LOS ANGELES, Feb. 5, 2007 (PRIME NEWSWIRE) -- Occidental Petroleum Corporation (NYSE:OXY) announced today that in 2006 the company's consolidated subsidiaries had preliminary proved reserve additions from all sources of 518 million barrels of oil equivalent (BOE) compared to production of 211 million BOE, for a production replacement rate of 245 percent. Occidental incurred $8.83 billion in costs for oil and gas property acquisitions and exploration and development activities. Included in the 2006 acquisitions cost is a related step-up for deferred income taxes of $1.34 billion for the purchase of Vintage Petroleum Inc. There was no goodwill recorded for this acquisition. At the end of 2006, Occidental's consolidated reserves-to-production ratio, assuming production remained at the 2006 level, was 13.6 years.
At year-end 2006, Occidental's worldwide proved reserves, on a consolidated basis, totaled 2.87 billion BOE compared to 2.57 billion BOE at the end of 2005.
The 2006 consolidated proved reserve additions totaled 518 million BOE. Acquisitions provided 63%, improved recovery 27%, extensions and discoveries 7% and revisions of previous estimates provided 3% of the total proved reserve additions.
Purchases of proved reserves added 326 million BOE, of which 143 million BOE were in the United States and 178 million BOE were in Latin America. The Vintage acquisition added proved reserves of 160 million BOE in Argentina and 8 million BOE in Bolivia with the remainder in the United States and Yemen, of which 66 percent were proved developed reserves.
Improved recovery added 141 million BOE of proved reserves. In the United States, improved recovery additions in the Permian Basin were 43 million BOE and in the Elk Hills field were 28 million BOE. Additions were 23 million BOE in Argentina and 11 million BOE in Colombia. Occidental has successfully implemented programs which include gas flood and water flood techniques as well as infill drilling and expansion of CO2 floods.
Reserve additions from extensions and discoveries, which result from successful exploitation programs, totaled 34 million BOE. These additions were 13 million BOE in the United States, 14 million BOE in the Middle East, and 7 million BOE in Argentina. Revisions of previous estimates added net reserves of 17 million BOE.
In 2006, Occidental increased proved developed reserves to 78 percent of total proved reserves from 74 percent at year-end 2005. The Dolphin project transferred 134 million BOE to the proved developed category during 2006, with 132 million BOE undeveloped reserves remaining at December 31, 2006 for this project. In the United States, the Elk Hills field transferred 56 million BOE and the Permian Basin transferred 33 million BOE into proved developed reserves from undeveloped.
For the three-year period, 2004-2006, Occidental's consolidated proved reserve additions totaled 1.141 billion BOE, and total production equaled 575 million BOE, for a reserve replacement rate of 198 percent. Over the past three years, Occidental incurred $14.76 billion in costs for property acquisitions and exploration and development activities, which includes the step-up for deferred income taxes of $1.34 billion for the purchase of Vintage Petroleum Inc. As a result of the seizure of the Ecuador Block 15 assets in May 2006, Occidental has classified its Block 15 operations as discontinued operations on a retrospective application basis. Disclosures in this press release are for continuing operations as of December 31, 2006; accordingly, Ecuador reserves and costs have been excluded.
Occidental also had investments in other interests that recorded 7 million BOE of proved reserve reductions in 2006 compared to production of 8 million BOE. These interests accounted for 30 million BOE of proved reserves at year-end 2006, compared to 45 million BOE at the end of 2005. On January 18, 2007, Occidental closed the sale of its 50-percent interest in the Russian Vanyoganneft Joint Venture in western Siberia to TNK-BP. The Russian Vanyoganneft Joint Venture proved reserves at year-end 2006 were 33 million BOE and costs incurred during 2006 were $26 million. These amounts have not been removed from the presentation of 2006 reserve numbers in this release.
During 2004-2006, proved reserve additions from the other interests were 5 million BOE, and production totaled 25 million BOE. During this three-year period, the costs incurred for property acquisitions and exploration and development activities for these other interests totaled $44 million.
Forward-Looking Statements
Statements in this release that contain words such as "will," "expect" or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause results to differ materially include, but are not limited to: exploration risks such as drilling of unsuccessful wells, global commodity pricing fluctuations and supply/demand considerations for oil, gas and chemicals; higher than expected costs; political risks; changes in tax rates; unrealized acquisition benefits or higher than expected integration costs; and not successfully completing (or any material delay in) any expansion, capital expenditure, acquisition or disposition. You should not place undue reliance on these forward-looking statements which speak only as of the date of this 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. U.S. investors are urged to consider carefully the disclosure in our Form 10-K, available through 1-888-699-7383 or at www.oxy.com. You also can obtain a copy from the SEC by calling 1-800-SEC-0330.
OIL AND GAS PRELIMINARY RESERVES
The following table sets forth Occidental's net interests in quantities of proved developed and undeveloped reserves of crude oil, condensate and natural gas, and changes in such quantities. Crude oil reserves (in millions of barrels) include condensate. Natural gas volumes (in billion cubic feet) have been converted to barrels of oil equivalent (BOE) based on energy content of 6,000 cubic feet of gas to one barrel of oil.
