Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Howard Weil 41st Annual Energy Conference 2013
31 slides from Occidental Petroleum's conference presentation, Mar 18, 2013
Slide 1: Howard Weil 41st Annual Energy Conference
March 18 - 20, 2013 Occidental Petroleum Corporation Howard Weil 41st Annual Energy Conference Stephen I. Chazen President and Chief Executive Officer
Slide 2: Key Messages
2 • Execute on our capital program with a focus on growing our U.S. oil production. • Continue to drive our effort to further reduce our oil and gas operating costs, and improve our capital and drilling efficiency with the overriding goal to create higher margins from our oil and gas production. • E
Slide 3: Full Year 2012 Results – Summary
Full Year 2012 Results – Summary FY 2012 FY 2011 • *Core Income from continuing operations $5,750 $6,828 • *Core EPS (diluted) from continuing operations $7.09 $8.39 • Reported Net Income $4,598 $6,771 • Reported EPS (diluted) $5.67 $8.32 • Worldwide oil and gas production volumes (mboe/d) +5% 766 7
Slide 4: Updated 1Q13 Oil & Gas Sales and Earnings Guidance
4 • We currently estimate that our 1Q13 oil and gas production outside the U.S. will be roughly 18 mboe/d below the 4Q12 level, however, sales volumes should be approximately 40 mboe/d lower than 4Q12. • While the lower production volumes are due to the combined effect of a facility turnaround in Qa
Slide 5: What Is Our Philosophy & Strategy?
Overriding Goal is to Maximize Total Shareholder Return • We believe this can be achieved through a combination of: • Growing our oil and gas production by 5% to 8% per year on average over the long term; • Allocating and deploying capital with a focus on achieving well above cost-of-capital returns
Slide 6: Oxy Is Primarily a Domestic Oil Producer
170 61% 110 39% U.S. InternationalOil & Gas Production Full Year 2012 (Million barrels of oil equivalent) 171 61%30 11% 79 28% Oil NGLs Gas Oxy Is Primarily a Domestic Oil Producer 6
Slide 7: Cash Flow Priorities
1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase Cash Flow Priorities 7
Slide 8: Consistent Dividend Growth
8 • Our ability to pay dividends is indicated by our free cash flow generation. • In mid-February, the Board announced a further 18.5% increase in our dividend to an annualized rate of $2.56 per share, bringing the 11-year compound dividend growth rate to 16% per year. • We have now raised our divid
Slide 9: Consistent Dividend Growth
$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E $0.50 $0.52 $0.55 $0.65 $0.80 $0.94 $1.21 $1.31 $1.47 $1.84 $2.16 $2.56 $0.50 $1.02 $1.57 $2.22 $3.02 $3.96 $5.16 $6.48 $7.95 $9.79 $11.95 $14.51 Annual Dividends Paid Cumulative Di
Slide 10: Worldwide Oil & Gas Producing Areas
Worldwide Oil & Gas Producing Areas Colombia Libya Oman UAE Yemen Bolivia Qatar Iraq Bahrain Focus Areas United States Permian Basin California 10
Slide 11: Capital Efficiency & Operating Cost Reduction Program
$12.84 $14.22 $14.00 $14.99 $15.99 $14.95 <$12.84 8 10 12 14 16 FY11 4Q11 1Q12 2Q12 3Q12 4Q12 Goal $ P ro d uc tio n Cos ts per b o e • We expect our production costs per barrel to be under $14 in 2013, which is significantly lower than the 2012 average costs. • Steps taken in 4Q12, along with added
Slide 12: 2013 Capital Outlook
• Our overall capital spending is expected to decline by ~6% in 2013 to $9.6 billion from the $10.2 billion we spent in 2012. • The reduction in capital will come entirely from the oil and gas business where the 4Q12 spend rate was already close to the level planned for all of 2013. – Almost all of
Slide 13: Capital Spending 2013 Estimate vs. 2012 Actual
• Capital spending is expected to decline by ~6% in 2013 to $9.6 billion from the $10.2 billion we spent in 2012. Al Hosn Gas 11% Rest of Middle East 20% Chemicals 4% US Midstream 9% US Oil & Gas 46% Exploration & Other 10% 2013E Capital - $9.6 Billion Al Hosn Gas 12% Rest of Middle East 18% Chemica
Slide 14: 2013 Capital Outlook – Domestic Oil & Gas
0 10 20 30 40 50 60 2012 2013E O x y Op e ra ted Dome s tic A v e ra ge Rig Co u n ts 64 55 • In domestic oil and gas, development capital will be about 46% of our total capital program. – We expect our average operated rig count in the United States to be about 55 rigs during 2013 compared to 64 ri
Slide 15: 2013 Capital Outlook – Domestic Oil & Gas
• Permian capital should remain flat. • We expect to reduce CA capex ~$500 mm from 2012, as a result of ongoing well cost reductions and efficiencies, a modest shift toward more conventional drilling opportunities and the constraints of the current environment. • In the Midcontinent, we expect to re
Slide 16: U.S. Oil Production Should Continue to Grow in 2013
