Sammelthread zu Occidental Petroleum - 500 Beiträge pro Seite

[yatri]

Hallo OXY-Aktionäre,
hier eröffnet sich jetzt ein dt. Sammelbecken für alle Infos rund um Occidental Petroleum.

und ich stell schon mal was rein:

OCCIDENTAL PETROLEUM
Werte in $
Umsatz ca 18 Mrd US-$
Aktienanzahl 370,5 Mio.
Earn/Shr 4.88
P/E 6.04
Mkt Cap 10.933 Mrd. US-$
Dividende 1,00 $ im Jahr

Valuation Ratios
Price/Book (mrq) 2.13
Price/Earnings (ttm) 6.04
Price/Sales (ttm) 0.71

Business Summary
Occidental Petroleum Corp. is a multinational organization whose principal business segments are oil and gas exploration, production and marketing and chemicals production and marketing. Occidental conducts its operations through various oil and gas and chemical subsidiaries and affiliates. In oil and gas, Occidental has active exploration and production in the United States and in 10 other countries. Occidental`s OxyChem subsidiary has interests in basic chemicals (principally chlorine and caustic soda), vinyls, petrochemicals and specialty products. Occidental also has an interest in petrochemicals through its 29.5% ownership in Equistar Chemicals, LP.
More from Market Guide: Expanded Business Description

Financial Summary
OXY explores for, develops, produces and markets crude oil and gas; and manufactures and markets a variety of basic chemicals, polymers and plastics, specialty chemicals and petrochemicals. For the three months ended 3/31/01, total revenues rose 74% to $4.48 billion. Net income applicable to Common before extraordinary item and accounting change rose 88% to $511 million. Results reflect higher worldwide oil, natural gas and chemical prices, and a gain on the disposition of assets.

[yatri]

Hier der Zugriff auf die Investor Relations in der Homepage von OXY:

http://www.oxy.com/html/ir.html

grüße yatri

[yatri]

Vermutlich wird dieser Thread relativ unbeachtet sein Dasei fristen, allerdings denjenigen von Hilfe sein, die speziell an dieser aktie interessiert sind:
damit hier auch ein Austausch möglich ist, bitte ich mir eine Mail zuzuschicken, an: [e-mail]

yatri

[yatri]

Bin ich der einzige Aktionär bei OXY, der bei Wsallstreet-Online ist - oder will niemand posten?

[Brandenburg]

Merkwürdig, keiner hat hierfür Stimmung gemacht.Trotzdem hat der Kurs sich in relativ kurzer Zeit verdoppelt.(Die
Lemmige kaufen lieber Total/Fina etc..Volksverdummung wird
so wie gehabt weiter betrieben,man denke nur die letzten 20
Jahre an Siemens etc.).

Soll man denn Deiner Ansicht nach OXY weiter halten oder sogar kaufen?

[yatri]

Super ! - ich freu mich hier jemanden zum gegenseitigen Austausch gefunden zu haben.

Zu deiner Frage ("weiter halten oder sogar kaufen") ?
Das hängt natürlich alles von deiner Depotstruktur und einem evt. schon gehaltenen Anteil ab.
falls die Preise fürs Crude Oil Barrel kurzfristig nochmals auf 27 $ oder tiefer fallen sollten ist auch ein LEICHTER Kursrückgang auf 28$ möglich, langfristig aber sind weitere Kursgewinne wohl kaum zu vermeiden -
man muss nur geduld haben

Insofern kann ich dir OXY nicht zum traden empfehlen, da gibt es sehr viel bessere Werte, aber ein guter Anker fürs Depot, der problemlos mitwachsen dürfte ist OXY sicherlich.
Noch immer ist die jahr(zehnte)alte schlechte Stimmung an Wallstreet zu OXY spürbar - mehrfach haben die paar Analysten die den Wert untersuchen die Gewinne zu niedrig angesetzt - und das dürfte erstmal so bleiben !!
fürs nächste Jahr wird für OXY z.B. ein starker Rückgang prognostiziert - für XOM (Exxon) oder andere Öl-Werte allerdings nicht.
Es gibt auch ein reges OXY-board auf yahoo.com, das einige Punkte dieser "Underdog"-Situation beleuchtet.

Ich persönlich gehe nicht von einem verfall der Ölpreise auf unter 25 $ aud - vielmehr halte ich im nächsten Winter eine weitere verteuerung für gut möglich. Hinzu kommt, dass die re-Strukturierung von OXY bleibende früchte trägt und sogar ausgebaut wird.

deshalb kann man die Aktie auf dem jetzigen Niveau auch unbesorgt dazukaufen, sollte sie aber auf jeden fall halten.

Die Gewinne (und auch die dividende) sind einfach zu gut -
weitere gewinnsteigerungen sind nur eine frage der zeit - schon die in den nächsten Wochen anstehenden Zahlen für Q2 können positiv überraschen (trotz der in den letzten Wochen gefallenen Erdgaspreise in California)

da im Moment noch aufgrund einer langen schlechten vergangenheit niemand den Wert so richtig haben will, andererseits aber schon so viel verdient wird, das selbst bei einem KGV von 6-7 schon 30$ pro Aktie fällig sind, verharrt der Wert im Moment auf diesem Plateau.
Die gewinne sind einfach zu gut, als dass sich viel Verkaufsdruck bei einem Fall auf 29 und tiefer ergeben kann. Nach unten dürfte es daher nur langsam und nur wenig gehen. Ein Anstieg über 31 ist im Moment sehr schwierig, besonders da die erste Ölpreiserhöhungswelle hinter uns liegt, sobald aber 31-32 erreicht sind , sehe ich den Kurs innerhalb von ein paar tagen stabil bei 35 und von 35 aus auch schneller bei 40, als von 30 aus bis 35.

insofern braucht man wirklich geduld (falls man aus dem Neuen Markt-trading kommt)

ein recht risikoloses 30%-Geschäft zum Jahresende

grüße
yatri

[yatri]

Interessantes posting ausm Yahoo-Board zum seltsamen herunterfallen des Kurses:

What I`m keeping my eye on now are the "big boys" move on the stock. Watch the stock`s movement on July 14-18
when OXY`s 2nd quarter earnings will be "leaked" out to the "powers that be". You can see the play at hand now, the big institutional
holders are dumping enough shares so that the specialist has no option, but to buy the shares
"to book". They are hoping the small investor will get nervous, lock in the profits they have now, and then sweep up the cheaper price prior to the "official" earnings announcement. So hang on to your hat, this should be a nice ride
to 33.

[yatri]

Occidental profits rise, beat estimates
(UPDATE: Updates stock price in paragraph 6)

NEW YORK, July 19 (Reuters) - Occidental Petroleum Corp. (NYSE:OXY - news) said Thursday second-quarter income rose a better-than-expected 36 percent as strong oil and gas prices offset weakness in its chemicals business.

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Second-quarter income before special items rose to $466 million, or $1.25 a share, from $343 million, or 93 cents a share, in the same period a year ago.

Wall Street analysts had expected the company to earn between 96 cents and $1.10 a share in the quarter, with a consensus of $1.04, according to Thomson Financial/First Call, which tracks estimates.

The first of the big U.S. oil companies to report earnings, Occidental benefited from robust crude oil and natural gas prices. Its sales rose 19 percent to $3.8 billion from $3.2 billion in the same period a year ago.

``Strong energy prices, particularly in California`s natural gas market, resulted in outstanding earnings and cash flow for the second quarter and the first half of this year,`` Dr. Ray Irani, chairman and chief executive, said in a statement.

Occidental`s shares rose 7.43 percent in the second quarter, compared to a rise of 5.92 percent for the broader S&P oil company index (^SPOIL - news). They gained another 45 cents, or 1.75 percent, to $26.10 on Thursday.

But while strong energy prices helped the company`s oil and gas business, it hurt results from its chemicals unit. Before special items, earnings from the business fell to $58 million from $154 million because of lower sales and higher raw material costs.

