Full Description

Occidental Petroleum Corporation (Occidental) conducts its operations, through various oil and gas, chemical, midstream, marketing and other subsidiaries, and affiliates. The Company operates in three business segments: oil and gas segment, chemical segment, and midstream, marketing and other segment. The oil and gas segment explores for, develops, produces and markets crude oil, natural gas liquids (NGLs), condensate and natural gas. The chemical segment (OxyChem) manufactures and markets basic chemicals, vinyls and performance chemicals. The midstream, marketing and other segment (midstream and marketing) gathers, treats, processes, transports, stores, trades and markets crude oil, natural gas, NGLs, condensate and carbon dioxide (CO2) and generates and markets power. In February 2008, Occidental purchased from Plains a 50% interest in oil and gas properties in the Permian Basin and western Colorado.

Oil and gas operations

Occidental’s domestic oil and gas operations are located in Texas, New Mexico, California, Kansas, Oklahoma, Utah and Colorado. International operations are located in Argentina, Bolivia, Colombia, Libya, Oman, Qatar, the UAE and Yemen. The Permian Basin extends throughout southwest Texas and southeast New Mexico. Occidental is the producer of crude oil in the Permian Basin with an approximate 16% net share of the total production. Occidental also produces and processes natural gas and NGLs in the Permian Basin. During the year ended December 31, 2008, Occidental’s total share of Permian Basin oil and gas production was approximately 198,000 barrels of oil equivalent (BOE) per day. In 2008, Occidental's Permian Basin properties had 1.1 billion BOE in proved reserves. In 2008, Wasson San Andres was Occidental's Permian producing field with approximately 35,000 BOE per day of production and 277 million BOE of proved reserves at year-end. This field represents approximately 18% of Occidental's 2008 daily Permian Basin production and 25% of its year-end Permian Basin proved reserves.

Occidental’s interests in the Permian Basin offer additional development and exploitation potential. During 2008, Occidental drilled approximately 280 wells on its operated properties and participated in additional wells drilled on third-party-operated properties. Occidental conducted development activity on 11 carbon dioxide (CO2) projects during 2008, including implementation of new floods and expansion of existing CO2 floods.

Occidental's California operations consist of Elk Hills, THUMS, Tidelands and other interests in the Ventura, San Joaquin and Sacramento basins. Occidental's interest at Elk Hills includes the Elk Hills oil and gas field in the southern portion of California’s San Joaquin Valley, which it operates with an approximately 78% interest, and other adjacent properties. The Elk Hills field is the producer of gas in California. Oil and gas production in 2008 from the Elk Hills properties was approximately 84,000 BOE per day. During 2008, Occidental continued to perform infill drilling, field extensions and recompletions identified by advanced reservoir characterization techniques, resulting in 275 new wells being drilled and 550 wells being worked over. In 2008, the Elk Hills properties had an estimated 491 million BOE of proved reserves.

Occidental owns interests in California properties in the Ventura, San Joaquin and Sacramento basins, other than Elk Hills. The combined properties produce oil and gas from more than 50 fields. Oil and gas production from these properties in 2008 was approximately 24,000 BOE per day. At the end of 2008, the combined properties had an estimated 118 million BOE of proved reserves.

Occidental owns 739,000 acres in a large concentration of gas reserves, production interests and royalty interests in Kansas and Oklahoma where it drilled 87 Company-operated wells in 2008. Occidental also has over 77,000 net acres in western Colorado, including the properties acquired in 2008 from Plains where it drilled 68 Company-operated wells in 2008.

In 2008, Occidental’s Midcontinent and Rockies operations produced approximately 35,000 BOE per day. At December 31, 2008, proved reserves for these operations totaled 250 million BOE.

Occidental's investment in the Dolphin Project consists of two separate economic interests through which Occidental owns a 24.5% undivided interest in the assets and liabilities associated with a development and production sharing agreement (DPSA) with the Government of Qatar to develop and produce natural gas and NGLs in Qatar’s North Field for 25 years from the start of production, with a provision to request a 5-year extension, and a 24.5% interest in the stock of Dolphin Energy Limited (Dolphin Energy).

