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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, 1997
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
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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 New York Stock Exchange
Convertible Preferred Stock
Common Stock New York 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 20, 1998, the aggregate market value of the voting stock held as
at March 6, 1998, by nonaffiliates of the registrant was approximately $10
billion, based on the New York Stock Exchange closing price of $29.25 per share
of Common Stock on March 20, 1998. 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 6, 1998, there were 348,999,592 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report for the year ended December 31,
1997, are incorporated by reference into Parts I and II. Portions of the
registrant's definitive Proxy Statement filed in connection with its May 1,
1998, Annual Meeting of Stockholders are incorporated by reference into Part
III.
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TABLE OF CONTENTS
PAGE
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PART I
ITEMS 1 AND 2 Business and Properties............................... 1
General..................................................... 1
Oil and Gas Operations...................................... 2
Chemical Operations......................................... 8
Capital Expenditures........................................ 14
Employees................................................... 14
Environmental Regulation.................................... 14
ITEM 3 Legal Proceedings........................................... 15
Environmental Proceedings................................... 15
ITEM 4 Submission of Matters to a Vote of Security Holders......... 16
Executive Officers of the Registrant........................ 16
PART II
ITEM 5 Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 18
ITEM 6 Selected Financial Data..................................... 19
ITEM 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 19
ITEM 8 Financial Statements and Supplementary Data................. 20
ITEM 9 Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................... 23
PART III
ITEM 10 Directors and Executive Officers of the Registrant.......... 23
ITEM 11 Executive Compensation...................................... 23
ITEM 12 Security Ownership of Certain Beneficial Owners and
Management.................................................. 23
ITEM 13 Certain Relationships and Related Transactions.............. 23
PART IV
ITEM 14 Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 23
(i)
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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; and
manufactures and markets a variety of chlorovinyls (including basic chemicals
and polymers and plastics), specialty chemicals and petrochemicals. Occidental
conducts its principal operations through two subsidiaries: Occidental Oil and
Gas Corporation 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 two 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, 1997, see Note 17 to the Consolidated Financial Statements of
Occidental ("Consolidated Financial Statements"), which are included in
Occidental's 1997 Annual Report ("1997 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 1997
Annual Report and is incorporated by reference in Item 7 of this report.
Throughout this report, portions of the 1997 Annual Report are incorporated by
reference. These portions of the 1997 Annual Report are included as Exhibit 13
to this report.
In February 1998, Occidental acquired the government's approximate 78
percent interest (the "Interest") in the Elk Hills Naval Petroleum Reserve field
in California ("Elk Hills") for approximately $3.5 billion. Prior to the
purchase of the Interest in Elk Hills, Occidental sold all of the common stock
of its wholly-owned subsidiary, MidCon Corp. ("MidCon"), through which it
engaged in interstate and intrastate natural gas transmission and marketing. The
sale of MidCon to KN Energy, Inc. closed effective January 31, 1998, for net
proceeds to Occidental of approximately $3.1 billion after certain expenses.
Finally, on March 20 Occidental announced the proposed contribution of its
petrochemical business to a joint venture limited partnership called Equistar
Chemicals, LP ("Equistar"), in return for a 29.5 percent interest in such
partnership. (For a description of the Equistar transaction, please see the
information appearing under the caption "Chemical Operations -- Recent
Development" elsewhere in this report.)
Occidental has also sold or agreed to sell a number of nonstrategic oil and
gas producing properties described below in this report.
Occidental has undertaken these asset sales as part of a larger $4.7
billion asset redeployment program. The focus of such program is to sell certain
nonstrategic assets in order to: (i) improve average return on assets, (ii)
repay debt incurred in connection with the acquisition of the Interest in Elk
Hills, and (iii) fund Occidental's stock repurchase program. (See the
information appearing under the caption "Item 5 -- Market for Registrant's
Common Equity and Related Stockholder Matters" appearing elsewhere in this
report.)
Certain statements contained in this Annual Report on Form 10-K constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risk, uncertainties and other factors that may cause the actual results,
performance or achievements of Occidental to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; changes in political, social and
economic conditions and local regulations; global commodity pricing
fluctuations; competitive pricing pressures; higher than expected costs,
including feedstocks; the supply/demand considerations for Occidental's
products; any general economic recession domestically or internationally; not
successfully completing any development of new fields, expansion, capital
expenditure, efficiency improvement, acquisition or disposition; foreign
currency fluctua-
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tions; changes in, or failure to comply with, government regulations;
demographic changes; the reduction in sales to or loss of any significant
customers; changes in methods of distribution and technology; industry capacity;
cost and availability of drilling equipment; changes in business strategy or
development plans; availability of liquidity sufficient to meet Occidental's
need for capital; availability of qualified personnel; and various other factors
referenced in this Annual Report on Form 10-K. Occidental assumes no obligation
to update the forward-looking information to reflect actual results or changes
in the factors affecting such forward-looking information.
The forward-looking information referred to above includes, but is not
limited to: (a) expectations regarding sales growth, gross margins,
manufacturing productivity, and selling, general and administrative expenses;
(b) the availability and utilization of net operating loss carryforwards and
other deferred tax assets for income tax purposes; (c) expectations regarding
Occidental's financial condition and liquidity, as well as future cash flows;
(d) expectations regarding capital expenditures; and (e) the success of the
development of the Interest in Elk Hills and Occidental's asset redeployment
program.
OIL AND GAS OPERATIONS
Exploration and Production
GENERAL Through its subsidiaries, including Occidental Oil and Gas
Corporation, and its approximate 29 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 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.
Recent Developments
Elk Hills is one of the 11 largest fields in the lower 48 states and the
acquisition of the Interest significantly increases the quantity and quality of
Occidental's domestic reserves. Occidental expects to book initial proved
reserves of approximately 300 million barrels of oil and 665 billion cubic feet
of natural gas from the Interest. Through the application of improved drilling
and field management techniques to develop fully Occidental's share of the
field, Elk Hills reserves net to Occidental are expected ultimately to exceed
such numbers. Production is expected to increase as the field is developed.
Gross crude oil production averaged approximately 54,500 barrels of oil per day
in January 1998, with gas sales averaging 144 million cubic feet of gas per day
after reinjection of 197 million cubic feet of gas to maintain reservoir
pressure. Corresponding natural gas liquids production amounts to about 11,000
barrels per day. Gross crude oil production is forecast, based on estimates
prepared by Occidental's engineers and geophysicists, to rise to 65,000 barrels
of oil per day in 1998 and may rise to more than 100,000 barrels per day in the
year 2000, while gross natural gas sales are expected to reach 380 million cubic
feet per day in 1999. Occidental is the operator of Elk Hills. Chevron remains
the other unit interest holder.
In February 1998, Occidental sold its entire interest in an oil field
development project in Venezuela to Union Texas Petroleum for approximately $205
million in cash plus contingent payments of up to $90 million over six years
(not to exceed $15 million in any one year) based on future oil prices.
Occidental also has agreed to sell its natural gas properties in Oklahoma and
Kansas outside of the Hugoton field to ONEOK Resources Company for approximately
$135 million. In March 1998, Occidental agreed to sell the stock of its MC
Panhandle subsidiary, which owns certain natural gas interests in the West
Panhandle field in Texas to Chesapeake Energy Corporation for approximately $105
million. Also in March, Occidental announced execution of a definitive agreement
to sell certain Oklahoma oil and gas properties to Anadarko Petroleum
Corporation for approximately $120 million. The transaction is scheduled to
close in April subject to satisfaction of certain customary closing conditions.
Other smaller packages of assets have been scheduled for disposition, and many
of such sales are pending, for a total of 12 scheduled domestic oil and gas
transactions.
