LOS ANGELES, March 8, 2000 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) said today it has agreed to acquire all of the common interest in the Altura Energy Ltd. Partnership - the largest oil producer in the state of Texas. Altura has proved reserves of approximately 850 million barrels of oil equivalent.
Occidental will invest approximately $1.2 billion to acquire common equity in the partnership and become the managing general partner controlling 100 percent of the Altura assets. The partnership will borrow approximately $2.4 billion, which will be recourse only to the Altura assets. The transaction is valued at approximately $3.6 billion. The sellers, BP Amoco and Shell, will retain a limited preferred interest in the partnership and issue $2 billion in long-term notes to the partnership that will provide the partnership with additional credit support.
Dr. Ray R. Irani, Occidental's chairman and chief executive officer, said, "Creative, non-recourse project financing of this acquisition assures that we can accomplish our primary objective of achieving significant earnings growth and enhanced shareholder value without issuing stock or entering the long-term debt markets. Accordingly, we expect to maintain our investment grade credit ratings. Furthermore, the recently announced sale of our equity interest in Canadian Occidental Petroleum for $700 million in net after-tax proceeds already has raised nearly 60 percent of $1.2 billion we will invest in Altura. The remaining $500 million will be funded by the sale of various non-strategic assets before yearend."
"Based on the NYMEX oil price strip, we expect this transaction to add $0.50 per share to Oxy's 2000 earnings after accounting for all costs associated with the acquisition," Dr Irani said. "This strategic acquisition not only immediately increases our earnings per share and cash flow, but will do so over a range of energy prices. Moreover, the recently announced CanOxy stock sale will improve annual recurring earnings by an additional $0.08 per share."
The Altura transaction is expected to close in April.
As a result of the acquisition, Occidental's worldwide oil production will rise immediately to 417,000 barrels per day, a 36 percent increase above the average for 1999. The addition of 9 months of Altura production in 2000 will increase Occidental's average daily oil output this year to approximately 385,000 barrels, nearly 80,000 barrels per day higher than last year. In addition, Occidental's worldwide proved reserves will increase by 63 per cent to approximately 2.2 billion barrels, on an oil-equivalent basis.
Altura, a limited partnership formed in 1997 between BP Amoco and Shell, is a low-cost producer in the Permian Basin with stable production and long-lived reserves with a reserves-to-production ratio of nearly 18 years.
Approximately 95 percent of Altura's proved reserves are made up of oil and natural gas liquids and one-half of those reserves are in two fields (Wasson and Slaughter/Levelland).
On an oil-equivalent basis Occidental's worldwide 1999 production averaged 425,000 barrels per day, including 306,000 barrels of liquids and 714 million cubic feet of natural gas. Proved reserves at year-end 1999 were 1.35 billion barrels of oil equivalent comprised of 1,037 million barrels of liquids and 1,892 billion cubic feet of natural gas.
A conference call will be held today beginning at 9:00 am (EST) to discuss Occidental's acquisition of Altura. The call will include comments given by Dr. Ray R. Irani, Chairman and Chief Executive Officer, Dr. Dale R. Laurance, President of Occidental Petroleum and Chief Executive Officer of Occidental Oil and Gas Corp., and Steve Chazen, Chief Financial Officer and Executive Vice President Corporate Development. These comments will be followed by a question and answer period. The number to dial is 1-800-865-4460. International callers, the number to dial is (973) 628-7055. Instant replay of the call will be available until March 17, 2000. The instant replay number for domestic callers is 888-305-9474, the international number to dial is (402) 220-2852.
To view the data presentation to be used in the conference call, go to http://www.oxy.com.
Note: This press release may contain forward-looking statements that reflect management's expectations and are based upon data available at the time. Actual results are subject to future events and uncertainties that could materially impact performance. -0-