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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9210
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OCCIDENTAL PETROLEUM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4035997
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10889 WILSHIRE BOULEVARD 90024
LOS ANGELES, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 208-8800
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
10 1/8% Senior Notes due 2001 New York Stock Exchange
10 1/8% Senior Debentures due
2009 New York Stock Exchange
11 1/8% Senior Debentures due
2019 New York Stock Exchange
9 1/4% Senior Debentures due
2019 New York Stock Exchange
$3.00 Cumulative CXY-Indexed
Convertible Preferred Stock New York Stock Exchange
Common Stock New York Stock Exchange,
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or l5(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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At March 7, 1997, the aggregate market value of the voting stock held by
nonaffiliates of the registrant was approximately $8.5 billion, based on the
New York Stock Exchange composite tape closing price of $25.375 per share of
Common Stock (assuming conversion of all outstanding shares of Occidental's
$3.875 Cumulative Convertible Voting Preferred Stock, par value $1.00 per
share) on March 7, 1997. Shares of Common Stock held by each officer and
director have been excluded from this computation in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
At March 7, 1997, there were 329,754,982 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report for the year ended December 31,
1996, are incorporated by reference into Parts I and II. Portions of the
registrant's definitive Proxy Statement filed in connection with its April 25,
1997, Annual Meeting of Stockholders are incorporated by reference into Part
III.
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TABLE OF CONTENTS
PART I
ITEMS 1 AND 2 Business and Properties...................................... 1
General.................................................................. 1
Oil and Gas Operations................................................... 1
Natural Gas Transmission Operations...................................... 7
Chemical Operations...................................................... 11
Capital Expenditures..................................................... 15
Employees................................................................ 15
Environmental Regulation................................................. 15
ITEM 3 Legal Proceedings................................................... 16
Environmental Proceedings................................................ 16
ITEM 4 Submission of Matters to a Vote of Security Holders................. 17
Executive Officers of the Registrant..................................... 17
PART II
ITEM 5 Market for Registrant's Common Equity and Related Stockholder Mat-
ters...................................................................... 19
ITEM 6 Selected Financial Data............................................. 20
ITEM 7 Management's Discussion and Analysis of Financial Condition and Re-
sults of Operations....................................................... 20
ITEM 8 Financial Statements and Supplementary Data......................... 21
ITEM 9 Changes in and Disagreements With Accountants on Accounting and Fi-
nancial Disclosure........................................................ 24
PART III
ITEM 10 Directors and Executive Officers of the Registrant................. 24
ITEM 11 Executive Compensation............................................. 24
ITEM 12 Security Ownership of Certain Beneficial Owners and Management..... 24
ITEM 13 Certain Relationships and Related Transactions..................... 24
PART IV
ITEM 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.... 24
(i)
PART I
ITEMS 1 AND 2 BUSINESS AND PROPERTIES
GENERAL
Occidental Petroleum Corporation, a Delaware corporation ("Occidental"),
explores for, develops, produces and markets crude oil and natural gas;
engages in interstate and intrastate natural gas transmission and marketing;
and manufactures and markets a variety of basic chemicals, petrochemicals,
polymers and plastics and specialty chemicals. Occidental conducts its
principal operations through three subsidiaries: Occidental Oil and Gas
Corporation, MidCon Corp. and Occidental Chemical Corporation. Occidental's
executive offices are located at 10889 Wilshire Boulevard, Los Angeles,
California 90024; telephone (310) 208-8800.
Occidental was organized in April 1986 and, as the result of a
reorganization effective May 21, 1986, became the successor to a California
corporation of the same name organized in 1920. As used herein, the term
"Occidental" refers to Occidental alone or together with one or more of its
subsidiaries.
Occidental's principal businesses constitute three industry segments, the
operations of which are described below. For information with respect to the
revenues, net income and assets of Occidental's industry segments and of its
operations in various geographic areas for each of the three years in the
period ended December 31, 1996, see Note 17 to the Consolidated Financial
Statements of Occidental ("Consolidated Financial Statements"), which are
included in Occidental's 1996 Annual Report ("1996 Annual Report") and are
incorporated by reference in Item 8 of this report, and the information
appearing under the caption "Management's Discussion and Analysis," which is
included in the 1996 Annual Report and is incorporated by reference in Item 7
of this report. Throughout this report, portions of the 1996 Annual Report are
incorporated by reference. These portions of the 1996 Annual Report are
included as Exhibit 13 to this report.
OIL AND GAS OPERATIONS
Exploration and Production
GENERAL Through Occidental Oil and Gas Corporation and its subsidiaries, and
its approximate 30 percent equity interest in Canadian Occidental Petroleum
Ltd. ("CanadianOxy"), Occidental produces or participates in the production of
crude oil, condensate and natural gas in the United States, Canada, Colombia,
Ecuador, the Dutch and United Kingdom sectors of the North Sea, Oman,
Pakistan, Peru, Qatar, Russia, Venezuela and Yemen. Occidental is continuing
its development programs for certain existing fields in certain of these
countries and also is conducting exploration activities in several of these
countries as well as in other countries.
1
COMPARATIVE OIL AND GAS RESERVES AND PRODUCTION
(Oil in millions of barrels; natural gas in billions of cubic feet)
1996 1995 1994
---------------- ---------------- ----------------
OIL GAS TOTAL* OIL GAS TOTAL* OIL GAS TOTAL*
--- ----- ------ --- ----- ------ --- ----- ------
International Reserves 694 840 834 734 639 841 700 354 759
U.S. Reserves 203 1,744 494 196 1,821 499 218 1,979 548
--- ----- ------ --- ----- ------ --- ----- ------
Total 897 2,584 1,328 930 2,460 1,340 918 2,333 1,307
=== ===== ====== === ===== ====== === ===== ======
International Production 84 42 91 78 46 86 65 19 68
U.S. Production 21 220 58 23 223 60 22 227 60
--- ----- ------ --- ----- ------ --- ----- ------
Total 105 262 149 101 269 146 87 246 128
=== ===== ====== === ===== ====== === ===== ======
- -------------------------
* Natural gas volumes have been converted to equivalent barrels based on
energy content of six Mcf of gas to one barrel of oil. 1995 and 1994 amounts
have been restated to reflect this methodology.
In 1996, Occidental added more oil to its reserves than it produced.
However, overall reserves decreased due to the sale of its interest in 46
million barrels of royalty oil, acquired by Occidental in 1993, to the Republic
of the Congo for $215 million. Occidental's consolidated worldwide net proved
developed and undeveloped reserves of crude oil (not including those of
CanadianOxy) were 897 million barrels at year-end 1996, compared with 930
million barrels at year-end 1995. Domestic reserves of crude oil were 203
million barrels at year-end 1996, compared with 196 million barrels at year-end
1995, while international crude oil reserves decreased to 694 million barrels
from 734 million barrels at year-end 1995. Worldwide net crude oil reserve
additions of 119 million barrels, mainly in the United States and Qatar, more
than replaced Occidental's worldwide production of 105 million barrels. The
calculation of net reserve additions does not take into account sales of
reserves. Worldwide net proved developed and undeveloped reserves of natural gas
were approximately 2.6 trillion cubic feet ("Tcf") at year-end 1996, with 1.7
Tcf attributable to domestic operations. Worldwide net proved developed and
undeveloped natural gas reserves were about 2.5 Tcf in the previous year.
Occidental's crude oil reserves include condensate. Estimates of reserves have
been made by Occidental engineers. These estimates include reserves in which
Occidental holds an economic interest under service contracts and other
arrangements. The reserves are stated after applicable royalties. See the
information under the caption "Reserves, Production and Related Information" and
the information incorporated under the caption "Supplemental Oil and Gas
Information" incorporated by reference in Item 8 of this report.
Net daily worldwide oil production averaged 286,000 barrels per day compared
to 278,000 barrels per day in 1995, and net worldwide natural gas production
averaged 716 million cubic feet ("MMcf") per day compared to 739 MMcf per day
in 1995. International operations accounted for 80 percent of Occidental's oil
production, while 84 percent of gas production came from the United States. On
an oil equivalent basis, Occidental produced 405,000 net barrels per day in
1996 from operations in 12 countries, including the United States.
As a producer of crude oil and natural gas, Occidental competes with
numerous other producers, as well as with nonpetroleum energy producers. Crude
oil and natural gas are commodities that are sensitive to prevailing
conditions of supply and demand and generally are sold at posted or contract
prices. Among the methods that Occidental uses to compete are the acquisition
of foreign contract exploration blocks in areas with known oil and gas
deposits and the cost-efficient development and production of its worldwide
oil and gas reserves. Specific strategies include the buying or selling of
proved reserves and flexible and responsive marketing techniques, particularly
for natural gas. Occidental has commenced the development process for its
recent gas discoveries in the Far East. Occidental is also pursuing
opportunities to increase production through enhanced oil recovery projects,
similar to those in Qatar and Venezuela, and focusing on oil and gas
exploration and strategic acquisitions.
2
Occidental's domestic oil and gas operations are affected by political
developments and by federal, state and local laws and regulations relating to,
among other things, increases in taxes and royalties, production limits and
environmental matters.
In December 1995, Occidental entered into a transaction with Clark USA, Inc.
("Clark") under which Occidental agreed to deliver approximately 17.7 million
barrels of West Texas Intermediate crude ("WTI")-equivalent oil over a six-
year period. In exchange, Occidental received $100 million in cash and
approximately 5.5 million shares of Clark common stock. As a result of this
transaction, Occidental owns approximately 19 percent of Clark. Occidental has
accounted for the consideration received in the transaction as deferred
revenue which is being amortized into revenue as WTI-equivalent oil is
produced and delivered during the term of the agreement. Reserves dedicated to
the transaction were excluded from the estimate of proved oil and gas reserves
in 1995 and 1996 (see the information incorporated under the caption
"Supplemental Oil and Gas Information" incorporated by reference in Item 8 of
this report). Occidental delivered approximately 2.2 million barrels of WTI-
equivalent oil to Clark in 1996. At December 31, 1996, approximately 15.5
million barrels remain to be delivered.
Portions of Occidental's oil and gas assets are located in countries outside
North America, some of which may be considered politically and economically
unstable. These assets and the related operations are subject to the risk of
actions by governmental authorities and insurgent groups. Occidental attempts
to conduct its financial affairs so as to protect against such risks and would
expect to receive compensation in the event of nationalization. At December
31, 1996, the carrying value of Occidental's oil and gas assets in countries
outside North America aggregated approximately $1.924 billion, or
approximately 11 percent of Occidental's total assets at that date.
Approximately $722 million of such assets were located in the Middle East, and
$639 million of such assets were located in Latin America. Substantially all
of the remainder was located in the Netherlands (comprising in part the Dutch
sector of the North Sea) and the Far East.
UNITED STATES Occidental produces crude oil and natural gas, principally in
Texas, the Gulf of Mexico, Kansas, Oklahoma, Louisiana, New Mexico,
California, Mississippi and Alaska.
Net daily domestic production of crude oil averaged approximately 57,300
barrels in 1996, compared with 64,000 barrels in 1995. The 1996 production is
net of approximately 6,000 barrels per day delivered to Clark. Net daily
domestic production of natural gas averaged 601 MMcf in 1996, compared with
612 MMcf in 1995.
Occidental's average sales price for domestic crude oil was $18.98 per
barrel in 1996, compared with $15.61 in the previous year. The average natural
gas sales price in 1996 was $2.11 per thousand cubic feet ("Mcf"), compared
with $1.51 per Mcf during 1995.
Occidental's largest concentration of gas reserves and production is the
Hugoton area encompassing portions of Kansas, Oklahoma and Texas, where it
produced an average of more than 207 MMcf of gas per day or approximately one-
third of the domestic total. Occidental has approximately 933 billion cubic
feet ("Bcf") of gas reserves and 5.5 million barrels of oil reserves in the
Hugoton area. Occidental continued infill drilling in the Chase formation of
the Hugoton field in 1996. In this program Occidental drilled and completed 54
wells, and 21 wells were stimulated by fracturing the Chase formation.
Sixteen additional wells were drilled in the Milne Point field in Alaska
during 1996. These wells are expected to add up to 15,000 gross barrels of oil
per day to the unit's production in 1997 in which Occidental has an
approximate 8.8 percent interest.
Occidental continued to develop its interest in the deep, high-pressure
Austin Chalk area of the Masters Creek field in Rapides Parish, Louisiana. In
December 1995, the Murry A-1, a 14,700-foot total vertical depth dual-lateral
horizontal well, was completed. The well was successfully tested at 3,200
barrels of oil and 10 MMcf of gas per day and was brought on production in
early 1996. This paved the way for dual-lateral development of Occidental's
interests in Masters Creek where Occidental has initial gross production of
5,450 barrels of oil and 14.7 MMcf of gas per day. During 1996, Occidental
participated in nine successful development wells in the Masters Creek area,
where Occidental has in excess of 100,000 acres under lease.
3
Occidental has an agreement to make available to certain parties, in
connection with a legal settlement, up to 49,500 million British thermal units
("MMBtu") of natural gas per day through 2010 at prices related to market.
Occidental also has an agreement to supply fuel gas at market prices to a
CITGO Petroleum Corporation ("CITGO") refinery until 2003 to the extent that
CITGO does not obtain such gas from other sources.
Additionally, Occidental has an agreement to supply CITGO, at CITGO's
option, with a majority of its domestic lease crude oil production through
August 31, 1998. During 1996, Occidental sold CITGO approximately 38,000
barrels of oil per day under this agreement. Occidental is currently disputing
certain provisions of this agreement.
Occidental has various agreements to supply certain gas marketing companies
with 69,400 MMBtu of natural gas per day in 1997 and with volumes ranging from
69,400 MMBtu down to 1,900 MMBtu per day from 1997 through 2003. Prices under
the different agreements are based on energy equivalent crude oil prices,
market-sensitive prices or contract prices, some with a yearly escalation
provision. Occidental also has agreements with various public utility
companies to provide approximately 40,000 MMBtu of natural gas per day through
1997 and approximately 19,100 MMBtu per day in 1998. The public utility
agreements provide for market-sensitive prices. In addition, Occidental has
entered into several other sales contracts of one year or more to industrial
customers with a total volume of 18,100 MMBtu of natural gas per day in 1997,
decreasing to 2,600 MMBtu per day by 1998.
CANADA Occidental owns an approximate 30 percent interest in CanadianOxy,
which is accounted for as an equity investment. See Note 15 to the
Consolidated Financial Statements.
CanadianOxy produces crude oil, natural gas, natural gas liquids and sulfur
in Canada, principally in the Province of Alberta; owns a 7.23 percent
interest in Syncrude Canada Ltd., which produces synthetic crude oil from the
tar sands of Northern Alberta; has interests in producing oil and gas leases
onshore and offshore in the United States and in the United Kingdom sector of
the North Sea and Yemen (where CanadianOxy is operator and Occidental a
participant); engages in exploration activities in Canada, the United States,
Indonesia, Romania, Pakistan, Kazakstan, Nigeria, Colombia and Vietnam; and
participates with Occidental in its operations in Ecuador. CanadianOxy also
conducts chemical operations in Canada and the United States.
At December 31, 1996, Occidental's proportional interest in CanadianOxy's
worldwide net proved developed and undeveloped reserves aggregated
approximately 33 million barrels of crude oil, condensate and natural gas
liquids, 153 Bcf of natural gas and 46 million barrels of synthetic crude oil
recoverable from tar sands.
BANGLADESH In early 1995, Occidental signed production-sharing contracts to
explore a 3.4-million-acre area in the gas-producing northeastern region and
to appraise the Jalalabad discovery made in 1989. Seismic exploration of the
area is in progress and two exploratory wells will be drilled in 1997.
Appraisal and development of the Jalalabad gas discovery is expected to result
in gas production and sales before the end of 1998. A sale contract with
Petrobangla, the national oil company, for the initial delivery of 100 MMcf
per day of natural gas was signed in November 1996. Occidental has farmed-out
50 percent of its interest in this block to an affiliate of Unocal.