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Estimated average 1997 production attributable to the nonstrategic assets
to be sold and described above was approximately 46,000 barrels of oil per day
(including approximately 25,000 barrels per day attributable to the sale of
Occidental's Venezuela interest) and 140 million cubic feet ("MMcf") of gas per
day. Following these nonstrategic asset sales and the acquisition of Elk Hills,
it is expected that Occidental's oil and gas production in the United States
will increase significantly. Accordingly, the description of United States
production information and description of properties set forth below concerns
Occidental's historic 1997 business.
COMPARATIVE OIL AND GAS RESERVES AND PRODUCTION
(Oil in millions of barrels; natural gas in billions of cubic feet)
1997 1996 1995
------------------ ------------------ ------------------
OIL GAS TOTAL* OIL GAS TOTAL* OIL GAS TOTAL*
--- ----- ------ --- ----- ------ --- ----- ------
International Reserves 703 823 840 694 840 834 734 639 841
U.S. Reserves 197 1,635 470 203 1,744 494 196 1,821 499
--- ----- ----- --- ----- ----- --- ----- -----
Total 900 2,458 1,310 897 2,584 1,328 930 2,460 1,340
=== ===== ===== === ===== ===== === ===== =====
International Production 80 40 87 84 42 91 78 46 86
U.S. Production 21 218 57 21 220 58 23 223 60
--- ----- ----- --- ----- ----- --- ----- -----
Total 101 258 144 105 262 149 101 269 146
=== ===== ===== === ===== ===== === ===== =====
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* Natural gas volumes have been converted to equivalent barrels based on energy
content of six thousand cubic feet ("Mcf") of gas to one barrel of oil. 1995
amounts have been restated to reflect this methodology.
In 1997, Occidental added more oil to its reserves than it produced.
Occidental's consolidated worldwide net proved developed and undeveloped
reserves of crude oil (not including those of CanadianOxy) were 900 million
barrels at year-end 1997, compared with 897 million barrels at year-end 1996.
Domestic reserves of crude oil were 197 million barrels at year-end 1997,
compared with 203 million barrels at year-end 1996, while international crude
oil reserves increased to 703 million barrels from 694 million barrels at
year-end 1996. Worldwide net crude oil reserve additions of 106 million barrels,
with the single largest reserve additions in Qatar, more than replaced
Occidental's worldwide production of 101 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 2.5
trillion cubic feet ("Tcf") at year-end 1997, with 1.6 Tcf attributable to
domestic operations. Worldwide net proved developed and undeveloped natural gas
reserves were about 2.6 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 277,000 barrels per day
compared to 286,000 barrels per day in 1996, and net worldwide natural gas
production averaged 706 MMcf per day compared to 716 MMcf per day in 1996.
International operations accounted for approximately 79 percent of Occidental's
oil production, while approximately 84 percent of gas production came from the
United States. On an oil equivalent basis, Occidental produced 394,100 net
barrels per day in 1997 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 contract
exploration blocks in areas with known oil and gas deposits and the
cost-efficient development and production of its worldwide oil and gas
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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 (i) enhanced oil recovery projects, similar to those in
Qatar, (ii) oil and gas exploration and (iii) strategic acquisitions.
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 agreed to deliver to Clark USA, Inc. ("Clark")
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.
Occidental delivered approximately 3.2 million barrels of WTI-equivalent oil to
an assignee of Clark in 1997. At December 31, 1997, approximately 12.2 million
barrels (depending on future oil prices) 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, 1997, the carrying value of Occidental's oil and gas assets in
countries outside North America aggregated approximately $2.3 billion, or
approximately 15 percent of Occidental's total assets at that date.
Approximately $950 million of such assets were located in the Middle East, and
approximately $700 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.
Oil Production and Marketing
Net daily domestic production of crude oil averaged approximately 57,100
barrels in 1997, compared with 57,300 barrels in 1996. The 1997 production is
net of approximately 5,200 barrels per day delivered to Clark's assignee. Net
daily domestic production of natural gas averaged 596 MMcf in 1997, compared
with 601 MMcf in 1996.
Occidental's average sales price for domestic crude oil was $18.72 per
barrel in 1997, compared with $18.98 in the previous year. The average natural
gas sales price in 1997 was $2.39 per Mcf, compared with $2.11 per Mcf during
1996.
Additionally, Occidental has an agreement to supply CITGO Petroleum
Corporation ("CITGO"), at CITGO's option, with a majority of its domestic lease
crude oil production through August 31, 1998. During 1997, Occidental sold CITGO
approximately 38,000 barrels of oil per day under this agreement. Occidental is
currently disputing certain provisions of this agreement.
In February 1998, Occidental entered into a fifteen-year contract with
Tosco Corporation ("Tosco") through which Tosco will take the majority of
Occidental's interest in the current gross oil production of the Interest in Elk
Hills of approximately 54,500 barrels per day. Tosco will also take additional
production as it increases.
Gas Production and Marketing
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 210 MMcf of gas per day or approximately
one-third of the domestic total. Occidental has approximately 862 billion cubic
feet
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("Bcf") of gas reserves and 4.2 million barrels of oil reserves in the Hugoton
area. Occidental continued infill drilling and fracture-stimulation program in
the Chase formation of the Hugoton field in 1997.
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
refinery until 2003 to the extent that CITGO does not obtain such gas from other
sources.
Occidental has various agreements to supply certain gas marketing companies
with 69,400 MMBtu of natural gas per day in 1998 and with volumes ranging from
69,400 MMBtu down to 1,900 MMBtu per day from 1998 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.
CANADA Occidental owns an approximate 29 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 provinces of Alberta and Saskatchewan; 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, Australia, Nigeria and Colombia; and participates with Occidental in
its operations in Ecuador. CanadianOxy also conducts chemical operations in
Canada and the United States (where CanadianOxy is the operator and Occidental a
participant), and is involved in crude oil and natural gas marketing activities,
primarily in North America.
At December 31, 1997, Occidental's proportional interest in CanadianOxy's
worldwide net proved developed and undeveloped reserves aggregated approximately
73 million barrels of crude oil, condensate and natural gas liquids, 238 Bcf of
natural gas and 45 million barrels of synthetic crude oil recoverable from tar
sands. This increase in reserves since last year reflects CanadianOxy's
acquisition of Wascana Energy Inc. in April 1997.
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. 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. Seismic exploration resulted in the definition of multiple
prospects, one of which is being drilled. The first exploratory well drilled in
mid-1997 blew out after encountering shallow, high-pressure gas. A replacement
well will be drilled in 1998. Additional seismic acquisition is underway to
determine the course of future exploration. Occidental is negotiating with
Petrobangla regarding the continuation of the exploration period for several
blocks. A drilling program has commenced appraisal and development of the
Jalalabad natural gas discovery, and it is expected that initial gas production
from this field will be delivered to Petrobangla in 1998.
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.
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All of Occidental's share of production is exported through a trans-Andean
pipeline system operated by Ecopetrol, the state oil company, 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. Gross production from Occidental's Cano Limon area declined to
approximately 160,000 barrels per day in 1997, compared with 190,000 barrels per
day in 1996. Part of the reduction is due to a natural decline, but there was an
increase in the frequency and severity of terrorist activity against the oil
pipeline during the past year which continues to restrict the pipeline's ability
to transport all of the oil that the field is capable of producing.
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. Due to pipeline restrictions, gross production declined to
approximately 17,100 barrels per day in 1997 compared to gross production of
approximately 21,500 barrels per day in 1996. Development of the fields will
continue in 1998 after completion of a three-dimensional seismic program and
expansion of the government-owned pipeline system. After renegotiation of
contract terms for the concession to provide incentives for additional
exploration over 97 percent of the acreage, Occidental drilled the Eden-1, the
first of four commitment wells, in the southeast corner of the block in late
1996. The well tested from four zones at a combined rate of 6,500 barrels per
day of oil with an average gravity of 21 degrees API, and negotiations are under
way with the Ecuador state oil company, PetroEcuador, to develop the field in
1998. Occidental also completed acquisition of two-dimensional seismic data to
be used to delineate exploration prospects in the eastern portion of the block.
