Occidental Petroleum Corporation chairman and CEO Dr. Ray Irani was no doubt in buoyant mood on Friday when he reported on the company’s 2009 financial and operational achievements at Oxy’s annual stockholders’ meeting on Friday in Santa Monica, California.
Highlights included record oil and gas production, significant reserves growth and the highest year-end stock price in the company’s history, and a net-income for the year of US$2.9 billion.
“We are gratified by Oxy’s strong financial performance in 2009, a year that tested strategic and execution capabilities throughout the worldwide oil and gas industry. Amid a challenging business environment, we increased our worldwide production to the highest volume in Oxy’s history, and we achieved significant oil and gas reserve replacement of over 200 percent. We were able to achieve this growth while reducing production costs, maintaining our low debt-to-capitalization ratio and achieving exemplary safety and environmental performance,” Dr. Irani said.
Oxy increased worldwide production by 7% in 2009 to a company-record 645,000 barrels of oil equivalent (BOE) per day while leading its industry peers in operating income per BOE for the 11th consecutive year. In addition, Oxy replaced 206% of its production in 2009, adding a total of 483 million BOE in proved reserves.
Oxy ended 2009 with net income of $2.9 billion, net debt after cash of less than $1.6 billion, and a debt-to-capitalization ratio of 9% — among the lowest of the major oil and gas companies.
Oxy’s year-end closing stock price of $81.35 per share was the highest year-end stock price in the company’s history and 36% higher than the closing price at year-end 2008. Total stockholder return in 2009, based on stock price appreciation plus dividend reinvestment, was 38%.
Dr. Irani announced last week that Oxy’s board of directors declared a 15% increase in the company’s annual dividend to stockholders. Oxy has raised the dividend every year since 2002. “The Board of Directors believes that dividend growth is an important part of delivering strong returns to Oxy’s stockholders,” Dr. Irani said.
Stockholders also received updates on significant 2009 activities in Oxy’s three core oil and gas producing regions. During the year, 58% of Oxy’s worldwide production was generated in the United States, 29% in the Middle East/North Africa and 13% in Latin America.
Middle East
Oxy engaged in several transactions in 2009 with its partners in the Middle East, a key growth region for the company. In Bahrain, Oxy is partnering with Mubadala of Abu Dhabi on a project to redevelop the Bahrain field, site of the first oilfield discovery in an Arab Gulf state. Field operations began on December 1, 2009. In addition, partnering with a consortium led by Eni in the fourth quarter of 2009, Oxy was awarded a license for development of the giant Zubair oilfield in southern Iraq. The signing of the contract with the Iraqi government, in January 2010, made Oxy the first of only two U.S. companies on the ground floor of the new investment opportunities in Iraq.
In the United States, Oxy’s 2009 growth was most evident in California, where the company’s exploration team made a significant discovery in Kern County. Announced in July, the discovery is estimated to contain between 150 million and 250 million gross BOE of oil and natural gas reserves. It is believed to be the state’s largest in 35 years and is one of the largest in Oxy’s 90-year history. Oxy also strengthened its U.S. holdings during 2009 with numerous acquisitions of properties adjacent to key operations in Texas, where Oxy is the No. 1 oil producer, and California, where it is the No. 1 natural gas producer and No. 2 oil producer.