Overall, the company said net income was $473 million, or $1.27 a share, down from $564 million, or $1.53 a share, for the same period last year. The second quarter of 2001 included a $7 million gain from the sale of interests in Gulf of Mexico properties, while the period a year ago included a $300 million gain and a $79 million charge.

[yatri]

Thursday January 31 10:31 AM ET
Occidental Taking Stake in Lyondell
HOUSTON (Reuters) - Occidental Petroleum Corp. is buying a 21 percent stake in Lyondell Chemicals Co. (NYSE:LYO - news), and Lyondell is buying Occidental`s interest in a chemicals joint venture, Lyondell said on Thursday.

Lyondell said the deals would allow it to conserve cash and accelerate its debt repayment program.

Occidental will become Lyondell`s biggest shareholder and will take two seats on the Lyondell board of directors.

Lyondell shares were up 58 cents, or 4.5 percent, at $13.34 in morning trade on the New York Stock Exchange (news - web sites). Occidental was up 28 cents, or 1.1 percent, at $25.36.

Houston-based Lyondell will buy Occidental`s 29.5 percent stake in the Equistar Chemicals joint venture, raising Lyondell`s stake in Equistar to 70.5 percent.

Millennium Chemicals Inc. (NYSE:MCH - news), which established the joint venture with Lyondell in 1997 to house the firms` petrochemical and polymer businesses, owns the remaining 29.5 percent stake.

Occidental will make an initial equity investment in Lyondell, including purchasing up to 34 million newly issued Series B Lyondell shares that can be converted into regular common shares after three years.

Lyondell will use the proceeds of that transaction to buy Occidental`s stake in Equistar. Occidental gained the stake in 1998 after adding its petrochemical business to the venture.

Lyondell did not disclose financial details of either transaction.

Lyondell said that while the deals will initially be cash-flow neutral and will dilute its earnings, they will eventually generate improved cash flow and add to earnings as the chemical business cycle improves.

With the additional cash flow, Lyondell hopes to accelerate its efforts to relieve its balance sheet of debt brought on by its $5.6 billion purchase of ARCO Chemical in 1998.

``These transactions are cash flow driven,`` Dan Smith, Lyondell president and chief executive officer, said in a prepared statement. ``The structure allows Lyondell to conserve cash at the trough of the chemical cycle while significantly increasing our proportionate share of Equistar`s cash distribution as the chemical cycle improves.``

Occidental Chairman and Chief Executive Ray Irani and Chief Financial Officer Stephen Chazen will take the seats on Lyondell`s board.

[yatri]

Aus den yahoo-Naxhrichten - angesichts des Lyondell-Deals:

S&P comments on Occidental Petroleum
(UPDATE: Press release provided by Standard & Poor`s)

NEW YORK, Jan 31 - Standard & Poor`s said today that Occidental Petroleum Corp.`s (NYSE:OXY - news) (BBB/Stable/A-2) announcement that it is selling its 29.5% interest in Equistar Chemicals to Lyondell Chemicals Co. (NYSE:LYO - news) for an equity stake in Lyondell will not immediately affect the ratings or outlook on the company.

Under terms of the agreement, Occidental will own about 21% of Lyondell and will also receive warrants to purchase additional equity and a small payment based on Equistar`s 2002 and 2003 performance payable in either cash or Lyondell stock,

at Lyondell`s discretion. It is expected that volatility in Occidental`s earnings and cash flow should be reduced as a result of this transaction because its ownership stake in Lyondell provides exposure to a broader slate of chemicals than Equistar`s product line.

Standard & Poor`s views Occidental`s desire to reduce its involvement in the chemicals sector while focusing on its oil and gas activities as beneficial to its business profile.

[yatri]

March 13, 2002

OCCIDENTAL PETROLEUM CORP /DE/ (OXY)
Annual Report (SEC form 10-K)
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (INCORPORATING ITEM 7A)


2001 BUSINESS ENVIRONMENT
In this report, the term "Occidental" refers to Occidental Petroleum Corporation and/or one or more entities in which it owns a majority voting interest (subsidiaries). Occidental is divided into two major operating businesses.


OIL AND NATURAL GAS INDUSTRY
The market price of West Texas Intermediate (WTI) declined considerably during 2001, falling from around $30/bbl in January to less than $20/bbl in December. The fourth quarter was the weakest for oil prices since the third quarter of 1999. Overall, the crude oil market continued to indicate both long-term and short-term price uncertainty. NYMEX domestic natural gas prices were subject to greater volatility in 2001. Natural gas prices, which were over $5/thousand cubic feet (Mcf) in the fourth quarter of 2000, rose to $7/Mcf in the first quarter of 2001 and then declined significantly to less than $3/Mcf by year-end. Increased supply from heavy investment in drilling by the industry in 2000 and 2001, higher inventories and decreased demand combined to lower gas prices back to the level last seen in the first quarter of 2000. The number of U.S. onshore rigs in use climbed from under 500 in mid-1999 to over 1,100 in mid-2001, but the decline in oil and gas prices resulted in fewer than 800 rigs in use by the end of the year.


CHEMICAL INDUSTRY
The chemical industry experienced a significant decrease in demand as the decade-long U.S. economic expansion gave way to a recession in March 2001 following a slowdown that began midway through 2000. Due to a pessimistic outlook and no near-term signs of economic recovery, customers and distributors continued with inventory reduction and limited purchases. Most Asian, European and South American countries also experienced an economic downturn similar to North American trends. Record-high energy prices and feedstock costs began to drop in the second quarter, but poor product demand for the year resulted in overall weaker prices and profit margins.



Domestic chlorine demand decreased significantly in 2001, compared with 2000, due to poor demand for chlorine derivatives including vinyls, polyurethane chemicals, epichlorohydrin and others, which are primarily used in durable goods and consumer products. The poor chlorine demand resulted in chlorine prices declining throughout the year. Caustic soda prices peaked in the first half of the year due to major cutbacks in chlorine production. Demand was stable in the first half of the year but began to soften in the third quarter. Polyvinyl chloride (PVC) prices, but not margins, improved for a short time reflecting higher energy and feedstock prices during the first few months before reaching a peak in April, but weakened throughout the remainder of the year due to poor demand and increased industry capacity.


STRATEGIC OVERVIEW AND REVIEW OF BUSINESS RESULTS - 1999 - 2001



STRATEGY
Occidental`s overall strategy to add value for shareholders consists of three basic elements:

>> Shift corporate assets to large, long-lived oil and gas assets with growth potential >> Maintain financial discipline and strengthen the balance sheet >> Harvest cash from chemicals

Implementation of this strategy included divesting interests in the natural gas pipeline segment and buying large "legacy" oil and gas assets in California and Texas that are expected to provide stable production, strong earnings and cash flow and a solid platform for new growth initiatives.

At Occidental, financial discipline means prudently investing capital in projects that are expected to produce superior returns while strengthening the balance sheet to reduce both risk and earnings volatility.

The chemicals business is being used to provide free cash flow.


SPECIFIC ACTIONS

OIL AND GAS
The oil and gas business strategy has three parts that, together, are focused on adding new oil and natural gas reserves at a pace well ahead of production, while simultaneously keeping finding and development costs among the lowest in the industry.

>> Continue to add commercial reserves in and around core areas in the U.S., Middle East and Latin America through a combination of focused exploration and development programs.

>> Pursue commercial opportunities with host governments in core areas to enhance the development of mature fields with large volumes of remaining oil in place by applying appropriate technology and innovative reservoir-management practices.

>> Maintain a disciplined approach in buying and selling assets at attractive prices.

Occidental`s oil and gas business is currently concentrated in five U.S. states and nine foreign countries. The asset mix within each of these areas has been strengthened by the sale of properties with low or no current return and investment in assets with much higher performance potential. The results of these changes are discussed below in "Business Review - Oil & Gas."


