Occidental Replaces 245% of 2006 Production
Occidental Petroleum reports that in 2006 the company's consolidated subsidiaries had preliminary proved reserve additions from all sources of 518 million barrels of oil equivalent (BOE) compared to production of 211 million BOE, for a production replacement rate of 245 percent. Occidental incurred $8.83 billion in costs for oil and gas property acquisitions and exploration and development activities. Included in the 2006 acquisitions cost is a related step-up for deferred income taxes of $1.34 billion for the purchase of Vintage Petroleum Inc. There was no goodwill recorded for this acquisition. At the end of 2006, Occidental's consolidated reserves-to-production ratio, assuming production remained at the 2006 level, was 13.6 years.
At year-end 2006, Occidental's worldwide proved reserves, on a consolidated basis, totaled 2.87 billion BOE compared to 2.57 billion BOE at the end of 2005.
The 2006 consolidated proved reserve additions totaled 518 million BOE. Acquisitions provided 63%, improved recovery 27%, extensions and discoveries 7% and revisions of previous estimates provided 3% of the total proved reserve additions.
Purchases of proved reserves added 326 million BOE, of which 143 million BOE were in the United States and 178 million BOE were in Latin America. The Vintage acquisition added proved reserves of 160 million BOE in Argentina and 8 million BOE in Bolivia with the remainder in the United States and Yemen, of which 66 percent were proved developed reserves.
Improved recovery added 141 million BOE of proved reserves. In the United States, improved recovery additions in the Permian Basin were 43 million BOE and in the Elk Hills field were 28 million BOE. Additions were 23 million BOE in Argentina and 11 million BOE in Colombia. Occidental has successfully implemented programs which include gas flood and water flood techniques as well as infill drilling and expansion of CO2 floods.
Reserve additions from extensions and discoveries, which result from successful exploitation programs, totaled 34 million BOE. These additions were 13 million BOE in the United States, 14 million BOE in the Middle East, and 7 million BOE in Argentina. Revisions of previous estimates added net reserves of 17 million BOE.
In 2006, Occidental increased proved developed reserves to 78 percent of total proved reserves from 74 percent at year-end 2005. The Dolphin project transferred 134 million BOE to the proved developed category during 2006, with 132 million BOE undeveloped reserves remaining at December 31, 2006 for this project. In the United States, the Elk Hills field transferred 56 million BOE and the Permian Basin transferred 33 million BOE into proved developed reserves from undeveloped.
For the three-year period, 2004-2006, Occidental's consolidated proved reserve additions totaled 1.141 billion BOE, and total production equaled 575 million BOE, for a reserve replacement rate of 198 percent. Over the past three years, Occidental incurred $14.76 billion in costs for property acquisitions and exploration and development activities, which includes the step-up for deferred income taxes of $1.34 billion for the purchase of Vintage Petroleum Inc. As a result of the seizure of the Ecuador Block 15 assets in May 2006, Occidental has classified its Block 15 operations as discontinued operations on a retrospective application basis. Disclosures in this press release are for continuing operations as of December 31, 2006; accordingly, Ecuador reserves and costs have been excluded.
Occidental also had investments in other interests that recorded 7 million BOE of proved reserve reductions in 2006 compared to production of 8 million BOE. These interests accounted for 30 million BOE of proved reserves at year-end 2006, compared to 45 million BOE at the end of 2005. On January 18, 2007, Occidental closed the sale of its 50-percent interest in the Russian Vanyoganneft Joint Venture in western Siberia to TNK-BP. The Russian Vanyoganneft Joint Venture proved reserves at year-end 2006 were 33 million BOE and costs incurred during 2006 were $26 million. These amounts have not been removed from the presentation of 2006 reserve numbers in this release.
During 2004-2006, proved reserve additions from the other interests were 5 million BOE, and production totaled 25 million BOE. During this three-year period, the costs incurred for property acquisitions and exploration and development activities for these other interests totaled $44 million.
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