COLOMBIA Occidental conducts exploration and production operations in
Colombia under three contracts with Ecopetrol, the Colombian national oil
company. These contracts cover the producing Cano Limon area in the Llanos
region of northeastern Colombia, one exploration area in the Llanos fold belt
and one exploration area in the Bogota basin. Occidental's interest in these
contracts is through its 75 percent ownership of the stock of a subsidiary
that owns the company conducting operations in Colombia. After giving effect
to a government royalty, Occidental's net share of existing production is 15
percent from the contract covering the Llanos area.
All of Occidental's share of production is exported through a trans-Andean
pipeline system that carries crude oil to an export terminal at Covenas.
Occidental has an 18.75 percent net ownership interest in the pipeline and
marine terminal. The pipeline is subject to periodic attacks by insurgent
groups, which from time to time disrupt the flow of oil.
4
Gross production from Occidental's Cano Limon area declined to approximately
190,000 barrels per day in 1996, compared with 197,000 barrels per day in
1995.
CONGO In July 1996, Occidental sold its entire royalty interest in the
Republic of the Congo (the "Congo") to the Congo for approximately $215
million. Occidental's net royalty oil production for seven months of 1996 in
the Congo averaged approximately 6,000 barrels per day.
ECUADOR Occidental operates the 494,000-acre Block 15, in the Oriente Basin,
under a risk-service contract. Six oil fields were discovered from 1985 to
1992. Drilling will continue until the fields are fully developed. Gross
production was approximately 21,500 barrels per day in 1996 compared to gross
production of approximately 23,800 barrels per day in 1995. In late 1996,
Occidental drilled a successful exploratory well in the southeastern portion
of the block. Appraisal of the discovery is required to determine its
commercial potential. In January 1997, the Ecuadorean government initiated
discussions to convert Occidental's existing risk-service contract to a
participation type of agreement.
Occidental has an 85 percent interest in the parent of the company that
holds title to the block. CanadianOxy owns the remaining 15 percent.
NORTH SEA Through the purchase of Placid International Oil Ltd. (now
Occidental Netherlands, Inc.) Occidental has interests in seven gas-producing
licenses and one exploration license in the Dutch sector of the North Sea.
Also acquired was a 38.6 percent interest in a 110-mile gas pipeline system
that services the area. Net production for 1996 was approximately 73 MMcf of
gas per day.
OMAN Occidental is the operator, with a 65 percent working interest, of the
Suneinah Block, which contains the Safah field and six small fields along the
southern border of the block. Exploration and field development will continue
in 1997. Occidental's net share of production from the block in 1996 averaged
approximately 13,400 barrels per day of crude oil, compared with 12,000
barrels per day in 1995.
PAKISTAN In southern Pakistan, Occidental has a 30 percent working interest
in the Badin Block, which in 1996 produced a net share of 6,400 barrels of oil
per day and 43 MMcf of gas per day, compared to 6,000 barrels of oil per day
and 49 MMcf of gas per day in 1995. Exploration of the block resulted in two
oil and gas discoveries that will help maintain production at current rates.
In addition, Occidental holds exploration rights for a 356,000-acre block in
northern Pakistan and for two contiguous blocks in the Central Indus gas basin
totaling 2.9 million acres. Seismic exploration of the Northern Pakistan Salt
Range block has delineated several prospects, and drilling will occur in one
such prospect in 1997.
PERU Occidental conducts exploration and production activities under four
separate service contracts with the Peruvian government. One of these
contracts, in which Occidental retains all the interest, covers continuing
operations in the northern jungle and provides for Occidental to receive, as
compensation for its services, fees, based on barrels of production, that vary
with the value of a "basket" of international oils. All production is
delivered to Perupetro, the Peruvian national oil company.
Occidental owns a 65 percent interest and a 50 percent interest,
respectively, in two contiguous exploration blocks totalling 4.4 million
acres. The remaining contract in which Occidental has a 100 percent interest
covers a 2-million-acre block in the Hualluga Basin. The contract for the
Talara producing operation in Peru expired in July 1996 and was not renewed.
Gross production from the northern jungle block averaged approximately
52,300 barrels per day in 1996, compared with 55,000 barrels per day in 1995.
Occidental's net production in Peru amounted to approximately 53,700 barrels
per day in 1996, compared to 58,000 barrels per day in 1995.
QATAR In October 1994, a unified agreement was approved authorizing
Occidental to implement a development plan to increase production and reserves
from the Idd el Shargi North Dome field.
5
Under a production-sharing agreement, Occidental is the operator of the
field and will complete development of the field's three main reservoirs using
horizontally drilled wells in conjunction with pressure maintenance by both
water injection and gas injection to effect a high recovery from the
reservoir. Average production increased from approximately 20,000 net barrels
per day for 1995 to approximately 38,000 net barrels per day for 1996. Proved
developed and undeveloped project reserves are presently estimated by
Occidental to be approximately 207 million barrels.
RUSSIA In 1992, Occidental and AAOT Chernogorneft Enterprise began operation
of a 50 percent owned joint venture company, Vanyoganneft, which was formed to
increase oil recovery and production from the Vanyogan and Ayogan oil fields
and to sell the oil to foreign markets. The two oil fields are located 40
miles northeast of the city of Nizhnevartovsk in the western Siberian oil
basin. During 1996, gross production averaged 50,800 barrels per day.
Approximately 27 percent of such oil was exported in 1996. Occidental expects
to continue exports of some of its oil production in 1997.
In 1992, Occidental was awarded the 1.5-million-acre Block 15 in the Russian
Federation's Komi Republic. A joint venture, Parmaneft, was established
between Occidental, which owns a 75 percent interest, and
Ukhtaneftegasgeologica to explore for oil and gas and develop discoveries
within the block. During the exploration phase, Occidental is paying 100
percent of the costs. In 1996 Occidental results included a $105 million
charge, reflecting the write-down of its investment in Komi, although certain
drilling has continued to satisfy contractual obligations.
VENEZUELA In November 1993, Occidental executed a 20-year operating services
agreement with Maraven, an affiliate of the Venezuelan national oil company,
to increase oil production and reserves from existing fields in the 968,000-
acre unit just west of Lake Maracaibo. Occidental is the operator, with a 100
percent interest, and receives, as compensation for its services, fees based
on barrels of production that vary with the values of a "basket" of
international oils, inflation and accumulated production. A three-year work
program, completed in early 1997, included the workover and repair of existing
wells, the drilling of new wells, the installation of high-rate pumping
equipment in all wells and the expansion of existing production facilities to
accommodate increased production. Occidental achieved further production
increases in 1996, with production averaging 27,200 barrels per day for 1996,
compared to 20,900 barrels per day for 1995.
YEMEN In 1991, Occidental acquired an 18 percent working interest in the
310,000-acre Masila Block (although the block consisted at one time of 6.8
million acres, substantial territory was relinquished in 1995 and 1996), where
CanadianOxy, the operator, with a 52 percent working interest, has made 12 oil
discoveries. Production started in July 1993. Occidental's net share under a
production-sharing contract was 14,700 barrels per day compared to 15,200
barrels per day in 1995. Drilling will continue until the fields are fully
developed. Occidental also has a 100 percent working interest in a production-
sharing contract in a central Yemen exploration block.
OTHER INTERNATIONAL EXPLORATION Several of the projects listed below would
involve substantial expenditures and several years would be required to
complete project development.
In 1992, a substantial oil and gas discovery was made in the Malampaya
prospect on Block SC-38 offshore northwest Palawan Island in the Philippines.
Appraisal wells confirmed that the 1989 Camago discovery by Occidental and the
Malampaya discovery contain sufficient recoverable gas for a commercial project.
Occidental has a 50 percent working interest in this project. Occidental and its
partner, Shell Philippines Exploration Corporation, the operator, have signed a
memorandum of understanding with the National Power Corporation of the Republic
of the Philippines to investigate the repowering of an idle nuclear plant in
Bataan with natural gas.
In East Malaysia, Occidental has made significant gas discoveries offshore
Sarawak. In 1995, agreements were executed with its partners for the
commercialization of these discoveries. A joint venture company will be owned
by Occidental and its partners, PETRONAS, the Malaysian national oil company,
Shell Gas B.V. and Nippon Oil Company to construct the country's third
liquefied natural gas ("LNG") plant. Feedstock for the
6
plant initially will come from the Jintan discovery containing recoverable gas
estimated at 2.9 Tcf. Occidental is the operator, with a 37.5 percent interest
in the gas discoveries. Occidental will have a 10 percent interest in the new
LNG plant. The partners began the detailed upstream facility design in 1996.
The estimated start-up date of the LNG plant is the year 2001.
In Indonesia, Occidental has a 22.9 percent interest in the Berau Block,
offshore Irian Jaya, where appraisal of five major natural gas discoveries by
ARCO, the operator, will continue into 1997 to determine if the natural gas
reserves are sufficient to justify construction of an LNG plant on Irian Jaya.
In addition, Occidental acquired new exploration blocks in Albania, Peru and
Papua New Guinea. During 1997, exploration activities are planned in these
areas as well as on previously acquired blocks in Albania, Bangladesh, China,
Colombia, Gabon, Hungary, Indonesia, Ireland, Oman, Pakistan, Papua New
Guinea, the Philippines and Russia.
Special Item in 1996
Financial results for 1996 included a charge of $105 million, reflecting the
write-down of Occidental's oil and gas exploration project in the Republic of
Komi in the former Soviet Union.
Reserves, Production and Related Information
Reference is made to Note 18 to the Consolidated Financial Statements and
the information incorporated under the caption "Supplemental Oil and Gas
Information" incorporated by reference in Item 8 of this report for
information with respect to Occidental's oil and gas reserves, the production
from and other changes in such reserves, the discounted present value of
estimated future net cash flows therefrom, certain costs and other financial
and statistical information regarding Occidental's oil and gas exploration and
production operations. Estimates of reserves have been made by Occidental
engineers and include reserves under which Occidental holds an economic
interest under service contracts and other arrangements. The definitions used
are in accordance with applicable Securities and Exchange Commission
regulations. Accordingly, proved oil and gas reserves are those estimated
quantities of crude oil, natural gas, and natural gas liquids that geological
and engineering data demonstrate with reasonable certainty will be recoverable
in future years from known reservoirs under existing economic and operating
conditions. Proved developed oil and gas reserves are proved reserves that can
be expected to be recovered through existing wells with existing equipment and
operating methods. Unless otherwise stated, all references to reserves are
made on a net basis. On March 31, 1996, Occidental reported to the U.S.
Department of Energy (the "DOE") on Form EIA-28 the same proved oil and gas
reserves at December 31, 1995, as are set forth for that date in the
information incorporated under the caption "Supplemental Oil and Gas
Information" contained in Occidental's 1995 Annual Report.
NATURAL GAS TRANSMISSION OPERATIONS
General
Through MidCon Corp. ("MidCon"), Occidental engages in interstate and
intrastate natural gas transmission and marketing and electric power
marketing. MidCon's subsidiaries purchase, transport, store and process gas
and sell gas to utilities, municipalities and industrial and commercial users.
The principal subsidiaries of MidCon are Natural Gas Pipeline Company of
America ("Natural"), which owns a major interstate pipeline transmission
system; MidCon Texas Pipeline Operator, Inc. ("MidCon Texas"), which operates
an intrastate pipeline system in Texas, now owned by other Occidental
subsidiaries (see "MidCon ESOP" below); MidCon Gas Services Corp. ("MidCon
Gas"), which engages in the purchase and sale of gas and arranges for the
transportation and storage of such gas; and MidCon Power Services Corp.
("MidCon Power"), which purchases electricity from electric utilities and
other electric power producers and marketers, resells electricity to wholesale
customers and arranges for the transmission of such power. Another
7
subsidiary of MidCon processes natural gas. Through subsidiaries, MidCon also
owns interests in several gas pipeline joint ventures.
Natural is subject to extensive regulation by the Federal Energy Regulatory
Commission (the "FERC"). The FERC regulates, among other things, rates and
charges for transportation and storage of gas in interstate commerce, the
construction and operation of interstate pipeline facilities and the accounts
and records of interstate pipelines. Certain of MidCon Texas' rates and other
aspects of its business are subject to regulation by the Texas Railroad
Commission.
A series of orders (collectively, "Order 636") were adopted by the FERC in
1992 to address certain marketing advantages purportedly enjoyed by interstate
pipelines over other resellers of gas, mandates that interstate pipelines no
longer provide a "bundled" service using their gas transportation and storage
facilities as part of marketing gas to sales customers. As a consequence,
Natural eliminated its traditional gas sales service to customers effective
December 1, 1993, and no longer needed gas supplies to meet sales
requirements. Thus, Natural incurred gas supply realignment ("GSR") costs in
order to terminate or otherwise resolve its obligations under its gas supply
contracts. Natural reached settlement agreements with former customers
providing for recovery of a significant amount of its GSR costs. Under these
settlements, which were approved by the FERC, Natural, through monthly demand
charge billings, recovers GSR costs allocated to these customers over a 48-
month period that began in December 1993. The FERC also permitted Natural to
implement a tariff mechanism to recover additional portions of its GSR costs
in rates charged to transportation customers that are not party to the
settlements.
MidCon ESOP
In November 1996, Occidental established the MidCon Corp. Employee Stock
Ownership Plan (the "MidCon ESOP") for the benefit of employees of MidCon.
Pursuant to the MidCon ESOP, Occidental has issued 1,400,000 shares of its
Cumulative MidCon-Indexed Convertible Preferred Stock (the "CMIC Preferred
Stock") to the MidCon Corp. ESOP Trust.
The CMIC Preferred Stock is designed to track the value of MidCon, which
remains a wholly-owned subsidiary of Occidental. The MidCon ESOP paid for the
CMIC Preferred Stock with a $1.4 billion 30-year promissory note (the "ESOP
Note") guaranteed by MidCon. Dividends on the CMIC Preferred Stock are payable
at an annual rate of $21 per share, when and as declared by Occidental's Board
of Directors. It is anticipated that MidCon will make annual contributions
from its operating cash flow to the MidCon ESOP which, together with the
annual dividends, will be used to repay the ESOP Note due to Occidental.
Properties
Natural's principal facilities consist of two major interconnected
transmission pipelines terminating in the Chicago metropolitan area. One line,
which extends from west Texas and New Mexico producing areas, includes
approximately 6,600 miles of main pipeline and various small-diameter lines.
The other line extends from the Gulf Coast areas of Texas and Louisiana and
comprises approximately 4,900 miles of main pipeline and various small-
diameter lines. These two main pipelines are connected at points in Texas and
Oklahoma by Natural's 240-mile Amarillo/Gulf Coast ("A/G") Pipeline. A 105-
mile pipeline runs from the Arkoma Basin gas producing area of eastern
Oklahoma to the A/G Pipeline.
Nine underground storage fields are operated in four states to provide
services to Natural's customers and to support pipeline deliveries during the
winter, when space heating demand is higher.
MidCon Texas operates an intrastate pipeline system, located primarily in
the Texas Gulf Coast area, which it leases from an affiliate under a 30-year
lease. The system includes approximately 2,600 miles of pipelines, supply
lines, sales laterals and related facilities. A subsidiary of MidCon Gas owns
a separate Texas intrastate pipeline system (the "Palo Duro System") that
includes approximately 400 miles of pipeline and related
8
facilities. The Palo Duro System is leased to a nonaffiliate. MidCon Texas
operates a gas storage facility in south Texas that it leases from a
partnership in which a subsidiary of MidCon Gas owns an interest.
Markets, Sales, Transportation, Storage and Processing
The location of MidCon's pipelines provides access to large market areas, to
most other major pipeline systems and to nearly all major North American
producing areas. This permits delivery of natural gas directly or by
displacement to pipeline systems serving most of the United States.
Deliveries of gas by MidCon's pipelines include both volumes sold by the
pipelines and their marketing affiliates and volumes owned by others which are
transported. The following table sets forth in Bcf the gas volumes sold to, or
transported for, nonaffiliates by Natural, MidCon Texas and MidCon Gas for
each of the last three calendar years:
1996 1995 1994
----- ----- -----
Natural
Transportation 1,284 1,318 1,318
MidCon Texas
Sales 239 238 198
Transportation 271 215 215
MidCon Gas
Sales 460 410 351
Sales volumes shown in the foregoing table for MidCon Texas include sales
deliveries by a marketing affiliate to nonaffiliates. The table does not
include gas transported by Natural for affiliates for sale to nonaffiliates of
approximately 220 Bcf in 1996, 221 Bcf in 1995 and 220 Bcf in 1994. The table
also does not show volumes of gas that have been auctioned by Natural
following the termination of its traditional gas sales service on December 1,
1993.