Occidental has an 85 percent interest in the parent of the company that
holds title to Block 15. CanadianOxy owns the remaining 15 percent.
NETHERLANDS NORTH SEA Occidental has interests in seven gas-producing
licenses and one exploration license in the Dutch sector of the North Sea, and a
38.6 percent interest in a 110-mile gas pipeline system that services the area.
Net production for 1997 was approximately 72 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
1998. Occidental's net share of production from the block in 1997 averaged
approximately 14,400 barrels per day of crude oil, compared with 13,400 barrels
per day in 1996.
A new contract area, Block 31, the Mountain Front Block, was awarded to
Occidental by the government in September, and acquisition of three-dimensional
seismic is scheduled for 1998 to confirm prospects defined by older seismic.
Occidental has a 100 percent working interest in this area.
PAKISTAN In southern Pakistan, Occidental has a 30 percent working interest
in the three Badin Blocks, which in 1997 produced a net share of 6,600 barrels
of oil per day and 38 MMcf of gas per day, compared to 6,400 barrels of oil per
day and 43 MMcf of gas per day in 1996. Recent exploration 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. One exploratory well was
drilled in 1997 and the block is being evaluated for further drilling. However,
the Central Indus gas basin blocks are under force majeure due to tribal unrest.
PERU Occidental conducts exploration activities under four separate service
contracts with the Peruvian government. Occidental conducts production
activities under 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. Net
production from the northern jungle block averaged approximately 49,500 barrels
per day in 1997, compared to 54,000 barrels per day in 1996.
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 70 percent interest covers a
2-million-acre block in the Hualluga Basin of the Northern Jungle Region. In
1997
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Occidental was awarded a 100 percent interest in the 859,000-acre Offshore Block
Z-3 along the northern coast of Peru.
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 ("ISND").
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 gross production increased from approximately 38,000 net barrels per day
for 1996 to approximately 89,800 net barrels per day for 1997. Average net
interest production from such field in 1997 amounted to approximately 45,000
barrels per day, amounting to an approximate 50 percent working interest. Proved
developed and undeveloped project reserves are presently estimated by Occidental
to be approximately 206 million barrels.
In December 1997, Occidental signed a second production-sharing agreement
to develop the Idd el Shargi South Dome ("ISSD") field, 15 miles south of the
ISND field. Occidental will operate ISSD as a satellite of the ISND field, which
has sufficient capacity to handle the field's expected production of 50,000
barrels per day. Occidental expects to eventually invest up to $450 million in
capital and have a net interest of approximately 44 percent over the life of the
field.
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 1997, gross production averaged 54,000 barrels per day compared to 50,800
barrels per day in 1996. Approximately 39 percent of such oil was exported in
1997. Occidental expects to continue exports of a minimum of 30 percent of its
oil production in 1998. Export prices are materially higher than domestic prices
in Russia.
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. 1996 Occidental results included a $105 million charge, reflecting
the write-down of its investment in Komi. No operations were undertaken in 1997.
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).
CanadianOxy, the operator, with a 52 percent working interest, has made 14 oil
discoveries, including one in 1997. Production started in July 1993.
Occidental's net share under a production-sharing contract was 14,100 barrels
per day in 1997 compared to 14,700 barrels per day in 1996.
OTHER INTERNATIONAL OPERATIONS 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 in 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.
Each of Occidental and its partner, Shell Philippines Exploration B.V., the
operator, has a 50 percent working interest in this project. With recoverable
gas estimated by the operator of 3.4 Tcf, the fields have the capacity to supply
a plateau rate of 400 MMcf per day for 20 years. Recoverable condensate is
estimated at about 120 million barrels. Occidental and Shell have negotiated
conditional gas sale agreements. Under these agreements, if approved by the
Philippine government and the parties, beginning in 2002, joint ventures formed
by First Philippine Holdings, British Gas and the Manila Electric Company, would
consume approximately 200 MMcf of natural gas per day at newly built combined
cycle gas turbine ("CCGT") power plants at Santa Tira and Calabarson, and the
Philippine National Power Corporation would construct a CCGT plant in Iljian and
consume approximately 150 MMcf of natural gas per day.
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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 plant initially will come from the
Occidental discovery containing recoverable gas estimated at 2.9 Tcf. Occidental
is the operator, with a 33.75 percent interest in the gas discoveries. An
Occidental subsidiary will have a 9 percent interest in the new LNG plant. The
partners began the detailed upstream facility design in 1996. In 1997 Occidental
sold 10 percent of its interest in these Malaysian operations by selling equity
in two Occidental subsidiaries to a third party.
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 1998 to determine if the natural gas
reserves are sufficient to justify construction of an LNG plant on Irian Jaya.
Prior to ARCO farming in to the Berau Block, Occidental made two discoveries.
The Berau Block discoveries, together with ARCO's Wiriagar Block discovery,
contain an estimated 20 Tcf of natural gas, sufficient to justify construction
of a multi-train LNG project which might be slated for start-up early in the
next century.
In addition, during 1997 Occidental acquired new exploration blocks in the
United States Gulf of Mexico and Albania. Occidental acquired interests in 15
exploration blocks in a promising deep-water section of the Gulf of Mexico.
During 1998, exploration activities are planned in these areas as well as on
previously acquired blocks in Albania, Angola, Bangladesh, Colombia, the Congo,
Ecuador, Gabon, Indonesia, Malaysia, Netherlands, Oman, Pakistan, Papua New
Guinea, Peru and the Philippines.
Special Items in 1997
In 1997, Occidental recorded charges of $256 million for the write-down of
various nonstrategic assets, including assets expected to be sold and related
costs, and additional environmental and other reserves. The asset write-downs
included $88 million for the Austin Chalk oil and gas property and $44 million
for the Garden Banks oil and gas property. The operating results from these
properties were not significant.
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 June 10, 1997,
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, 1996, as are set forth for
that date in the information incorporated under the caption "Supplemental Oil
and Gas Information" contained in Occidental's 1996 Annual Report.
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 chlorovinyls
(including basic chemicals and polymers and plastics), specialty chemicals and
petrochemicals.
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OxyChem 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.
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 1997 by higher sales prices
and lower hydrocarbon feedstock costs, partially offset by increased energy
costs, resulting in improved 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 1997. Operating rates for
certain products may decline in 1998 as a result of weakness in key Asian
economies.
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.
Recent Development
On March 20, 1998, Occidental, Lyondell Petrochemical Company ("Lyondell")
and Millennium Chemicals Inc. ("Millennium") announced the signing of a
definitive master transaction agreement ("MTA") to expand Equistar, which is
currently owned by subsidiaries of Lyondell and Millennium, through the
contribution of the ethylene, propylene, ethylene oxide ("EO") and ethylene
glycol ("EG") derivatives businesses of OxyChem (the "Petrochemicals Business").
The Petrochemicals Business includes the following:
(i) Olefins plants at Corpus Christi and Chocolate Bayou, Texas, and Lake
Charles, Louisiana, producing 3.65 billion pounds per year of ethylene;
(ii) EO and EG derivatives plant located at Bayport, Texas, together with
Occidental's 50 percent ownership of PD Glycol, a limited partnership which
operates EO/EG plants at Beaumont, Texas (PD Glycol is a 50/50 joint venture
with Du Pont);
(iii) A distribution system consisting of more than 950 miles of
ethylene/propylene pipelines in the U.S. Gulf Coast and two storage wells in
South Texas; and
(iv) $205 million of OxyChem debt currently associated with these
businesses (the "Assumed Debt"). The addition of the Petrochemicals Business
will make Equistar the second-largest producer of ethylene in the world, with
more than 11.4 billion pounds of annual capacity.