Dolphin Energy is the operator under the DPSA and owns and operates a 230-mile-long, 48-inch natural gas pipeline (Dolphin Pipeline), which transports dry natural gas from Qatar to the UAE. In 2008, Occidental’s share of proved oil and gas reserves from the Dolphin Project was 298 million BOE. In addition to its participation in the Dolphin Project, Occidental operates three offshore projects in Qatar: Idd El Shargi North Dome (ISND) and Idd El Shargi South Dome (ISSD), with a 100% working interest in each, and Al Rayyan (Block 12), with a 92.5% working interest. Additionally, Occidental holds a 92.5% working interest in the Block 13 exploration block.

Occidental owns contractual interests in three producing blocks in Yemen, including a 38% direct-working interest in the Masila field, a 40.4% interest in the East Shabwa field, including an 11.8% equity interest in an unconsolidated entity, and a 75% working interest in Block S-1. In addition, Occidental owns a 75% working interest in Block 75. Occidental's share of production from the Yemen properties was 21,000 BOE per day in 2008. Proved reserves for these properties totaled 28 million BOE in 2008.

In Oman, Occidental is the operator of Block 9 and Block 27, with a 65% working interest in each, Block 53, with a 45% working interest, Block 54, with a 70% working interest and Block 62, with a 48% working interest. Occidental's share of production from the Oman properties was approximately 27,000 BOE per day and the proved reserves totaled 142 million BOE in 2008.

In 2008, Occidental’s share of production was approximately 15,000 BOE per day in Libya. The proved reserves for Occidental’s Libya assets totaled 28 million BOE in 2008. In October 2008, Occidental announced the signing of the preliminary agreement with Abu Dhabi National Oil Company to appraise and develop the Jarn Yaphour and Ramhan oil and gas fields in the Emirate of Abu Dhabi.

The Argentina assets consist of 23 concessions located in the San Jorge Basin in southern Argentina and the Cuyo Basin and Neuquén Basin in western Argentina. Occidental operates 20 of the concessions with a 100% working interest. During 2008, Occidental drilled 162 new wells and performed a number of recompletions and well repairs. Occidental’s share of production from Argentina was approximately 36,000 BOE per day in 2008. Proved reserves from these assets totaled 160 million BOE in 2008. During 2008, Occidental completed two workovers in Naranjillos Field in Bolivia.

Occidental is the operator under four contracts within the Llanos Norte Basin: the Cravo Norte, Rondón, Cosecha, and Chipirón Association Contracts. Occidental’s working interests under the four contracts are 42%, 44%, 53% and 61% respectively. Colombia's national oil company, Ecopetrol, operates the Caño Limón-Coveñas oil pipeline and marine-export terminal. The pipeline transports oil produced from the Llanos Norte Basin for export to international markets. Occidental's share of 2008 production from its Colombia operations was approximately 37,000 BOE per day and proved reserves for these interests totaled 85 million BOE in 2008. In 2008, Occidental added reserves of 247 million BOE through improved recovery.

Chemicals segment

The chemical segment (OxyChem) manufactures and markets basic chemicals, vinyls and performance chemicals. OxyChem owns and operates manufacturing plants at 21 domestic sites in Alabama, Georgia, Illinois, Kansas, Louisiana, New Jersey, New York, Ohio, Pennsylvania and Texas and at three international sites in Brazil, Canada and Chile. The basic chemicals manufactured by the Company include chlorine, caustic soda, chlorinated organics, potassium chemicals and ethylene dichloride (EDC). The vinyls manufactured by the Company include vinyl chloride monomer (VCM) and polyvinyl chloride (PVC). The performance chemicals manufactured by the Company include chlorinated isocyanurates, resorcinol and sodium silicates.

Midstream, marketing and other segment

The midstream and marketing segment gathers, treats, processes, transports, stores, trades and markets crude oil, natural gas, NGLs, condensate and CO2 and generates and markets power. The Company’s gas plants are at California, Colorado and Permian Basin.