As a consequence of Order 636, Natural's sales service agreements were
replaced in December 1993 principally with service agreements for combined
transportation and storage services provided to former customers. These
combined transportation and storage agreements, in turn, terminated on
December 1, 1995. Contracts for new services that included new combined
transportation and storage service options were entered with those customers,
but several were renewed at reduced service levels and reduced rates.
Customers purchasing this combined service pay monthly demand charges
irrespective of gas volumes actually transported and stored. In addition,
Natural is authorized to assess separate monthly demand charges to these
customers to recover a portion of Natural's GSR costs.
Approximately 85 percent of Natural's pipeline capacity to Chicago remains
subscribed for long-term firm transportation service. Natural was able to sell
on a short-term basis substantially all of the remaining unsubscribed capacity
during the 1995-96 and 1996-97 winter heating seasons.
In June 1995, Natural filed a general rate case with the FERC to allow
Natural to institute tariff changes to reflect the new transportation and
storage services it planned to institute in December 1995 and to approve rates
for these new services. By orders issued by the FERC, these new rates became
effective on December 1, 1995, subject to potential adjustment upon final
resolution of issues in the rate case. In May 1996, Natural filed a settlement
with the FERC to resolve all rate case issues. Natural currently is engaged in
negotiations with one intervenor group in an effort to obtain unanimous
support for the proposed settlement.
Pursuant to transportation agreements and FERC tariff provisions, Natural
offers both firm transportation service and interruptible transportation
service. Under Natural's tariff, firm transportation customers pay reservation
charges each month, irrespective of volumes actually transported.
Interruptible transportation customers pay a monthly commodity charge based
upon actual volumes transported. Reservation and commodity
9
charges are both based upon geographical location, time of year and distance
of the transportation service provided. In addition, as in the case of the
combined service described above, Natural is authorized to assess separate
monthly demand charges to firm transportation customers to recover a portion
of the GSR costs.
Natural also provides firm and interruptible gas storage service pursuant to
storage agreements and FERC-approved tariffs. Firm storage customers pay a
monthly demand charge irrespective of actual volumes stored. Interruptible
storage customers pay a monthly commodity charge based upon actual volumes of
gas stored.
Natural transports a substantial portion of the natural gas delivered into
its principal market, the Chicago metropolitan area. The Chicago area
deliveries were primarily to three major gas distribution utility companies.
Natural's transportation competitors in the Chicago metropolitan area
consist of other interstate pipelines that own facilities in the vicinity.
Natural faces increased competition in this market as other pipelines consider
expansion projects to increase their capability to serve the Chicago area. In
August 1996, Natural received preliminary approval, subject to environmental
review, from the FERC to expand its existing pipeline system from Harper,
Iowa, to Chicago. This expansion, plus existing capacity, would accommodate
more than 500 MMcf per day of new gas supplies to be delivered through a
proposed expansion of the system of Northern Border Pipeline Company
("Northern Border"), a competitor, that transports gas originating in western
Canada. Northern Border has also received preliminary approval, subject to
environmental review, from the FERC for its pipeline expansion as well as an
extension of its pipeline system from its existing terminus near Harper to the
Chicago area. Natural is opposed to the "rolled-in" rate structure proposed
for the Northern Border extension and also argues that, from an environmental
standpoint, the Northern Border extension is less favorable than a further
expansion of Natural's system. In December 1996, Alliance Pipeline L.P. filed
an application with the FERC for authority to construct a new pipeline from
the Saskatchewan/North Dakota border to the Chicago area. Natural has opposed
the application. If Northern Border builds its proposed extension into the
Chicago area, service may begin within two to three years. Natural expects to
mitigate any negative impact over time with additional market growth and
expansion of capacity to move volumes east.
Natural also furnishes transportation service for others to and from many
other locations on its pipeline system and, in recent years, has increased
transportation deliveries to markets outside the Chicago metropolitan area.
Competition for such service may be provided by one or more other pipelines,
depending upon the nature of the transportation service required.
Transportation rates, service options and available pipeline capacity and, in
some cases, the availability of, and rates for, storage services are the key
factors in determining Natural's ability to compete for particular
transportation business.
In 1996, Trailblazer Pipeline Company ("Trailblazer"), a partnership in
which a subsidiary of Natural owns a one-third interest, signed 10-year
agreements with six shippers for additional firm transportation service. To
accommodate these additional service requirements, Trailblazer has sought
approval from the FERC to install compression to increase pipeline capacity by
approximately 104 MMcf per day. The new compression facilities are anticipated
to be in service during the summer of 1997. Trailblazer's system runs from
eastern Colorado to eastern Nebraska and transports gas produced in the Rocky
Mountains. Natural is the operator of the pipeline. Trailblazer moved
approximately 194 Bcf of gas in 1996, a record for the 14-year old line.
In January 1997, Natural and a subsidiary of NIPSCO Industries, Inc.
completed construction of a 100-MMcf-per-day pipeline interconnection in the
Chicago metropolitan area between their respective pipeline systems. The
interconnection provides Natural an additional connection to pipelines serving
markets east of Chicago.
MidCon Texas makes sales principally to customers located in the Houston-
Beaumont and Port Arthur area of Texas and provides transportation service
within the State of Texas. Intense competition exists among numerous suppliers
for sales of gas to customers in MidCon Texas' sales markets. Price is the
primary competitive factor. At most locations on its system, MidCon Texas
faces competition from other pipelines for gas transportation business.
Transportation rates and available pipeline capacity are generally the key
factors in determining MidCon Texas' ability to compete for transportation
business.
10
The rates for MidCon Texas' city-gate sales are subject to regulation by the
Texas Railroad Commission. Other sales and transportation rates are determined
by prevailing market conditions and are largely unregulated. Transportation
service is provided by MidCon Texas on both a firm and an interruptible basis.
In January 1996, MidCon Texas entered into agreements with a major south Texas
producer to purchase and transport 274 billion cubic feet of gas over a five-
year period. In August 1996, MidCon Texas completed construction of a 68-mile
pipeline to connect its existing pipeline system to these gas reserves.
MidCon Gas makes sales of gas to local distribution companies, other
marketing companies and large commercial and industrial end users. Sales
prices received by MidCon Gas are established by negotiation. MidCon Gas uses
gas futures contracts, options and swaps to hedge the impact of natural gas
price fluctuations. MidCon Gas also offers a variety of fuel management
services to utilities and other large volume gas users. During 1996, MidCon
Gas provided gas portfolio management services to four large local
distribution companies and to a large steel company. MidCon Gas has formed a
new marketing subsidiary, "mc2", to target gas sales to commercial and small
industrial customers. Initial product marketing begins in the Chicago and New
York City metropolitan areas in 1997.
MidCon was granted a permit by Mexico to construct approximately 100 miles
of pipeline from the United States to Monterrey, Mexico. This is the first
pipeline transportation permit since Mexico amended its Constitution to
provide for private ownership of gas pipelines and storage systems. When
built, this pipeline will deliver up to 270 MMcf per day of gas to local
distribution companies, industrial customers and electricity generators.
In 1996, MidCon Power sold approximately 600,000 megawatt hours of
electricity to wholesale customers. In 1997, MidCon Power anticipates
participating in several electric sales pilot programs initiated by various
state utility regulators as initial steps toward opening up retail electric
sales markets to competition.
During 1996, MidCon subsidiaries sold approximately 174 million gallons of
natural gas liquids obtained through gas processing operations.
Gas Supply
As a part of its service restructuring pursuant to Order 636, Natural
reduced substantially the amount of gas supplies it has under contracts
expiring over the next several years.
MidCon Texas purchases its gas supplies from producers and, to a lesser
extent, from other pipeline companies or their subsidiaries. MidCon Gas
purchases gas supplies from Natural at auction and from producers and other
gas marketers. MidCon Gas maintains inventories of gas supplies in storage
facilities of its affiliates and other pipeline companies. It had
approximately 100 Bcf of working gas storage capacity available under various
arrangements at the beginning of the 1996-97 winter heating season.
Pipeline Ventures
Through subsidiaries, MidCon owns interests of 20 to 50 percent in three
pipeline ventures that operate approximately 530 miles of pipeline in the Gulf
of Mexico and interests, of varying percentages, in approximately 260 miles of
jointly owned supply laterals that also operate in the Gulf of Mexico. The
ventures transport gas onshore from producers in the offshore Louisiana and
Texas areas for various customers. Other subsidiaries of MidCon own interests
of 18 and 33 1/3 percent, respectively, in two onshore pipeline ventures.
These ventures operate approximately 520 miles of pipelines in Wyoming,
Colorado and Nebraska.
CHEMICAL OPERATIONS
General
Occidental conducts its chemical operations through Occidental Chemical
Corporation and its various subsidiaries and affiliates (collectively,
"OxyChem"). OxyChem manufactures and markets a variety of basic chemicals,
petrochemicals, polymers and plastics and specialty chemicals.
11
A substantial portion of OxyChem's products are principally commodity in
nature, i.e., they are equivalent to products manufactured by others that are
generally available in the marketplace and are produced and sold in large
volumes, primarily to industrial customers for use as raw materials. Many of
OxyChem's manufacturing operations are integrated, and many of its products
are both sold to others and further processed by OxyChem into other chemical
products. As a counterbalance to the commodity business, Occidental organized
the Specialty Business Group in 1995. The Specialty Business Group focuses on
smaller volume specialty and intermediate chemical markets where OxyChem's
product may be more readily differentiated and enjoy a particular market
niche. Demand for specialty chemical products is less cyclical than commodity
products and specialty products are expected to provide a more steady source
of earnings.
OxyChem also has added capacity at several of its facilities over the past
few years through "debottlenecking" projects, which expand or modify portions
of existing facilities that had previously limited production, thus adding
incremental capacity at a relatively low cost.
In April 1996, OxyChem completed the acquisition of a 64 percent equity
interest (on a fully-diluted basis) in INDSPEC Holding Corporation, and,
indirectly, its sole operating subsidiary INDSPEC Chemical Corporation
("INDSPEC") for approximately $92 million, with $87 million in common stock
and the balance in cash. Under the terms of the transaction, INDSPEC's
management and employees have retained voting control of INDSPEC. INDSPEC is
the largest producer of resorcinol in the world and the sole commercial
producer in the United States. Resorcinol is a chemical used primarily as a
bonding and stiffening agent in the manufacture of tires and tread rubber. In
addition, resorcinol is used in the manufacture of high-performance wood
adhesives, ultraviolet stabilizers, sunscreens, dyestuffs, pharmaceuticals,
agrichemicals, carbonless paper and fire retardant plastic additives.
Also in April 1996, OxyChem completed the sale of certain international
phosphate fertilizer trading operation assets. These assets were sold for
notes receivable of approximately $20 million and did not result in a material
gain or loss.
In August 1996, OxyChem acquired three specialty chemical units: Laurel
Industries, Inc.; Natural Gas Odorizing, Inc.; and a plant from Power Silicates
Manufacturing, Inc. ("Power Silicates"). These acquisitions were made in
separate transactions for approximately $149 million, through the issuance of
5,512,355 shares of Occidental common stock with a value of approximately $130
million, with the remainder paid in cash. Laurel Industries, Inc. was
acquired from private investors, and is North America's largest producer of
antimony oxide at its LaPorte, Texas, facility. Antimony oxide is used as a
polymerization catalyst in the manufacture of polyethylene terephthalate
resins and as a flame retardant in plastics, where it complements an OxyChem
flame retardant synergist, DechPlus(R). Natural Gas Odorizing, Inc. was
purchased from Helmerich & Payne, and is the leading U.S. producer of
mercaptan-based warning agents for use in natural gas and propane. The plant
is located in Baytown, Texas. In addition, a plant in Augusta, Georgia, was
purchased from Power Silicates, which produces sodium silicates for use in
soap and detergent formulating, paper manufacturing and silica-based catalysts
and will augment OxyChem's five existing silicates plants by its presence in
the growing southeast U.S. market.
OxyChem's operations are affected by cyclical factors in the general
economic environment and by specific chemical industry conditions. The
chemical industry in the United States was characterized in 1996 by lower
sales prices and higher feedstock and energy costs resulting in lower margins
for many chemical products, including those manufactured by OxyChem. The
integration strategy adopted by OxyChem permitted it to maintain relatively
high operating rates in 1996, with similar operating rates expected to
continue for 1997.
OxyChem's operations also have been affected by environmental regulation and
associated costs. See the information appearing under the caption
"Environmental Regulation" in this report.
12
Principal Products
OxyChem produces the following chemical products:
Principal Products Major Uses
------------------------------------ ------------------------------
Basic Chemicals Chlor-alkali chemicals
Chlorine.......................... Polyvinyl chloride, chemical
manufacturing, pulp and paper
production, water treatment
Caustic soda...................... Chemical manufacturing, pulp
and paper production,
cleaning products
Potassium chemicals (including
potassium hydroxide)............. Glass, fertilizers, cleaning
products, rubber
Ethylene dichloride................. Raw material for vinyl
chloride monomer
------------------------------------ ------------------------------
Specialty Busi- Sodium silicates.................... Soaps and detergents,
nesses catalysts, paint pigments
Chrome chemicals.................... Metal and wood treatments,
leather tanning
ACL pool chemicals (chlorinated
isocyanurates)..................... Swimming pool sanitation,
household and industrial
disinfecting and sanitizing
products
Proprietary chemicals (chemical
intermediates derived principally
from fluorine, chlorine and
sulfur)............................ Agricultural, pharmaceutical,
plastics, metal plating,
aerospace and food-service
applications
Phenolic resins/molding compounds... Automotive brake pistons,
adhesives, carbonless copy
paper, pot and pan handles
Mercaptans.......................... Warning agents for natural gas
and propane and agricultural
chemicals
Antimony oxide...................... Flame retardant synergist and
catalysts
Resorcinol.......................... Tire manufacture, wood
adhesives and flame retardant
synergist
------------------------------------ ------------------------------
Petrochemicals Ethylene............................ Raw material for production of
polyethylene, vinyl chloride
monomer, ethylene glycols and
other ethylene oxide
derivatives
Benzene............................. Raw material for production of
styrene, phenolic polymers
and nylon
Propylene........................... Raw material for the
production of polypropylene
and acrylonitrile
Ethylene glycols and other ethylene
oxide derivatives.................. Polyester products,
antifreeze, brake fluids
------------------------------------ ------------------------------
(Table continued on next page)
13
Principal Products Major Uses
------------------------------------ -----------------------
Polymers and Plas- Vinyl chloride monomer.............. Raw material for
tics polyvinyl chloride
Polyvinyl chloride.................. Calendering and film,
pipe, wire insulation,
flooring, footwear,
bottles, siding, home
construction products
------------------------------------ -----------------------
Based in part on statistics in chemical industry publications, Occidental
believes that during 1996: it was the largest United States merchant marketer
of chlorine and caustic soda; including OxyMar (OxyChem's joint venture with
Marubeni) the second-largest United States producer of vinyl chloride monomer;
the fourth-largest producer of PVC resins in North America (and will, upon
completion of the Pasadena PVC plant expansion in mid-1997, be the third
largest producer of PVC resins in the United States); the largest producer of
chrome chemicals and phenolic molding compounds; the second-largest producer
of sodium silicates; including its PD Glycol joint venture with DuPont, the
third-largest producer of ethylene glycols; the seventh-largest producer of
ethylene; and the largest supplier to the DOT-3 brake fluids aftermarket in
the United States. Additionally, Occidental believes it was the world's
largest producer of potassium hydroxide and chlorinated isocyanurate products
and the world's largest marketer of ethylene dichloride.
Raw Materials
Nearly all raw materials utilized in OxyChem's operations that are not
produced by OxyChem or acquired from affiliates are readily available from a
variety of sources. Most of OxyChem's key raw materials purchases are made
through short- and long-term contracts. OxyChem is not dependent on any single
nonaffiliated supplier for a material amount of its raw material or energy
requirements, subject to establishing alternative means of transportation or
delivery in the event of the termination of arrangements with existing
suppliers.