U.S. Oil Production Should Continue to Grow in 2013 139 139 140 135 133 240 244 249 260 265 70 72 73 74 77 0 100 200 300 400 500 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 Natural Gas Oil NGLs T h o u san d b o e per da y +25 mb/d oil production growth 449 455 462 469 475 • Total U.S. production grew b
Slide 17: 2013 Production Outlook
17 • Domestically, we expect oil production for all of 2013 to grow by about 8% to 10% from the 2012 average. − With lower drilling on gas properties, we expect natural gas and NGL production to decline somewhat this year. − Planned plant turnarounds in the Permian CO2 business will cause additional
Slide 18: California Overview
Sacramento San Francisco Los Angeles Bakersfield Oxy Acreage • Largest acreage holder in CA with ~2.1 mm acres, majority of which are net fee mineral interests; • 2012 production of 148 mboe/d vs. 138 mboe/d in 2011; • 78% interest in the Elk Hills Field — the largest producer of gas and NGLs in CA;
Slide 19: California Update
• Total CA oil production volumes grew 10% in 2012 vs. 2011, and as we continued to execute on our oil production growth strategy. • We have grown our production in CA despite declines seen at the mature Elk Hills field, permitting issues and continued low gas prices. • Overall performance of the ne
Slide 20: Permian Basin Overview
• 2012 production of 207 mboe/d, vs. 198 mboe/d in 2011; • Largest oil producer in Permian (~16% net share of total) • Largest operator in Permian (of 1,500+ operators); • ~60% of Oxy’s Permian oil production is from CO2 related EOR projects – Oxy’s most profitable business; • Drilled ~550 wells on
Slide 21: Acreage in Select Permian Plays
Delaware Basin Gross Oxy Share Avalon 340 120 Bone Spring 1 Sand 560 220 Bone Spring 2 Sand 530 210 Bone Spring 3 Sand 420 140 Wolfbone 180 55 Wolfcamp Shale 570 200 Delaware Shale 420 160 Penn Shale 320 120 Wabo 190 50 Yeso 230 60 Midland Basin Cline Shale 390 160 Wolfcamp Shale 425 150 Wolfberry 2
Slide 22: Map of Select Permian Basin Plays
Delaware Basin Midland Basin Central Basin Platform Ozona Arch Matador Arch Val Verde Basin Northwest Shelf Diablo Platform Eastern Shelf Wolfberry Wolfcamp horz. Cline Shale Bone Spring Wolfcamp horz. Avalon Wolfbone Map of Select Permian Basin Plays 22
Slide 23: 2013 Capital Outlook – Future Growth Projects
• Capital for future growth projects: − The Al Hosn Gas Project. − Construction has begun on the BridgeTex pipeline, which we expect will start operations in 2014. − Gas and CO2 processing plants and pipelines to expand the capacity of these facilities to handle future production growth. − A new chl
Slide 24: Future Contribution of Growth Projects
• Future growth projects: − The Al Hosn Gas Project; − The BridgeTex Pipeline; − Gas and CO2 processing plants and pipelines; − A new chlor-alkali plant in the chemical business. • Accumulated balance of these project costs is ~$3 billion and expected to grow to ~$5 billion by the end of 2013. • Onc
Slide 25: Future Growth – Al Hosn Gas Project
Future Growth – Al Hosn Gas Project • Shah Gas Field one of the largest in the Middle East; • Oxy holds a 40% participating interest under a 30-year contract; • The project involves development of high-sulfur content reservoirs within the Shah field, onshore ~180 km so. west of Abu Dhabi; • Producti
Slide 26: Future Growth – Al Hosn Gas Project
• The Project is ~65% complete and progressing as planned; • Spending on the Project was ~12% ($1.2 B) of our total capex for 2012; • Capex for the Project is expected to decline modestly from 2012 levels, and comprise about 11% of our total capex program for 2013; • Once the Project becomes operati
Slide 27: Future Growth – The BridgeTex Pipeline Project
27 • Oxy spending $400 mm to develop the BridgeTex pipeline as a JV with Magellan Midstream Partners; • The ~450 mile pipeline will have a capacity to transport ~300,000 b/d of crude oil between the Permian region (Colorado City, TX) and the Gulf Coast refinery markets; • Project also includes const
Slide 28: Oxy – Investment Attributes
• 5 - 8% base annual production growth over the long term • Opportunity for additional volume growth • Returns on invested capital significantly in excess of the Company’s cost of capital • Consistent, annual increases in dividends • Significant financial flexibility for opportunities in distressed
Slide 29: 2013 Summary Outlook
29 • Assuming similar realized oil and gas prices to 2012 and our expectation of comparable Chemical and Midstream segment earnings, we expect that our 2013 program will: − Generate cash flow from operations of about $12.7 billion; and − Invest about $9.6 billion in capital spending. • In 2012, we r
Slide 30: Cautionary Statement
Cautionary Statement Portions of this presentation contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are
Slide 31: Occidental Petroleum Corporation
a — OXY Ww Occidental Petroleum Corporation
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