CHEMICAL
Occidental conducts its chemical operations through Occidental Chemical Corporation and its various subsidiaries and affiliates (collectively, OxyChem). OxyChem focuses on the chlorovinyls chain where it begins with ethylene and chlorine, which is co-produced with caustic soda, and converts them through a series of intermediate products into PVC. In order to strengthen its position along the chlorovinyls chain, Occidental entered into a major business alliance in 1999, a vinyls partnership with Geon (now known as PolyOne) named OxyVinyls, LP (OxyVinyls).


CORPORATE
In July 2001, Occidental sold its interests in a subsidiary that owned a Texas intrastate pipeline and its interest in a liquefied natural gas (LNG) project in Indonesia. After-tax proceeds of approximately $750 million from these transactions were used to reduce debt. In April 2000, Occidental sold its interest in Canadian Occidental Petroleum Ltd., renamed Nexen Inc. (CanadianOxy or Nexen). After-tax proceeds, together with tax benefits from the disposition of oil-producing properties in Peru, totaling $700 million were used to reduce debt following the Altura acquisition. Occidental received $775 million from Chevron in a litigation settlement in November 1999, which was used mainly to reduce high-cost debt.


DEBT STRUCTURE
Occidental`s total debt comprises three components, as shown in the table below (amounts in millions):


Occidental Other Altura Non-
Public Recourse Recourse Total
Date Debt Debt Debt Debt(a)
================ =========== =========== =========== ===========
12/31/97 $ 4,965 $ 1,361 $ -- $ 6,326
12/31/98 $ 5,402 $ 776 $ -- $ 6,178
12/31/99 $ 4,401 $ 1,047 $ -- $ 5,448
April 2000(b) $ 5,766 $ 1,009 $ 2,400 $ 9,175
12/31/00 $ 3,544 $ 912 $ 1,900 $ 6,356
12/31/01 $ 4,119 $ 771 $ -- $ 4,890
---------------- ----------- ----------- ----------- -----------
(a) Includes Trust Preferred Securities, natural gas delivery commitment,
preferred stock and capital lease obligations.
(b) Reflects, on a pro-forma basis, the effect of $1.2 billion in debt from the
Altura acquisition on Occidental`s debt as of April 2000.


Occidental took full advantage of its increased production profile and high oil and gas prices over an eighteen-month period in 2000 and 2001 to reduce total debt. The Altura purchase increased pro-forma debt to nearly $9.2 billion in April 2000. By the end of 2001, total debt had been lowered to $4.9 billion, $1.4 billion below the year-end total in 1997. Occidental`s public debt at year-end 2001 is more than $800 million below the year-end 1997 level and more than $275 million below year-end 1999. Occidental`s other recourse debt, which includes preferred stock and Trust Preferred Securities in the above table, decreased from $1.4 billion in 1997 to $771 million in 2001.

Total Debt/Capitalization Ratio (%) Date Total Debt/Capitalization Ratio =============================== =============================== 12/31/97 67% 12/31/98 66% 12/31/99 61% April 2000(a) 71% 12/31/00 57% 12/31/01 46% - - (a) Reflects, on a pro-forma basis, the effect of $1.2 billion in debt from the Altura acquisition on Occidental`s public debt as of April 2000.

Occidental`s year-end 2001 total debt-to-capitalization ratio has declined to approximately 46 percent from the 67-percent level that existed at the end of 1997. The debt-to-capitalization ratio is computed by dividing total debt by total capitalization, excluding minority interest.


BUSINESS REVIEW - OIL AND GAS
Occidental`s overall performance during the past three years reflected the successful implementation of its oil and gas business strategy, beginning with the 1998 $3.5 billion acquisition of the Elk Hills oil and gas field in California. Elk Hills is one of the top ten oil and gas fields in the U.S. and the largest source of gas in California. The Elk Hills acquisition was followed in April 2000 by the purchases of Altura Energy in Texas for $3.6 billion and the much smaller THUMS property in Long Beach for $110 million. At the end of 2001, these three assets made up 65 percent of Occidental`s worldwide proven oil reserves and 52 percent of its proven gas reserves. On a barrel of oil equivalent (BOE) basis, they accounted for 63 percent of worldwide reserves. In 2001, the combined production from these assets averaged approximately 266,000 BOE per day, which represents 56 percent of Occidental`s total worldwide production.


ALTURA ACQUISITION
Occidental completed the acquisition of the Altura properties on April 19, 2000. In the relatively short period since the acquisition, the Altura properties have generated nearly $1.2 billion in operating cash flow after capital expenditures of approximately $350 million. Net production averaged 140,000 BOE per day in 2001. The Altura properties were successfully integrated with Occidental`s existing Permian operations, making Occidental the largest oil producer in Texas. With the Altura acquisition, Occidental has become a world leader in carbon dioxide (CO2) flood technology, an enhanced oil recovery technique that involves injecting CO2 into oil reservoirs where it acts as a solvent causing the oil to flow more freely so it can be pumped to the surface. Currently, Occidental`s CO2 floods provide about half of its oil production in the Permian Basin.


MILNE POINT - BRAVO DOME SWAP
In late 2000, Occidental swapped its 9-percent interest in the Milne Point oil field in Alaska operated by BP p.l.c. (BP) for BP`s 75-percent working interest in the Bravo Dome CO2 unit in northern New Mexico. Bravo Dome CO2 production averaged approximately 320 million cubic feet per day in 2001. Because of third-party sales commitments, Bravo Dome currently meets approximately one-third of Occidental`s CO2 demand in the Permian Basin.


THUMS
At year-end 2001, net production from the THUMS oil property in Long Beach, CA was averaging 30,000 barrels per day, an increase from approximately 25,000 barrels per day at the end of 2000. In December 2001, work began on a 3-D vertical seismic profile survey, which is expected to be completed in the first quarter of 2002. The results of this survey are expected to assist in planning for the future development of the properties. Occidental plans to build a 45-megawatt gas-fired power plant to enhance THUMS` value. Since production at THUMS depends on electric submersible pumps, electricity is the single largest component of this operation`s cost structure. Moreover, the supply of electricity is interruptible, meaning that when power is in short supply, service may be interrupted to accommodate other users such as domestic households. The new power plant will allow THUMS to generate its own secure supply of electricity from its untapped natural gas resources, while simultaneously lowering operating costs. Any excess electricity can be sold back to the local electricity grid. The permitting process and pre-construction activities are progressing well, and construction is expected to commence in the first half of 2002.


GULF OF MEXICO
In July 2000, Occidental monetized its interests on the Continental Shelf in the Gulf of Mexico (GOM) and the proceeds were used to reduce debt. Also refer to "Acquisitions, Dispositions and Commitments - 2000" for further information. The development in the GOM is currently focused on the deep water Horn Mountain oil discovery in which Occidental has a one-third interest and BP is the operator. The discovery well, which was drilled to a depth of nearly 14,000 feet, is located about 60 miles off the Louisiana-Mississippi coast in 5,400 feet of water.



Gross proved reserves exceed 100 million BOE with production scheduled to begin late in 2002. Production is expected to peak in 2003 with Occidental`s peak share estimated at 21,000 BOE per day.


ELK HILLS
As a result of sustained capital investment, production increased in 2001 to approximately 99,000 BOE per day from approximately 96,000 BOE per day in 1999 and 2000. Elk Hills has generated total free cash flow, after capital expenditures, of approximately $2.4 billion since Occidental acquired the asset in early 1998. Since the date of acquisition, Occidental has replaced 108 percent of its total Elk Hills oil and gas production of 136 million BOE. At the end of 2001, the property still had an estimated 437 million BOE of proved reserves, compared to the 425 million BOE that were recorded at the time of the acquisition.


MIDDLE EAST

OMAN
Occidental`s Oman business centers on its 300-million barrel discovery in Block 9. Occidental has produced more than 150 million gross barrels from the Block, most of it from the Safah field. Net production to Occidental averaged 14,000 barrels of oil per day in the fourth quarter, and Occidental expects to expand its Oman business over the next few years. Occidental uses multi-lateral horizontal wells to increase production and recovery rates and to minimize the number of wells needed. Today, 60 percent of Occidental`s production in Oman relies on horizontal wells. A new waterflood program is currently under way at Safah that will enhance production and improve the ultimate recovery of reserves from the field.


YEMEN
In Yemen, Occidental`s net production averaged 33,000 barrels of oil per day in 2001, with 29,000 coming from the Masila field and the remainder from East Shabwa. A series of step-out wells are planned for Masila in 2002 that are expected to add new reserves. In 2001, Occidental completed a 3-D seismic program in Block 20. Preliminary analysis of these data was completed, and plans are under way to begin drilling two exploratory wells in Block 20 in late 2002. In addition, a 3-D seismic program is beginning in the first quarter of 2002 in Block 44. Analysis of seismic data for Block 59, which is part of the under-explored southern portion of the Rub al Khali desert, has been completed and a test well began drilling in January 2002.


QATAR
In Qatar, Occidental successfully reversed 25 years of declining production in the Idd el Shargi North Dome field. By introducing advanced drilling systems and by applying new waterflooding and reservoir characterization techniques, gross production increased from 20,000 barrels per day to more than 100,000 barrels per day, peaking at 138,000 barrels in 1998. Occidental is developing the South Dome field as a satellite to the North Dome, which reduces the overall capital requirement of the two projects. Combined production from the two fields in the fourth quarter of 2001 was 43,000 barrels per day, net to Occidental. Occidental also has implemented a waterflood program in the North Dome`s Shuaiba Reservoir and is currently evaluating a second-generation redevelopment project. Occidental is also pursuing new exploration opportunities in Qatar.


SAUDI ARABIA
In Saudi Arabia, Occidental has a 20-percent interest in the Core Venture Two consortium, which expects to invest in the Red Sea area to help the Kingdom identify and develop new natural gas reserves for the domestic market. The Red Sea venture currently consists of development of discovered gas from the Midyan and Barqan fields in the northwest part of the Kingdom, and construction of related gas-processing and pipeline facilities. The consortium expects to build at least one power plant and possibly a water-desalination unit and will also evaluate the potential for a petrochemical plant. The project also calls for onshore and offshore exploration in Blocks 40 to 49 located in and along the Red Sea. Exploration success in these blocks will lay the foundation for additional investment opportunities in power generation, water desalination and petrochemicals in the western part of the Kingdom. An initial agreement was signed with the Kingdom on June 3, 2001. Final agreements are currently expected to be signed in 2002.


OTHER EASTERN HEMISPHERE

PAKISTAN
Occidental holds oil and gas interests in the Badin Blocks in Pakistan, which BP operates. Current gross production is 65,000 BOE per day. Occidental`s net share is approximately 16,000 BOE per day. Current plans call for drilling 13 to 15 wells per year to develop new and existing fields by the end of 2003, and Occidental continues to evaluate additional exploration opportunities.


RUSSIA
In Russia, Occidental`s 50-percent joint venture company, Vanyoganneft, produced approximately 28,000 BOE, net to Occidental, in the fourth quarter of 2001.


INDONESIA
In July 2001, Occidental sold its interest in the Tangguh LNG project in Indonesia, which was in its initial phase of development, to Mitsubishi Corporation of Japan for a sale price of $480 million. The proceeds were used in Occidental`s debt-reduction program.




LATIN AMERICA

COLOMBIA
In 2001, production from Occidental`s Cano Limon operations in Colombia was substantially reduced from 2000 and 1999 levels due to a record number of attacks by local left-wing terrorist groups on the pipeline, which is operated by Ecopetrol. Nevertheless, Occidental`s net share of 2001 production averaged 18,000 barrels of oil per day and this operation continues to be profitable. This operation accounts for less than one percent of Occidental`s worldwide assets and only three percent of total worldwide reserves and four percent of worldwide oil and gas production at year-end 2001. Occidental presently anticipates that it will recover the proved reserves attributable to its contract. The potential rewards are significant when the pipeline is fully operational. The Gibraltar exploration well, which was drilled approximately 100 miles west of Cano Limon, did not encounter commercial quantities of hydrocarbons, and the $66 million cost of the well was written off in 2001.


ECUADOR
In 2000, Occidental farmed out a 40-percent economic interest in Block 15 in Ecuador to Alberta Energy Company Ltd. (AEC). This transaction reduced Occidental`s exposure in Ecuador and is expected to largely fund its capital program in-country through 2004. Gross production in Block 15 is currently flat with 2001 average production of approximately 30,000 barrels of oil per day, with 13,000 barrels net to Occidental. Occidental has begun development of the Eden-Yuturi oil field in the southeastern corner of Block 15. The start-up of production is scheduled to coincide with the completion of the Oleoducto de Crudos Pesados (OCP) Ltd. heavy-oil pipeline in 2003. In addition, work is being carried out in the western portion of the block in and around fields currently in production. The combined effect of these projects is expected to add net incremental production of 30,000 barrels per day to Occidental`s production profile. In addition, Occidental is expanding its exploration activities in Block 15 with an aggressive 3-D seismic program. Foreign oil companies, including Occidental, have been paying Value Added Tax (VAT), generally calculated on the basis of 10-12 percent of expenditures for goods and services used in the production of oil for export. Until 2001, these VAT payments were reimbursed to the oil companies because they are incurred for the production of an export product. In 2001, the Ecuador tax authority announced that these VAT payments do not qualify for reimbursement. In response, the affected oil companies filed actions in the Ecuador Tax Court to seek a judicial determination that the expenditures are subject to reimbursement. Occidental believes that it has a valid claim for reimbursement under applicable Ecuador tax law and historic precedent.


BUSINESS REVIEW - CHEMICAL
Although industry volumes improved in early 2001 following weak second-half 2000 demand, PVC resin sales in North America lagged 2000 levels by 8 percent through June 2001. Overall demand declined 2.6 percent from 2000 to 2001. Significant oversupply of PVC resin combined with continued inventory reductions by customers resulted in North American PVC industry operating rates of around 80 percent in 2001, versus 85 percent in 2000. PVC resin prices increased only slightly in the first half of 2001, but declined throughout the remainder of the year. Higher exports in 2001 prevented operating rates from falling lower, but export sales returned only minimal margins. On June 1, 2001, OxyChem temporarily idled its Ingleside, TX ethylene dichloride (EDC) plant and on December 27, 2001, OxyChem temporarily idled the Deer Park chlor-alkali plant in Houston, TX due to a combination of deteriorating prices and weak demand. These facilities will remain idle until economic conditions improve. In Occidental`s chlor-alkali business, reduced demand for chlorine led to significantly reduced operating rates. OxyChem`s operating rate, as a percent of capacity, fell from 92 percent in 2000 to 84 percent in 2001. The chlorine industry`s 2001 operating rate was 85 percent compared to 92 percent for 2000. Despite reduced liquid caustic production, caustic prices declined in the second half of the year on weak demand. As 2001 progressed, chlorine prices fell due to declining demand, especially in the global vinyls market. Operations at the Convent chlor-alkali and EDC plant, which had been curtailed, were recommenced in 2001. Record-high energy costs in the first quarter of 2001 adversely affected earnings. For the total year, energy costs were higher than 2000, but well below first quarter levels. Feedstock costs followed the same trend as energy costs. Petrochemical margins were under pressure throughout 2001 due to weak demand and significant capacity additions by BASF/AtoFina, Formosa Plastics and Union Carbide/Nova Chemical. Lower feedstock costs in the fourth quarter were offset by lower prices due to continued weak demand. The primary goal of Occidental`s chemical business is to provide free cash flow. From 1995 through 2001, total cash flow from the chemicals business was $3.8 billion, including asset sales, net of acquisitions, of $1.0 billion.


2002 OUTLOOK

OIL AND GAS
The petroleum industry is highly competitive and subject to significant volatility due to numerous market forces. Crude oil and natural gas prices are affected by market fundamentals such as weather, inventory levels, competing fuel prices, overall demand and the availability of supply.



In the fourth quarter of 2001, worldwide oil prices weakened considerably and have remained lower than their ten-year averages in the first quarter of 2002. Sustained low prices will significantly impact profitability and returns for Occidental and other upstream producers. However, the industry has historically experienced wide fluctuations within price cycles. While fundamentals are a decisive factor affecting crude oil prices over the long term, day-to-day prices may be more volatile in the futures markets; such as on the NYMEX and other exchanges, which make it difficult to accurately predict oil and natural gas prices. In the short term, other factors such as weather patterns do have a significant effect, particularly on natural gas prices. In the United States, increased gas supplies from large capital investment over the past year, combined with a later winter, resulted in inventory levels at the end of 2001 exceeding the average of the preceding five years by 20 percent. The combination of higher gas supplies and lower demand, which is continuing into the first quarter of 2002, is expected to result in significantly lower average gas price realizations for Occidental in 2002 than in 2001.


CHEMICAL
The performance of the chemical business is difficult to forecast, but this business is capable of contributing significant earnings and cash flow when demand is strong. Industry operating rates in the chlor-alkali/vinyls business are expected to recover gradually in 2002.


CHLOR-ALKALI
Domestic chlorine demand is expected to increase by nearly 2 percent in 2002, which should allow the industry`s operating rates to improve in the absence of capacity additions. Liquid caustic pricing is expected to continue to be weak. The domestic chlorine market price is expected to improve gradually throughout 2002 as the vinyls demand for chlorine increases. Liquid caustic pricing peaked in the second quarter of 2001 and is expected to decline through the second quarter of 2002. In late 2001, OxyChem temporarily idled its Deer Park, TX chlor-alkali facility until economic conditions improve.


VINYLS
While the beginning of a weak recovery is expected in the second half of 2002, continued supply/demand imbalances in PVC markets will likely prevent all but seasonal product price increases. Continued pressure on raw materials, particularly ethylene, should result in relatively stable, albeit low, price spreads over raw materials. Overall, North American PVC growth is expected to average only 2.6 percent in 2002, reflecting weak consumer confidence and low GDP growth. While PVC will continue to make inroads into new markets, the high-volume construction and automotive end markets for PVC products will likely remain well below peak demand levels. North American PVC industry operating rates are expected to average between 80-85 percent for the year.


PETROCHEMICALS (EQUISTAR PARTNERSHIP)
In January 2002, Occidental and Lyondell Chemical Company (Lyondell) agreed, in principle, for Occidental to sell its share of Equistar to Lyondell and to purchase an equity interest of approximately 21 percent in Lyondell. These transactions are subject to the execution of definitive documents and corporate and regulatory approvals. In connection with the agreement in principle, Occidental wrote down its investment in the Equistar partnership by $240 million, after tax, in December 2001. Occidental will continue to reflect its share of Equistar`s results until the transaction closes, which is expected in the second quarter of 2002.


INCOME SUMMARY
Occidental reported net income of $1.2 billion ($3.10 per share) in 2001, on net sales of $14.0 billion, compared with net income of $1.6 billion ($4.26 per share) in 2000, on net sales of $13.6 billion. Earnings before special items were $1.3 billion in 2001 and 2000.


SEGMENT OPERATIONS
The following discussion of Occidental`s two operating segments and corporate items should be read in conjunction with Note 15 to the Consolidated Financial Statements. Segment earnings exclude interest income, interest expense, unallocated corporate expenses and extraordinary items, but include gains and losses from dispositions of segment assets and results from equity investments.

Foreign income and other taxes and certain state taxes are included in segment earnings on the basis of operating results. U.S. federal income taxes are not allocated to segments except for amounts in lieu thereof that represent the tax effect of operating charges resulting from purchase accounting adjustments, and the tax effects resulting from major, infrequently occurring transactions, such as asset dispositions and legal settlements that relate to segment results. Segment earnings in 2001 were affected by $14 million of net charges allocated comprising $56 million of charges and $42 million of credits in oil and gas and chemical, respectively. The oil and gas amount included a charge for the sale of the Indonesian Tangguh LNG project. The chemical amount included credits for the sale of certain chemical operations. Segment earnings in 2000 were affected by $25 million from net charges allocated comprising $32 million of charges and $7 million in credits in oil and gas and chemical, respectively. The oil and gas amount included a charge for the monetization of the GOM Continental Shelf assets. The chemical amount included a net charge for the sale of certain chemical operations. Segment earnings in 1999 were affected by $212 million from net charges allocated comprising $228 million of charges and $16 million of credits in oil and gas and chemical, respectively. The oil and gas amount included a charge related to the income on the Chevron litigation settlement and a credit for losses on sales of assets.



The following table sets forth the sales and earnings of each operating segment and corporate items:


SEGMENT OPERATIONS
In millions

For the years ended December 31, 2001 2000 1999
================================ ======== ======== ========
SALES
Oil and Gas $ 10,893 $ 9,779 $ 4,599
Chemical 3,092 3,795 3,221
-------- -------- --------
$ 13,985 $ 13,574 $ 7,820
================================ ======== ======== ========
EARNINGS(LOSS)
Oil and Gas $ 2,845 $ 2,417 $ 1,267
Chemical (394) 169 (37)
-------- -------- --------
2,451 2,586 1,230
Unallocated corporate items
Interest expense, net(a) (263) (380) (468)
Income taxes(c) (366) (861) (68)
Trust preferred distributions (56) (67) (62)
and other
Other (b) (580) 291 (64)
-------- -------- --------

Income before extraordinary items and effect of changes in
accounting principles 1,186 1,569 568
Extraordinary gain(loss), net (8) 1 (107)
Cumulative effect of changes in
accounting principles, net (24) -- (13)
-------- -------- --------
Net Income $ 1,154 $ 1,570 $ 448
================================ ======== ======== ========
(a) The 2001 and 2000 amounts are net of $102 million and $106 million,
respectively, of interest income on notes receivable from Altura partners.
(b) The 2001 amount includes the after-tax loss of $272 million related to the
sale of the entity that owns pipelines in Texas that were leased to a
former subsidiary, a $109 million charge for environmental remediation
expenses and $104 million of preferred distributions to the Altura
partners. The 2000 amount includes the pre-tax gain on the sale of the
CanadianOxy investment of $493 million, partially offset by preferred
distributions to the Altura partners of $107 million. The preferred
distributions are essentially offset by the interest income discussed in
(a) above.
(c) The 2001 amount excludes the income tax benefit of $188 million attributed
to the sale of the entity that owns pipelines in Texas.

<
OIL AND GAS

In millions, except as indicated 2001 2000 1999
===================================== ======== ======== ========
SEGMENT SALES $ 10,893 $ 9,779 $ 4,599
SEGMENT EARNINGS $ 2,845 $ 2,417 $ 1,267
EARNINGS BEFORE SPECIAL ITEMS(a) $ 2,439 $ 2,404 $ 841
NET PRODUCTION PER DAY
UNITED STATES
Crude oil and liquids (MBBL)
California 76 70 52
Permian 137 101 13
U.S. Other -- 1 8
-------- -------- --------
Total 213 172 73
Natural Gas (MMCF)
California 303 306 287
Hugoton 159 168 172
Permian 148 119 55
U.S. Other -- 66 148
-------- -------- --------
Total 610 659 662
LATIN AMERICA
Crude oil & condensate (MBBL)
Colombia 18 32 43
Ecuador 13 17 15
Peru -- -- 38
-------- -------- --------
Total 31 49 96
EASTERN HEMISPHERE
Crude oil & condensate (MBBL)
Oman 12 9 15
Pakistan 7 6 5
Qatar 43 49 58
Russia 27 26 27
Yemen 33 32 32
-------- -------- --------
Total 122 122 137
Natural Gas (MMCF)
Bangladesh -- -- 8
Pakistan 50 49 44
-------- -------- --------
Total 50 49 52

BARRELS OF OIL EQUIVALENT (MBOE) 476 461 425
AVERAGE SALES PRICES
CRUDE OIL PRICES (per barrel)
U.S. $ 21.74 $ 26.66 $ 15.81
Latin America $ 19.95 $ 26.01 $ 13.20
Eastern Hemisphere $ 21.32 $ 25.14 $ 15.86
GAS PRICES (per thousand cubic feet)
U.S. $ 6.40 $ 3.66 $ 2.09
Eastern Hemisphere $ 2.29 $ 1.99 $ 1.17
EXPENSED EXPLORATION(b) $ 184 $ 94 $ 75
CAPITAL EXPENDITURES
Development $ 918 $ 582 $ 302
Exploration $ 171 $ 132 $ 103
Acquisitions and other(c, d) $ 134 $ 77 $ 69
------------------------------------- -------- -------- --------
(a) Earnings before special items represents segment earnings adjusted for the
effect of certain infrequent transactions that may affect comparability
between years. Earnings before special items is not considered to be an
alternative to operating income in accordance with generally accepted
accounting principles. See "Special Items" table for a list of special
items affecting earnings.
(b) Includes certain amounts previously shown in exploration capital
expenditures. The 2001 amount includes a $66 million write-off of the
Gibraltar well in Colombia.
(c) Includes mineral acquisitions but excludes significant acquisitions
individually discussed in this report.
(d) Includes capitalized portion of injected CO2 of $48 million and $44 million
in 2001 and 2000, respectively.

Occidental explores for and produces oil and natural gas, domestically and internationally. Occidental seeks long-term growth and improvement in profitability and cash flow through a combination of increased operating efficiencies in core assets, enhanced oil recovery projects, focused exploration opportunities and complementary property acquisitions.


Earnings before special items in 2001 were $2.44 billion compared with $2.40 billion in 2000. The increase in earnings before special items reflected primarily the impact of higher natural gas prices and higher production volumes, partially offset by lower worldwide crude oil prices and higher exploration expense. Approximately 54 percent of oil and gas sales revenues for 2001 were attributable to oil and gas trading activity, compared with approximately 50 percent in 2000 and 43 percent in 1999. These trading activities focus on obtaining the highest sale price available. Occidental also occasionally engages in hedging activities for relatively small parts of its total production to reduce exposure to price risk, thereby mitigating cash-flow volatility. Refer to "Derivative and Hedging Activities" for a complete discussion. Other than the positive effect on oil and gas realized prices, the results of trading activities are not significant. The increase in oil and gas trading revenues from 2000 to 2001 was due to a 14-percent increase in the volume of oil and gas trades and a 49-percent increase in gas prices. The revenue was also positively affected by an increase in the volume of Natural Gas Liquids (NGLs), although this impact was not significant. These positive effects were partially offset by an 18-percent decrease in oil prices associated with the trading contracts.


CHEMICAL


In millions, except as indicated 2001 2000 1999
========================================== ======== ======== ========
SEGMENT SALES $ 3,092 $ 3,795 $ 3,221
SEGMENT (LOSS) EARNINGS $ (394) $ 169 $ (37)
EARNINGS BEFORE SPECIAL ITEMS(a) $ 41 $ 293 $ 147
KEY PRODUCT INDEXES (1987 through
1990 average price = 1.0)
Chlorine 0.74 1.58 0.79
Caustic soda 1.33 0.69 0.66
Ethylene Dichloride 0.61 1.37 0.97
PVC commodity resins(c) 0.68 0.95 0.70
KEY PRODUCT VOLUMES
Chlorine (thousands of tons) 2,847 2,977 3,230
Caustic soda (thousands of tons) 2,857 3,168 3,223
Ethylene Dichloride (thousands of tons) 735 979 1,080
PVC commodity resins
(millions of pounds) 3,950 3,902 3,454
CAPITAL EXPENDITURES(b)
Basic chemicals $ 37 $ 49 $ 35
Vinyls $ 55 $ 61 $ 25
Specialty businesses $ 25 $ 41 $ 50
Other $ 3 $ 4 $ 6
------------------------------------------ -------- -------- --------
(a) Earnings before special items represents segment earnings adjusted for the
effect of certain infrequent transactions that may affect comparability
between years. Earnings before special items is not considered to be an
alternative to operating income in accordance with generally accepted
accounting principles. See "Special Items" table for a list of special
items affecting earnings.
(b) Excludes the formation of OxyVinyls and the acquisition of the balance of
INDSPEC in 1999.
(c) Product volumes produced at PolyOne facilities contributed to OxyVinyls are
excluded from the product indexes.

Earnings before special items were $41 million in 2001, compared with $293 million in 2000. The decrease in earnings before special items reflected the impact of lower average prices for chlorine, EDC and PVC resins and a loss from the Equistar equity investment compared with income from the prior year, partially offset by higher prices for caustic soda and lower raw-material and feedstock costs. Earnings before special items were $293 million in 2000, compared with $147 million in 1999. The increase in earnings before special items primarily reflected the impact of higher average prices for chlorine, EDC and PVC resins, partially offset by higher raw-material and feedstock costs.

SPECIAL ITEMS
Special items are significant, infrequent items reflected in the Consolidated Statements of Operations that may affect comparability between years. These items are listed below to assist in understanding the results of Occidental`s operations on an ongoing basis. The special items included in the 2001, 2000 and 1999 results are detailed below. For further information, see Note 15 to the Consolidated Financial Statements and the discussion above.


SPECIAL ITEMS


Benefit (Charge) In millions 2001 2000 1999
========================================= ======= ======= =======
OIL AND GAS
Gain on sale of interest in the
Indonesian Tangguh LNG project(a) $ 399 $ -- $ --
Gain on sale of additional interests in
Gulf of Mexico assets(a) 7 -- --
Gain on partial sale of Gulf of Mexico
assets(a) -- 39 --
Write-down of various assets, real
estate and investments -- (53) (9)
Loss on sale of office building(a) -- (14) --
Chevron litigation settlement(a) -- -- 488
Write-down of Peru producing
operations(a) -- -- (29)
Claims, settlements,
reorganization and other -- -- (35)
Gain on buyout of contingency
payment(a) -- 41 --
Gain on receipt of contingency
payment -- -- 11
----------------------------------------- ------- ------- -------
CHEMICAL
Write-down of Equistar investment $ (412) $ -- $ --
Credit from state tax rate adjustment 14 -- --
Write-down of chemical intermediate
businesses and various assets -- (135) (159)
Gain on sale of Durez business(a) -- 13 --
Loss on foreign investment
abandonment (a) -- (2) --
Write-downs by Equistar -- -- (28)
Severance, plant shutdown, idling and
plant write-down costs (37) -- --
Gain on sale of chemical plant by
Equistar -- -- 12
Claims and settlements -- -- (9)
----------------------------------------- ------- ------- -------
CORPORATE
Loss on sale of pipeline-owning
entity (a) $ (272) $ -- $ --
Environmental remediation (109) -- --
Settlement of state tax issue 70 -- --
Gain on sale of CanadianOxy
investment -- 493 --
Claims and settlements -- (17) --
Extraordinary (loss)gain on debt
redemption(a) (8) 1 (107)
Insurance dividend 6 11 18
Changes in accounting principles(a) (24) -- (13)
Tax effect of pre-tax adjustments 192 (133) 55
----------------------------------------- ------- ------- -------
(a) These amounts are shown after-tax.



CONSOLIDATED OPERATIONS - REVENUES



SELECTED REVENUE ITEMS


In millions 2001 2000 1999
=========================================== ======== ======== ========
Net sales $ 13,985 $ 13,574 $ 7,820
Interest, dividends and other income $ 223 $ 263 $ 913
Gains(losses) on disposition of assets, net $ 10 $ 639 $ (13)
(Loss)income from equity investments $ (92) $ 67 $ 41
------------------------------------------- -------- -------- --------

The increase in sales in 2001, compared to 2000, primarily reflected higher natural gas prices and higher oil and gas trading revenue, in turn, due to higher oil and gas trading volumes and higher gas prices, partially offset by lower crude oil and chemical prices. The increase in sales in 2000, compared with 1999, primarily reflected higher worldwide crude oil and natural gas prices, higher domestic oil production, mainly from the Altura and THUMS acquisitions, higher oil and gas trading activity and the inclusion of the full year revenues from OxyVinyls, partially offset by lower international oil production. Interest, dividends and other income in 2001 and 2000 included interest income on the notes receivable from the Altura partners of $102 million and $106 million, respectively. Interest, dividends and other income in 1999 included the favorable litigation settlement of $775 million. Gains on disposition of assets in 2001 included the pre-tax gain of $454 million on the sale of the interest in the Tangguh LNG project and the pre-tax loss on the sale of an interest in the subsidiary that leased a pipeline to Occidental`s former MidCon subsidiary of $459 million. Gains on disposition of assets in 2000 included the pre-tax gain of $493 million on the sale of the CanadianOxy investment, the pre-tax gain of $61 million on the partial sale of the Gulf of Mexico assets, the pre-tax gain of $63 million on the receipt of contingency payments related to a prior-year sale of a Dutch North Sea subsidiary and the pre-tax gain of $34 million on the sale of the Durez business. The loss from equity investments in 2001, compared with income from equity investments in 2000, was primarily due to a loss of $89 million from the Equistar equity investment in 2001. The increase in income from equity investments in 2000, compared with 1999, was due to higher earnings at Equistar.

CONSOLIDATED OPERATIONS - EXPENSES



SELECTED EXPENSE ITEMS


In millions 2001 2000 1999
=================================== ======== ======== ========
Cost of sales $ 9,488 $ 8,963 $ 5,269
Selling, general and administrative
and other operating expenses $ 675 $ 691 $ 645
Write-down of assets $ 415 $ 180 $ 212
Minority interest $ 143 $ 185 $ 58
Exploration expense $ 184 $ 94 $ 75
Interest and debt expense, net $ 392 $ 518 $ 498
----------------------------------- -------- -------- --------

The increase in cost of sales in 2001, compared with 2000, primarily reflected higher costs related to increased oil and gas trading volumes, higher prices for gas trading and higher production volumes. The increase in cost of sales in 2000, compared with 1999, primarily reflected the higher costs related to oil and gas trading, higher domestic oil production volumes and higher raw-material and energy costs in the chemical segment. Selling, general and administrative and other operating expenses decreased in 2001, compared to 2000, due mainly to a decrease in chemical selling costs. Selling, general and administrative and other operating expenses increased in 2000, compared to 1999, due to the increase in oil and gas production taxes resulting from higher oil and gas prices and the acquisition-related higher production, partially offset by lower other costs. Write-down of assets in 2001 included the write-down of the Equistar equity investment. The 2000 amount includes the write-down of certain oil and gas investments and the write-down of the chemical intermediate businesses. The 1999 amount includes the write-down of the Peru producing operations and the write-down of the chemical intermediate business. Minority interest in 2001 and 2000 included preferred distributions to the Altura partners of $104 million and $107 million, respectively. Exploration expense in 2001 included expensing higher-cost exploration wells, primarily the Gibraltar well in Colombia of $66 million. The decrease in interest and debt expense in 2001, compared with 2000, reflected lower outstanding debt levels and lower interest rates. The increase in interest and debt expense, net in 2000, compared to 1999, reflected the interest on the Altura non-recourse debt, partially offset by lower outstanding corporate debt levels.

LIQUIDITY AND CAPITAL RESOURCES



OPERATING ACTIVITIES


In millions 2001 2000 1999
======= ======= =======
NET CASH PROVIDED $ 2,652 $ 2,401 $ 1,044

The higher operating cash flow in 2001, compared with 2000, resulted from higher recurring non-cash charges, including depreciation, depletion and amortization, exploration expenses and a loss from equity investments. The higher operating cash flow in 2000, compared with 1999, resulted mainly from higher earnings before special items. Depreciation, depletion and amortization of assets increased due to the increase in property, plant and equipment from the Altura acquisition. Other non-cash charges in 2001 included the write-down of the Equistar investment and environmental remediation accruals. Other non-cash charges in


included the write-down of the chemical intermediate businesses and other miscellaneous items. Other non-cash charges in 1999 included the write-down of chemical assets and other miscellaneous items. See the "Special Items" table on page 19. Each of the three years also included charges for employee benefit plans and other items.


INVESTING ACTIVITIES


In millions 2001 2000 1999
======= ======= =======
NET CASH(USED) PROVIDED $ (736) $(3,097) $ 1,591

The 2001 amount included the gross proceeds of $863 million from the sale of the entity that owns pipelines in Texas and the sale of Occidental`s interest in the Tangguh LNG project in Indonesia. The 2000 amount included the gross proceeds of approximately $800 million from the sale of the CanadianOxy investment, gross proceeds of $150 million from the sale of the Durez business and approximately $342 million from the monetization of the GOM assets. The 2000 amount also included approximately $3.7 billion for the purchases of Altura and THUMS. The 1999 amount included the proceeds from the $1.4 billion note receivable and the $775 million proceeds from the Chevron litigation settlement. The 1999 amount reflected lower capital expenditures and also reflected net cash used of $113 million in connection with the formation of OxyVinyls.

CAPITAL EXPENDITURES


IN MILLIONS 2001 2000 1999
=========================== ======= ======= =======
Oil and Gas $ 1,223 $ 791 $ 474
Chemical 120 155 116
Corporate and other 58 6 11
------- ------- -------
TOTAL $ 1,401 $ 952 $ 601
=========================== ======= ======= =======

Oil and gas capital expenditures were significantly higher in 2001 reflecting higher oil field service costs and higher development spending resulting, primarily, from a larger asset base. Amounts from all three years exclude any significant acquisitions. Occidental`s capital spending budget for 2002 is $1.1 billion. Of the total, approximately $1 billion will be allocated to oil and gas, with Qatar, Elk Hills and the Permian Basin receiving the highest priority.

FINANCING ACTIVITIES


In millions 2001 2000 1999
======= ======= =======
NET CASH (USED)PROVIDED $(1,814) $ 579 $(2,517)

The 2001 amount reflected the repayment of $2.3 billion of long-term and non-recourse debt, partially offset by proceeds of $861 million from new long-term debt. The 2000 amount reflected the proceeds from the $2.4 billion non-recourse debt offset by repayments of $1.4 billion on the long-term and non-recourse debt. The 2000 amount also includes the first year of purchases made to satisfy delivery commitments under the gas pre-sale commitment that was signed in 1998. The 1999 amount reflected the repayment of commercial paper and long-term debt. Occidental paid common stock dividends of $372 million in 2001 and $369 million in 2000 and paid preferred and common stock dividends of $363 million in 1999. In 1999, a total of 4,847,130 shares of CXY-indexed convertible preferred stock were converted by the holders into 15,708,176 shares of Occidental`s common stock. At the end of 2001, 2000 and 1999, Occidental had no preferred stock outstanding. However, most of the Trust Preferred Securities issued in January 1999 by Oxy Capital Trust I, a wholly-owned subsidiary of Occidental, remain outstanding at December 31, 2001. Occidental has a centralized cash-management system that funds the working capital and capital expenditure requirements of its various subsidiaries. There are no provisions under existing debt agreements that significantly restrict the ability to move funds among operating entities.