Patents, Trademarks and Processes
OxyChem owns and licenses a large number of patents and trademarks and uses
a variety of processes in connection with its operations, some of which are
proprietary and some of which are licensed. OxyChem does not regard its
business as being materially dependent on any single patent or trademark it
owns or licenses or any process it uses.
Sales and Marketing
OxyChem's products are sold primarily to industrial users or distributors
located in the United States, largely by its own sales force. OxyChem sells
its products principally at current market or current market-related prices
through short- and long-term sales agreements. Except for sales in the export
market, OxyChem generally does not use spot markets to sell products. No
significant portion of OxyChem's business is dependent on a single customer.
In general, OxyChem does not manufacture its products against a backlog of
firm orders; production is geared primarily to the level of incoming orders
and to projections of future demand.
Competition
The chemical business is very competitive. Since most of OxyChem's products
are commodity in nature, they compete primarily on the basis of price, quality
characteristics and timely delivery. Because OxyChem's products generally do
not occupy proprietary positions, OxyChem endeavors to be an efficient, low-
cost producer through the employment of modern, high-yield plants, equipment
and technology. OxyChem's size and the number and location of its plants also
produce competitive advantages, principally in its ability to meet customer
specifications and delivery requirements.
14
Properties
OxyChem, which is headquartered in Dallas, Texas, operates 32 chemical
product manufacturing facilities in the United States. Many of the larger
facilities are located in the Gulf Coast areas of Texas and Louisiana. In
addition, OxyChem operates 11 chemical product manufacturing facilities in
seven foreign countries, with the most significant foreign plants being in
Brazil. A number of additional facilities process, blend and store the
chemical products. OxyChem uses an extensive fleet of barges and railroad cars
and owns and operates a pipeline network of over 950 miles along the Gulf
Coast of Texas for the transportation of ethylene, propylene and feedstocks.
All of OxyChem's manufacturing facilities are owned or leased on a long-term
basis.
Special Items in 1996
Chemical division earnings included the pretax gain of $170 million related
to favorable litigation settlements, and a charge of $75 million for
additional environmental reserves relating to various existing sites, and the
related state tax effects.
CAPITAL EXPENDITURES
Occidental's oil and gas operations, based on depletable resources, are
capital intensive, involving large-scale expenditures. In particular, in the
search for and development of new reserves, long lead times are often
required. In addition, Occidental's other businesses require capital
expenditures to remain competitive and to comply with safety and environmental
laws. Occidental's capital expenditures for its ongoing businesses totaled
approximately $1.2 billion in 1996, $979 million in 1995 and $1.1 billion in
1994, exclusive of the noncash consideration for acquisitions. The 1996 amount
included capital expenditures aggregating $762 million for oil and gas,
$262 million for chemical and $147 million for natural gas transmission.
Occidental's total capital expenditures, exclusive of acquisitions, if any,
for 1997 are expected to approximate $1.34 billion, with $900 million for oil
and gas, the majority of which is for international oil and gas operations.
EMPLOYEES
Occidental and its subsidiaries employed a total of 14,270 persons at
December 31, 1996, of whom 10,070 were located in the United States. 4,470
were employed in oil and gas operations, 1,730 in natural gas transmission
operations and 7,520 in chemical operations. An additional 550 persons were
employed at corporate headquarters. Approximately 1,500 U.S.-based employees
are represented by labor unions.
Occidental has a long-standing policy to ensure that fair and equal
employment opportunities are extended to all persons without regard to race,
color, religion, ethnicity, gender, national origin, disability, age, sexual
orientation, veteran status or any other legally impermissible factor.
Occidental maintains numerous diversity and outreach programs which are in
effect at company locations.
ENVIRONMENTAL REGULATION
Occidental's operations in the United States are subject to increasingly
stringent federal, state and local laws and regulations relating to improving
or maintaining the quality of the environment. Foreign operations are also
subject to environmental protection laws. Applicable U.S. laws include the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments, and similar state environmental laws. The laws that require or
address environmental remediation apply retroactively to previous waste
disposal practices and, in many cases, the laws apply regardless of fault,
legality of the original activities or ownership or control of sites.
Occidental is currently participating in environmental assessments and
cleanups under these laws at federal Superfund sites, comparable state sites
and other remediation sites, including Occidental facilities and previously
owned sites. Also, Occidental and certain of its subsidiaries have been
involved in a substantial number of governmental and private proceedings
involving historical practices at various sites, including, in some instances,
having been named as defendants, as potentially responsible parties
15
("PRPs"), or as both defendants and PRPs under the federal Superfund law.
These proceedings seek remediation, funding for remediation, or both, and, in
some cases, compensation for alleged personal injury or property damage,
punitive damages and civil penalties, aggregating substantial amounts.
Occidental has accrued reserves for its environmental liabilities. As of
December 31, 1996 and 1995, Occidental had environmental reserves of
approximately $566 million and $582 million, respectively. Occidental provided
additional reserves of approximately $100 million in 1996, $21 million in 1995
and $5 million in 1994 for costs associated with expected remediation efforts
at a number of sites. The 1996 and 1995 amounts related primarily to the
chemical division. The 1994 amount related primarily to the oil and gas
division.
Occidental's estimated operating expenses in 1996 relating to compliance
with environmental laws and regulations governing ongoing operations were
approximately $105 million, compared with $111 million in 1995 and $114
million in 1994. The 1996 amount included $59 million in the chemical
division, $41 million in the oil and gas division and $5 million in the
natural gas transmission division. In addition, capital expenditures for
environmental compliance were $89 million in 1996, compared with $74 million
in 1995 and $67 million in 1994. The 1996 amount included $54 million in the
oil and gas division, $27 million in the chemical division and $8 million in
the natural gas transmission division. Occidental presently estimates that
divisional capital expenditures for environmental compliance (including
environmental control facilities) will be in the range of $90 million to $100
million for each of 1997 and 1998.
ITEM 3 LEGAL PROCEEDINGS
There is incorporated by reference herein the information regarding
lawsuits, claims and related matters in Note 10 to the Consolidated Financial
Statements.
On July 22, 1996, Occidental announced that a judgment of $742 million had
been entered in favor of its OXY USA Inc. ("OXY USA") subsidiary against
Chevron USA by the state district court in Tulsa, Oklahoma. The unanimous
verdict was for approximately $229 million in compensatory damages for breach
of a 1982 merger agreement and interest on these damages from 1982 to the date
of judgment. Interest has continued to accrue from July 19, 1996, in an amount
of approximately $6 million per month. Chevron has appealed the decision to the
Oklahoma Supreme Court, and, in connection with that appeal, has obtained an
appeal bond to secure payment of any final judgment and accrued interest as
required by Oklahoma law.
In 1991, Continental Trend Resources obtained a jury verdict against OXY USA
in the U.S. District Court for the Western District of Oklahoma for $269,000
in actual damages and $30 million in punitive damages for tortious
interference with contract. In 1995, the U.S. Court of Appeals for the 10th
Circuit affirmed the subsequent judgment. In 1996, the U.S. Supreme Court
granted OXY USA's petition for writ of certiorari, vacated the judgment and
remanded the action to the Court of Appeals for further consideration. In
November 1996, the Court of Appeals reduced the punitive damage award to $6
million and, alternatively, offered the plaintiffs a new trial on punitive
damages. The plaintiffs' motion for rehearing was denied and the plaintiffs
have sought a stay of mandate in order to petition the Supreme Court for a
writ of certiorari.
MidCon Gas Services Corp. ("MidCon Gas") purchases transportation and
storage services from pipeline companies to support its gas sales business. A
significant amount of these services are purchased from Natural Gas Pipeline
Company of America ("Natural"). In January 1997, Amoco Production Company and
Amoco Trading Corporation (collectively, "Amoco"), filed a complaint against
Natural before the FERC contending that Natural improperly had provided MidCon
Gas transportation service on preferential terms. Amoco has requested, among
other things, that the FERC require Natural to terminate the transportation
services it provides to MidCon Gas. Natural believes it has treated all
shippers, including Amoco, fairly and it will vigorously defend its actions.
ENVIRONMENTAL PROCEEDINGS
In 1992, Occidental Chemical Corporation ("OCC") submitted to the
Environmental Protection Agency ("EPA") its report under EPA's Toxic
Substances Control Act Section 8(e) Compliance Audit Program (the
16
"Program"). Under the Program, numerous companies voluntarily submitted to the
EPA all studies meeting the EPA's thresholds for reporting information that
may indicate a substantial risk exists from any chemical that a company
manufactures, processes or distributes, and agreed to pay stipulated penalties
for previously unreported studies, with a maximum penalty of $1 million per
company. In 1996, OCC was assessed and paid a penalty of $869,000.
In September 1996, the EPA filed an administrative Complaint against Natural
Gas Odorizing, Inc., which was recently acquired by Occidental, alleging
failure to file during 1994 an Inventory Update Report under the Toxic
Substance Control Act regarding its facility in Baytown, Texas, and proposed a
civil penalty of $136,000. OCC is engaged in settlement discussions with the
EPA.
In October 1996, the West Virginia Division of Environmental Protection
filed a civil action in the Circuit Court, Kanawha County, West Virginia,
against OCC alleging violations of hazardous waste management regulations at
its Belle Plant, from October 1994 to September 1995. The Complaint seeks
civil penalties of up to $25,000 per violation per day and injunctive relief
requiring correction of the alleged violations. OCC is contesting the
allegations and proposed civil penalties.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Occidental's security holders during
the fourth quarter of 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
AGE AT
FEBRUARY 28, POSITIONS WITH OCCIDENTAL AND SUBSIDIARIES
NAME 1997 AND FIVE-YEAR EMPLOYMENT HISTORY
---- ------------ ------------------------------------------
Dr. Ray R. Irani 62 Chairman and Chief Executive Officer since
1990; President from 1984 to 1996; 1984-
1990, Chief Operating Officer; Director
since 1984; 1983-January 1991, Chief
Executive Officer of Occidental Chemical
Corporation ("Occidental Chemical");
Chairman of the Board of CanadianOxy since
1987; member of Executive Committee.
Dr. Dale R. Laurance 51 President since 1996; Executive Vice
President and Senior Operating Officer since
1990; 1984-1990, Executive Vice President--
Operations; Director since 1990; member of
Executive Committee.
Stephen I. Chazen 50 Executive Vice President--Corporate
Development since 1994; 1990-1994, Managing
Director, Merrill Lynch & Co. Incorporated.
Donald P. de Brier 56 Executive Vice President, General Counsel
and Secretary since 1993; 1989-1993, General
Counsel and member of the Management
Committee of BP Exploration and Production
Company.
Richard W. Hallock 52 Executive Vice President--Human Resources
since 1994; 1993-1994, Director, Worldwide
Total Compensation of IBM; 1990-1993,
various other human resources positions with
IBM.
J. Roger Hirl 65 Executive Vice President since 1984;
Director since 1988; President and Chief
Executive Officer of Occidental Chemical
since 1991; 1983-1991, President and Chief
Operating Officer of Occidental Chemical.
Anthony R. Leach 57 Executive Vice President and Chief Financial
Officer since 1991; 1984-1991, Vice
President and Controller.
John F. Riordan 61 Executive Vice President since 1991;
Director since 1991; President and Chief
Executive Officer of MidCon Corp. since
1990; 1988-1990, President and Chief
Operating Officer of MidCon Corp.
(Table continued on next page)
17
AGE AT
FEBRUARY 28, POSITIONS WITH OCCIDENTAL AND SUBSIDIARIES
NAME 1997 AND FIVE-YEAR EMPLOYMENT HISTORY
---- ------------ ------------------------------------------
Howard Collins 53 Vice President--Public Relations since
1993; 1986-1993, Director--Public
Relations.
E. Leon Daniel 60 Vice President since 1996; Executive Vice
President--International EOR and
Engineering, Occidental Oil and Gas
Corporation since 1996; 1993-1996,
President of Oxy Engineering Services;
1987-1993, Executive Vice President--
Engineering, Drilling and Production--
International of Occidental Oil and Gas
Corporation and Occidental International
Exploration and Production Company.
Samuel P. Dominick, Jr. 56 Vice President and Controller since 1991;
1990-1991, Assistant Controller--Internal
Audit; 1985-1990, Director of Internal
Audit.
Fred J. Gruberth 63 Vice President and Treasurer since 1992;
1978-1992, Senior Assistant Treasurer.
Kenneth J. Huffman 52 Vice President--Investor Relations since
1991; 1989-1991, Vice President--Finance,
American Exploration Company.
John L. Hurst 57 Vice President since 1996; Executive Vice
President--Manufacturing and Engineering
of Occidental Chemical Corporation since
1996; 1988-1996, Executive Vice
President--Operations of Occidental
Chemical Corporation.
Robert M. McGee 50 Vice President since 1994; President of
Occidental International Corporation
since 1991; 1981-1991, Senior Executive
Vice President of Occidental
International Corporation.
John W. Morgan 43 Vice President--Operations since 1991;
1984-1991, Director--Operations.
S.A. Smith 52 Vice President since 1984; Executive Vice
President--Worldwide Finance and
Administration and Chief Financial
Officer of Occidental Oil and Gas
Corporation since 1994; 1986-1994, Vice
President--Financial Planning and
Analysis.
Richard A. Swan 49 Vice President--Health, Environment and
Safety since 1995; 1991-1995, Director--
Investor Relations.
Aurmond A. Watkins, Jr. 54 Vice President--Tax since 1991; 1986-
1991, Director--Taxes.
The current term of office of each Executive Officer will expire at the
April 25, 1997, organizational meeting of the Occidental Board of Directors or
at such time as his or her successor shall be elected.
18
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Trading Price Range and Dividends
There is hereby incorporated by reference the quarterly financial data
appearing under the caption "Quarterly Financial Data" and the information
appearing under the caption "Management's Discussion and Analysis--Liquidity
and Capital Resources" in the 1996 Annual Report, relevant portions of which
1996 Annual Report are filed as Exhibit 13 to this report. Occidental's common
stock was held by approximately 107,750 stockholders of record at year-end
1996, with an estimated 165,000 additional stockholders whose shares were held
for them in street name or nominee accounts. The common stock is listed and
traded principally on the New York and Pacific stock exchanges and also is
listed on various foreign exchanges identified in the 1996 Annual Report. The
quarterly financial data on pages 61 and 62 of the 1996 Annual Report sets
forth the range of trading prices for the common stock as reported on the New
York Stock Exchange's composite tape and quarterly dividend information.
The quarterly dividend rate for the common stock is $.25 per share. On
February 13, 1997, a dividend of $.25 per share was declared on the common
stock, payable on April 15, 1997 to stockholders of record on March 7, 1997.
Occidental is subject to certain financial covenants in instruments pertaining
to its long-term indebtedness which do not currently impose restrictions on
dividend policy. In 1992 Occidental entered into a settlement agreement with
certain private litigants which, among other things, imposed an obligation to
maintain the annual common stock dividend at no less than $1 per share through
1997, subject to the exercise by the Board of Directors of its fiduciary
obligations and the business judgment rule. Thus, the declaration of future
cash dividends is a business decision made by the Board of Directors from time
to time, and will depend on the foregoing considerations, earnings, financial
condition and other factors deemed relevant by the Board; however, Occidental
presently expects that dividends will continue to be paid.
Recent Sales of Unregistered Securities
During the previous three years commencing January 1, 1994, Occidental sold
the following securities which were not initially registered under the
Securities Act of 1933, as amended (the "Act").
(1) In March 1994, Occidental acquired interests in certain U.S. Gulf Coast
oil and gas properties from Agip Petroleum Co. Inc. ("AGIP") for a purchase
price of $161 million through the issuance of 5,150,602 shares of Occidental
common stock and $78 million in cash.
(2) In December 1994, Occidental acquired Placid Oil Company from certain
Hunt Family trusts (the "Trusts") for an aggregate purchase price of
approximately $250 million through the issuance of 3,606,484 shares of $3.875
Cumulative Convertible Voting Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), with a value of $175 million, and the balance through the
issuance of 3,835,941 shares of Occidental common stock.
