EARNINGS - ARNIES TOP 1 / Canadian Occidental reports 1997 Results
CALGARY, Feb. 27 /CNW/ - Canadian Occidental Petroleum Ltd. reports
record financial and operating results for the fourth consecutive year. These
results were driven by the successful acquisition and integration of Wascana
Energy Inc. and drilling success in Canada and Yemen. Consolidated annual cash
flow from operations increased to $865 million ($6.34 per share) from $766
million ($5.64 per share) in 1996. Cash flow for the fourth quarter achieved
an all-time high, totaling $242 million ($1.77 per share) compared to $214
million ($1.57 per share) in the fourth quarter of 1996.
Net income for the year totaled $139 million ($1.02 per share) compared
to $190 million ($1.40 per share) in 1996. Lower net income was the result of
the non-tax deductibility of depletion associated with the Wascana acquisition
and higher exploration expense. For the fourth quarter, net income was $15
million ($0.11 per share) compared to $47 million ($0.34 per share) in the
fourth quarter of 1996.
CanadianOxy produced an average of 186,500 barrels of crude oil per day
(68 million barrels for the year), compared to 137,600 barrels per day (50
million barrels) in 1996. This increase was largely due to the acquisition of
Wascana early in the second quarter and the intensive capital program which
followed. In Yemen, production increased seven per cent, establishing a new
record for the Masila Project of 189,600 barrels per day (98,600 net to
CanadianOxy). Syncrude also achieved record production, with CanadianOxy's
share averaging 15,000 barrels per day.
Natural gas production averaged 388 million cubic feet per day (142
billion cubic feet), a 59 per cent increase over 1996. This increase was
primarily due to the acquisition of Wascana and subsequent capital program and
the successful exploitation of the Vermilion fields in the Gulf of Mexico.
With the significant growth in our asset base, capital reinvestment
increased from $632 million to $925 million, the largest capital program in
the Company's history. CanadianOxy invested $456 million in its Western
Canadian exploration and development program. A major focus of this program
was to bring on-stream a large volume of proved undeveloped reserves acquired
in the Wascana acquisition. Development of the Ejulebe field in Nigeria and
exploration activities in Indonesia, Colombia and Australia also contributed
to the increased investment.
Total proved and probable reserves increased 35 per cent to 935 million
barrels equivalent, net of production of 86 million barrels. Reserve additions
totaled 331 million barrels of oil equivalent, representing a production
replacement of almost four times. Exploration, development and performance
accounted for 142 million barrels of new reserves, which equals 1.7 years of
production at 1997 rates. At year end, CanadianOxy's reserve life index was
eight years of production on a proved basis and eleven years on a proved and
probable basis.
CanadianOxy's conventional reserve replacement cost averaged $6.74 per
barrel equivalent for proved reserves and $6.93 per barrel for proved and
probable reserves in 1997. Over the past five years, costs have averaged $7.93
per barrel equivalent for proved reserves and $6.71 on a proved and probable
basis. With the expansion of its development project portfolio in North
America and Yemen and attractive exploration opportunities in the Gulf of
Mexico, Indonesia, Australia, Colombia and West Africa, CanadianOxy expects to
see substantial low-cost reserves growth in the next several years.
CanadianOxy's Chemical operations increased sodium chlorate sales volumes
10 per cent despite a slowdown in the pulp and paper industry which caused
modest price erosion. Cash flow from this business remained steady at $87
million while capital investment totaled $18 million.
For 1998, capital investment is budgeted at $800 million. Approximately
95 per cent is for investment in oil and gas projects and approximately 30 per
cent of this investment is for exploration activities. In North America,
exploration is targeted at reserve additions from a significant portfolio of
undeveloped acreage in Western Canada and the deeper waters of the Gulf of
Mexico. International exploration is focused primarily on seismic acquisition
and drilling of recently acquired properties in Australia, Indonesia and
Colombia.
At year end, CanadianOxy's net debt was less than $2.1 billion,
representing 2.4 times 1997 cash flow. A successful asset disposition program
repaid one quarter of the cost of the Wascana acquisition, enabling the
Company to achieve its debt target one full year ahead of schedule.
Commenting on the year, Chief Executive Officer, Victor Zaleschuk said,
''CanadianOxy underwent a very significant transformation in 1997 - we've
become a much stronger Company as a result. We now have a solid base for
significant low-cost growth in Western Canada, allowing the Company to
aggressively pursue new international ventures with potential upside similar
to our Masila Project in Yemen.''
The Board of Directors has declared the regular quarterly dividend of
$0.075 per common share payable April 1, 1998 to shareholders of record on
March 10, 1998.
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CANADIAN OCCIDENTAL PETROLEUM LTD.