Through their respective subsidiaries, Lyondell and Millennium presently
own Equistar. Pursuant to the terms and conditions set forth in the MTA, at
closing three subsidiaries of OxyChem (a newly formed subsidiary to be organized
prior to closing, Oxy Petrochemicals Inc. and PDG Chemical Inc. (collectively,
the "Occidental Partners")) will contribute certain assets to Equistar, subject
to the assumption by Equistar of certain liabilities of the Occidental Partners,
including the Assumed Debt. Following the closing of the transactions
contemplated by the MTA, which is expected to occur by mid-year 1998, Lyondell
will own a 41 percent interest in Equistar, and Millennium and Occidental will
each own a 29.5 percent interest. Prior to closing the parties must execute and
deliver an Amended and Restated Partnership Agreement, a Parent Agreement and an
Asset Contribution Agreement (the "Definitive Agreements") and certain other
agreements. At closing, Equistar will borrow approximately $500 million of
additional debt in order to distribute cash of $420 million to Occidental
Petroleum and $75 million to Millennium. The transaction also includes a
long-term agreement for Equistar to supply the ethylene requirements (up to 2.55
billion pounds per annum) for OxyChem's chlorovinyls business.
The investment in Equistar is subject to satisfaction of certain conditions
precedent, including: (i) expiration or early termination of all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;
(ii) approval by Occidental's Board of Directors; (iii) execution and delivery
of the Definitive Agreements and other agreements and (iv) the implementation by
Equistar of a larger credit facility.
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Chlorovinyl Products
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. Approximately 70 percent of OxyChem's ethylene and 45 percent of its
chlorine production is consumed internally, primarily into the vinyls product
chain, including ethylene dichloride ("EDC"), vinyl chloride monomer ("VCM") and
polyvinyl chloride ("PVC") resin. To better manage and sharpen its focus on its
chlor-alkali and plastic businesses, OxyChem combined its basic chemicals and
polymers and plastics groups into the Chloro-Vinyls Group.
In March 1997, OxyChem's wholly-owned Brazilian subsidiary, Vulcan Material
Plastico S.A. ("Vulcan") acquired the business and assets of Plasticos Plavinil
S.A., the largest Brazilian producer of PVC laminated film. This business gives
OxyChem a very strong position in several growing markets and complements the
company's existing Vulcan PVC operations in the state of Rio de Janeiro.
In May 1997, OxyChem announced plans to expand production capacity of
potassium hydroxide by 100,000 tons per year, bringing total capacity to 500,000
tons per year by the end of 1999. Potassium hydroxide is used by fertilizer,
soap and detergent and rubber manufacturers. Also in May, OxyChem and Thai
Plastic and Chemicals Public Company Limited began commercial operation of a new
22,500 tons-per-year PVC plant in Rayong Province in Thailand. Output from the
new plant will be sold within Thailand and through regional exports.
In June 1997, Occidental sold its chlor-alkali chemical plant located in
Tacoma, Washington for approximately $102 million which included $97 million in
cash and the balance in the buyer's convertible preferred stock. The sale did
not have a material effect on the results of operations. In addition, Occidental
purchased 28,000 shares of preferred stock of Leslie's Poolmart, Inc.
("Leslie's"), an OxyChem customer, for total consideration of $28 million, which
consisted of cash and the exchange of $10 million of Leslie's subordinated
debentures held by Occidental. Also in June, OxyChem completed a
700-million-pound-per-year VCM expansion project at Ingleside, Texas, increasing
production capacity at the joint-venture plant by 50 percent to 2.1 billion
pounds per year.
In November 1997, OxyChem took significant steps to increase its
chlorovinyl integration. A 450-million-pounds-per-year expansion at the
company's Pasadena, Texas, PVC plant increased capacity at the Pasadena site to
1.8 billion pounds, thereby increasing OxyChem's total capacity to 2 billion
pounds of PVC.
Specialty Chemicals
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
products 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 has targeted the Specialty Business Group for substantial growth in the
coming years through volume expansion in existing products, development of new
products and acquisitions of synergistic businesses and product lines.
In February 1997, OxyChem began several specialty chemicals projects at its
Niagara Falls, New York, chemicals complex. Spending is expected to total
approximately $85 million and is scheduled to be completed by the end of 1998.
An additional $42 million has been committed at the same location in order to
enhance production of specialty chemicals, as well as to make new products which
are used for crop protection, pharmaceutical, coating and solvent applications.
This additional investment will be used to enhance production and handling of
key existing specialty chemicals, as well as make new products.
In July 1997, OxyChem announced an investment of $17 million to increase
specialty chemicals production at the company's Ashtabula, Ohio, Designed
Products Plant. This investment will enhance
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OxyChem's capabilities to launch and support new and existing products to serve
the agricultural intermediates, pharmaceutical intermediates, coating and
polymer additives industries.
In September 1997, OxyChem and Sumitomo Bakelite began production at a new
glass-filled phenolic molding compound facility adjacent to OxyChem's Durez(R)
division's Fort Erie, Ontario, manufacturing site. This expansion will serve
component manufacturers that supply the automotive and outdoor power-equipment
industries.
In December 1997, OxyChem enhanced its specialty chemical position by
purchasing Elf Atochem's flame retardants business, which will enhance its
capabilities in this important growth market.
In February 1998, OxyChem announced an agreement to form a joint venture
company, Aqua Clear Industries, LLC, with Aqua Clear Industries, Inc. The
venture will own and operate Aqua Clear's New York state-based swimming pool and
spa chemical formulating, packaging and marketing business, and will be a steady
consumer of OxyChem's chlorinated isocyanurates.
OxyChem continues to build on its specialty business acquired in large part
through the following acquisitions. In 1996, OxyChem acquired a 64 percent
equity interest (on a fully-diluted basis) in INDSPEC Holding Corporation, and,
indirectly, its sole operating subsidiary INDSPEC Chemical Corporation
("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 1996, OxyChem acquired three specialty chemical units: Laurel
Industries, Inc. ("Laurel"); Natural Gas Odorizing, Inc. ("NGO"); and a plant
from Power Silicates Manufacturing, Inc. ("Power Silicates"). Laurel 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). NGO 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, augmenting
OxyChem's five existing silicates plants by its presence in the growing
southeast U.S. market.
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Principal Products
OxyChem produces the following chemical products:
PRINCIPAL PRODUCTS MAJOR USES
---------------------------------- ----------------------------------
Chlorovinyls Chlor-alkali chemicals
Chlorine........................ Raw material for 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
Vinyl chloride monomer............ Raw material for polyvinyl
chloride
Polyvinyl chloride................ Calendering and film, pipe, wire
insulation, flooring, footwear,
bottles, siding, windows, door
frames and other home
construction products
----------------------------------
Specialty Businesses Sodium silicates.................. Soaps and detergents, 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 production of
polypropylene and acrylonitrile
Ethylene glycols and other
ethylene oxide derivatives...... Polyester products, antifreeze,
brake fluids
---------------------------------- ----------------------------------
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Based on statistics in chemical industry publications, Occidental believes
that during 1997: it was the largest U.S. merchant marketer of chlorine and
caustic soda; including OxyMar (OxyChem's joint venture with Marubeni), the
second-largest U.S. producer of VCM; the third-largest producer of PVC resins in
North America; the largest producer of chrome chemicals and phenolic molding
compounds, antimony oxide and mercaptan warning agents, and, through its
interest in INDSPEC, resorcinol; the second-largest producer of sodium
silicates; and, including its PD Glycol joint venture with Du Pont, the
third-largest producer of ethylene oxide and ethylene glycols. 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.