All or a portion of the shares held of the Preferred Stock is convertible at
the option of the holder thereof into such number of whole shares of common
stock as is equal to the aggregate liquidation preference of shares of
Preferred Stock ($50 per share) surrendered for conversion divided by the
Conversion Price, initially $22.76, subject to adjustment as described in the
governing Certificate of Designations, Preferences and Rights and in
Occidental's Registration Statement on Form 8-B/A (Amendment No. 5) dated
November 1, 1995.
(3) In August 1996, Occidental acquired three specialty chemical units in
separate transactions for approximately $149 million through the issuance of
5,512,355 shares of Occidental common stock, with a value of approximately
$130 million, and the balance paid in cash. The acquisitions included Laurel
Industries, Inc. ("Laurel"), Natural Gas Odorizing, Inc. ("NGO"), and a plant
in Augusta, Georgia, purchased from Power Silicates Manufacturing, Inc. The
NGO shares were issued to its parent, Helmerich & Payne, Inc., while the
Laurel shares were issued to certain Laurel investors.
19
(4) In November 1996, Occidental issued 1,400,000 shares of its Cumulative
MidCon-Indexed Convertible Preferred Stock, par value $1.00 per share, to the
MidCon Corp. ESOP Trust for $1,400,000 in cash and a promissory note in the
principal amount of $1,398,600,000. For terms of conversion, reference is made
to Occidental's Form 8-K dated November 20, 1996, and the governing
Certificate of Designations filed as an exhibit thereto.
The securities described in the paragraphs marked (1) through (4) above were
issued in reliance on the exemption from registration under Section 4(2) of
the Act, and the rules promulgated under the Act, as transactions not
involving a public offering. Each recipient of such securities stated that it
was its intent to acquire the securities for investment purposes. In each case
the recipient had access to Occidental's public financial information.
Appropriate restrictive legends were, in each case, affixed to the stock
certificates issued in each transaction. The shares of Occidental common stock
issued in the Agip, Laurel and NGO transactions were subsequently registered
for resale in secondary offering Registration Statements on Form S-3 filed
with the Securities and Exchange Commission. Demand registration rights
granted to the Trusts in the Placid transaction have been exercised with
respect to certain shares of Occidental's common stock issued in such
transaction.
ITEM 6 SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing under
the caption "Five-Year Summary of Selected Financial Data" in the 1996 Annual
Report.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
There is hereby incorporated by reference the information appearing under
the caption "Management's Discussion and Analysis" in the 1996 Annual Report.
20
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND RELATED INFORMATION
PAGES
-----------------------
ANNUAL REPORT FORM 10-K
------------- ---------
Financial Statements and Supplementary Data (pages 21
through 58 and pages 60 through 68 of Occidental's
1996 Annual Report incorporated herein by reference):
Consolidated Statements of Operations............... 33 --
Consolidated Balance Sheets......................... 34 --
Consolidated Statements of Stockholders' Equity..... 36 --
Consolidated Statements of Cash Flows............... 37 --
Notes to Consolidated Financial Statements.......... 38 --
Report of Independent Public Accountants............ 60 --
Quarterly Financial Data............................ 61 --
Supplemental Oil and Gas Information................ 63 --
Report of Independent Public Accountants.............. -- 22
Financial Statement Schedule:
II Valuation and Qualifying Accounts................ -- 23
21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors, Occidental Petroleum Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in Occidental Petroleum
Corporation's Annual Report for the year ended December 31, 1996, incorporated
by reference in this Annual Report on Form 10-K, and have issued our report
thereon dated January 31, 1997. Our audit was made for the purpose of forming
an opinion on those statements taken as a whole. The financial statement
schedule listed in the Index to Financial Statements and Related Information
is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and
regulations under the Securities Exchange Act of 1934 and is not a required
part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Los Angeles, California ARTHUR ANDERSEN LLP
January 31, 1997
22
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In millions)
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------ ---------- ---------- ---------- ---------- ----------
1996
Allowance for doubtful
accounts $ 19 $ 12 $ -- $ (7) $ 24
====== ====== ====== ====== ======
Environmental $ 582 $ 100 $ 11 $ (127)(a) $ 566
Contract impairment 81 -- -- (36)(c) 45
Foreign and other
taxes, litigation and
other reserves 969 71 24 (101)(a) 963
------ ------ ------ ------ ------
$1,632 $ 171 $ 35 $ (264) $1,574
- ------------------------ ====== ====== ====== ====== ======
1995
Allowance for doubtful
accounts $ 17 $ 8 $ 1 $ (7) $ 19
====== ====== ====== ====== ======
Environmental $ 635 $ 21 $ 19 $ (93)(a) $ 582
Contract impairment 141 -- -- (60)(a) 81
Foreign and other
taxes, litigation and
other reserves 1,002 140 50 (223)(a) 969
------ ------ ------ ------ ------
$1,778 $ 161 $ 69 $ (376) $1,632(b)
- ------------------------ ====== ====== ====== ====== ======
1994
Allowance for doubtful
accounts $ 13 $ 6 $ -- $ (2) $ 17
====== ====== ====== ====== ======
Environmental $ 742 $ 5 $ 50 $ (162)(a) $ 635
Contract impairment 165 -- -- (24)(c) 141
Foreign and other
taxes, litigation and
other reserves 818 190 84 (90)(a) 1,002
------ ------ ------ ------ ------
$1,725 $ 195 $ 134 $ (276) $1,778(b)
- ------------------------ ====== ====== ====== ====== ======
(a) Primarily represents payments.
(b) Of these amounts, $209 million, $228 million and $197 million in 1996,
1995 and 1994, respectively, is classified as current.
(c) Primarily represents the reduction of the reserve to reflect a decrease in
the net exposure under disadvantageous gas purchase contracts, the
elimination of certain potential claims, the successful resolution of
litigation, settlements or other changes in the expected outcome of
matters covered by the reserve.
23
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information regarding
Occidental's directors appearing under the caption "Election of Directors" in
Occidental's definitive proxy statement filed in connection with its April 25,
1997, Annual Meeting of Stockholders (the "1997 Proxy Statement"). See also
the list of Occidental's executive officers and related information under
"Executive Officers of the Registrant" in Part I hereof.
ITEM 11 EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information appearing under
the captions "Executive Compensation" (excluding, however, the information
appearing under the subcaptions "Report of the Compensation Committee" and
"Performance Graphs") and "Election of Directors--Information Regarding the
Board of Directors and Its Committees" in the 1997 Proxy Statement.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information with respect to
security ownership appearing under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the 1997 Proxy Statement.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information appearing under
the caption "Election of Directors--Compensation Committee Interlocks and
Insider Participation" in the 1997 Proxy Statement.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) AND (2). FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Reference is made to the Index to Financial Statements and Related
Information under Item 8 in Part II hereof, where these documents are listed.
(a) (3). EXHIBITS
3.(i)* (a) Restated Certificate of Incorporation of Occidental, together with
all certificates amendatory thereof filed with the Secretary of State
of Delaware through December 23, 1994 (filed as Exhibit 3.(i) to the
Annual Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1994, File No. 1-9210).
(b) Certificate of Designation of the Cumulative MidCon-Indexed
Convertible Preferred Stock (par value $1.00 per share) of Occidental
Petroleum Corporation (filed as Exhibit 3.1 to Occidental's Current
Report on Form 8-K dated November 20, 1996, File No. 1-9210).
3.(ii)* Bylaws of Occidental, as amended through December 15, 1994 (filed as
Exhibit 3.(ii) to the Annual Report on Form 10-K of Occidental for the
fiscal year ended December 31, 1994, File No. 1-9210).
- -------------------------------
* Incorporated herein by reference.
24
4.1* Occidental Petroleum Corporation Credit Agreement, dated as of October
20, 1994 (filed as Exhibit 4 to the Quarterly Report on Form 10-Q of
Occidental for the quarterly period ended September 30, 1994, File No.
1-9210).
4.2 Instruments defining the rights of holders of other long-term debt of
Occidental and its subsidiaries are not being filed since the total
amount of securities authorized under each of such instruments does not
exceed 10 percent of the total assets of Occidental and its
subsidiaries on a consolidated basis. Occidental agrees to furnish a
copy of any such instrument to the Commission upon request.
All of the Exhibits numbered 10.1 to 10.42 are management contracts and
compensatory plans required to be identified specifically as responsive
to Item 601(b)(10)(iii)(A) of Regulation S-K pursuant to Item 14(c) of
Form 10-K.
10.1* Consultation Agreement, dated December 16, 1974, between Occidental
Petroleum Corporation, a California corporation, and Arthur Groman
(filed as Exhibit 10.3 to the Annual Report on Form 10-K of Occidental
for the fiscal year ended December 31, 1987, File No. 1-9210).
10.2* Employment Agreement, dated as of May 14, 1992, between Occidental and
J. Roger Hirl (filed as Exhibit 10.2 to the Quarterly Report on Form
10-Q of Occidental for the quarterly period ended June 30, 1992, File
No. 1-9210).
10.3* Employment Agreement, dated November 16, 1991, between Occidental and
Dr. Ray R. Irani (filed as Exhibit 10.5 to the Annual Report on Form
10-K of Occidental for the fiscal year ended December 31, 1991, File
No. 1-9210).
10.4* Employment Agreement, dated September 16, 1993, between Occidental and
Dr. Dale R. Laurance (filed as Exhibit 10.7 to the Annual Report on
Form 10-K of Occidental for the fiscal year ended December 31, 1993,
File No. 1-9210).
10.5* Employment Agreement, dated as of May 14, 1992, between Occidental and
John F. Riordan (filed as Exhibit 10.4 to the Quarterly Report on Form
10-Q of Occidental for the quarterly period ended June 30, 1992, File
No. 1-9210).
10.6* Termination of Consulting Agreement and Release, dated November 11,
1993, between OXY USA Inc. and George O. Nolley (filed as Exhibit 10.9
to the Annual Report on Form 10-K of Occidental for the fiscal year
ended December 31, 1993, File No. 1-9210).
10.7* Form of Indemnification Agreement between Occidental and each of its
directors (filed as Exhibit B to Occidental's Proxy Statement for its
May 21, 1987, Annual Meeting of Stockholders, File No. 1-9210).
10.8* Occidental Petroleum Corporation Split Dollar Life Insurance Program
and Related Documents (filed as Exhibit 10.2 to the Quarterly Report on
Form 10-Q of Occidental for the quarterly period ended September 30,
1994, File No. 1-9210).
10.9* Occidental Petroleum Insured Medical Plan, as amended and restated
effective April 29, 1994, amending and restating the Occidental
Petroleum Corporation Executive Medical Plan (As Amended and Restated
Effective April 1, 1993) (filed as Exhibit 10 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ending March 31,
1994, File No. 1-9210).
10.10* Occidental Petroleum Corporation 1978 Stock Option Plan (as amended and
restated effective May 21, 1987) (filed as Exhibit 28(a) to
Occidental's Registration Statement on Form S-8, File No. 33-14662).
10.11* Form of Nonqualified Stock Option Grant under Occidental Petroleum
Corporation 1978 Stock Option Plan (filed as Exhibit 10.19 to the
Registration Statement on Form 8-B, dated June 26, 1986, of Occidental,
File No. 1-9210).
- -------------------------------
* Incorporated herein by reference.
25
10.12* Form of Incentive Stock Option Grant under Occidental Petroleum
Corporation 1978 Stock Option Plan (filed as Exhibit 10.20 to the
Registration Statement on Form 8-B, dated June 26, 1986, of Occidental,
File No. 1-9210).
10.13* Occidental Petroleum Corporation 1987 Stock Option Plan, as amended
through April 29, 1992 (filed as Exhibit 10.1 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ended March 31,
1992, File No. 1-9210).
10.14* Form of Nonqualified Stock Option Agreement under Occidental Petroleum
Corporation 1987 Stock Option Plan (filed as Exhibit 10.2 to the
Quarterly Report on Form 10-Q of Occidental for the quarterly period
ended March 31, 1992, File No. 1-9210).
10.15* Form of Nonqualified Stock Option Agreement, with Stock Appreciation
Right, under Occidental Petroleum Corporation 1987 Stock Option Plan
(filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q of
Occidental for the quarterly period ended March 31, 1992, File No. 1-
9210).
10.16* Form of Incentive Stock Option Agreement under Occidental Petroleum
Corporation 1987 Stock Option Plan (filed as Exhibit 10.4 to the
Quarterly Report on Form 10-Q of Occidental for the quarterly period
ended March 31, 1992, File No. 1-9210).
10.17* Form of Incentive Stock Option Agreement, with Stock Appreciation
Right, under Occidental Petroleum Corporation 1987 Stock Option Plan
(filed as Exhibit 10.5 to the Quarterly Report on Form 10-Q of
Occidental for the quarterly period ended March 31, 1992, File No. 1-
9210).
10.18* Occidental Petroleum Corporation 1977 Executive Long-Term Incentive
Stock Purchase Plan, as amended through December 10, 1992 (filed as
Exhibit 10.20 to the Annual Report on Form 10-K of Occidental for the
fiscal year ended December 31, 1992, File No. 1-9210).
10.19* Form of award letter utilized under Occidental Petroleum Corporation
1977 Executive Long-Term Incentive Stock Purchase Plan (filed as
Exhibit 10.21 to the Annual Report on Form 10-K of Occidental for the
fiscal year ended December 31, 1992, File No. 1-9210).
10.20* Occidental Petroleum Corporation Incentive Compensation Plan, effective
as of October 28, 1991 (filed as Exhibit 10.2 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ended September 30,
1991, File No. 1-9210).
10.21* Occidental Petroleum Corporation 1988 Deferred Compensation Plan (as
amended and restated effective as of January 1, 1994) (filed as Exhibit
10.1 to the Quarterly Report on Form 10-Q of Occidental for the
quarterly period ended September 30, 1994, File No. 1-9210).
10.22* Memorandum, dated February 8, 1990, regarding MidCon Corp. Financial
Counseling Program (filed as Exhibit 10.29 to the Annual Report on Form
10-K of Occidental for the fiscal year ended December 31, 1989, File
No. 1-9210).
10.23* Occidental Petroleum Corporation Senior Executive Deferred Compensation
Plan (effective as of January 1, 1986, as amended and restated
effective as of January 1, 1996) (filed as Exhibit 10.24 to the Annual
Report on Form 10-K of Occidental for the fiscal year ended December
31, 1995, File No. 1-9210).
10.24* Occidental Petroleum Corporation Senior Executive Supplemental Life
Insurance Plan (effective as of January 1, 1986, as amended and
restated effective as of January 1, 1996) (filed as Exhibit 10.25 to
the Annual Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
10.25* Occidental Petroleum Corporation Senior Executive Supplemental
Retirement Plan (effective as of January 1, 1986, as amended and
restated effective as of January 1, 1996) (filed as Exhibit 10.26 to
the Annual Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
- -------------------------------
* Incorporated herein by reference.
26
10.26* Occidental Petroleum Corporation Senior Executive Survivor Benefit Plan
(effective as of January 1, 1986, as amended and restated effective as
of January 1, 1996) (filed as Exhibit 10.27 to the Annual Report on
Form 10-K of Occidental for the fiscal year ended December 31, 1995,
File No. 1-9210).
10.27* Occidental Petroleum Corporation 1995 Incentive Stock Plan, effective
April 29, 1995 (filed as Exhibit 99.1 to Occidental's Registration
Statement on Form S-8, File No. 33-64719).
10.28* Form of Incentive Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.2 to
Occidental's Registration Statement on Form S-8, File No. 33-64719).
10.29* Form of Nonqualified Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.3 to
Occidental's Registration Statement on Form S-8, File No. 33-64719).
10.30* Form of Stock Appreciation Rights Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.4 to the
Registration Statement on Form S-8, File No. 33-64719).
10.31* Form of Restricted Stock Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.5 to the
Registration Statement on Form S-8, File No. 33-64719).
10.32* Form of Performance Stock Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.6 to the
Registration Statement on Form S-8, File No. 33-64719).
10.33* Occidental Petroleum Corporation 1996 Restricted Stock Plan for Non-
Employee Directors, effective April 26, 1996 (filed as Exhibit 99.1 to
the Registration Statement on Form S-8, File No. 333-02901).
