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Gas industry

Occidental Petroleum Reaches Tentative Settlement with US Department of Energy

Strategic Insights

— 1 min read

Occidental Petroleum Corp., a multinational oil and gas company, has reached a tentative settlement with the U.S. Department of Energy (DOE) for $275 million. The settlement relates to OXY USA Inc.'s purchases and sales of crude oil between October 1979 and January 1981, prior to Occidental's acquisition of the company. The agreement involves no admission of wrongdoing by OXY USA.

Key Takeaways:

  • The settlement amount of $275 million will be paid in two parts: $100 million upfront and five annual payments of $35 million plus 7.6% interest.
  • The settlement covers OXY USA Inc.'s purchases and sales of crude oil between October 1979 and January 1981.
  • The agreement does not imply that OXY USA Inc. violated DOE regulations.
  • Occidental expects its reported earnings in the second quarter of 1995 to be similar to those in the first quarter of 1995 after adjusting for the settlement.
  • The company still aims to reduce its debt by at least $1 billion over the next two years.
  • Notable parties involved include Howard Collins (media) and Kenneth J. Huffman (investors) from Occidental Petroleum.
  • The settlement will be published in the Federal Register, and interested parties will have at least 30 days to comment.

Statistics:

  • Settlement amount: $275 million.
  • Upfront payment: $100 million.
  • Annual payments: 5 payments of $35 million plus 7.6% interest.
  • Interest rate: 7.6%.
  • Period covered by the settlement: October 1979 to January 1981.
  • Expected earnings impact: Occidental's reported earnings in the second quarter of 1995 will be approximately equal to those in the first quarter of 1995.

Sources:

  • Origination Date: June 27, 1995.
  • Occidental Petroleum Corp. (NYSE: OXY).
  • U.S. Department of Energy.
  • OXY USA Inc. (formerly Cities Service).

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