Properties
As of December 31, 1997, OxyChem, which is headquartered in Dallas, Texas,
operated 33 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 10 chemical product manufacturing
facilities in six 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, as of December 31, 1997, owned and operated 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.
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Special Items in 1997
Chemical division earnings reflected charges of $82 million related to the
write-down of various nonstrategic assets, and a charge of $65 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 chemical business requires capital expenditures to
remain competitive and to comply with safety and environmental laws.
Occidental's capital expenditures for its ongoing businesses totaled
approximately $1.549 billion in 1997, $1.2 billion in 1996 and $979 million in
1995, exclusive of the noncash consideration for acquisitions. The 1997 amount
included capital expenditures aggregating $1.15 billion for oil and gas, $396
million for chemical and $3 million for corporate and other. Occidental's total
capital expenditures, exclusive of acquisitions, if any, for 1998 are expected
to approximate $1.2 billion, with approximately $850 million for oil and gas,
the majority of which is for international oil and gas operations. These amounts
do not include the $3.5 billion acquisition of the Elk Hills field in 1998.
EMPLOYEES
Occidental and its subsidiaries employed a total of 12,380 persons at
December 31, 1997, of whom 8,130 were located in the United States. 4,480 were
employed in oil and gas operations and 7,350 in chemical operations. An
additional 550 persons were employed at corporate headquarters. Approximately
1,200 U.S.-based employees are represented by labor unions. These employment
statistics do not reflect the 1,810 persons employed by Occidental's former
natural gas transmissions operations, which were reclassified as discontinued
operations in the fourth quarter of 1997.
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 ("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, 1997 and 1996, Occidental had environmental reserves of
approximately $567 million and $562 million, respectively. Occidental provided
additional reserves of approximately $136 million in 1997, $100 million in 1996
and $21 million in 1995 for costs associated with expected remediation efforts
at a number of sites. The 1997
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amount related to both the oil and gas and the chemical divisions. The 1996 and
1995 amounts related primarily to the chemical division.
Occidental's estimated operating expenses in 1997 relating to compliance
with environmental laws and regulations governing ongoing operations were
approximately $93 million, compared with $100 million in 1996 and $104 million
in 1995. The 1997 amount included $60 million in the chemical division and $33
million in the oil and gas division. In addition, capital expenditures for
environmental compliance were $116 million in 1997, compared with $81 million in
1996 and $70 million in 1995. The 1997 amount included $85 million in the oil
and gas division and $31 million in the chemical division. Occidental presently
estimates that divisional capital expenditures for environmental compliance
(including environmental control facilities) will be in the range of $115
million for 1998 and in the range of $130 million for 1999.
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.
In 1996, a judgment of $742 million was entered in favor of OXY USA Inc.
("OXY USA") 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 1997, Occidental was informed that the Securities and Exchange
Commission (the "SEC") would conduct a private, formal investigation as a result
of certain matters described in a May 12, 1997 Wall Street Journal article
concerning Occidental's business dealings with several foreign consultants.
According to the SEC, the purpose of its investigation is to determine whether
Occidental may have violated the federal securities laws, including the Foreign
Corrupt Practices Act and the reporting requirements of the Securities Exchange
Act of 1934, as amended. That investigation is ongoing. Occidental has
cooperated with the SEC and has produced documents in response to an SEC
subpoena.
In January 1998, two shareholder derivative actions were filed in Los
Angeles Superior Court against the Board of Directors of Occidental and
Occidental, as a nominal defendant, with respect to the payments made in 1997 to
Occidental's Chairman and President in connection with the restructuring of
their respective employment agreements. The actions, brought by the Teachers'
Retirement System of Louisiana and by Rita Edelson, Paul Klingenstein and
Clayton J. Steenson, have been consolidated. No relief is sought against
Occidental. The complaints allege, among other things, corporate waste, breach
of fiduciary duty and unjust enrichment. The plaintiffs seek, among other
things, compensatory damages, equitable and declaratory relief, the imposition
of a constructive trust on the 1997 payments and that the Occidental Board be
ordered to rescind the payments. In addition, the plaintiffs seek a declaration
that the restated and amended employment agreements are null and void and an
order enjoining the receipt of remuneration thereunder. The plaintiffs also seek
an award of attorneys' fees and costs.
ENVIRONMENTAL PROCEEDINGS
In 1996, the West Virginia Division of Environmental Protection ("WVDEP")
filed a civil action in the Circuit Court, Kanawha County, West Virginia,
against OxyChem alleging violations of hazardous waste management regulations at
its Belle Plant, from October 1994 to September 1995. The Complaint sought civil
penalties and injunctive relief requiring correction of the alleged violations.
In December 1997 the WVDEP voluntarily dismissed the action.
In 1997, OxyChem received an Administrative Complaint from the EPA, Region
2, that alleged violations of the permit for a hazardous waste incinerator at
its Durez(R) division facility in Niagara Falls, New York. The Complaint sought
administrative penalties in the amount of $230,500. In October 1997, OxyChem
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entered into an administrative consent order agreeing to pay a penalty of
$27,000 and to implement a Supplemental Environmental Project at the facility,
in settlement of the action.
In 1997, OxyChem received a proposed "Order on Consent" from the New York
State Department of Environmental Conservation ("NYDEC") involving its
chlor-alkali facility in Niagara Falls, New York. The NYDEC alleges a violation
of statutory reporting requirements regarding a chemical spill at the facility
that allegedly caused a further violation of water quality standards, and seeks
an administrative penalty of $100,000. OxyChem is contesting the alleged
violations and the proposed administrative penalty.
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 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT
AGE AT
FEBRUARY
28, POSITIONS WITH OCCIDENTAL AND SUBSIDIARIES
NAME 1998 AND FIVE-YEAR EMPLOYMENT HISTORY
---- -------- ------------------------------------------
Dr. Ray R. Irani 63 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 52 President and Senior Operating Officer since 1996;
1990 - 1996 Executive Vice President and Senior
Operating Officer; 1984 - 1990, Executive Vice
President -- Operations; Director since 1990; member of
Executive Committee.
Roger L. Abel 54 Executive Vice President since 1997; President and Chief
Operating Officer of Occidental Oil and Gas Corporation
since 1997; 1993 - 1997, Chairman, Conoco Exploration
Production Europe; 1991 - 1993, Vice President, Conoco
Russia.
Stephen I. Chazen 51 Executive Vice President -- Corporate Development since
1994; 1990 - 1994, Managing Director, Merrill Lynch &
Co. Incorporated.
Donald P. de Brier 57 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 53 Executive Vice President -- Human Resources since 1994;
1993 - 1994, Director, Worldwide Total Compensation of
IBM; 1990 - 1993, various other human resources
positions with IBM.
David A. Hentschel 64 Executive Vice President since 1997; Chairman of the
Board and Chief Executive Officer of Occidental Oil and
Gas Corporation since 1997; 1995 - 1997, President and
Chief Executive Officer of Canadian Occidental Petroleum
Corporation; 1986 - 1993, Chairman and Chief Executive
Officer of Occidental Oil and Gas Corporation;
1986 - 1993, Executive Vice President.
J. Roger Hirl 66 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.
16
19
AGE AT
FEBRUARY
28, POSITIONS WITH OCCIDENTAL AND SUBSIDIARIES
NAME 1998 AND FIVE-YEAR EMPLOYMENT HISTORY
---- -------- ------------------------------------------
Anthony R. Leach 58 Executive Vice President and Chief Financial Officer
since 1991; 1984 - 1991, Vice President and Controller.
Howard Collins 54 Vice President -- Public Relations since 1993;
1986 - 1993, Director -- Public Relations.
Samuel P. Dominick, Jr. 57 Vice President and Controller since 1991; 1990 - 1991,
Assistant Controller -- Internal Audit; 1985 - 1990,
Director of Internal Audit.
Kenneth J. Huffman 53 Vice President -- Investor Relations since 1991;
1989 - 1991, Vice President -- Finance, American
Exploration Company.
John L. Hurst 58 Vice President since 1996; Executive Vice President --
Manufacturing and Engineering of Occidental Chemical
since 1996; 1988 - 1996, Executive Vice
President -- Operations of Occidental Chemical.
Robert M. McGee 51 Vice President since 1994; President of Occidental
International Corporation since 1991; 1981 - 1991,
Senior Executive Vice President of Occidental
International Corporation.
John W. Morgan 44 Vice President -- Operations since 1991; 1984 - 1991,
Director -- Operations.
S.A. Smith 53 Vice President since 1984; Executive Vice President --
Worldwide Finance and Administration of Occidental Oil
and Gas Corporation since 1994; 1986 - 1994, Vice
President -- Financial Planning and Analysis.
Richard A. Swan 50 Vice President -- Health, Environment and Safety since
1995; 1991 - 1995, Director -- Investor Relations.
Aurmond A. Watkins, Jr. 55 Vice President -- Tax since 1991; 1986 - 1991,
Director -- Taxes.
David C. Yen 43 Vice President and Treasurer since 1997; 1993 - 1997,
Vice President -- Treasurer, Pratt & Whitney;
1988 - 1993, Assistant Treasurer, United Technologies
Corporation.
The current term of office of each Executive Officer will expire at the
April 30, 1998 organizational meeting of the Occidental Board of Directors or at
such time as his successor shall be elected.
17
20
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Recent Preferred Stock Conversion
Occidental gave notice to redeem all 15,106,444 outstanding shares of its
$3.875 voting and nonvoting Cumulative Convertible Preferred Stock by March 13,
1998. Before such time all holders elected to convert the shares of the
preferred stock, causing the issuance of approximately 33 million shares of
common stock. Assuming dividends on the preferred shares of approximately $58
million per annum, the conversion results in annual dividend savings to
Occidental of approximately $25 million.
Common Stock Repurchase Program
In October, Occidental began a program to repurchase up to 40 million
shares of its common stock for approximately $1 billion. The repurchases are
made in the open market or in privately negotiated transactions at the
discretion of Occidental's management, depending upon financial and market
conditions or as otherwise provided by the Securities and Exchange Commission
and New York Stock Exchange ("NYSE") rules and regulations. Since October,
approximately 13 million shares have been repurchased. The program is expected
to be completed in 1998.
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 1997 Annual Report, relevant portions of which
1997 Annual Report are filed as Exhibit 13 to this report. Occidental's common
stock was held by approximately 97,236 stockholders of record at year-end 1997,
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 NYSE and also is listed on various foreign exchanges
identified in the 1997 Annual Report. The quarterly financial data on pages 57
and 58 of the 1997 Annual Report sets forth the range of trading prices for the
common stock as reported on the NYSE's composite tape and quarterly dividend
information.
The quarterly dividend rate for the common stock is $.25 per share. On
February 12, 1998, a dividend of $.25 per share was declared on the common
stock, payable on April 15, 1998 to stockholders of record on March 10, 1998.
Occidental is subject to certain financial covenants in instruments pertaining
to its long-term indebtedness which do not currently impose restrictions on
dividend policy. 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, 1995, Occidental sold
the following securities which were not initially registered under the
Securities Act of 1933, as amended (the "Act").
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, 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.
The securities described in the foregoing paragraph 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
18
21
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 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 and the
registration statement in respect of the Laurel shares has been withdrawn.
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 1997 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 1997 Annual Report.
19
22
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 17
through 54 and pages 56 through 64 of Occidental's 1997
Annual Report incorporated herein by reference):
Consolidated Statements of Operations.................. 29 --
Consolidated Balance Sheets............................ 30 --
Consolidated Statements of Stockholders' Equity........ 32 --
Consolidated Statements of Cash Flows.................. 33 --
Notes to Consolidated Financial Statements............. 34 --
Report of Independent Public Accountants............... 56 --
Quarterly Financial Data............................... 57 --
Supplemental Oil and Gas Information................... 59 --
Report of Independent Public Accountants.................... -- 21
Financial Statement Schedule:
II Valuation and Qualifying Accounts................... -- 22
20
23
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, 1997, incorporated
by reference in this Annual Report on Form 10-K, and have issued our report
thereon dated February 16, 1998. 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
February 16, 1998
21
24
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
- ----------------------------------------- ---------- ---------- ---------- ---------- ----------
1997
Allowance for doubtful accounts $ 24 $ 3 $ -- $ (3) $ 24
====== ====== ====== ====== ======
Environmental $ 562 $ 136 $ 6 $ (137)(a) $ 567
Foreign and other taxes, litigation
and other reserves 935 94 16 (143)(a) 902
------ ------ ------ ------ ------
$1,497 $ 230 $ 22 $ (280) $1,469(b)
- ----------------------------------------- ====== ====== ====== ====== ======
1996
Allowance for doubtful accounts $ 19 $ 12 $ -- $ (7) $ 24
====== ====== ====== ====== ======
Environmental $ 578 $ 100 $ 11 $ (127)(a) $ 562
Foreign and other taxes, litigation
and other reserves 931 65 24 (85)(a) 935
------ ------ ------ ------ ------
$1,509 $ 165 $ 35 $ (212) $1,497(b)
- ----------------------------------------- ====== ====== ====== ====== ======
1995
Allowance for doubtful accounts $ 17 $ 8 $ 1 $ (7) $ 19
====== ====== ====== ====== ======
Environmental $ 632 $ 21 $ 18 $ (93)(a) $ 578
Foreign and other taxes, litigation
and other reserves 953 140 50 (212)(a) 931
------ ------ ------ ------ ------
$1,585 $ 161 $ 68 $ (305) $1,509(b)
- ----------------------------------------- ====== ====== ====== ====== ======
(a) Primarily represents payments.
(b) Of these amounts, $170 million, $204 million and $207 million in 1997, 1996
and 1995, respectively, is classified as current.
22
25
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 May 1,
1998, Annual Meeting of Stockholders (the "1998 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 1998 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 1998 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 1998 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, as amended to date
(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, except for Exhibit 3.(i)(b) described below that
is attached to this report).
(b) Certificate of Amendment of Restated Certificate of
Incorporation of Occidental dated April 25, 1997.
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).
4.1 Occidental Petroleum Corporation Credit Agreement, dated as
of December 18, 1997.
- ---------------------------------------------
*Incorporated herein by reference.
23
26
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 10.45 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 May 14, 1997, between Occidental and J. Roger Hirl (filed as Exhibit 10.1 to
the Quarterly Report on Form 10-Q of Occidental for the quarterly period ended June 30, 1997, File No.
1-9210).
10.3* Employment Agreement, dated as of September 11, 1997, between Occidental and Dr. Ray R. Irani (filed as
Exhibit 10.1 to the Current Report on Form 8-K of Occidental dated October 6, 1997 (date of earliest
event reported), File No. 1-9210).
10.4* Receipt and Acknowledgment, dated September 11, 1997, of Dr. Ray R. Irani and Ghada Irani (filed as
Exhibit 10.2 to the Current Report on Form 8-K of Occidental dated October 6, 1997 (date of earliest
event reported), File No. 1-9210).
10.5* Employment Agreement, dated as of September 11, 1997, between Occidental and Dr. Dale R. Laurance (filed
as Exhibit 10.3 to the Current Report on Form 8-K of Occidental dated October 6, 1997 (date of earliest
event reported), File No. 1-9210).
10.6* Receipt and Acknowledgment, dated September 11, 1997, of Dr. Dale R. Laurance and Lynda E. Laurance
(filed as Exhibit 10.4 to the Current Report on Form 8-K of Occidental dated October 6, 1997 (date of
earliest event reported), File No. 1-9210).
10.7 Employment Agreement, dated as of November 13, 1997, between Occidental and John F. Riordan.
10.8 Employment Agreement, dated as of April 4, 1994, between Occidental and Stephen I. Chazen.
10.9 Indemnification Agreement made and entered into as of February 12, 1998, between Occidental and Stephen
I. Chazen.
10.10* 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).
10.11* 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).
10.12* 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).
10.13* 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).
10.14* 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).
- ---------------------------------------------
*Incorporated herein by reference.
24
27
10.15* 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).
10.16* 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).
10.17* 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).
10.18* 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).
10.19* 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).
10.20* 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).
10.21* 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).
10.22* 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).
10.23* 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).
10.24* 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).
10.25* 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).
10.26* 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).
10.27* 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).
10.28* 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).
- ---------------------------------------------
*Incorporated herein by reference.
25
28
10.29* 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).
10.30* 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).
10.31* 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).
10.32* 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).
10.33* 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).
10.34* 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).
10.35* 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).
10.36* 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).
10.37* 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).
10.38* 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).
10.39* 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).
10.40* 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).
10.41* 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).
10.42* 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.
26
29
10.43* Amendment No. 1 to MidCon Corp. Savings Plan (filed as
Exhibit 99.1 to Occidental's Registration Statement on Form
S-8, File No. 333-17879).
10.44* MidCon Corp. Supplemental Retirement Plan (effective as of
January 1, 1997).
10.45* Form of 1997 Performance Stock Option Agreement under the
1995 Incentive Stock Plan of Occidental Petroleum
Corporation (filed as Exhibit 10.2 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ended
June 30, 1997, File No. 1-9210).
10.46* Grant of option agreement, executed October 5, 1997, between
the Department of Energy and Occidental related to the
purchase of the U.S. Government's 78 percent interest in the
Elk Hills field (filed as Exhibit 10.1 to the Quarterly
Report on Form 10-Q of Occidental for the quarterly period
ended September 30, 1997, File No. 1-9210).
10.47* Stock Purchase Agreement dated as of December 18, 1997, by
and among Occidental, as seller, and KN Energy, Inc., as
buyer, together with the exhibits thereto (filed as Exhibit
10.1 to the Current Report on Form 8-K of Occidental dated
January 31, 1998 (date of earliest event reported), File No.
1-9210).
10.48* Amendment No. 1 to Stock Purchase Agreement dated January
30, 1998, between Occidental, as seller, and KN Energy,
Inc., as buyer, together with exhibit thereto (filed as
Exhibit 10.2 to the Current Report on Form 8-K of Occidental
dated January 31, 1998 (date of earliest event reported),
File No. 1-9210).
10.49* Supplemental Agreement dated as of January 20, 1998, by and
between Occidental and KN Energy, Inc., together with the
exhibits thereto (filed as Exhibit 10.3 to the Current
Report on Form 8-K of Occidental dated January 31, 1998
(date of earliest event reported), File No. 1-9210).
12 Statement regarding computation of total enterprise ratios
of earnings to fixed charges for the five years ended
December 31, 1997.
13 Pages 17 through 54 and pages 56 through 64 of Occidental's
Annual Report for the fiscal year ended December 31, 1997,
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, 1997.
23 Consent of Independent Public Accountants.
27.1 Financial data schedule of Occidental for the fiscal year
ended December 31, 1997 (included only in the copy of this
report filed electronically with the Securities and Exchange
Commission).
27.2 Financial data schedule of Occidental for the fiscal year
ended December 31, 1995 (included only in the copy of this
report filed electronically with the Securities and Exchange
Commission).
27.3 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).
27.4 Financial data schedule of Occidental for the three month
period ended March 31, 1996 (included only in the copy of
this report filed electronically with the Securities and
Exchange Commission).
27.5 Financial data schedule of Occidental for the six month
period ended June 30, 1996 (included only in the copy of
this report filed electronically with the Securities and
Exchange Commission).
27.6 Financial data schedule of Occidental for the nine month
period ended September 30, 1996 (included only in the copy
of this report filed electronically with the Securities and
Exchange Commission).
27.7 Financial data schedule of Occidental for the three month
period ended March 31, 1997 (included only in the copy of
this report filed electronically with the Securities and
Exchange Commission).
27.8 Financial data schedule of Occidental for the six month
period ended June 30, 1997 (included only in the copy of
this report filed electronically with the Securities and
Exchange Commission).
- ---------------------------------------------
*Incorporated herein by reference.
27
30
27.9 Financial data schedule of Occidental for the nine month period ended September 30, 1997 (included only
in the copy of this report filed electronically with the Securities and Exchange Commission).
(B) REPORTS ON FORM 8-K
During the fourth quarter of 1997, Occidental filed the following Current
Reports on Form 8-K:
1. Current Report on Form 8-K dated October 6, 1997 (date of earliest event
reported), filed on October 17, 1997, for the purpose of reporting, under Item
5, certain recent developments.
2. Current Report on Form 8-K dated October 16, 1997 (date of earliest
event reported), filed on October 17, 1997, for the purpose of reporting, under
Item 5, Occidental's results of operations for the third quarter ended September
30, 1997.
3. Current Report on Form 8-K dated December 18, 1997 (date of earliest
event reported), filed on December 31, 1997, for the purpose of reporting, under
Item 5, Occidental's disposition of MidCon Corp.
During the first quarter of 1998 to the date hereof, Occidental filed the
following Current Report on Form 8-K:
1. Current Report on Form 8-K dated January 26, 1998 (date of earliest
event reported), filed on January 27, 1998, for the purpose of reporting, under
Item 5, Occidental's results of operations for the fourth quarter and fiscal
year ended December 31, 1997.
2. Current Report on Form 8-K dated January 30, 1998 (date of earliest
event reported), filed on January 30, 1998, for the purpose of reporting, under
Item 5, the filing of restated financial statements for the fiscal year ended
December 31, 1996, and each of the fiscal quarters ended March 31, June 30 and
September 30, 1997, such restatement to reflect the treatment of MidCon Corp. as
a discontinued operation.
3. Current Report on Form 8-K dated January 31, 1998 (date of earliest
event reported), filed on February 10, 1998, for the purpose of reporting, under
Item 2, the acquisition of the Elk Hills field and the disposition of MidCon
Corp., and, under Item 5, certain recent developments.
4. Current Report on Form 8-K dated February 11, 1998 (date of earliest
event reported), filed on February 12, 1998, for the purpose of reporting, under
Item 5, Occidental's recently announced preferred stock redemption.
5. Current Report on Form 8-K dated February 12, 1998 (date of earliest
event reported), filed on February 26, 1998, for the purpose of reporting, under
Item 5, Occidental's announcement of a record date for its annual meeting.
28
31
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 26, 1998 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 26, 1998
- -------------------------------------------------------- Directors and Chief
Ray R. Irani Executive Officer
ANTHONY R. LEACH Executive Vice President March 26, 1998
- -------------------------------------------------------- and Chief Financial
Anthony R. Leach Officer
SAMUEL P. DOMINICK, JR. Vice President and March 26, 1998
- -------------------------------------------------------- Controller (Chief
Samuel P. Dominick, Jr. Accounting Officer)
JOHN S. CHALSTY Director March 26, 1998
- --------------------------------------------------------
John S. Chalsty
EDWARD P. DJEREJIAN Director March 26, 1998
- --------------------------------------------------------
Edward P. Djerejian
ALBERT GORE Director March 26, 1998
- --------------------------------------------------------
Albert Gore
ARTHUR GROMAN Director March 26, 1998
- --------------------------------------------------------
Arthur Groman
J. ROGER HIRL Director March 26, 1998
- --------------------------------------------------------
J. Roger Hirl
29
32
SIGNATURE TITLE DATE
--------- ----- ----
JOHN W. KLUGE Director March 26, 1998
- --------------------------------------------------------
John W. Kluge
DALE R. LAURANCE Director March 26, 1998
- --------------------------------------------------------
Dale R. Laurance
IRVIN W. MALONEY Director March 26, 1998
- --------------------------------------------------------
Irvin W. Maloney
GEORGE O. NOLLEY Director March 26, 1998
- --------------------------------------------------------
George O. Nolley
RODOLFO SEGOVIA Director March 26, 1998
- --------------------------------------------------------
Rodolfo Segovia
AZIZ D. SYRIANI Director March 26, 1998
- --------------------------------------------------------
Aziz D. Syriani
ROSEMARY TOMICH Director March 26, 1998
- --------------------------------------------------------
Rosemary Tomich
30
33
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, as amended to date
(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, except for Exhibit 3.(i)(b) described below that
is attached to this report).
(b) Certificate of Amendment of Restated Certificate of
Incorporation of Occidental dated April 25, 1997.
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).
4.1 Occidental Petroleum Corporation Credit Agreement, dated as
of December 18, 1997.
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 10.45 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 May 14, 1997, between Occidental
and J. Roger Hirl (filed as Exhibit 10.1 to the Quarterly
Report on Form 10-Q of Occidental for the quarterly period
ended June 30, 1997, File No. 1-9210).
10.3* Employment Agreement, dated as of September 11, 1997,
between Occidental and Dr. Ray R. Irani (filed as Exhibit
10.1 to the Current Report on Form 8-K of Occidental dated
October 6, 1997 (date of earliest event reported), File No.
1-9210).
10.4* Receipt and Acknowledgment, dated September 11, 1997, of Dr.
Ray R. Irani and Ghada Irani (filed as Exhibit 10.2 to the
Current Report on Form 8-K of Occidental dated October 6,
1997 (date of earliest event reported), File No. 1-9210).
10.5* Employment Agreement, dated as of September 11, 1997,
between Occidental and Dr. Dale R. Laurance (filed as
Exhibit 10.3 to the Current Report on Form 8-K of Occidental
dated October 6, 1997 (date of earliest event reported),
File No. 1-9210).
10.6* Receipt and Acknowledgment, dated September 11, 1997, of Dr.
Dale R. Laurance and Lynda E. Laurance (filed as Exhibit
10.4 to the Current Report on Form 8-K of Occidental dated
October 6, 1997 (date of earliest event reported), File No.
1-9210).
10.7 Employment Agreement, dated as of November 13, 1997, between
Occidental and John F. Riordan.
10.8 Employment Agreement, dated as of April 4, 1994, between
Occidental and Stephen I. Chazen.
10.9 Indemnification Agreement made and entered into as of
February 12, 1998, between Occidental and Stephen I. Chazen.
- ---------------------------------------------
* Incorporated herein by reference.
31
34
10.10* 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).
10.11* 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).
10.12* 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).
10.13* 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).
10.14* 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).
10.15* 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).
10.16* 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).
10.17* 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).
10.18* 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).
10.19* 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).
10.20* 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).
10.21* 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).
10.22* 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).
10.23* 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).
10.24* 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).
- ---------------------------------------------
* Incorporated herein by reference.
32
35
10.25* 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).
10.26* 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).
10.27* 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).
10.28* 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).
10.29* 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).
10.30* 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).
10.31* 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).
10.32* 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).
10.33* 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).
10.34* 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).
10.35* 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).
10.36* 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).
10.37* 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).
10.38* 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).
- ---------------------------------------------
* Incorporated herein by reference.
33
36
10.39* 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).
10.40* 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).
10.41* 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).
10.42* MidCon Corp. Savings Plan (filed as Exhibit 99.1 to
Occidental's Registration Statement on Form S-8, File No.
333-17879).
10.43* Amendment No. 1 to MidCon Corp. Savings Plan (filed as
Exhibit 99.1 to Occidental's Registration Statement on Form
S-8, File No. 333-17879).
10.44* MidCon Corp. Supplemental Retirement Plan (effective as of
January 1, 1997).
10.45* Form of 1997 Performance Stock Option Agreement under the
1995 Incentive Stock Plan of Occidental Petroleum
Corporation (filed as Exhibit 10.2 to the Quarterly Report
on Form 10-Q of Occidental for the quarterly period ended
June 30, 1997, File No. 1-9210).
10.46* Grant of option agreement, executed October 5, 1997, between
the Department of Energy and Occidental related to the
purchase of the U.S. Government's 78 percent interest in the
Elk Hills field (filed as Exhibit 10.1 to the Quarterly
Report on Form 10-Q of Occidental for the quarterly period
ended September 30, 1997, File No. 1-9210).
10.47* Stock Purchase Agreement dated as of December 18, 1997, by
and among Occidental, as seller, and KN Energy, Inc., as
buyer, together with the exhibits thereto (filed as Exhibit
10.1 to the Current Report on Form 8-K of Occidental dated
January 31, 1998 (date of earliest event reported), File No.
1-9210).
10.48* Amendment No. 1 to Stock Purchase Agreement dated January
30, 1998, between Occidental, as seller, and KN Energy,
Inc., as buyer, together with exhibit thereto (filed as
Exhibit 10.2 to the Current Report on Form 8-K of Occidental
dated January 31, 1998 (date of earliest event reported),
File No. 1-9210).
10.49* Supplemental Agreement dated as of January 20, 1998, by and
between Occidental and KN Energy, Inc., together with the
exhibits thereto (filed as Exhibit 10.3 to the Current
Report on Form 8-K of Occidental dated January 31, 1998
(date of earliest event reported), File No. 1-9210).
12 Statement regarding computation of total enterprise ratios
of earnings to fixed charges for the five years ended
December 31, 1997.
13 Pages 17 through 54 and pages 56 through 64 of Occidental's
Annual Report for the fiscal year ended December 31, 1997,
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, 1997.
23 Consent of Independent Public Accountants.
- ---------------------------------------------
* Incorporated herein by reference.
34
37
27.1 Financial data schedule of Occidental for the fiscal year ended December 31, 1997 (included only in the
copy of this report filed electronically with the Securities and Exchange Commission).
27.2 Financial data schedule of Occidental for the fiscal year ended December 31, 1995 (included only in the
copy of this report filed electronically with the Securities and Exchange Commission).
27.3 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).
27.4 Financial data schedule of Occidental for the three month period ended March 31, 1996 (included only in
the copy of this report filed electronically with the Securities and Exchange Commission).
27.5 Financial data schedule of Occidental for the six month period ended June 30, 1996 (included only in
the copy of this report filed electronically with the Securities and Exchange Commission).
27.6 Financial data schedule of Occidental for the nine month period ended September 30, 1996 (included only
in the copy of this report filed electronically with the Securities and Exchange Commission).
27.7 Financial data schedule of Occidental for the three month period ended March 31, 1997 (included only in
the copy of this report filed electronically with the Securities and Exchange Commission).
27.8 Financial data schedule of Occidental for the six month period ended June 30, 1997 (included only in
the copy of this report filed electronically with the Securities and Exchange Commission).
27.9 Financial data schedule of Occidental for the nine month period ended September 30, 1997 (included only
in the copy of this report filed electronically with the Securities and Exchange Commission).
35