Occidental to Acquire Vintage Petroleum

Occidental Petroleum has agreed to acquire, by means of a merger, Vintage Petroleum, Inc. (NYSE:VPI) for $20.00 per Vintage share in cash, plus 0.42 Occidental shares per Vintage share. The total purchase consideration for Vintage's approximately 68.3 million shares on a fully diluted basis, including debt assumption net of cash, is approximately $3.8 billion. As part of this transaction, Oxy plans to implement a stock re-purchase program for 9 million Oxy shares in the open market or otherwise, from time-to-time, subject to market conditions and retention of the company's credit rating.

"Vintage Petroleum is an excellent strategic fit for Oxy, adding to our core areas in California, the Middle East and Latin America," said Dr. Ray R. Irani, Chairman, President and Chief Executive Officer of Occidental Petroleum Corporation. "On a per share basis, we expect the acquisition to be immediately accretive to cash flow, free cash flow and earnings. At the end of 2004, Vintage had proved reserves of 437 million barrels of oil equivalent, 50 percent of which were located in Argentina and 32 percent in the U.S. In addition, according to reports prepared for Vintage, the company had 421 million equivalent barrels of probable and possible reserves. During the second quarter of 2005, Vintage's total production averaged approximately 76,000 equivalent barrels per day, with Argentina and California contributing 37,000 and 11,000 equivalent barrels per day, respectively. We hope to double Vintage's production from Argentina within five years as well as increase production from California by up to 20 percent over the next few years."

Vintage's operating assets in Argentina and California provide opportunities to increase production and reserves through the application of enhanced oil recovery and exploitation techniques Oxy has employed successfully in other operations. Oxy will incorporate Vintage's California assets into its nearby operations in the southern San Joaquin Valley and in the Sacramento Valley. Oxy also will integrate Vintage's Latin American assets into its existing position in Latin America, where it is one of the largest producers in Colombia and Ecuador, with combined second quarter 2005 net production of 70,000 barrels of oil per day.

Vintage's second quarter production in Yemen averaged nearly 4,000 barrels of oil per day, and its assets, which are contiguous to Oxy's existing operations, offer attractive opportunities for future growth and operational synergies.

In announcing the acquisition, Oxy indicated its interest in divesting non-strategic Vintage assets located in East Texas, along the Gulf Coast and in the Mid-Continent region. These assets accounted for approximately 19,000 equivalent barrels per day of Vintage's second quarter 2005 production.

At the end of 2004, Oxy had total proved reserves from all sources of 2.53 billion equivalent barrels. The addition of Vintage's proved reserves is expected to increase Oxy's reserves to a record high of approximately 3 billion equivalent barrels and extend Oxy's reserve life at current production levels from 12.2 years to 12.7 years.

Oxy expects to continue growing both reserves and production from the Vintage assets it retains through a capital program with estimated spending in the range of $150 million to $200 million annually. In addition, Oxy expects to realize significant synergies with G&A expense reductions of $40 to $60 million per year and exploration capital expense reductions of about $100 million per year.

Oxy expects to finance the acquisition and the stock re-purchase program from $1.7 billion of cash on hand as of September 30, 2005, plus additional cash generated in the fourth quarter. In addition, Vintage is expected to have approximately $225 million in cash at year-end 2005, and Oxy will be assuming $550 million of Vintage debt.


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