10.34* Form of Restricted Stock Option Assignment under Occidental Petroleum
Corporation 1996 Restricted Stock Plan for Non-Employee Directors
(filed as Exhibit 99.2 to the Registration Statement on Form S-8, File
No. 333-02901).
10.35* Form of Incentive Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 10.1 to
Occidental's quarterly report on Form 10-Q for the fiscal quarter ended
June 30, 1996, File No. 1-9210, amends Form previously filed as Exhibit
99.2 to Occidental's Registration Statement on Form S-8, File No. 33-
64719 and incorporated by reference as Exhibit 10.29 to the Annual
Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
10.36* Form of Nonqualified Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 10.2 to
Occidental's quarterly report on Form 10-Q for the fiscal quarter ended
June 30, 1996, File No. 1-9210, amends Form previously filed as Exhibit
99.3 to Occidental's Registration Statement on Form S-8, File No. 33-
64719 and incorporates by reference as Exhibit 10.30 to the Annual
Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
10.37* Agreement, dated September 9, 1996, between Occidental and David R.
Martin (filed as Exhibit 10.1 to Occidental's quarterly report on Form
10-Q for the fiscal quarter ended September 30, 1996, File No. 1-9210).
10.38* Occidental Petroleum Corporation 1988 Deferred Compensation Plan (as
amended and restated effective as of January 1, 1996) (filed as Exhibit
10.2 to Occidental's quarterly report on Form 10-Q for the fiscal
quarter ended September 30, 1996, File No. 1-9210).
10.39* MidCon Corp. Savings Plan (filed as Exhibit 99.1 to Occidental's
Registration Statement on Form S-8, File No. 333-17879).
10.40* Amendment No. 1 MidCon Corp. Savings Plan (filed as Exhibit 99.1 to
Occidental's Registration Statement on Form S-8, File No. 333-17879).
- -------------------------------
* Incorporated herein by reference.
27
10.41 MidCon Corp. Supplemental Retirement Plan (effective as of January 1,
1997).
10.42 Employment Agreement made as of the 3rd day of May, 1993, by and between
Occidental and Donald de Brier.
11 Statement regarding computation of earnings per common and common
equivalent share and fully diluted earnings per share for the three
years ended December 31, 1996.
12 Statement regarding computation of total enterprise ratios of earnings
to fixed charges for the five years ended December 31, 1996.
13 Pages 21 through 58 and pages 60 through 68 of Occidental's Annual
Report for the fiscal year ended December 31, 1996, which are
incorporated by reference in Parts I and II of this Annual Report on
Form 10-K.
21 List of subsidiaries of Occidental at December 31, 1996.
23 Consent of Independent Public Accountants.
27 Financial data schedule of Occidental for the fiscal year ended December
31, 1996 (included only in the copy of this report filed electronically
with the Securities and Exchange Commission).
- -------------------------------
* Incorporated herein by reference.
28
(b) REPORTS ON FORM 8-K
During the fourth quarter of 1996, Occidental filed the following Current
Reports on Form 8-K:
1. Current Report on Form 8-K dated October 17, 1996 (date of earliest event
reported), filed on October 18, 1996, for the purpose of reporting, under Item
5, Occidental's results of operations for the third quarter ended September
30, 1996.
2. Current Report on Form 8-K dated November 20, 1996 (date of earliest
event reported), filed on November 21, 1996, for the purpose of reporting,
under Item 5, Occidental's implementation of the MidCon ESOP.
During the first quarter of 1997 to the date hereof, Occidental filed the
following Current Report on Form 8-K:
1. Current Report on Form 8-K dated January 23, 1997 (date of earliest event
reported), filed on January 24, 1997, for the purpose of reporting, under Item
5, Occidental's results of operations for the fourth quarter and fiscal year
ended December 31, 1996.
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
March 19, 1997 By: Ray R. Irani
-----------------------------------
Ray R. Irani
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Ray R. Irani Chairman of the Board of March 19, 1997
__________________________________ Directors and Chief
Ray R. Irani Executive Officer
Anthony R. Leach Executive Vice President March 19, 1997
__________________________________ and Chief Financial Officer
Anthony R. Leach
Samuel P. Dominick, Jr. Vice President and March 19, 1997
__________________________________ Controller (Chief
Samuel P. Dominick, Jr. Accounting Officer)
John S. Chalsty Director March 19, 1997
__________________________________
John S. Chalsty
Edward P. Djerejian Director March 19, 1997
__________________________________
Edward P. Djerejian
Albert Gore Director March 19, 1997
__________________________________
Albert Gore
Arthur Groman Director March 19, 1997
__________________________________
Arthur Groman
J. Roger Hirl Director March 19, 1997
__________________________________
J. Roger Hirl
John W. Kluge Director March 19, 1997
__________________________________
John W. Kluge
30
SIGNATURE TITLE DATE
--------- ----- ----
Dale R. Laurance Director March 19, 1997
__________________________________
Dale R. Laurance
Irvin W. Maloney Director March 19, 1997
__________________________________
Irvin W. Maloney
George O. Nolley Director March 19, 1997
__________________________________
George O. Nolley
John F. Riordan Director March 19, 1997
__________________________________
John F. Riordan
Rodolfo Segovia Director March 19, 1997
__________________________________
Rodolfo Segovia
Aziz D. Syriani Director March 19, 1997
__________________________________
Aziz D. Syriani
Rosemary Tomich Director March 19, 1997
__________________________________
Rosemary Tomich
31
INDEX TO EXHIBITS
EXHIBITS
(a) (3). EXHIBITS
3.(i)* (a) Restated Certificate of Incorporation of Occidental, together with
all certificates amendatory thereof filed with the Secretary of State
of Delaware through December 23, 1994 (filed as Exhibit 3(i) to the
Annual Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1994, File No. 1-9210).
(b) Certificate of Designation of the Cumulative MidCon-Indexed
Convertible Preferred Stock (par value $1.00 per share) of Occidental
Petroleum Corporation (filed as Exhibit 3.1 to Occidental's Current
Report on Form 8-K dated November 20, 1996, File No. 1-9210).
3.(ii)* By-laws of Occidental, as amended through December 15, 1994 (filed as
Exhibit 3(ii) to the Annual Report on Form 10-K of Occidental for the
fiscal year ended December 31, 1994, File No. 1-9210).
4.1* Occidental Petroleum Corporation Credit Agreement, dated as of October
20, 1994 (filed as Exhibit 4 to the Quarterly Report on Form 10-Q of
Occidental for the quarterly period ended September 30, 1994, File No.
1-9210).
4.2 Instruments defining the rights of holders of other long-term debt of
Occidental and its subsidiaries are not being filed since the total
amount of securities authorized under each of such instruments does
not exceed 10 percent of the total assets of Occidental and its
subsidiaries on a consolidated basis. Occidental agrees to furnish a
copy of any such instrument to the Commission upon request.
All of the Exhibits numbered 10.1 to 10.42 are management contracts
and compensatory plans required to be identified specifically as
responsive to Item 601(b)(10)(iii)(A) of Regulation S-K pursuant to
Item 14(c) of Form 10-K.
10.1* Consultation Agreement, dated December 16, 1974, between Occidental
Petroleum Corporation, a California corporation, and Arthur Groman
(filed as Exhibit 10.3 to the Annual Report on Form 10-K of Occidental
for the fiscal year ended December 31, 1987, File No. 1-9210).
10.2* Employment Agreement, dated as of May 14, 1992, between Occidental and
J. Roger Hirl (filed as Exhibit 10.2 to the Quarterly Report on Form
10-Q of Occidental for the quarterly period ended June 30, 1992, File
No. 1-9210).
10.3* Employment Agreement, dated November 16, 1991, between Occidental and
Dr. Ray R. Irani (filed as Exhibit 10.5 to the Annual Report on Form
10-K of Occidental for the fiscal year ended December 31, 1991, File
No. 1-9210).
10.4* Employment Agreement, dated September 16, 1993, between Occidental and
Dr. Dale R. Laurance (filed as Exhibit 10.7 to the Annual Report on
Form 10-K of Occidental for the fiscal year ended December 31, 1993,
File No. 1-9210).
10.5* Employment Agreement, dated as of May 14, 1992, between Occidental and
John F. Riordan (filed as Exhibit 10.4 to the Quarterly Report on Form
10-Q of Occidental for the quarterly period ended June 30, 1992, File
No. 1-9210).
10.6* Termination of Consulting Agreement and Release, dated November 11,
1993, between OXY USA Inc. and George O. Nolley (filed as Exhibit 10.9
to the Annual Report on Form 10-K of Occidental for the fiscal year
ended December 31, 1993, File No. 1-9210).
10.7* Form of Indemnification Agreement between Occidental and each of its
directors (filed as Exhibit B to Occidental's Proxy Statement for its
May 21, 1987, Annual Meeting of Stockholders, File No. 1-9210).
- -------------------------------
* Incorporated herein by reference.
32
10.8* Occidental Petroleum Corporation Split Dollar Life Insurance Program
and Related Documents (filed as Exhibit 10.2 to the Quarterly Report on
Form 10-Q of Occidental for the quarterly period ended September 30,
1994, File No. 1-9210).
10.9* Occidental Petroleum Insured Medical Plan, as amended and restated
effective April 29, 1994, amending and restating the Occidental
Petroleum Corporation Executive Medical Plan (As Amended and Restated
Effective April 1, 1993) (filed as Exhibit 10 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ending March 31,
1994, File No. 1-9210).
10.10* Occidental Petroleum Corporation 1978 Stock Option Plan (as amended and
restated effective May 21, 1987) (filed as Exhibit 28(a) to
Occidental's Registration Statement on Form S-8, File No. 33-14662).
10.11* Form of Nonqualified Stock Option Grant under Occidental Petroleum
Corporation 1978 Stock Option Plan (filed as Exhibit 10.19 to the
Registration Statement on Form 8-B, dated June 26, 1986, of Occidental,
File No. 1-9210).
10.12* Form of Incentive Stock Option Grant under Occidental Petroleum
Corporation 1978 Stock Option Plan (filed as Exhibit 10.20 to the
Registration Statement on Form 8-B, dated June 26, 1986, of Occidental,
File No. 1-9210).
10.13* Occidental Petroleum Corporation 1987 Stock Option Plan, as amended
through April 29, 1992 (filed as Exhibit 10.1 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ended March 31,
1992, File No. 1-9210).
10.14* Form of Nonqualified Stock Option Agreement under Occidental Petroleum
Corporation 1987 Stock Option Plan (filed as Exhibit 10.2 to the
Quarterly Report on Form 10-Q of Occidental for the quarterly period
ended March 31, 1992, File No. 1-9210).
10.15* Form of Nonqualified Stock Option Agreement, with Stock Appreciation
Rights, under Occidental Petroleum Corporation 1987 Stock Option Plan
(filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q of
Occidental for the quarterly period ended March 31, 1992, File No. 1-
9210).
10.16* Form of Incentive Stock Option Agreement under Occidental Petroleum
Corporation 1987 Stock Option Plan (filed as Exhibit 10.4 to the
Quarterly Report on Form 10-Q of Occidental for the quarterly period
ended March 31, 1992, File No. 1-9210).
10.17* Form of Incentive Stock Option Agreement, with Stock Appreciation
Rights, under Occidental Petroleum Corporation 1987 Stock Option Plan
(filed as Exhibit 10.5 to the Quarterly Report on Form 10-Q of
Occidental for the quarterly period ended March 31, 1992, File No. 1-
9210).
10.18* Occidental Petroleum Corporation 1977 Executive Long-Term Incentive
Stock Purchase Plan, as amended through December 10, 1992 (filed as
Exhibit 10.20 to the Annual Report on Form 10-K of Occidental for the
fiscal year ended December 31, 1992, File No. 1-9210).
10.19* Form of award letter utilized under Occidental Petroleum Corporation
1977 Executive Long-Term Incentive Stock Purchase Plan (filed as
Exhibit 10.21 to the Annual Report on Form 10-K of Occidental for the
fiscal year ended December 31, 1992, File No. 1-9210).
10.20* Occidental Petroleum Corporation Incentive Compensation Plan, effective
as of October 28, 1991 (filed as Exhibit 10.2 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ended September 30,
1991, File No. 1-9210).
10.21* Occidental Petroleum Corporation 1988 Deferred Compensation Plan (as
amended and restated effective as of January 1, 1994) (filed as Exhibit
10.1 to the Quarterly Report on Form 10-Q of Occidental for the
quarterly period ended September 30, 1994, File No. 1-9210).
- -------------------------------
* Incorporated herein by reference.
33
10.22* Memorandum, dated February 8, 1990, regarding MidCon Corp. Financial
Counseling Program (filed as Exhibit 10.29 to the Annual Report on Form
10-K of Occidental for the fiscal year ended December 31, 1989, File
No. 1-9210).
10.23* Occidental Petroleum Corporation Senior Executive Deferred Compensation
Plan (effective as of January 1, 1986, as amended and restated
effective as of January 1, 1996) (filed as Exhibit 10.24 to the Annual
Report on Form 10-K of Occidental for the fiscal year ended December
31, 1995, File No. 1-9210).
10.24* Occidental Petroleum Corporation Senior Executive Supplemental Life
Insurance Plan (effective as of January 1, 1986, as amended and
restated effective as of January 1, 1996) (filed as Exhibit 10.25 to
the Annual Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
10.25* Occidental Petroleum Corporation Senior Executive Supplemental
Retirement Plan (effective as of January 1, 1986, as amended and
restated effective as of January 1, 1996) (filed as Exhibit 10.26 to
the Annual Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
10.26* Occidental Petroleum Corporation Senior Executive Survivor Benefit Plan
(effective as of January 1, 1986, as amended and restated effective as
of January 1, 1996) (filed as Exhibit 10.27 to the Annual Report on
Form 10-K of Occidental for the fiscal year ended December 31, 1995,
File No. 1-9210).
10.27* Occidental Petroleum Corporation 1995 Incentive Stock Plan, effective
April 29, 1995 (filed as Exhibit 99.1 to Occidental's Registration
Statement on Form S-8, File No. 33-64719).
10.28* Form of Incentive Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.2 to
Occidental's Registration Statement on Form S-8, File No. 33-64719).
10.29* Form of Nonqualified Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.3 to
Occidental's Registration Statement on Form S-8, File No. 33-64719).
10.30* Form of Stock Appreciation Rights Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.4 to the
Registration Statement on Form S-8, File No. 33-64719).
10.31* Form of Restricted Stock Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.5 to the
Registration Statement on Form S-8, File No. 33-64719).
10.32* Form of Performance Stock Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 99.6 to the
Registration Statement on Form S-8, File No. 33-64719).
10.33* Occidental Petroleum Corporation 1996 Restricted Stock Plan for Non-
Employee Directors, effective April 26, 1996 (filed as Exhibit 99.1 to
the Registration Statement on Form S-8, File No. 333-02901).
10.34* Form of Restricted Stock Option Assignment under Occidental Petroleum
Corporation 1996 Restricted Stock Plan for Non-Employee Directors
(filed as Exhibit 99.2 to the Registration Statement on Form S-8, File
No. 333-02901).
10.35* Form of Incentive Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 10.1 to
Occidental's quarterly report on Form 10-Q for the fiscal quarter ended
June 30, 1996, File No. 1-9210, amends Form previously filed as Exhibit
99.2 to Occidental's Registration Statement on Form S-8, File No. 33-
64719 and incorporated by reference as Exhibit 10.29 to the Annual
Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
- -------------------------------
* Incorporated herein by reference.
34
10.36* Form of Nonqualified Stock Option Agreement under Occidental Petroleum
Corporation 1995 Incentive Stock Plan (filed as Exhibit 10.2 to
Occidental's quarterly report on Form 10-Q for the fiscal quarter ended
June 30, 1996, File No. 1-9210, amends Form previously filed as Exhibit
99.3 to Occidental's Registration Statement on Form S-8, File No. 33-
64719 and incorporates by reference as Exhibit 10.30 to the Annual
Report on Form 10-K of Occidental for the fiscal year ended
December 31, 1995, File No. 1-9210).