Consolidated Other
Subsidiaries Interests
----------------- -----------------
(million BOE) Oil Gas BOE Oil Gas BOE
=============================== ===== ===== ===== ===== ===== =====
PROVED DEVELOPED AND UNDEVELOPED
RESERVES
Balance at December 31, 2003 1,884 2,585 2,316 48 9 50
Revisions of previous estimates 8 241 48 5 (9) 3
Improved recovery 88 185 120 1 -- 1
Extensions and discoveries 12 191 43 2 -- 2
Purchases of proved reserves 39 7 40 (4) -- (4)
Sales of proved reserves -- (1) -- -- -- --
Production (142) (233) (181) (9) -- (9)
------------------------------- ----- ----- ----- ----- ----- -----
Balance at December 31, 2004 1,889 2,975 2,386 43 -- 43
Revisions of previous estimates (18) 30 (13) 8 6 9
Improved recovery 107 131 129 -- -- --
Extensions and discoveries 46 427 117 1 -- 1
Purchases of proved reserves 112 164 139 -- -- --
Sales of proved reserves (8) (3) (9) -- -- --
Production (142) (246) (183) (7) (6) (8)
------------------------------- ----- ----- ----- ----- ----- -----
Balance at December 31, 2005 1,986 3,478 2,566 45 -- 45
Revisions of previous estimates 22 (28) 17 (7) 8 (6)
Improved recovery 118 136 141 (1) -- (1)
Extensions and discoveries 24 59 34 -- -- --
Purchases of proved reserves 254 435 326 -- -- --
Sales of proved reserves (4) (2) (4) -- -- --
Production (166) (268) (211) (7) (8) (8)
------------------------------- ----- ----- ----- ----- ----- -----
Balance at December 31, 2006 2,234 3,810 2,869 30 -- 30
=============================== ===== ===== ===== ===== ===== =====
PROVED DEVELOPED RESERVES (a)
December 31, 2003 1,543 1,803 1,844 35 9 37
=============================== ===== ===== ===== ===== ===== =====
December 31, 2004 1,539 1,839 1,846 37 -- 37
=============================== ===== ===== ===== ===== ===== =====
December 31, 2005 1,558 1,999 1,891 37 -- 37
=============================== ===== ===== ===== ===== ===== =====
December 31, 2006 1,788 2,718 2,241 23 -- 23
=============================== ===== ===== ===== ===== ===== =====
(a) Approximately four percent of the proved developed oil reserves
and approximately 22 percent of the proved developed gas reserves at
December 31, 2006 are non-producing. Plans are to begin producing
these reserves in 2007.
PRELIMINARY COSTS INCURRED
Occidental's 2006, 2005 and 2004 costs incurred in oil and gas property acquisition, exploration and development activities, whether capitalized or expensed, were as follows:
Consolidated Other
(in millions) Subsidiaries Interests (c)
=============================== ================= =================
FOR THE YEAR ENDED
DECEMBER 31, 2006
Property Acquisition Costs (a)
Proved Properties $ 4,899 $ --
Unproved Properties 1,142 --
Exploration Costs 315 1
Development Costs 2,470 32
------- -------
Costs Incurred (b) $ 8,826 $ 33
================================ ======= =======
FOR THE YEAR ENDED
DECEMBER 31, 2005
Property Acquisition Costs
Proved Properties $ 1,782 $ --
Unproved Properties 398 --
Exploration Costs 244 (2)
Development Costs 1,846 15
------- -------
Costs Incurred (b) $ 4,270 $ 13
================================ ======= =======
FOR THE YEAR ENDED
DECEMBER 31, 2004
Property Acquisition Costs
Proved Properties $ 158 $ (12)
Unproved Properties 8 --
Exploration Costs 137 --
Development Costs 1,361 10
------- -------
Costs Incurred (b) $ 1,664 $ (2)
================================ ======= =======
(a) Includes acquisition costs and related step-up for deferred
income taxes of $1.34 billion for the purchase of Vintage Petroleum
Inc. There was no goodwill recorded for this acquisition.
(b) Excludes capitalized CO2 of $64 million in 2006, $59 million in
2005 and $54 million in 2004.
(c) Includes equity investees' costs in Russia (sold in 2007) and
Yemen, partially offset by minority interests in a Colombian
affiliate.
PRELIMINARY 5-YEAR DATA
CONSOLIDATED SUBSIDIARIES
Reserve Costs
Additions Production Incurred
(Million BOE) (Million BOE) ($ Millions)
========= ============= ============= ============
2002 234 175 1,115
2003 340 181 1,498
2004 251 181 1,664
2005 372 183 4,270
2006 518 211 8,826*
3-Year
Average 380 192 4,920
5-Year
Average 343 186 3,475
Reserves Replacement
(Million BOE)
Improved Extensions
Revisions Recovery Discoveries Acquisitions Total
========= ========= ========== =========== ============ =====
2002 (8) 137 39 66 234
2003 6 97 130 107 340
2004 48 120 43 40 251
2005 (13) 129 117 139 372
2006 17 141 34 326 518
3-Year
Average 17 130 65 168 380
5-Year
Average 10 125 72 136 343
Costs Incurred
($ Millions)
Exploration Development
Acquisitions Costs Costs Total
========= ============ ============ ============ =====
2002 192 109 814 1,115
2003 368 88 1,042 1,498
2004 166 137 1,361 1,664
2005 2,180 244 1,846 4,270
2006 6,041 315 2,470 8,826*
3-Year
Average 2,796 232 1,892 4,920
5-Year
Average 1,789 179 1,507 3,475
*Includes acquisition costs and related step-up for deferred
income taxes of $1.34 billion for the purchase of Vintage Petroleum
Inc. There was no goodwill recorded for this acquisition.