
income and other taxes 631 -- 5 (4) 636
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Income(loss) from continuing
operations 568 336 (297) 607
Preferred dividends (7) (7)
Effect of repurchase of Trust Preferred
Securities 1 -- -- 1
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Earnings(loss) from continuing operations
applicable to common stock $ 562 $ 336 $ (297) $ 601
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Basic earnings per common share
from continuing operations $ 1.58 $ 1.69
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Average shares outstanding (in
thousands) 355,400 355,400
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Diluted earnings per common
share from continuing operations $ 1.58 $ 1.69
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Average shares outstanding (in
thousands) 355,500 355,500
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(1) Reflects the inclusion of additional depreciation, depletion and
amortization expense to be recognized based on a preliminary purchase price
allocation for the Altura interest.
(2) Reflects the inclusion of preferred minority interest distributions to the
affiliates of the sellers.
(3) Reflects the inclusion of (a) $67 million of additional interest expense
expected to be incurred by Occidental on long-term debt of approximately
$1.2 billion, based on an estimated weighted average interest rate of
approximately 5.6 percent, incurred in connection with the Altura
transaction and (b) the additional net interest expense of $27 million that
Altura will record on the debt of $2.4 billion, based on an estimated
weighted average interest rate of approximately 6.33 percent, partially
offset by the interest income earned on the $1.968 billion notes from
affiliates of the sellers, based on an estimated weighted average interest
rate of approximately 6.43.
(4) Reflects the inclusion of additional income tax expense of $15 million
calculated by applying the statutory tax rate to Altura's pro forma pretax
income offset by a tax credit of approximately $10 million from enhanced
oil recovery operations related to the acquisition.
* These pro forma financial statements do not reflect reduction in interest
expense resulting from the repayment of pro forma debt using asset sale
proceeds including proceeds from the recent disposition of Canadian
Occidental Petroleum interests and Peru producing operations. Additionally,
these statements do not reflect anticipated cost savings, synergies,
changes in realized prices or production rates or certain other adjustments
that may result from the acquisition of the Altura interest.
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2. Unaudited Pro Forma Statement of Financial Position of Occidental as at
December 31, 1999, reflecting the acquisition of the Altura interest.
UNAUDITED PRO FORMA STATEMENT OF FINANCIAL POSITION *
(IN MILLIONS)
Occidental Altura Occidental*
Historical Historical Pro Forma Pro Forma
12/31/99 12/31/99 Adjustments 12/31/99
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Assets
Current assets $ 1,688 $ 183 $ 7 (1) $ 1,878
Long-term receivables, net 168 -- 1,968 (2) 2,136
Equity investments 1,754 -- -- 1,754
Property, plant and equipment, net 10,029 2,039 1,612 (3) 13,680
Other assets 486 -- 8 (4) 494
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$ 14,125 $ 2,222 $ 3,595 $ 19,942
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Liabilities and Equity
Current maturities of long-term debt $ 5 -- $ 200 (5) $ 205
Current liabilities 1,962 $ 142 -- 2,104
Long-term debt, net 4,368 -- 3,396 (6) 7,764
Deferred and other domestic and foreign
income taxes 995 -- -- 995
Other deferred credits and other liabilities 2,534 92 (20)(7) 2,606
Minority interest 252 -- 2,007 (8) 2,259
Redeemable trust preferred securities 486 -- -- 486
Stockholders' equity 3,523 1,988 (1,988)(9) 3,523
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$ 14,125 $ 2,222 $ 3,595 $ 19,942
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(1) Reflects the inclusion of (a) proceeds of $2.4 billion from debt incurred
by the Altura partnership, (b) a $1.968 billion cash loan to the sellers in
exchange for note receivables, (c) capital distributions of $620 million
paid to the sellers and (d) approximately $195 million of other preliminary
purchase price adjustments.
(2) Reflects the inclusion of notes receivable issued to the Altura partnership
by sellers.
(3) Reflects the inclusion of a preliminary purchase price adjustment to record
property, plant and equipment at estimated fair market value.
(4) Reflects the inclusion of capitalized loan fees related to the debt
incurred by the Altura partnership.
(5) Reflects the inclusion of the current portion of the $2.4 billion of
additional debt incurred by the Altura partnership, which is recourse only
to the Altura assets.
(6) Reflects the inclusion of (a) the long term portion of the $2.4 billion of
additional debt incurred by the Altura partnership, which is recourse only
to the Altura assets and (b) approximately $1.2 billion of additional debt
incurred by Occidental to fund the cash payment to the sellers.
(7) Reflects the inclusion of additional transition and employee-related
liabilities and purchase price adjustments for environmental remediation
and abandonment reserves resulting from the transaction.
(8) Reflects the inclusion of the preferred limited partnership minority
interest of the sellers.
(9) Reflects the elimination of the historical equity of Altura.
* These pro forma financial statements do not reflect reduction in debt from
asset sale proceeds including proceeds from the recent disposition of
Canadian Occidental Petroleum interests and Peru producing operations.
Additionally, these statements do not reflect anticipated cost savings,
synergies, changes in realized prices or production rates or certain other
adjustments that may result from the acquisition of the Altura interest.
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(c) Exhibits.
10.1 Purchase and Sale Agreement dated March 7, 2000, by and among
Amoco D. T. Company, Amoco X. T. Company, Amoco Y. T. Company, SWEPI LP, Shell
Land & Energy Company, Shell Onshore Ventures Inc., Shell K2 Inc., and Shell
Everest, Inc., as Sellers, and Occidental Petroleum Corporation, as Buyer.
(filed as Exhibit 10.1 of the Current Report on Form 8-K of Occidental
previously filed and also dated March 7, 2000 (Date of earliest event reported),
File No. 1-9210, and incorporated herein by this reference).
23.1 Consent of Ernst & Young LLP, Houston, Texas.
99.1 Altura Financial Statements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: May 12, 2000 S.P. Dominick, Jr.
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S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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23.1 Consent of Ernst & Young LLP, Houston, Texas.
99.1 Altura Financial Statements.
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