LOS ANGELES, April 30, 1999 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) said today that 1998 and 1999 are "pivotal transition years" in achieving sustained and profitable growth.
Speaking to stockholders at the company's annual meeting, Chairman and Chief Executive Officer Dr. Ray R. Irani said that, despite turbulence cause by historic low energy and chemical prices, "We made substantial progress by remaining focused on our long-term strategy to strengthen Occidental."
He said Occidental's goal is to build its oil and gas operations into one of the world's leading exploration and development companies and to enhance its leadership position in chemicals.
In the past year, Occidental has completed a number of transactions that are strengthening the company: the sale of its MidCon natural gas transmission unit, the purchase of the Elk Hills oil and gas field, the sale of $1 billion in underperforming oil and gas assets, the multi-nation swap of oil and gas assets with Royal Dutch/Shell, and the formation of two chemical alliances creating the largest producers of ethylene and polyvinyl chloride in North America.
To ensure that the company remains strong through the current cyclical downturn in prices, Occidental has taken steps to reduce capital spending and cut costs.
The company now expects to spend approximately $450 million in capital in 1999, compared with nearly $1.1 billion in 1998. Earlier this year, the 1999 spending plan was $350 million.
By the end of 2000, the company expects to reduce overhead costs by $250 million. In 1997, overhead costs totaled $730 million.
Dr. Irani noted that energy prices have begun to strengthen recently and said that Occidental expects prices for PVC and related chemicals to improve later this year as export markets strengthen. Higher prices will have significant impact on Occidental's income.
Occidental's President Dr. Dale R. Laurance said the company has made significant progress simplifying and reducing costs in its oil and gas operations.
In the past year, Occidental's oil and gas unit has reduced from 21 to 11 the number of countries where it operates. In addition, direct operating costs have been reduced 23 percent to $1.77 per barrel since 1998 and are expected to be reduced another 25 percent this year to about $1.35 per barrel, Dr. Laurance said.
Worldwide, Occidental expects its net oil production in 1999 to remain steady at about 320,000 barrels per day, and natural gas production is expected to increase by nearly 4 percent to 730 million cubic feet per day.
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.