10.37* Agreement, dated September 9, 1996, between Occidental and David R.
Martin (filed as Exhibit 10.1 to Occidental's quarterly report on Form
10-Q for the fiscal quarter ended September 30, 1996, File No. 1-9210).
10.38* Occidental Petroleum Corporation 1988 Deferred Compensation Plan (as
amended and restated effective as of January 1, 1996) (filed as Exhibit
10.2 to Occidental's quarterly report on Form 10-Q for the fiscal
quarter ended September 30, 1996, File No. 1-9210).
10.39* MidCon Corp. Savings Plan (filed as Exhibit 99.1 to Occidental's
Registration Statement on Form S-8, File No. 333-17879).
10.40* Amendment No. 1 MidCon Corp. Savings Plan (filed as Exhibit 99.1 to
Occidental's Registration Statement on Form S-8, File No. 333-17879).
10.41 MidCon Corp. Supplemental Retirement Plan (effective as of January 1,
1997).
10.42 Employment Agreement made as of the 3rd day of May, 1993, by and
between Occidental and Donald de Brier.
11 Statement regarding computation of earnings per common and common
equivalent share and fully diluted earnings per share for the three
years ended December 31, 1996.
12 Statement regarding computation of total enterprise ratios of earnings
to fixed charges for the five years ended December 31, 1996.
13 Pages 21 through 58 and pages 60 through 68 of Occidental's Annual
Report for the fiscal year ended December 31, 1996, which are
incorporated by reference in Parts I and II of this Annual Report on
Form 10-K.
21 List of subsidiaries of Occidental at December 31, 1996.
23 Consent of Independent Public Accountants.
27 Financial data schedule of Occidental for the fiscal year ended
December 31, 1996.
- -------------------------------
* Incorporated herein by reference.
35
EXHIBIT 10.41
MIDCON CORP.
SUPPLEMENTAL RETIREMENT PLAN
Effective as of January 1, 1997
053.msw 11/13/96
MIDCON CORP.
------------
SUPPLEMENTAL RETIREMENT PLAN
----------------------------
Effective as of January 1, 1997
TABLE OF CONTENTS
-----------------
Article Section Page
------- ------- ----
1 Establishment and Purpose
-------------------------
1.1 Establishment of Plan 1
1.2 Purpose of the Plan 1
1.3 Application of Plan 1
2 Definitions
-----------
2.1 Definitions 2
2.2 Gender and Number 4
3 Eligibility and Participation
-----------------------------
3.1 Participation 5
4 Benefits
--------
4.1 Allocations Relating to Retirement Plan, 6
Supplemental Benefit Plan and
Employee Stock Ownership Plan
4.2 Contributions Relating to Retirement Plan, 6
Supplemental Benefit Plan and
Employee Stock Ownership Plan
4.3 Allocations Relating to Savings Plan 7
4.4 Contributions Relating to Savings Plan 7
4.5 Maintenance of Accounts 8
4.6 Vesting and Forfeiture 9
4.7 Payment 9
4.8 Death 10
5 Administration
--------------
5.1 Administrative Committee 11
5.2 Uniform Rules 11
5.3 Notice of Address 11
5.4 Records 12
6 Amendment and Termination
-------------------------
6.1 Amendment and Termination 13
6.2 Reorganization of Employer 13
6.3 Protected Benefits 13
7 General Provisions
------------------
7.1 Nonassignability 14
7.2 Employment Rights 14
7.3 Illegality of Particular Provision 14
7.4 Applicable Laws 14
7.5 Transfers Involving Occidental Petroleum
Corporation Supplemental Retirement Plan 15
i
MIDCON CORP.
------------
SUPPLEMENTAL RETIREMENT PLAN
----------------------------
Effective as of January 1, 1997
Article 1. Establishment and Purpose
-------------------------------------
1.1 Establishment of Plan. MidCon Corp. (the "Company")
---------------------
hereby establishes this Plan effective as of January 1, 1997,
which Plan shall be known as the MIDCON CORP. SUPPLEMENTAL
RETIREMENT PLAN (the "Plan"). The Plan is intended to be
exempt from the participation, vesting, funding, and fiduciary
requirements of Title 1 of the Employee Retirement Income
Security Act of 1974 ("ERISA"), as an unfunded plan maintained
primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated
employees.
1.2 Purpose of the Plan. It is the purpose of this Plan
-------------------
to provide eligible employees with benefits that will
compensate them for maximums imposed by law upon contributions
to qualified plans.
1.3 Application of Plan. The terms of this Plan are
-------------------
applicable to eligible employees employed by the Company on or
after January 1, 1997.
1
Article 2. Definitions
-----------------------
2.1 Definitions. Whenever used in the Plan, the
-----------
following terms shall have the respective meanings set forth
below, unless a different meaning is required by the context
in which the word is used, and when the defined meaning is
intended, the term is capitalized:
(a) "Administrative Committee" means the committee
---------------------------
with authority to administer the Plan as provided
under section 5.1.
(b) "Beneficiary" means the persons designated
-------------
under the Retirement Plan by the Participant to
receive benefits in the event of his death.
(c) "Board of Directors" means the Board of
----------------------
Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986.
------
(e) "Company" means MidCon Corp., a Delaware
---------
corporation, and any successor thereto.
(f) "Compensation" means the base salary of the
--------------
employee as stated in the payroll records of the
Employer, excluding any amounts paid for bonuses,
income realized upon exercise of stock options, and
any other special pay which the Employer pays to the
employee during the year, prior to reduction for any
deferral of base salary under the Company's Savings
Plan, 1988 Deferred Compensation Plan or any other
qualified or non-qualified deferred compensation
plan or agreement. In the case of a Participant who
became disabled prior to October 1, 1995 and who is
receiving benefits under the Long-Term Disability
Plan, Compensation shall be his base salary as
described above in effect at the time he became
disabled, as that term is defined in the Long-Term
Disability Plan.
2
(g) "Employee Stock Ownership Plan" means the
-------------------------------------
MidCon Corp. Employee Stock Ownership Plan.
(h) "Employer" means (a) the Company, (b) each
----------
affiliate which is a subsidiary of the Company and
(c) any other affiliate or organizational unit which
(i) is designated as an Employer under the Plan by
the Board of Directors or by the Administrative
Committee with respect to all or a specified group
of employees of such organizational unit or
affiliate and (ii) adopts this Plan.
(i) "Long-Term Disability Plan" means the
----------------------------------
OCCIDENTAL PETROLEUM CORPORATION LONG-TERM
DISABILITY PLAN, as amended from time to time.
(j) "Participant" means a person meeting the
-------------
requirements set forth in Article 3 to participate
in the Plan.
(k) "Retirement Plan" means the MIDCON CORP.
-------------------
RETIREMENT PLAN, and as amended from time to time.
(l) "Savings Plan" means the MIDCON CORP. SAVINGS
--------------
PLAN, as amended from time to time.
(m) "Senior Executive Supplemental Retirement Plan"
----------------------------------------------------
means the OCCIDENTAL PETROLEUM CORPORATION SENIOR
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN, as amended
from time to time.
(n) "Subsidiary" means any corporation which is
------------
controlled by the Company.
(o) "Supplemental Benefit Plan" means the
----------------------------------
OCCIDENTAL PETROLEUM CORPORATION SUPPLEMENTAL
BENEFIT PLAN, as amended from time to time.
(p) "Years of Service" means the number of full
----------------------
years credited to a Participant under the Retirement
Plan for vesting purposes.
3
(q) "1988 Deferred Compensation Plan" means the
---------------------------------------
OCCIDENTAL PETROLEUM CORPORATION 1988 DEFERRED
COMPENSATION PLAN, as amended from time to time.
2.2 Gender and Number. Except when otherwise indicated
------------------
by the context, any masculine terminology used herein shall
also include the feminine, and the use of any term herein in
the singular may also include the plural.
4
Article 3. Eligibility and Participation
-----------------------------------------
3.1 Participation. Any employee (other than a
-------------
participant in the Senior Executive Supplemental Retirement
Plan) who is eligible to participate in the Savings Plan and
the Retirement Plan and who, for a given plan year of the
Savings Plan, would be ineligible to receive the maximum
employer matching contribution under section 5.1 of the
Savings Plan due to the limitations imposed by sections
401(a)(17) (which limits the amount of compensation which may
be taken into account) or 415 of the Code (assuming the second
paragraph of section 4.8 of the Retirement Plan is applicable
to the employee) shall become a Participant.
In addition, any employee (other than a Participant
in the Senior Executive Supplemental Retirement Plan) who
would be ineligible to receive the maximum employer matching
contribution under section 5.1 of the Savings Plan in a plan
year, due to the limitations described in the preceding
paragraph, on account of deferrals of base salary during the
year under the 1988 Deferred Compensation Plan (or any other
nonqualified pension benefit plan sponsored by the Company or
a Subsidiary in which the Participant participates) shall be a
Participant in this Plan for that plan year.
Notwithstanding anything contained herein, any
employee who is entitled to receive supplemental retirement
benefits upon his retirement pursuant to a written contract of
employment between himself and the Company shall be ineligible
to be a Participant effective upon the later of January 1,
1997 or January 1 of the year after the effective date of such
contractual provision.
5
Article 4. Benefits
--------------------
4.1 Allocations Relating to Retirement Plan,
------------------------------------------------
Supplemental Benefit Plan and Employee Stock Ownership Plan.
- -------------------------------------------------------------
A credit shall be made as of the last day of each month to a
contingent account for each Participant. The amount to be
allocated shall equal the sum of (a) the amount which would be
allocated to the account of the Participant for the month
under the Retirement Plan, based on the Participant's
Compensation, if the Participant were not subject to
provisions that withhold allocations until the end of the plan
year, and (b), in the case of a Participant who is a
participant in the Supplemental Benefit Plan, the amount which
cannot be accrued under section 4.1 of the Supplemental
Benefit Plan during the month due to the limitations imposed
by section 401(a)(17) of the Code, and (c), in the case of a
Participant who is a participant in the Employee Stock
Ownership Plan, the value denominated in cash of the amount
which cannot be allocated under section 4.3 of the Employee
Stock Ownership Plan due to the limitations imposed by
sections 415 and 401(a)(17) of the Code.
4.2 Contributions Relating to Retirement Plan,
------------------------------------------------
Supplemental Benefit Plan and Employee Stock Ownership Plan.
- -------------------------------------------------------------
For Participants covered under this Plan, allocations under
the Retirement Plan are determined at the end of the plan
year, to the extent allowable under Code limitations. The
amounts contingently credited under section 4.1 during the
year to a Participant shall be reduced by the amount actually
allocated to his account under the Retirement Plan, and any
remaining amount shall be credited permanently to his account
under this Plan. At the end of each year, the Employer shall
contribute to a grantor trust or similar arrangement to fund
benefits hereunder an amount which shall equal such remaining
amounts permanently allocated to Participants hereunder. The
Employer shall also contribute
6
and permanently credit to each Participant's account earnings
on contingent monthly allocations under section 4.1 for the
year as if such contingent allocations shared in earnings at
the rate and in the manner described in section 4.5.
Notwithstanding the foregoing, any earnings attributable to
the Retirement Plan previously credited to the account of a
Participant under the Plan during the current or any preceding
plan year shall be reallocated to the account of the
Participant under the Retirement Plan in any year when it is
permissible to do so under Code limitations.
4.3 Allocations Relating to Savings Plan. A credit
-------------------------------------
shall be made as of the last day of the plan year to the
account of each Participant who, for that plan year of the
Savings Plan, makes the maximum deferral or contribution
permitted under Article 4 of the Savings Plan and is not
eligible to receive the maximum employer matching contribution
under section 5.1 of the Savings Plan due to the limitations
imposed by sections 401(a)(17) or 415 of the Code. The amount
to be allocated under this Plan shall equal the amount which
cannot be allocated to the account of the Participant under
the Savings Plan for the plan year on account of the
limitations imposed under the Code, reduced by any such amount
which is credited on behalf of the Participant under any other
Company nonqualified pension benefit plan, including the 1988
Deferred Compensation Plan. An additional amount equal to
five percent (5%) of the amount allocated to the Participant
under the preceding sentence shall be allocated to each
Participant in lieu of interest on such amount for the plan
year.
4.4 Contributions Relating to Savings Plan. The amounts
--------------------------------------
allocated to a Participant under section 4.3 for a plan year
shall be credited permanently to his account under this Plan.
At the end of each year, the Employer shall contribute to a
grantor trust or similar arrangement to fund benefits
hereunder an amount which shall equal such amounts permanently
allocated to Participants hereunder.
7
4.5 Maintenance of Accounts.
-----------------------
(a) The Employer shall establish and
maintain, in the name of each Participant, an
individual account which shall consist of all
amounts permanently credited to the
Participant. As of the end of each semimonthly
processing period, the Administrative Committee
shall increase or decrease the balance, if any,
of the Participant's individual account as of
the last day of the preceding semimonthly
processing period, by multiplying such amount
by a number equal to one plus .083% plus the
semimonthly yield on 5-Year Treasury Constant
Maturities for the semimonthly processing
period. As of December 31st of each year the
Administrative Committee shall then add to such
account balance, any permanent allocation to
which the Participant is entitled for such
year.
(b) The individual account of each
Participant shall represent a liability,
payable when due under this Plan, out of the
general assets of the Employer, or from the
assets of any trust, custodial account or
escrow arrangement which the Employer may
establish for the purpose of assuring
availability of funds sufficient to pay
benefits under this Plan. The money in any
such trust or account shall at all times remain
the property of the Employer, and neither this
Plan nor any Participant shall have any
beneficial ownership interest in the assets
thereof. No property or assets of the Employer
shall be pledged, encumbered, or otherwise
subjected to a lien or security interest for
payment of
8
benefits hereunder. Accounting for
this Plan shall be based on generally accepted
accounting principles.
4.6 Vesting and Forfeiture. All benefits under this
----------------------
Plan shall be contingent and forfeitable and no Participant
shall have a vested interest in any benefit until one of the
events listed below occurs while he is still employed with the
Employer:
(a) he completes five Years of Service;
(b) he attains age 60; or
(c) he dies or becomes disabled (as defined in the
Retirement Plan).
A person who terminates employment with the Employer for
any reason prior to becoming vested hereunder shall not
receive a benefit.
4.7 Payment. Every Participant who terminates
-------
employment shall, if vested, have his account distributed to
him as soon as practicable following his termination of
employment under one of the following distribution options
elected by the Participant on a form prescribed by the
Administrative Committee:
(a) One lump sum payment; or
(b) Annual installment payments payable over 5, 10,
15, or 20 years commencing in the calendar year
following the calendar year in which he terminates
employment.
The election must be made by the Participant as soon
as practicable after his commencement of participation, but in
no event later than the end of the calendar year thereof. An
election form shall be provided to the Participant in non-
technical language and shall contain a general description of
the distribution options. If a Participant fails to make an
election by the close of the calendar year in which he
commenced participation, he will be
9
deemed to have elected to receive his benefits in the form of
a lump sum payment pursuant to option (a) above.
If benefits are to be paid in installments pursuant
to option (b) above, the Participant's account will continue
to be adjusted until any series of installments has been
completed. The amount of each annual installment shall equal
the amount credited to the account as of January 31 of the
year in which the installment is to be paid multiplied by a
fraction, the numerator of which is 1 and the denominator of
which is the number of installments (including the current
one) which remain to be paid. Each installment shall be paid
on or before January 31 of the calendar year.
Notwithstanding anything else contained in this
section 4.7, no Participant who is eligible for Employer
provided long-term disability benefits and who became disabled
prior to October 1, 1995 shall be entitled to a distribution
of benefits hereunder prior to the time long-term disability
payments cease.
4.8 Death. The account of a Participant who dies while
-----
employed by an Employer shall be paid in a single sum to the
Participant's Beneficiary as soon as administratively possible
following the Participant's date of death. If a Participant
dies after termination of employment, then his surviving
Beneficiary shall be paid the amount in the Participant's
account in a single sum as soon as administratively possible
following the Participant's date of death.
10
Article 5. Administration
--------------------------
5.1 Administrative Committee. This Plan shall be
-------------------------
administered by the committee appointed to administer the
Retirement Plan (the "Administrative Committee").
