Occidental's strong financial performance has built upon strategic transactions that transformed the company and established it in the industry. We continually manage our asset portfolio with an eye toward adding value through new acquisitions or, as we deem appropriate, through divestment.
Our stable, low-risk projects in the U.S., and development opportunities in the Middle East region and Latin America yield strong production growth and are expected to generate high returns on capital employed. For capital planning purposes, we require that proposed investments meet stringent return expectations: 15 percent or more for domestic projects and 20 percent or more for international projects. Our capital allocation philosophy is driven by the goal of creating long-term value for our stockholders.
Since 2013, Occidental has strategically divested of lower-margin, lower-return oil and gas production, and replaced it with higher-margin, higher-return production from our Permian Resources business.
of Seminole-San Andres Unit Properties/Monetization of Non-Strategic Permian
Resources Acreage: Occidental completed a number of purchase and
sale transactions in the Permian Basin that enhanced the value of both the
company’s Enhanced Oil Recovery (EOR) and Permian Resources businesses. On a
combined basis, these transactions required no net cash outlay and resulted in
Seminole-San Andres EOR properties:
The transaction included the acquisition of
working interests in the Seminole-San Andres Unit, a premier CO2
flood; interests in the Seminole Gas Processing Plant; source fields at Bravo
Dome Unit and West Bravo Dome Unit; and the Sheep Mountain and Rosebud CO2
pipelines. Occidental has increased ownership interest in these EOR assets
since 2000. With this acquisition, the Seminole-San Andres Unit became
Occidental’s largest operated, domestic oil-producing EOR unit.
of non-strategic Permian Resources acreage: Occidental
concurrently completed transactions to divest a combined 13,000 net acres of
non-strategic acreage in Pecos, Andrews and Martin Counties, while adding
incremental acreage to enhance a future core development area in Glasscock
Sale of South Texas Operations: Occidental divested its non-core South Texas gas properties.
Ingleside Ethylene cracker: OxyChem and
Mexichem began operations at their joint venture ethylene cracker in Ingleside,
Texas. The cracker, which is operated by OxyChem, has the capacity to produce
1.2 billion pounds of ethylene per year and provides OxyChem with an ongoing
source of ethylene for manufacturing vinyl chloride monomer, which Mexichem
will use to produce polyvinyl chloride (PVC resin) and PVC piping systems. The
companies have a 20-year supply agreement.
Acquisition of Permian Basin Resources Properties: Occidental increased its working interests in 35,000 net acres of producing and non-producing leasehold in Reeves and Pecos Counties in the Permian Basin.
Acquisition of Permian EOR Properties: Occidental acquired additional working interests in several EOR properties where Occidental was already an owner or operator, including interests in Seminole-San Andres. These properties included roughly 4,000 boepd of production.
Sale of Eagle Ford Properties: Occidental divested largely non-operated Eagle Ford properties located in South Central Texas.
Oil Export Terminal Opens: The Oxy Ingleside Energy Center (OIEC) Terminal, located at the Port of Corpus Christi in Ingleside, Texas, began exporting crude oil in October 2016. The crude oil storage and export facility provides access to international and domestic markets.
Adnoc Sour Gas (Al Hosn Gas): In January, a joint venture between Occidental and Abu Dhabi National Oil Company (ADNOC) announced that production had begun at the Al Hosn Gas Project in the United Arab Emirates. The 30-year joint venture was formed to develop the Shah Field, one of the largest gas fields in the Middle East.
Non-core Operations: Occidental minimized or ceased its involvement in non-core operations in the Middle East and North Africa, including Bahrain, Iraq, Libya and Yemen. The company also sold its interest in the Williston Basin of North Dakota and agreed to sell its Piceance Basin operations in Colorado. The Piceance sale closed in 2016.
Spin-off of California Operations: In November, Occidental completed the spin-off of its California oil and gas business into an independent, publicly-traded company, California Resources Corporation.
Pipelines: In September, Occidental's Centurion Pipeline unit expanded its Permian Basin oil pipeline infrastructure with the activation of the Cline Shale pipeline.
In November, Occidental sold a portion of its investment in the General Partner of Plains All-American Pipeline, L.P., and its interest in the BridgeTex pipeline, while retaining long-term, cost-advantaged shipping commitments on BridgeTex, which extends from the Permian Basin to the Houston-Gulf Coast area.
Chlor-alkali Plant in New Johnsonville, Tennessee: In March, OxyChem completed construction and began operating its membrane cell chlor-alkali plant in New Johnsonville, Tennessee.
Sale of Hugoton Field Assets: Occidental completed the divestment of its non-core Hugton Field assets.