LOS ANGELES--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced today it has
agreed to acquire, by means of a merger, Vintage Petroleum, Inc.
(NYSE:VPI) for $20.00 per Vintage share in cash, plus 0.42 Occidental
shares per Vintage share. The total purchase consideration for Vintage's
approximately 68.3 million shares on a fully diluted basis, including
debt assumption net of cash, is approximately $3.8 billion. As part of
this transaction, Oxy plans to implement a stock re-purchase program for
9 million Oxy shares in the open market or otherwise, from time-to-time,
subject to market conditions and retention of the company's credit
Materials accompanying this press release are available at
"Vintage Petroleum is an excellent strategic fit for Oxy, adding to our
core areas in California, the Middle East and Latin America," said Dr.
Ray R. Irani, Chairman, President and Chief Executive Officer of
Occidental Petroleum Corporation. "On a per share basis, we expect the
acquisition to be immediately accretive to cash flow, free cash flow and
earnings. At the end of 2004, Vintage had proved reserves of 437 million
barrels of oil equivalent, 50 percent of which were located in Argentina
and 32 percent in the U.S. In addition, according to reports prepared
for Vintage, the company had 421 million equivalent barrels of probable
and possible reserves. During the second quarter of 2005, Vintage's
total production averaged approximately 76,000 equivalent barrels per
day, with Argentina and California contributing 37,000 and 11,000
equivalent barrels per day, respectively. We hope to double Vintage's
production from Argentina within five years as well as increase
production from California by up to 20 percent over the next few years."
Vintage's operating assets in Argentina and California provide
opportunities to increase production and reserves through the
application of enhanced oil recovery and exploitation techniques Oxy has
employed successfully in other operations. Oxy will incorporate
Vintage's California assets into its nearby operations in the southern
San Joaquin Valley and in the Sacramento Valley. Oxy also will integrate
Vintage's Latin American assets into its existing position in Latin
America, where it is one of the largest producers in Colombia and
Ecuador, with combined second quarter 2005 net production of 70,000
barrels of oil per day.
Vintage's second quarter production in Yemen averaged nearly 4,000
barrels of oil per day, and its assets, which are contiguous to Oxy's
existing operations, offer attractive opportunities for future growth
and operational synergies.
In announcing the acquisition, Oxy indicated its interest in divesting
non-strategic Vintage assets located in East Texas, along the Gulf Coast
and in the Mid-Continent region. These assets accounted for
approximately 19,000 equivalent barrels per day of Vintage's second
quarter 2005 production.
At the end of 2004, Oxy had total proved reserves from all sources of
2.53 billion equivalent barrels. The addition of Vintage's proved
reserves is expected to increase Oxy's reserves to a record high of
approximately 3 billion equivalent barrels and extend Oxy's reserve life
at current production levels from 12.2 years to 12.7 years.
Oxy expects to continue growing both reserves and production from the
Vintage assets it retains through a capital program with estimated
spending in the range of $150 million to $200 million annually. In
addition, Oxy expects to realize significant synergies with G&A expense
reductions of $40 to $60 million per year and exploration capital
expense reductions of about $100 million per year.
Oxy expects to finance the acquisition and the stock re-purchase program
from $1.7 billion of cash on hand as of September 30, 2005, plus
additional cash generated in the fourth quarter. In addition, Vintage is
expected to have approximately $225 million in cash at year-end 2005,
and Oxy will be assuming $550 million of Vintage debt.
The Vintage transaction is expected to close in the first quarter of
2006, subject to regulatory approvals. Goldman, Sachs & Co. and Petrie
Parkman & Co. provided fairness opinions to Oxy's Board of Directors.
Supplemental information on the acquisition will be available at www.oxy.com
through the Investor Relations section, concurrent with the SEC filing.
Additional Information and Where to Find It
Oxy will file a Form S-4, Vintage will file a proxy statement and both
companies will file other relevant documents concerning the proposed
merger transaction with the Securities and Exchange Commission (SEC).
INVESTORS ARE URGED TO READ THE FORM S-4 AND PROXY STATEMENT WHEN THEY
BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to
obtain the documents free of charge at the website maintained by the SEC
In addition, you may obtain documents filed with the SEC by Oxy free of
charge by contacting Christel Pauli, Counsel and Assistant Secretary,
Occidental Petroleum Corporation, at 10889 Wilshire Blvd., Los Angeles,
California 90024. The documents will also be available online at www.oxy.com.
Participants in Solicitation
Oxy, Vintage and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from Vintage
shareholders in connection with the merger. Information about the
directors and executive officers of Oxy and their ownership of Oxy stock
is set forth in the proxy statement for Oxy 2005 Annual Meeting of
Shareholders. Information about the directors and executive officers of
Vintage and their ownership of Vintage stock is set forth in the proxy
statement for Vintage's 2005 Annual Meeting of Shareholders. Investors
may obtain additional information regarding the interests of such
participants by reading the Form S-4 and proxy statement for the merger
when they become available.
Investors should read the Form S-4 and proxy statement carefully when
they become available before making any voting or investment decisions.
The matters set forth in this press release, including statements as to
the expected benefits of the acquisition such as efficiencies, cost
savings, financial strength, and the competitive ability and position of
the combined company, and other statements identified by such words as
"will," "estimates," "expects," "hopes," "projects," "plans," and
similar expressions are forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements involve risks and
uncertainties that could significantly affect expected results,
including a delay in or failure to obtain required approvals, the
possibility that the anticipated benefits from the acquisition cannot be
fully realized, the possibility that costs or difficulties related to
the integration will be greater than expected, the ability to manage
regulatory, tax and legal matters, including changes in tax rates, the
impact of competition, and other risk factors related to our industries
as detailed in each of Oxy's and Vintage's reports filed with the SEC.
You should not place undue reliance on these forward-looking statements,
which speak only as of the date of this press release. Unless legally
required, Oxy undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. Actual results may differ from those set
forth in the forward-looking statements.
The SEC limits the ability of oil and natural gas companies, in their
filings with the SEC, to disclose reserves other than proved reserves
demonstrated by actual production or conclusive formation tests to be
economically producible under existing economic and operating
conditions. We use certain terms in this press release, such as
probable, possible and recoverable reserves, that the SEC's guidelines
limit in filings with the SEC.
Information contained in this press release regarding Vintage's
production, reserves, results, assets and other information has been
taken from Vintage's public filings with the SEC. Oxy makes no
representation with respect to the accuracy of this information.