Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q4 2007 Earnings Presentation
16 slides from Occidental Petroleum's earnings presentation, Jan 29, 2008
Slide 1: Fourth Quarter 2007 Earnings Conference Call
Fourth Quarter 2007 Earnings Conference Call January 29, 2008
Slide 2: Fourth Quarter 2007 Earnings – Highlights
Fourth Quarter 2007 Earnings – Highlights • Reported Net Income - $1.452 Billion • Reported EPS $1.74 (diluted) • + 60% year-over-year • Reported Net Income includes: • $16 mm after-tax severance charge • $4 mm after-tax income from discontinued ops. • Core Results - $1.464 Billion • Core EPS $1.76
Slide 3: Oil & Gas Segment Variance Analysis - 4Q07 vs. 4Q06
Fourth Quarter 2007 Earnings - Oil & Gas Segment Variance Analysis - 4Q07 vs. 4Q06 • Core results for 4Q07 of $2.599 Billion + 83% year-over-year ($ in millions) 4Q 06 Sales Price Sales Volume/Mix All Others* 4Q 07 $1,422 $2,599 $1,348 $66 $237 *All Others include: DD&A increase ($64 mm), and higher
Slide 4: Oil & Gas Segment
Fourth Quarter 2007 Earnings – Oil & Gas Segment 4Q07 4Q06 Reported Segment Earnings ($ mm) $2,599 $1,422 WTI Oil Price ($/bbl) $90.68 $60.20 NYMEX Gas Price ($/mcf) $7.06 $6.27 Oxy’s Realized Prices Worldwide Oil ($/bbl) $80.30 $52.55 US Natural Gas ($/mcf) $6.77 $5.63
Slide 5: Oil & Gas Segment Production
4Q07 4Q06 Oil and Gas Production (mboe/day) 590 561 • + 5.2% year-over-year • The improvement was largely the result of the Dolphin project start-up • Production lower than earlier guidance due to: – Price impact from PSCs (- 8 mboe/day); – A well blowout in Libya (- 4 mboe/day); – Strikes during Oc
Slide 6: Oil & Gas Segment Exploration Expense and Production Costs
4Q07 4Q06 • Exploration Expense ($ mm) $101 $101 • Oil and Gas production costs were $12.87 per boe for full-year 2007 vs. $11.70 per boe for full-year 2006. – Increase due to higher field operating and maintenance costs. Fourth Quarter 2007 Earnings – Oil & Gas Segment
Slide 7: Chemical Segment Variance Analysis - 4Q07 vs. 4Q06
• Earnings for 4Q07 of $94 Million • -40% year-over-year; • Lower than earlier guidance of $100 to $140 million due to: – lower PVC margins resulting from higher feedstock costs and weaker industry demand. Fourth Quarter 2007 Earnings – Chemical Segment Variance Analysis - 4Q07 vs. 4Q06 4Q 06 Sales
Slide 8: Taxes
• Worldwide effective tax-rate was 42% in 4Q07 (excl. asset sales and other items); – 4% lower than guidance of 46% due primarily to significantly higher oil and gas prices; – The increased oil price resulted in a higher portion of US income which has lower income tax rates than our international op
Slide 9: Full Year 2007 Results
Fourth Quarter 2007 Earnings – Full Year 2007 Results FY2007 FY2006 • Reported Net Income $5,400 $4,191 • Reported EPS (diluted) $6.44 $4.87 • Core Results $4,405 $4,116 • Core EPS (diluted) $5.25 $4.78 • + 10% year-over-year • Oil and Gas production (mboe/day) 570 545 • +4.6% year-over-year • Capit
Slide 10: Full Year 2007 Cash Flow
Fourth Quarter 2007 Earnings – Full Year 2007 Cash Flow $8,380 $1,600 $3,500 $1,130 $1,200 $765 $2,000 Available Cash Asset Sale Acquisitions Capex Share Repurchase Reduction Dividends Other Ending Cash Balance 12/31/07 Cash Flow From Operations $6,800 ($ in millions) Debt Beginning Cash $1,580 Proc
Slide 11: Share Repurchase
Fourth Quarter 2007 Earnings — Share Repurchase • Spent $1.13 billion to repurchase 20.6 million shares during 2007 at an average price of $54.75 a share. • As of 12/31/07, 6.3 million shares remained under the current 55 million share repurchase authorization. Shares Outstanding (mm) YTD2007 12/31/
Slide 12: 1Q08 Outlook
Fourth Quarter 2007 Earnings - 1Q08 Outlook • We expect oil and gas production to be in the range of 600 to 615 mboe/day in 1Q08, at last quarter’s $90 oil price. – Dolphin is expected to be fully operational in February; – Dolphin is expected to run at 78% of capacity with production of 53 mboe/day
Slide 13: 1Q08 Outlook
Fourth Quarter 2007 Earnings - 1Q08 Outlook • PSC production impact for changes in oil price – A $5.00 change in oil price affects Oxy’s production by approximately 4,000 barrels/day. • Commodity Price Sensitivity — Earnings – A $1.00 per barrel change in oil price impacts oil and gas quarterly earn
Slide 14: 1Q08 Outlook
Fourth Quarter 2007 Earnings - 1Q08 Outlook • We expect 1Q08 Chemical segment earnings to be in the range of $100 to $125 mm, compared to $94 mm in 4Q07. – Improved volumes and prices in vinyls and higher caustic soda prices are the primary drivers of the expected sequential increase. – Expectations
Slide 15: Cost Reduction Program
Fourth Quarter 2007 Earnings — Cost Reduction Program • Oxy has embarked on a Cost Reduction Program • The impact of the Program: – It will affect operating and G&A costs; – We took a restructuring charge in 2007 totaling $25 mm; – We expect a similar amount to be taken in 2008; – Improvements have
Slide 16: See the investor relations supplemental schedules for the reconciliation of non- GAAP items. Statements
Fourth Quarter 2007 Earnings See the investor relations supplemental schedules for the reconciliation of non- GAAP items. Statements in this presentation that contain words such as "will," "expect" or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertaint