SEC Company Response from OCCIDENTAL PETROLEUM (OXY) — Dec 8, 2005
OCCIDENTAL PETROLEUM CORP /DE/ (OXY, OXY-WT) (CIK 0000797468)
Date: Dec. 8, 2005 · CIK: 0000797468 · Accession: 0000797468-05-000171
AI Filing Summary & Sentiment
File numbers found in text: 333-129721
Letter
Securities and Exchange Commission Washington, D.C. 20549 Re: Occidental Petroleum Corporation (Form S-4, File No. 333-129721)
Dear Mr. Stem:
On behalf of Occidental Petroleum Corporation (Occidental), we are providing you with this response to the suggestions that you made in a telephone call to me on December 2, 2005, concerning Occidental’s Registration Statement on Form S-4 (the “Form S-4”) in connection with Occidental’s planned acquisition of Vintage Petroleum, Inc. (“Vintage”). In that call you confirmed that you had received Occidental’s fax of December 2, 2005. Additionally, you agreed with our conclusion that Occidental’s acquisition of Vintage would not meet the test as a significant subsidiary pursuant to Rule 11-01(b)(1). However, you also indicated that the Securities and Exchange Commission believes that pro forma financial information and pro forma oil and gas reserve information is important in this case because of the size of the proposed transaction. Therefore, Occidental proposes to add the information on Attachment I herein to Occidental’s Form S-4 in an amended filing, on page 11, after the section titled SELECTED HISTORICAL FINANCIAL DATA OF VINTAGE.
Securities and Exchange Commission
December 8, 2005
Page 2
If you have any questions or comments regarding the attached materials, please do not hesitate to call me at (310) 443-6765 or Linda Peterson at (310) 443-6189.
Very truly yours,
/s/ JIM A. LEONARD
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OCCIDENTAL PETROLEUM CORPORATION
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
TELEPHONE (310) 208-8800
FACSIMILE (310) 443-6690
December 8, 2005
Mr. Barry Stem
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
Occidental Petroleum Corporation
(Form S-4, File No. 333-129721)
Dear Mr. Stem:
On behalf of Occidental Petroleum Corporation (Occidental), we are providing you with this response to the suggestions that you made in a telephone call to me on December 2, 2005, concerning Occidental’s Registration Statement on Form S-4 (the “Form S-4”) in connection with Occidental’s planned acquisition of Vintage Petroleum, Inc. (“Vintage”). In that call you confirmed that you had received Occidental’s fax of December 2, 2005. Additionally, you agreed with our conclusion that Occidental’s acquisition of Vintage would not meet the test as a significant subsidiary pursuant to Rule 11-01(b)(1). However, you also indicated that the Securities and Exchange Commission believes that pro forma financial information and pro forma oil and gas reserve information is important in this case because of the size of the proposed
transaction. Therefore, Occidental proposes to add the information on Attachment I herein to Occidental’s Form S-4 in an amended filing, on page 11, after the section titled SELECTED HISTORICAL FINANCIAL DATA OF VINTAGE.
Securities and Exchange Commission
December 8, 2005
Page 2
If you have any questions or comments regarding the attached materials, please do not hesitate to call me at (310) 443-6765 or Linda Peterson at (310) 443-6189.
Very truly yours,
/s/ JIM A. LEONARD
Jim A. Leonard
Vice President and Controller
Attachment
cc:
Carmen Moncada-Terry
(Securities and Exchange Commission)
Donald P. de Brier
Linda S. Peterson
(Occidental Petroleum Corporation)
Robert W. Cox
(Vintage Petroleum, Inc.)
Patrick S. Brown
Alison S. Ressler
(Sullivan & Cromwell LLP)
Robert J. Melgaard
Robert A. Curry
(Conner & Winters, LLP)
Occidental Response to SEC Phone Call
December 8, 2005
Attachment I
Unaudited pro forma condensed consolidated financial statements
The following unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of Occidental and Vintage, adjusted to reflect the proposed acquisition of Vintage by Occidental. The historical financial information for Occidental and Vintage was derived from their respective Annual and Quarterly Reports on Form 10-K and 10-Q, for the year ended December 31, 2004 and for the nine months ended September 30, 2005, respectively, which are incorporated by reference into this document. The following pro forma information has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and accordingly includes the effects of purchase accounting resulting from the proposed acquisition. It does not include cost savings, synergies, changes to Vintage’s hedging program or certain other adjustments that may
result from the proposed acquisition of Vintage. In addition, the pro forma financial statements and the pro forma per share amounts do not include the effect of Occidental’s announced intention to repurchase 9 million shares of Occidental common stock. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2005 reflects the acquisition as if it had occurred as of that date. The unaudited pro forma condensed consolidated statements of income for the year ended December 31, 2004 and the nine months ended September 30, 2005 reflect the acquisition as if it had occurred on January 1, 2004. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the operating results or financial position of Occidental that would have occurred if the acquisition had been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined
company.
A preliminary allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying unaudited pro forma condensed consolidated financial statements based on currently available information. The actual final purchase price allocation and the resulting effect on income from operations may differ from the pro forma amounts included herein. These pro forma adjustments represent Occidental’s preliminary determination of purchase accounting adjustments and are based on available information and certain assumptions that Occidental believes to be reasonable. Consequently, the amounts reflected in the pro forma financial information are subject to change.
Occidental Response to SEC Phone Call
December 8, 2005
Unaudited Pro forma Condensed Consolidated Statement of Income
For the Nine Months ended
September 30, 2005
($ in millions,
except per-share amounts)
Occidental Historical
Vintage Historical
Pro forma Adjustments
Notes
Occidental Pro forma
Revenues
Net Sales
$10,878
$ 772
$ —
$11,650
Interest, Dividends and Other Income
120
—
—
120
Gains on Dispositions of Assets, net
870
—
—
870
11,868
772
—
12,640
Costs & Other Deductions
Cost of Sales
4,993
379
161
(a)
5,533
Selling, General and Administrative and Other Operating Expenses
1,143
91
—
1,234
Environmental Remediation
29
—
—
29
Exploration Expense
213
30
—
243
Interest and Debt Expense, net
232
35
(5)
(b)
262
6,610
535
156
7,301
Income before Taxes
and Other Items
5,258
237
(156)
5,339
Provision for Domestic and Foreign Income and Other Taxes
1,256
86
(62)
(c)
1,280
Minority Interest
44
—
—
44
Income from Equity Investments
(166)
—
—
(166)
Income from Continuing Operations
$ 4,124
$ 151
$ (94)
$ 4,181
Basic Earnings per Common Share
Income from Continuing Operations
10.25
9.72
Diluted Earnings per Common Share
Income from Continuing Operations
10.10
9.59
Basic Shares
402.4
27.9
430.3
Diluted Shares
408.3
27.9
436.2
Pg. 2 of 11 of Attachment I
Occidental Response to SEC Phone Call
December 8, 2005
Unaudited Pro forma Condensed Consolidated Statement of Income
For the year ended
December 31, 2004
($ in millions,
except per-share amounts)
Occidental Historical
Vintage Historical
Pro forma Adjustments
Notes
Occidental Pro forma
Revenues
Net Sales
$ 11,368
$ 778
$ —
$12,146
Interest, Dividends and Other Income
144
—
—
144
Gains on Dispositions of Assets, net
1
—
—
1
11,513
778
—
12,291
Costs & Other Deductions
Cost of Sales
4,509
294
—
4,803
Selling, General and Administrative and Other Operating Expenses
1,008
92
—
1,100
Depreciation, Depletion & Amortization
1,303
103
202
(a)
1,608
Environmental Remediation
59
—
—
59
Exploration Expense
219
32
—
251
Interest and Debt Expense, net
260
62
(6)
(b)
316
7,358
583
196
8,137
Income before Taxes
and Other Items
4,155
195
(196)
4,154
Provision for Domestic and Foreign Income and Other Taxes
1,708
69
(79)
(c)
1,698
Minority Interest
75
—
—
75
Income from Equity Investments
(113)
—
—
(113)
Gain on Lyondell Stock Issuance
(121)
—
—
(121)
Income from Continuing Operations
$ 2,606
$ 126
$ (117)
$ 2,615
Basic Earnings per Common Share
Income from Continuing Operations
6.59
6.17
Diluted Earnings per Common Share
Income from Continuing Operations
6.50
6.09
Basic Shares
395.6
27.9
423.5
Diluted Shares
401.1
27.9
429.0
(a) Reflects the additional depreciation, depletion and amortization expense to be recognized based on a preliminary purchase price allocation to reflect the Vintage property, plant and equipment at estimated fair value.
(b)
Reflects the amortization of the adjustment to reflect the Vintage long-term debt at estimated fair value.
(c)
Reflects additional income tax benefit calculated by applying prevailing statutory tax rates by jurisdiction to the pro forma adjustments.
Pg. 3 of 11 of Attachment I
Occidental Response to SEC Phone Call
December 8, 2005
Unaudited Pro forma Condensed Consolidated Balance Sheet
As of September 30, 2005
($ in millions)
Occidental Historical
Vintage Historical
Pro forma Adjustments
Notes
Occidental Pro forma
Current Assets
Cash and Cash Equivalents
$ 1,716
$ 181
$ (1,431)
(d)
$ 466
Receivables, net
3,393
141
—
3,534
Other Current Assets
783
59
—
842
Total Current Assets
5,892
381
(1,431)
4,842
Long Term Assets
Property, Plant and Equipment, net of Accumulated Depreciation, Depletion and Amortization
17,134
1,433
4,603
(e)
23,170
Other Assets
2,071
62
—
2,133
25,097
1,876
3,172
30,145
Current Liabilities
Accounts Payable and Accrued Liabilities
4,063
271
50
(f)
4,384
Other Current Liabilities
506
25
—
531
Total Current Liabilities
4,569
296
50
4,915
Long Term Debt, net of Current Maturities and Unamortized Discount
2,896
550
38
(g)
3,484
Deferred and Other Domestic and Foreign Income Taxes
843
88
1,833
(h)
2,764
Other Deferred Credits and Other Liabilities
2,550
132
—
2,682
Minority Interest
330
—
—
330
Stockholders’ Equity
Additional Paid-in Capital
4,883
—
2,061
(i)
6,944
Retained Earnings
9,419
—
—
9,419
Other Equity
(393)
810
(810)
(j)
(393)
13,909
810
1,251
15,970
$ 25,097
$1,876
$ 3,172
$30,145
(d) Reflects the cash purchase price component of the acquisition of approximately $1.33 billion and the cash settlement of Vintage stock incentive awards of approximately $101 million.
(e)
Reflects the preliminary purchase price allocation to record the Vintage property, plant and equipment at estimated fair value.
(f)
Reflects the estimated severance liability for Vintage employees and other transaction-related costs.
(g)
Reflects the adjustment to reflect Vintage’s long-term debt at estimated fair value.
(h)
Reflects the additional deferred tax liability resulting from the preliminary allocation of the purchase price to Vintage’s assets and liabilities.
(i)
Reflects issuance of Occidental shares for the stock component of the purchase price.
(j)
Reflects the elimination of the historical equity of Vintage.
Pg. 4 of 11 of Attachment I
Occidental Response to SEC Phone Call
December 8, 2005
The following unaudited pro forma consolidated information for oil and gas producing activities is derived from information contained in Occidental and Vintage’s respective Annual and Quarterly Reports on Form 10-K and
10-Q, for the year ended December 31, 2004 and for the nine months ended September 30, 2005, respectively, which are incorporated by reference into this document. However, this information is not necessarily indicative of what Occidental’s reserves, production and other related information would have been at the dates or for the periods presented nor is it necessarily indicative of future reserves, production or other related information. The following tables summarize the pro forma consolidated estimated proved reserves of Occidental as of December 31, 2004, giving effect to the acquisition of Vintage as if such acquisition had occurred as of that date and the pro forma consolidated average daily production for the nine months ended September 30, 2005, giving effect to the acquisition of Vintage as if such acquisition had occurred on January 1, 2005. The followin