Item 7.01 - Regulation FD Disclosure
On February 13 and 14, 2014, Occidental issued press releases with respect to
the transactions disclosed in Item 8.01 below. The press releases are furnished
as Exhibits 99.1, 99.2, 99.3, and 99.4. The information in this Item 7.01 and
the exhibits shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, except
as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events
Increase in Dividend and Share Repurchase Authorization
On February 13, 2014, Occidental announced that its Board of Directors has
increased the Company's dividend to an annual rate of $2.88 per share. The $.72
per share quarterly dividend will be payable on April 15, 2014, to stockholders
of record as of March 10, 2014.
The Board also has authorized the repurchase of an additional 30 million shares
of the Company's common stock. The share repurchase authorization remaining at
the end of 2013 was 7 million shares. The program does not require purchases to
be made within a particular timeframe. Share repurchases will continue to be
funded from available cash from operations, excess cash on hand and proceeds
from asset sales as part of the previously announced strategic review.
Occidental expects to announce additional increases to its share repurchase
authorization as the strategic review progresses.
Sale of Hugoton Field Assets as Part of Company's Strategic Review
On February 13, 2014
, Occidental announced that it has reached a definitive
agreement to sell its Hugoton Field assets to an undisclosed buyer for pre-tax
proceeds of $1.4 billion
. This sale was approved by the Board of Directors as
part of Occidental's strategic review to streamline and focus operations where
it has depth and scale in order to better execute the Company's long-term
strategy and enhance value for shareholders.
The Hugoton Field properties comprise interests in more than 1.4 million net
acres in one of the largest natural gas fields in the United States
, the Oklahoma
panhandle and eastern Colorado
average net production from the Hugoton Field properties in 2013 was
approximately 110 million cubic feet equivalent per day, of which approximately
30 percent was oil.
Occidental anticipates the transaction will be completed by April 30, 2014
subject to regulatory approval and transaction adjustments. The Company expects
to report a gain on the sale. Proceeds from this transaction will be used to
partially fund the announced increase to the Company's share repurchase program.
Separation of California Business
On February 14, 2014
, Occidental announced the next phase of its strategic
review. The Board of Directors has authorized the separation of Occidental's
assets into an independent and separately traded company.
The new California
company will have 8,000 employees and contractors and will
establish its headquarters in the state. It will be California's
gas producer and the state's largest oil and gas producer on a gross-operated
barrels of oil equivalent basis. This new company will be the largest oil and
gas mineral acreage holder in the state with approximately 2.3 million net
acres, and will have major operations in the state's high-potential oil and gas
basins, including Los Angeles
, San Joaquin
.Occidental Petroleum Corporation
will be headquartered in Houston, Texas
will have exploration and production operations in the Permian Basin
parts of Texas
, the Middle East
region and Colombia
. It will also have a
midstream and marketing segment and a chemical subsidiary, OxyChem. Each of
these segments is a leader in its respective sector. Consistent with
Occidental's strategic review to focus in core businesses, it also plans to
reduce its exposure to proprietary trading activities related to crude oil and
The Board also announced that Mr. Chazen
has been asked to remain as President
and CEO to lead the successful completion of the strategic review and ensure a
suitable management team is in place for Occidental. He has agreed to do so
through the 2016 Annual Meeting of Stockholders. The
Board also has asked Ambassador Edward P. Djerejian
, who was elected as Chairman
of the Board last May, to remain as Chairman for an additional one-year term.
Occidental will continue planning for the separation of the businesses,
including determining management and governance of the California
Company expects to announce the California
management team in the third quarter
of this year and complete the separation by the end of 2014 or the early part of
The separation is subject to market conditions, customary regulatory approvals
including the sufficiency of a Form 10 filing with the SEC
, execution of
intercompany agreements, acceptance of the new company's stock for listing and
final approval by the Board of Directors. Occidental expects to incur one-time
charges related to the separation, which will be quantified at a later date.
The Company is executing the actions announced in October 2013
and will continue
to disclose material developments as they occur.
The information on the attachment to the press release on Exhibit 99.4 is hereby
incorporated by reference in this Item 8.01.
Portions of this report contain forward-looking statements and involve risks and
uncertainties that could materially affect expected results of operations,
liquidity, cash flows and business prospects. Actual results may differ from
anticipated results sometimes materially, and reported results should not be
considered an indication of future performance. Factors that could cause results
to differ materially include, but are not limited to: reorganization or
restructuring of Occidental's operations; delay of, or other negative
developments affecting the separation; inability to obtain new financing for the
company, regulatory approvals or satisfactory tax rulings; approval
of the final terms by our board of directors; inability of the separated
businesses to operate independently; global commodity pricing fluctuations;
supply and demand considerations for Occidental's products; higher-than-expected
costs; the regulatory approval environment; not successfully completing, or any
material delay of, any field developments, expansion projects, capital
expenditures, efficiency projects, acquisitions or dispositions;
lower-than-expected production from development projects or acquisitions;
exploration risks; general economic slowdowns domestically or internationally;
political conditions and events; liability under environmental regulations
including remedial actions; litigation; disruption or interruption of production
or manufacturing or facility damage due to accidents, chemical releases, labor
unrest, weather, natural disasters, cyber attacks or insurgent activity; failure
of risk management; changes in law or regulations; or changes in tax rates.
Words such as "will," "expects," "commitment" or similar expressions that convey
the prospective nature of events or outcomes generally indicate forward-looking
statements. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this report. Unless legally
required, Occidental does not undertake any obligation to update any
forward-looking statements, as a result of new information or future events or
otherwise. Material risks that may affect Occidental's results of operations and
financial position appear in Part I, Item 1A "Risk Factors" of the 2012 Form
10-K. Occidental posts or provides links to important information on its website
Item 9.01. Financial Statements and Exhibits
99.1 New Director Press release dated February 14, 2014.
99.2 Dividend and Share Repurchase Press release dated February 13, 2014.
99.3 Sale of Hugoton Press release dated February 13, 2014.
99.4 Separation of California Press release dated February 14, 2014.