| (3) | Unlevered Free Cash Flow is defined as net income (loss) before interest and taxes, less unlevered taxes, plus depreciation and amortization, plus (less) changes in working capital, less capital expenditures (and other investing cash flows excluding capitalized interest expense), plus non-cash exploration expense, plus other non-cash items. Unlevered Free Cash Flow is a non-GAAP financial measure as it excludes amounts included in net income (loss), the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net income (loss) or other measures derived in accordance with GAAP. Unlevered Free Cash Flow differs from the definition of Adjusted Free Cash Flow historically provided by Anadarko due to its exclusion of interest expenses and associated tax shield when including impact of tax expenses. |
Anadarko does not intend to update or otherwise revise the above unaudited financial and operating forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such unaudited financial and operating forecasts are no longer appropriate, except as may be required by applicable law.
Summary Unaudited Prospective Financial Information Relating to Occidental
In connection with their respective financial analyses, Anadarko’s financial advisors reviewed certain non-public projected financial and operating data relating to Occidental on a stand-alone basis prepared and furnished to Anadarko’s financial advisors by the management of Occidental, as adjusted by Anadarko’s management and approved by Anadarko for use by Anadarko’s financial advisors (the “adjusted Occidental standalone forecast”). For more information on the respective analyses of Anadarko’s financial advisors, see “—Opinions of Anadarko’s Financial Advisors” beginning on page .
The following table summarizes the adjusted Occidental standalone forecast ($ in millions):
2019E |
2020E |
2021E |
2022E |
|||||||||
Total Net Production (Mboe/d) |
735 | 788 | 863 | 968 | ||||||||
Consolidated EBITDAX(1) |
$ | 6,976 | $ | 7,602 | $ | 8,065 | $ | 8,957 | ||||
Consolidated Capital Expenditures |
$ | 4,500 | $ | 4,830 | $ | 5,190 | $ | 5,410 | ||||
Free Cash Flow Pre-Dividends(2) |
$ | 2,196 | $ | 2,158 | $ | 2,166 | $ | 2,824 | ||||
| (1) | Consolidated EBITDAX is defined as earnings before interest, tax, depreciation, amortization and exploration expense. Consolidated EBITDAX is a non-GAAP financial measure as it excludes amounts included in net income (loss), the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net income (loss) or other measures derived in accordance with GAAP. |
| (2) | Free Cash Flow Pre-Dividends is defined as cash flow from operations less consolidated capital expenditures. Free Cash Flow Pre-Dividends is a non-GAAP financial measure as it excludes amounts included in cash flow from operations, the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to cash flow from operations or other measures derived in accordance with GAAP. |
In connection with its financial analyses, Goldman Sachs reviewed certain internal financial analyses and forecasts for Occidental on a pro forma basis giving effect to the merger prepared and furnished to Goldman Sachs by the management of Occidental, as adjusted by Anadarko’s management and approved by Anadarko for use by Goldman Sachs (the “adjusted Occidental pro forma forecast”). For more information on Goldman Sachs’ analyses, see “—Opinions of Anadarko’s Financial Advisors—Opinion of Goldman Sachs & Co. LLC” beginning on page .
The following table summarizes the adjusted Occidental pro forma forecast ($ in millions):
2020E |
2021E |
2022E |
|||||||
Total Net Production (Mboe/d) |
1,475 | 1,494 | 1,580 | ||||||
Consolidated EBITDAX(1) |
$ | 15,397 | $ | 15,185 | $ | 15,812 | |||
Consolidated Capital Expenditures |
$ | 8,070 | $ | 7,390 | $ | 7,500 | |||
Free Cash Flow Post-Dividends(2) |
$ | 1,200 | $ | 2,059 | $ | 2,473 | |||
| (1) | Consolidated EBITDAX is defined as earnings before interest, tax, depreciation, amortization and exploration expense. Consolidated EBITDAX is a non-GAAP financial measure as it excludes amounts included in net income (loss), the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net income (loss) or other measures derived in accordance with GAAP. |
| (2) | Free Cash Flow Post-Dividends is defined as cash flow from operations less consolidated capital expenditures and dividends. Free Cash Flow Post-Dividends is a non-GAAP financial measure as it excludes amounts included in cash flow from operations, the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to cash flow from operations or other measures derived in accordance with GAAP. |
While presented with numeric specificity, the unaudited prospective financial and operating information set forth above reflects numerous estimates and assumptions that are inherently uncertain and may be beyond the control of Occidental, including, among others, Occidental’s assumptions about energy markets, production and sales volume levels, levels of oil, natural-gas and NGL reserves, operating results, competitive conditions, technology, availability of capital resources, levels of capital expenditures, and other contractual obligations, supply and demand for, the price of, and the commercialization and transporting of oil, natural gas, NGLs and other products or services and other matters described in the sections entitled “Cautionary Note Regarding Forward-Looking Statements”, “Where You Can Find More Information”, and “Risk Factors”, beginning on pages 29, and 32, respectively. The unaudited prospective financial and operating information reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Occidental can give no assurance that the unaudited prospective financial and operating information and the underlying estimates and assumptions will be realized. In addition, since the unaudited prospective financial and operating information covers multiple years, such information by its nature becomes more speculative with each successive year. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected.
The unaudited prospective financial and operating information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the Public Company Accounting Oversight Board for preparation and presentation of prospective financial information. Neither Occidental’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial and operating information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. The report of the independent registered public accounting firm to Occidental contained in its Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference into this proxy statement/prospectus, relates to historical financial information of Occidental, and such report does not extend to the projections included below and should not be read to do so.
Furthermore, the unaudited prospective financial and operating information does not take into account any circumstances or events occurring after the date it was prepared. Occidental can give no assurance that, had the unaudited prospective financial and operating information been prepared as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. Except as required by applicable securities laws, Occidental does not intend to, and disclaims any obligation to, make publicly available any update or other revision to the unaudited prospective financial and operating information to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error or to reflect changes in general economic or industry conditions. The unaudited prospective financial and operating information does not take into account all the possible financial and other effects on Occidental of the merger, the effect on Occidental of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the unaudited prospective financial and operating information does not take into account the effect on Occidental of any possible failure of the merger to occur. None of Occidental or its affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Anadarko stockholder or other person regarding Occidental’s or the combined company’s ultimate performance compared to the information contained in the unaudited prospective financial and operating information or to the effect that the forecasted results will be achieved. The inclusion of the unaudited prospective financial and operating information herein should not be deemed an admission or representation by Occidental or its advisors or any other person that it is viewed as material information of Occidental, particularly in light of the inherent risks and uncertainties associated with such forecasts.