ADDITIONAL CONSIDERATIONS REGARDING FUNDING AND LIQUIDITY
In the course of its business activities, Occidental pursues a number of projects and transactions to meet its core business objectives. The accounting and financial statement treatment of these transactions is a result of the varying methods of funding employed. Occidental also makes commitments on behalf of unconsolidated entities. These transactions, or groups of transactions, are recorded in compliance with generally accepted accounting principles and, unless otherwise noted, are not recorded on Occidental`s balance sheets. The following is a description of the business purpose and nature of these transactions.


>> CHEMICAL TRANSACTIONS

TAFT COGENERATION FACILITY
Occidental has undertaken certain commitments in connection with the construction and leasing of a cogeneration facility in Taft, LA. This facility will supply all the steam and electric power requirements for Occidental`s Taft chlor-alkali plant for less cost than if the plant were to generate its own steam and purchase electricity from a public utility. An owner trust with investors as participating beneficiaries owns the project, with Occidental acting as general contractor during construction. The equity participant in the owner trust has committed to fund the owner trust with equity in the amount of three percent of the total project cost during construction and 13 percent of the total project cost upon commencement of the lease term. During the construction period, Occidental is fully liable for total project costs if an event of termination occurs due to its



willful misconduct or bankruptcy, and Occidental is liable to pay up to 89.9 percent of the eligible construction costs if an event of termination occurs for reasons other than force majeure. Upon completion of construction and satisfaction of certain other conditions, expected to occur by December 31, 2002, Occidental will enter into a 26-year operating lease of the facility. The total cost of the project at the inception of the lease is expected to be approximately $450 million. The total accumulated costs of the project as of December 31, 2001 amount to approximately $328 million. If these costs were recorded as liabilities on Occidental`s balance sheet, either during construction or during the lease term, the Taft cogeneration facility would also be recorded as an asset on the balance sheet.


LEASES
Occidental has entered into various operating lease agreements, mainly for railcars, manufacturing facilities and office space. The leased assets are used in Occidental`s operations where leasing offers advantages of greater operating flexibility and generally costs less than alternative methods of funding. Lease payments are charged to Occidental`s operations, mainly as cost of sales. Occidental estimates the present value of the remaining lease payments to be $310 million at December 31, 2001. Occidental has fixed-price purchase options associated with certain leases at various dates ranging from 2003 to 2015, with an estimated present value of $285 million. These obligations are not recorded as liabilities on Occidental`s consolidated balance sheets. If they were so recorded, the leased properties also would be included on the balance sheets as assets.


OXYMAR
Occidental has a 78.6-percent ownership interest in OxyMar, a general partnership that owns a vinyl chloride monomer (VCM) facility in Texas operated by OxyChem. Marubeni Corporation (Marubeni) owns the remaining 21.4 percent of OxyMar, but has a 50-percent voting interest. The OxyMar VCM plant is a modern, efficient manufacturing facility. Occidental`s chlorovinyls business derives economic benefit as the supplier of chlorine, a major raw material, to OxyMar. OxyMar, in turn, supplies VCM required by Occidental to manufacture PVC, one of its major products. This investment in OxyMar is recorded as an equity investment on the consolidated balance sheet. Occidental owns 28.6 percent of OxyMar directly and the OxyVinyls partnership, which is 76-percent owned by Occidental, owns 50 percent. Therefore, because of the effect of a third party`s minority ownership interest, Occidental`s total share of OxyMar`s results is only approximately 67 percent. Occidental guarantees 50 percent of OxyMar`s $165 million private placement bonds due 2016 and 100 percent of a $220 million revolving line of credit which matures in 2005, under which $105 million was outstanding at December 31, 2001. These amounts are reflected as debt on OxyMar`s balance sheet. Marubeni has a right to put its interest in OxyMar to Occidental in 2004 by paying approximately $30 million to Occidental and, in connection with this transfer, require Occidental to assume Marubeni`s guarantee of OxyMar`s debt. If Occidental acquires the Marubeni interest, it will consolidate OxyMar. If OxyMar were to be consolidated, its assets, including the VCM facility, and its liabilities, including debt to third parties, would be recorded on Occidental`s consolidated balance sheets. As of December 31, 2001, Occidental had advanced $144 million to OxyMar and had a net equity investment of $52 million.


INGLESIDE
Occidental and Conoco Inc. (Conoco) each has a 50-percent interest in Ingleside Cogeneration Limited Partnership, a limited partnership (Ingleside LP), which operates a cogeneration plant in Texas. The cogeneration facility supplies all of the steam and electric power requirements to Occidental`s Ingleside chlor-alkali plant and the VCM plant Occidental owns with Marubeni, at less cost than if these facilities were to produce their own steam and purchase electric power from a public utility. At December 31, 2001, Ingleside LP had approximately $178 million in debt, which is secured by its assets. Occidental has not guaranteed this debt; however, Occidental and Conoco currently each guarantee half of a debt service reserve amount of approximately $8.5 million. Occidental accounts for this investment using the equity method.


EQUISTAR
Occidental has entered into an indemnity agreement with Equistar, its 29.5-percent equity investee, to contribute to Equistar an amount equal to the lesser of approximately $420 million or the principal amount of Equistar`s notes due 2009 then outstanding, together with interest. At December 31, 2001, the outstanding principal amount of Equistar`s notes due 2009 was almost $600 million. Occidental is only required to pay this amount to Equistar if the holders of the notes have not been able to obtain payment after having pursued and exhausted all their remedies to compel payment by Equistar, including the liquidation of assets. The indemnity expressly does not create any right in the holders of the notes or any person other than Occidental, Equistar and the partners of Equistar. Occidental may elect to terminate the indemnity in certain circumstances.

v OIL AND GAS TRANSACTIONS
ECUADOR
In Ecuador, Occidental has a 12-percent interest in a company currently constructing a pipeline, which is expected to be completed in 2003. Construction of the pipeline has made it feasible for Occidental to begin developing the Eden Yuturi field it discovered several



years ago in the southeastern corner of Block 15. The development of Eden Yuturi, together with ongoing work in the western portion of the block that is currently in production, is expected to add net incremental production of 30,000 barrels per day, all of which is expected to be shipped through the new pipeline. Occidental has committed to make capital contributions up to its share (approximately $148 million) of the estimated total project costs, less an equivalent percentage (up to approximately $110 million under existing financing arrangements) of any senior project debt incurred by the pipeline company. The pipeline company`s senior project debt is to be repaid with the proceeds of ship-or-pay tariffs of certain upstream producers in Ecuador, including Occidental. Under their ship-or-pay commitments, Occidental and the other upstream producers have each assumed their respective share of project-specific risks, including construction risk, operating risk and force-majeure risk. Under certain circumstances, Occidental could be required to pay an advanced tariff payment that would in turn be used by the pipeline company to service or prepay project debt. As of December 31, 2001, Occidental has contributed $9 million to the company. Occidental reports this investment in its consolidated financial statements using the equity method of accounting.


ELK HILLS POWER
Occidental and Sempra Energy (Sempra) each has a 50-percent interest in Elk Hills Power LLC, a limited liability company that is currently constructing a gas-fired, power-generation plant in California. Occidental accounts for this investment using the equity method. In January 2002, Elk Hills Power LLC entered into a $400 million construction loan facility. Occidental guarantees $200 million (50 percent) of the loan facility. At January 31, 2002, approximately $94 million of the $200 million guaranteed amount was outstanding.

v OTHER TRANSACTIONS
RECEIVABLES SALE PROGRAM
Occidental has an agreement in place to sell, under a revolving sale program, an undivided interest in a designated pool of trade receivables. This program is used by Occidental as a low-cost source of working capital funding. The amount of proceeds, which totaled $360 million outstanding in each of 2001 and 2000, that Occidental has received on the sale of the undivided interest and the related accounts receivable that have been sold, are not included in