The interpretation and construction by the Administrative
Committee of any provisions of this Plan shall be final unless
otherwise determined by the Board of Directors. Subject to
the Board, the Administrative Committee is authorized to
interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to it, and to make all other
determinations necessary for its administration.
Without limiting the generality of the foregoing, the
Administrative Committee shall have the authority to calculate
amounts allocable to Participants, and to maintain and adjust
accounts. The Administrative Committee shall have authority
to delegate responsibility for performance of ministerial
functions necessary for administration of the Plan to such
officers of the Employer, including Participants, as the
Administrative Committee shall in its discretion deem
appropriate.
5.2 Uniform Rules. In administering the Plan, the
--------------
Administrative Committee will apply uniform rules to all
Participants similarly situated.
5.3 Notice of Address. Any payment to a Participant or
-----------------
Beneficiary, at the last known post office address submitted
to the Employer, shall constitute a complete acquittance and
discharge of the Employer and any director or officer with
respect thereto. Neither the
11
Employer nor any director or officer shall have any duty or
obligation to search for or ascertain the whereabouts of any
Participant or his Beneficiary.
5.4 Records. The records of the Administrative
-------
Committee with respect to the Plan shall be conclusive on all
Participants, all Beneficiaries, and all other persons
whomsoever.
12
Article 6. Amendment and Termination
-------------------------------------
6.1 Amendment and Termination. The Company expects the
-------------------------
Plan to be permanent, but since future conditions affecting
the Company cannot be anticipated or foreseen, the Company
must necessarily and does hereby reserve the right to amend,
modify, or terminate the Plan at any time by action of its
Board of Directors, except that no amendment shall reduce the
dollar amount credited to a Participant's account and any such
termination or amendment shall apply uniformly to all
Participants. The Administrative Committee in its discretion
may amend the Plan if it finds that such amendment does not
significantly increase or decrease benefits or costs.
6.2 Reorganization of Employer. In the event of a
--------------------------
merger or consolidation of the Employer, or the transfer of
substantially all of the assets of the Employer to another
corporation, such continuing, resulting or transferee
corporation shall have the right to continue and carry on the
Plan and to assume all liabilities of the Employer hereunder
without obtaining the consent of any Participant or
Beneficiary. If such successor shall assume the liabilities
of the Employer hereunder, then the Employer shall be relieved
of all such liability, and no Participant or Beneficiary shall
have the right to assert any claim against the Employer for
benefits under or in connection with this Plan.
6.3 Protected Benefits. If the Plan is terminated or
------------------
amended so as to prevent further earnings adjustments, or if
liabilities accrued hereunder up to the date of an event
specified in section 6.2 are not assumed by the successor to
the Employer, then the dollar amount in the account of each
Participant, or Beneficiary (whether or not vested) shall be
paid in cash to such Participant or Beneficiary in a single
sum on the last day of the second month following the month in
which the amendment or termination occurs.
13
Article 7. General Provisions
------------------------------
7.1 Nonassignability. Benefits under the Plan are not
----------------
in any way subject to the debts or other obligations of the
persons entitled thereto and may not voluntarily or
involuntarily be sold, transferred, or assigned. Any
voluntary attempt to sell, anticipate, assign, or encumber
benefits under this Plan shall operate to cancel the benefit
or the balance of a Participant's account as of the date of
such attempt and to relieve the Employer from any future
liability to pay or distribute any benefit with respect to
such canceled amount.
7.2 Employment Rights. The establishment of the Plan
-----------------
shall not be construed as conferring any legal rights upon any
Participant or any other person for a continuation of
employment, nor shall it interfere with the rights of the
Employer to discharge any person or treat him without regard
to the effect which such treatment might have upon him under
this Plan.
7.3 Illegality of Particular Provision. If any
--------------------------------------
particular provision of this Plan shall be found to be illegal
or unenforceable, such provision shall not affect any other
provision, but the Plan shall be construed in all respects as
if such invalid provision were omitted.
7.4 Applicable Laws. The Plan shall be governed by and
---------------
construed according to the laws of the State of Illinois.
14
7.5 Transfers Involving Occidental Petroleum Corporation
----------------------------------------------------
Supplemental Retirement Plan. In the case of a Participant
- -----------------------------
who ceases to be eligible to participate due to his having
transferred to the employment of Occidental Petroleum
Corporation or any other affiliate which is not an Employer, a
transfer of the Participant's account shall be made to the
Participant's account in the Occidental Petroleum Corporation
Supplemental Retirement Plan (the "Occidental SRP"). Such
transfer shall be effected on a date to be established by the
Administrative Committee and the administrative committee of
the Occidental SRP, which date shall be no later than the end
of the plan year following the plan year in which such
transfer of employment occurs. The amount thus transferred
will be credited to the Participant's account in the
Occidental SRP in accordance with such procedures as may be
established by the Administrative Committee and the
administrative committee of the Occidental SRP, provided that
the Administrative Committee provides notice of such transfer
in advance to such Participant. Notwithstanding the above
language, no such transfer shall be made in the event that the
affiliate to which the Participant transfers employment is not
a participating employer in the Occidental SRP, or in the
event the Participant fails to meet the eligibility
requirements for participation in the Occidental SRP.
In the case of an employee who becomes eligible to
participate hereunder due to his having transferred from the
employment of Occidental Petroleum Corporation or any other
affiliate which is not an Employer and who has a balance in
the Occidental SRP, a transfer shall be made to such
employee's account under this Plan. Such transfer shall be
effected on a date to be established by the Administrative
Committee and the administrative
15
committee of the Occidental SRP, which date shall be no later
than the end of the plan year following the plan year in which
such transfer of employment occurs. The amount thus
transferred will be credited to the Participant's account in
accordance with such procedures as may be established by the
Administrative Committee and the administrative committee of
the Occidental SRP, provided that the Administrative Committee
provides notice of such transfer in advance to such
Participant.
The provisions of this section 7.5 shall be
inapplicable in the event that Occidental Petroleum
Corporation ceases to be an Affiliate.
-----------
This amended and restated Plan shall be effective as
of January 1, 1997.
16
EXHIBIT 10.42
EMPLOYMENT AGREEMENT
--------------------
This Agreement is made as of the 3rd day of May, 1993
by and between Occidental Petroleum Corporation a Delaware
corporation (hereinafter referred to as "Employer") and Donald P.
de Brier (hereinafter referred to as "Employee").
WITNESSETH
----------
Employer hereby agrees to employ Employee, and Employee
agrees to perform services and to work for Employer, upon the
following terms and conditions:
1. Duties - Employee shall serve in the capacity of
Executive Vice President, Senior General Counsel and Corporate
Secretary or shall serve in such other capacity and with such
other duties for Employer or any of the subsidiaries of Employer
or any corporation affiliated with Employer (any such subsidiary
or affiliated corporation hereafter to be deemed Employer under
this Agreement).
In performing his duties, Employee agrees to observe
and follow the reasonable policies and procedures established by
the Employer, which are subject to change by the Employer from
time to time.
2. Term of Employment - The term of employment shall
be for a period of five (5) years (unless terminated prior
thereto in accordance with the provisions of this Agreement, or
unless extended by mutual agreement of the parties), commencing
on July 5, 1993, or such earlier date as Employee may specify.
In order to be valid, any such extension shall be in writing and
signed by the Chairman, President & Chief Executive Officer on
behalf of Employer.
3. Compensation - In consideration for his services
to be performed under this Agreement, Employee shall receive, in
addition to all other benefits provided in this Agreement, an
aggregate salary of no less than four hundred thousand dollars
($400,000) per year payable by Employer in equal semimonthly
installments or on such basis as is generally established for
principal executives of Employer from time to time.
4. Participation in Benefit Programs - During the
term of this Agreement, Employee shall be entitled to participate
in all benefit programs generally applicable to salaried
employees of employer in force or adopted by Employer from time
to time. Employee will be entitled to one country club
membership paid for by Employer provided that the Chairman,
President & Chief Executive Officer of Employer has prior
approval on the selection of the specific club. Furthermore,
Employee will be required to participate in the tax preparation
program conducted by Arthur Andersen & Co.
5. Compensation Plans - Employee shall be:
(i) eligible to participate in Employer's Incentive Compensation
Plan according to its terms, and shall receive a bonus under such
Plan for the year 1993 of forty percent (40%) of his base salary
for 1993 or $160,000 (this bonus shall be payable in December
1993 or January 1994 in the discretion of the Company); (ii)
eligible to receive annual grants under Employer's 1987 Stock
Option Plan and shall receive an option grant of twenty thousand
(20,000) shares under such Plan after Employee's execution of
this Agreement and the commencement of services pursuant to this
Agreement, and (iii) a participant in Employer's 1977 Executive
Long-Term Incentive Stock Purchase Plan and shall receive a grant
of forty percent (40%) of Employee's base salary or $160,000 in
January, 1994 under such Plan. Employee's participation in each
of the foregoing Plans shall be in accordance with and subject to
all of the terms and conditions of such Plans.
6. Additional Payments - In order to compensate
Employee for losses he will incur in leaving his current
employment, Employer shall pay to Employee an aggregate of
$100,000, payable after Employee's execution of this Agreement
and immediately prior to the commencement of his services
pursuant to this Agreement in Los Angeles, California.
7. Exclusivity of Services - Employee agrees to
devote his full-time, exclusive services to Employer hereunder,
except for such time as Employee may require in connection with
his personal investments, which shall be minimal. However, it is
understood that Employee may provide occasional transitional
advice to British Petroleum with respect to matters in which he
was involved during his employment with British Petroleum.
8. Vacation - Employee shall be entitled to a total
of four (4) weeks vacation in each contract year. Employee
agrees to follow Employer's relevant policies and procedures for
scheduling and taking such vacations.
9. Termination -
a. Cause - Notwithstanding the term of this
Agreement, Employer may discharge Employee and terminate this
Agreement for material cause, upon written notice, in the event
that Employee (i) shall willfully breach this agreement, or (ii)
shall refuse to carry out any lawful order of Employer or act in
a disloyal manner inimical to Employer. In any such event,
Employer shall give Employee notice of such cause and Employee
shall have 30 days to cure such breach.
2
b. Incapacity - If, during the term of this
Agreement, Employee is materially incapacitated from fully
performing his duties pursuant to this Agreement by reason of
illness, disability or other incapacity (unless incurred as a
direct result of his assignments hereunder) or by reason of any
statute, law, ordinance, regulation, order, judgment or decree,
Employer may terminate this Agreement without liability by
written notice to Employee, but only in the event that such
conditions shall aggregate not less than one-hundred eighty (180)
days during any one contract year of the term of employment.
c. Without Cause - Either party may terminate
this Agreement without cause at any time, by giving the other
party not less than 24 months written notice of termination.
Employer may terminate the employment of Employee without cause
at any time (including a time during such notice period); and in
such event Employer shall compensate Employee (in lieu of said
notice and continued employment and, except for benefits
specified hereunder, in complete satisfaction of all of its
obligations under this Agreement) at his then current rate and in
the manner provided in Paragraph 3 above for a period after
termination equivalent to the shortest of: (i) twenty-four
months; (ii) the remainder of the 24 months notice period (in the
event of termination during said notice period); or (iii) until
the expiration of the term of this Agreement. In any event,
Employer's maximum liability for any breach of this Agreement,
including but not limited to, termination without cause and/or
notice shall be no more than twenty-four (24) months compensation
plus the benefits specified hereunder (or a lesser amount as
determined in accordance with subsection (ii) or (iii) of this
paragraph) at the rate set forth above.
During this period of compensation, Employee shall
continue to be eligible to (i) participate in all employee
benefit plans of Employer (except the short and long-term
disability plans unless Employee has already become eligible
under such plans), in which he is participating at the time of
the notice, and (ii) exercise all stock options previously
granted to Employee under Employer's 1987 Stock Option Plan,
which options are or become exercisable under the provisions of
such Plan as though he were still a full time employee. During
the period, any award(s) to Employee pursuant to Employer's
Executive Long-Term Incentive Stock Purchase Plan shall continue
to vest in the same manner and in the same amounts as such
award(s) would have vested if Employee had continued as a full
time employee. However, this employee benefits participation and
stock plan vesting will cease if Employee accepts a full time
position with another employer.
In the event Employer compensates Employee (in
lieu of said notice and continued employment) under the first
paragraph of 9(c) above for a period exceeding twelve months,
then in such event, all remuneration or wages earned during the
second twelve months of such period by Employee, either as
3
employee, independent contractor or consultant to any person,
firm or corporation other than employer, shall be a set-off to
Employer's duty of compensation to Employee.
10. Initial Relocation - Employee's relocation from
London, United Kingdom to Los Angeles, California (including the
sale of Employee's existing residence in Shaker Heights, Ohio),
shall be covered by and subject to Employer's existing written
relocation policy. This will include the movement of household
goods both from England and Ohio, plus any additional relocation
benefits as approved by the Executive Vice President of Human
Resources. In order to assist Employee in obtaining a new
domicile in Los Angeles essentially equivalent to his current
domicile in Shaker Heights, Employer will reimburse Employee (on
or before June 30th and December 31st of each contract year) for
the difference between (x) his current housing costs in Shaker
Heights for mortgage payments, real estate taxes and home
insurance and (y) the amounts that Employee paid for those
housing costs in Los Angeles, subject to the following
limitations: no more than $35,000 for the first and second year
of Employee's Los Angeles home ownership, $26,250 for the third
such year, $17,500 for the fourth such year, $8,750 for the fifth
such year and nothing thereafter.
11. Confidential Information - Employee agrees that he
will not divulge to any person, nor use to the detriment of
Employer or any of its affiliates or subsidiaries, nor use in any
business competitive with or similar to any business of Employer
or any of its affiliates or subsidiaries, at any time during
employment by Employer or thereafter, any trade secrets or
confidential information obtained during the course of his
employment with Employer, without first obtaining the written
permission of Employer.
Employee agrees that, at the time of leaving the employ
of Employer, he will deliver to Employer and not keep or deliver
to anyone else any and all notes, notebooks, memoranda, documents
and, in general, any and all material relating to Employer's
business.
12. Entire Agreement; Modification - This Agreement
constitutes the entire agreement of the parties relating to the
subject matter hereof, and supercedes all previous agreements,
arrangements, and understandings, whether express or implied,
relating to the subject matter hereof. No other agreements,
oral, implied or otherwise, regarding the subject matter of this
Agreement shall be deemed to exist or bind either of the parties
hereto. This Agreement cannot be modified except by a writing
signed by both parties.
13. Severability - If any provision of this Agreement
is illegal and unenforceable in whole or in part, the remainder
of this Agreement shall remain enforceable to the extent
permitted by law.
4
14. Governing Law - This Agreement shall be construed
and enforced in accordance with the laws of the State of
California.
15. Assignment - This Agreement shall be binding upon
Employee, his heirs, executors and assigns and upon Employer, its
successors and assigns.
16. Sole Contract - Employee represents and warrants
to Employer that he is not barred by or subject to any
contractual or other obligation that would be violated by the
execution or performance of this Agreement.
17. No Waiver - The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver nor deprive that party of the
right to insist upon adherence to that term or any other term of
this Agreement. Any waiver or amendment to this Agreement must
be in writing.
18. Withholdings - All compensation provided by
Employer under this Agreement is subject to any and all
withholding by Employer as required by applicable law.
19. Arbitration - Both parties agree that any and all
disputes that relate to the termination of this Agreement and/or
Employee's employment (including whether Employer had sufficient
cause for termination or the manner in which the termination is
effected) shall be submitted to binding arbitration and judgment
under the Commercial Arbitration Rules of the American
Arbitration Association. Should the arbitrator rule in
Employee's favor on any dispute, the maximum exclusive remedy
shall be that as set forth in Paragraph 9(c) above. The judgment
on the award may be entered in any court having jurisdiction.
The parties to any arbitration under this paragraph shall bear
the cost of the arbitration and the fee of the neutral arbitrator
in such manner as determined by the arbitrator.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first above written.
OCCIDENTAL PETROLEUM CORPORATION
By: R. R. IRANI
----------------------------
By: DONALD P. DE BRIER
----------------------------
Donald P. de Brier
5