LOS ANGELES--(BUSINESS WIRE)--Occidental
Petroleum Corporation (NYSE:OXY) today announced the next phase of
its strategic review. The Board of Directors has authorized the
separation of Occidental’s California assets into an independent and
separately traded company. (See
The new California company will have 8,000 employees and contractors and
will establish its headquarters in the state. It will be California’s
largest natural gas producer and the state’s largest oil and gas
producer on a gross-operated barrels of oil equivalent basis. This new
company will be the largest oil and gas mineral acreage holder in the
state with approximately 2.3 million net acres, and will have major
operations in the state’s high-potential oil and gas basins, including
Los Angeles, San Joaquin, Ventura and Sacramento. Last year the
California business earned approximately $1.5 billion on a pre-tax
basis. Earnings before income, taxes, depreciation and amortization were
around $2.6 billion with capital expenditures of approximately $1.7
billion. Due to these strong results, capital expenditures planned for
2014 were increased to $2.1 billion. The company is expected to have a
strong and competitive balance sheet with between $4 billion and $5
billion of funded debt.
Occidental Petroleum Corporation will be headquartered in Houston,
Texas. It will have exploration and production operations in the Permian
Basin and other parts of Texas, the Middle East region and Colombia. It
will also have a midstream and marketing segment and a chemical
subsidiary, OxyChem. Each of these segments is a leader in its
respective sector. The company believes that it will be better
positioned to continue its strategy of generating growth with strong
returns on capital and consistently increasing its dividend. Consistent
with Occidental’s strategic review to focus in core businesses, it also
plans to reduce its exposure to proprietary trading activities related
to crude oil and other commodities.
“Creating two separate energy companies will result in more focused
businesses that will be competitive industry leaders,” said Stephen I.
Chazen, President and Chief Executive Officer.
The Board also announced that Mr. Chazen has been asked to remain as
President and CEO to lead the successful completion of the strategic
review and ensure a suitable management team is in place for Occidental.
He has agreed to do so through the 2016 Annual Meeting of Stockholders.
The Board also has asked Ambassador Edward P. Djerejian, who was elected
as Chairman of the Board last May, to remain as Chairman for an
additional one-year term.
“The Board believes that these extensions are in the best interests of
Occidental’s shareholders and will provide governance and management
continuity,” said Director Margaret M. Foran, Chair of the Board’s
Corporate Governance, Nominating and Social Responsibility Committee.
Occidental will continue planning for the separation of the businesses,
including determining management and governance of the California
business. The Company expects to announce the California management team
in the third quarter of this year and complete the separation by the end
of 2014 or the early part of 2015.
The separation is subject to market conditions, customary regulatory
approvals including the sufficiency of a Form 10 filing with the SEC,
execution of intercompany agreements, acceptance of the new company’s
stock for listing and final approval by the Board of Directors.
Occidental expects to incur one-time charges related to the separation,
which will be quantified at a later date.
The Company is executing the actions announced in October 2013 and will
continue to disclose material developments as they occur.
Petroleum Corporation is an international oil and gas exploration
and production company with operations in the United States, Middle
East/North Africa and Latin America regions. Oxy is one of the largest
U.S. oil and gas companies, based on equity market capitalization. Oxy's
wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali
products and vinyls. Oxy is committed to safeguarding the environment,
protecting the safety and health of employees and neighboring
communities and upholding high standards of social responsibility in all
of the company's worldwide operations.
Portions of this press release contain forward-looking statements and
involve risks and uncertainties that could materially affect expected
results of operations, liquidity, cash flows and business
prospects. Actual results may differ from anticipated results sometimes
materially, and reported results should not be considered an indication
of future performance. Factors that could cause results to differ
materially include, but are not limited to: delay of, or other negative
developments affecting the separation; inability to obtain new financing
for the California company, regulatory approvals or satisfactory tax
rulings; approval of the final terms by our board of directors;
inability of the separated businesses to operate independently; not
successfully completing, or any material delay of, field developments,
capital expenditures, efficiency projects, acquisitions or dispositions;
lower-than-expected production from development projects or
acquisitions; exploration risks; political conditions and events;
liability under environmental regulations including remedial actions;
litigation; disruption or interruption of operations or manufacturing or
facility damage due to separation activity, accidents, chemical
releases, labor unrest, weather, natural disasters, cyber attacks or
insurgent activity; failure of risk management; changes in law or
regulations; or changes in tax rates. Words such as “will,” “plan,”
“expect,” or similar expressions that convey the prospective nature of
events or outcomes generally indicate forward-looking statements. 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, Occidental does not undertake any obligation to update any
forward-looking statements, as a result of new information, future
events or otherwise. Material risks that may affect Occidental's results
of operations and financial position appear in Part I, Item 1A “Risk
Factors” of the 2012 Form 10-K. Occidental posts or provides links to
important information on its website at www.oxy.com.