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Oxy Pondering Sale of CanadianOxy Shares

August 2, 1999
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Oxy Pondering Sale of CanadianOxy Shares

Occidental Petroleum Corp. of Los Angeles is reviewing its investment in Canadian Occidental Petroleum Ltd. and considering all options, the company said. Oxy's investment in CanadianOxy of Calgary dates back to 1971, and Occidental currently owns 40.2 million shares, or about 29%, of the company's outstanding common shares.

In response to Oxy's announcement, CanadianOxy's board formed an independent committee to consider proposals that may be received from Occidental or a third party. The committee is recommending implementation of a shareholder rights plan.

In January CanadianOxy said it laid off 112 staffers in a corporate restructuring due to the sale of more than a billion dollars of non-core assets, as well as reduced capital investment in response to low oil prices. The layoffs included 66 staff in Calgary. Over the previous two years, CanadianOxy had sold assets worldwide, including significant dispositions in Canada. As a result, the Canadian division held a review of operations and processes.

CanadianOxy sold oil and gas properties worth $370 million in order to take the bite out of low commodity prices, the company said in December 1998, bringing its 1998 property sales to $630 million. The company did not disclose who bought the properties. An additional $235 million of sales were expected before the end of January 1999. Properties in Canada and the United Kingdom were included in the sale. The Canadian assets were located in northeast British Columbia, west central Alberta, and northeast Alberta. The lands produce 125 MMcf/d of gas and 6,000 b/d, and proved reserves total 290 Bcf of gas and 20 million barrels of oil annually.

"By the time the last of these dispositions close in January 1999, our long-term debt will be about $1.9 billion, credit lines will be replenished, and we'll be in good shape to weather volatility in commodity prices," Marv Romanow, CanadianOxy's chief financial officer, said at the time. "We will be drilling a number of prospects in 1999 which could require significant follow-up capital. And if this environment persists, we expect to see attractive opportunities to add to our portfolio."

Joe Fisher, Houston

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