December 31, 1997
FINANCIAL HIGHLIGHTS
(Amounts in millions of Canadian dollars except per share data)
Three Months Twelve Months
-------------------- --------------------
1997 1996 1997 1996
-------------------- --------------------
Net Sales $ 465 $ 382 $ 1,681 $ 1,362
Cash Flow from Operations $ 242 $ 214 $ 865 $ 766
Per Common Share $ 1.77 $ 1.57 $ 6.34 $ 5.64
Net Income $ 15 $ 47 $ 139 $ 190
Per Common Share $ 0.11 $ 0.34 $ 1.02 $ 1.40
Capital Expenditures $ 348 $ 213 $ 925 $ 632
Acquisitions $ - $ - $ 1,680 $ -
Net Debt $ 2,091 $ 463 $ 2,091 $ 463
CASH FLOW FROM OPERATIONS
(Amounts in millions of Canadian dollars)
Three Months Twelve Months
-------------------- --------------------
1997 1996 1997 1996
-------------------- --------------------
Cash Flow from Operations
Oil and Gas
Yemen $ 118 $ 140 $ 455 $ 480
Canada 77 33 246 105
United States 49 49 176 170
Alternate Fuels 22 18 62 51
North Sea 12 13 56 48
Other Countries - 1 - 3
Marketing 7 - 12 -
-------- -------- -------- --------
285 254 1,007 857
Chemicals 20 21 87 90
-------- -------- -------- --------
305 275 1,094 947
Interest and other
Corporate Items (38) (15) (107) (62)
Income Taxes (25) (46) (122) (119)
-------- -------- -------- --------
$ 242 $ 214 $ 865 $ 766
-------- -------- -------- --------
-------- -------- -------- --------
OPERATING PROFIT
(Amounts in millions of Canadian dollars)
Three Months Twelve Months
-------------------- --------------------
1997 1996 1997 1996
-------------------- --------------------
Operating Profit
Oil and Gas
Yemen $ 77 $ 84 $ 279 $ 268
Canada 1 - 17 29
United States 10 9 60 56
Alternate Fuels 18 15 49 39
North Sea 3 4 21 (5)
Other Countries (44) (33) (89) (55)
Marketing 4 - 4 -
-------- -------- -------- --------
69 79 341 332
Chemicals 9 15 56 66
-------- -------- -------- --------
78 94 397 398
Interest and other
Corporate Items (41) (19) (119) (79)
Income Taxes (22) (28) (139) (129)
-------- -------- -------- --------
Net Income $ 15 $ 47 $ 139 $ 190
-------- -------- -------- --------
-------- -------- -------- --------
PRODUCTION HIGHLIGHTS
Three Months Twelve Months
-------------------- --------------------
1997 1996 1997 1996
-------------------- --------------------
Crude Oil, Condensate and
Natural Gas Liquids
(thousand barrels per day)
Yemen 98.9 88.8 98.6 92.1
Canada 72.2 14.7 55.6 13.8
United States 13.3 12.8 12.7 13.4
Alternate Fuels 17.1 14.8 15.0 14.5
Other Countries 5.2 3.2 4.6 3.8
-------- -------- -------- --------
206.7 134.3 186.5 137.6
-------- -------- -------- --------
-------- -------- -------- --------
Natural Gas
(million cubic feet
per day)
Canada 302 130 255 129
United States 98 94 95 78
North Sea 29 39 38 37
-------- -------- -------- --------
429 263 388 244
-------- -------- -------- --------
-------- -------- -------- --------
AVERAGE COMMODITY PRICES
(Amounts in Canadian dollars except WTI)
Three Months Twelve Months
-------------------- --------------------
1997 1996 1997 1996
-------------------- --------------------
Crude Oil (per barrel)
Yemen $25.58 $30.78 $25.60 $27.42
Canada 17.26 26.73 18.16 24.92
United States 26.13 32.86 27.32 29.43
South America 16.44 16.81 16.10 16.16
Corporate Average 22.80 30.22 23.16 27.06
Synthetic Crude Oil
(per barrel) $28.06 $32.73 $28.19 $29.44
WTI Average (U.S.$) $19.94 $24.52 $20.61 $22.02
Natural Gas
(per thousand cubic feet)
Canada $2.01 $1.93 $1.81 $1.56
United States 4.20 4.30 3.73 4.04
North Sea 4.31 4.95 5.02 4.61
Corporate Average 2.65 3.21 2.59 2.82
RESERVES SUMMARY
December 31, 1997 December 31, 1996
--------------------------- ---------------------------
Proved Probable Total Proved Probable Total
-------- -------- -------- -------- -------- --------
Crude Oil and
Natural Gas
Liquids
(million barrels)
Yemen 156 106 262 109 97 206
Canada 183 48 231 40 18 58
United States 22 3 25 21 6 27
Other
Countries 14 35 49 14 84 98
Alternate
Fuels 168 45 213 174 18 192
-------- -------- -------- -------- -------- --------
543 237 780 358 223 581
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Natural Gas
(billion cubic
feet)
Canada 759 215 974 303 125 428
United States 188 22 210 193 56 249
North Sea 87 46 133 101 46 147
-------- -------- -------- -------- -------- --------
1,034 283 1,317 597 227 824
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
(1) Reserve quantities are CanadianOxy's working interest share
determined using escalated price assumptions.
(2) Probable reserves are unrisked.
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