Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Lehman Brothers 2008 CEO Energy/Power Conference
37 slides from Occidental Petroleum's conference presentation, Sep 3, 2008
Slide 1: Lehman Brothers 2008 CEO Energy/Power Conference
September 3, 2008 Stephen I. Chazen President and Chief Financial Officer Lehman Brothers 2008 CEO Energy/Power Conference
Slide 2: Six Months 2008 Results – Summary
2 1H2008 1H2007 • Core Results1 $4,119 $1,731 • Core EPS (diluted) $4.98 $2.05 • +143% year-over-year • Net Income $4,143 $2,624 • Reported EPS (diluted) $5.01 $3.11 • Oil and Gas production (mboe/day) 598 559 • +7% year-over-year • Capital Spending $1,984 $1,630 • Cash Flow from Operations $5,000 $
Slide 3: Oxy's Business Model – Blending Growth and Value
3 Oxy’s Business Model – Blending Growth and Value • Cash Business with growth upside – US Oil & Gas • Long-lived reserve base • Production growth through long-term resource capture • Lower risk and good returns • High capital efficiency • Generates large amounts of free cash flow to fund growth • G
Slide 4: Worldwide Oil & Gas Operations
4 Worldwide Oil & Gas Operations Permian Basin Hugoton California Colombia Libya Oman UAE Yemen Qatar Argentina Bolivia Piceance Joslyn
Slide 5: Worldwide Production Outlook
5 Worldwide Production Outlook 0 100 200 300 400 500 600 700 800 US ME/NA Latin America Variance Thousand BOE/Day 466 600 545 570 620 CAGR = 7.3% 2005 2006 2007 2008E Assumes $111 WTI Price Note: As a result of PSC contracts, for each $5 increase in WTI, production drops approximately 1,500 BOE per
Slide 6: Oil & Gas Capital Spending Program
6 Oil & Gas Capital Spending Program Growth Capital Base Capital Total Oil & Gas Capital 1,100 2,100 3,200 1,990 2,200 4,190 2007 2008E ($ in millions)
Slide 7: Increased 2008 Capital Spending
7 Increased 2008 Capital Spending Increased Activity # Drilling # New # Capital $MM Rigs Wells Workovers United States 195 6 203 52 Latin America 190 6 33 93 Mid. East / N. Africa 105 1 18 - Midstream 210 - - - 700 13 254 145 • 16% increase in new wells • 12% increase in capital workovers • West Tex
Slide 8: US Oil & Gas Operations
8 US Oil & Gas Operations Long Beach Hugoton Bravo Dome Oxy Permian Houston Los Angeles Bakersfield Sheep Mountain Elk Hills & California Properties 2007 net production* • 359 mboe/day • 63% of worldwide total 2007 reserves* • 2.15 billion boe • 75% of worldwide total * See attached for GAAP reconci
Slide 9: US Oil & Gas Operations
9 US Oil & Gas Operations Key Operations/Assets: – Permian Basin – California/Elk Hills Field – Piceance Basin 2007 Financial Data1 Pre-tax Income $3.9 Billion After-tax Cash $2.5 Billion Capital $1.3 Billion ROANCC** 21% 0 100 200 300 400 500 600 US Incremental Production 331 354 359 2005 2006 2007
Slide 10: Permian Basin Operations
10 Permian Basin Operations New Mexico Colorado Bravo Dome Salt Creek Denver City Unit Hugoton Sheep Mountain Kansas Lubbock • Large resource base • 1H08 production 200 mboe/day • Low decline rate & long-lived properties • Significant cash generation • Accelerating ongoing drilling program around se
Slide 11: Permian – Century CO2 Plant Project
11 Permian – Century CO2 Plant Project SandRidge Acreage 1,300 mi2 3D 5 phases Oxy Pakenham Oxy JM – Brown Bassett Gas Pipelines Oil Pipelines CO2 Pipelines County County NGL Pipelines Terrell (Oxy) Mitchell Gray Ranch New Plant “Century” Pikes Peak Pinon Field SD Plant Gas Plants McCamey Hub CO2 Pi
Slide 12: California Operations
12 California Operations • CA production 1H08 126 mboe/day. • Most of the increased drilling activity will be in CA – adding 6 new rigs this year and more in 2009. • Expanding our rig fleet in the Elk Hills area by 5. • We have added 50 capital workovers to our activity in 2H08. • Drilling an additi
Slide 13: Midcontinent & Rockies Operations
13 Midcontinent & Rockies Operations • 1H08 production – 32 mboe/day • Expect to double our gas production in the Piceance Basin to 80 mmcf/day by year-end as a result of the drilling program. • Expanded development program expected to boost our Piceance gas production to 100 mmcf/day in 2009 and to
Slide 14: Middle East/North Africa Oil & Gas
14 Qatar UAE Oman Yemen Libya Middle East/North Africa Oil & Gas 2007 net production* • 135 mboe/day • 24% of worldwide total 2007 reserves* • 468 million boe • 16% of worldwide total * See attached for GAAP reconciliation.
Slide 15: Middle East/North Africa Oil & Gas
15 Middle East/North Africa Oil & Gas Key Operations/Assets: – Dolphin Project – Qatar ISND – Oman/Mukhaizna – Libya 2007 Financial Data1 Pre-tax Income $2.9 Billion After-tax Cash $0.8 Billion Capital $1.1 Billion ROANCC** 26% 0 60 120 180 240 300 Middle East/NA Incremental Production 103 119 135 2
Slide 16: UAE / Qatar – Dolphin Project
16 UAE / Qatar – Dolphin Project • Oxy’s interest is 24.5% • Project became fully operational in February 2008 • Delivering 2 Bcf/d+ (gross) of natural gas to UAE markets • Net Production (mboe/d) - 1H08 51 • 1H08 after-tax income of $203 mm at $111 oil price • 2008E production - 48 mboe/d • High oi
Slide 17: Oman – Mukhaizna Project
17 Oman – Mukhaizna Project • Implemented a large scale steam flood • Expect to drill approximately 180 new wells in 2008 • On track for 2008 production exit rate of 50 mb/d (gross) • Large scale drilling activity, coupled with the introduction of multiple water treatment facilities to supply the st
Slide 18: Libya Operations
18 Libya Operations • New 30-year agreement with the Libyan National Oil Company (NOC) for major redevelopment projects signed on June 23rd. • Covers approximately 2.5 billion bbls of recoverable oil reserves. • Oxy share of planned capex is $1.9 B over 5 years • Plan to increase gross production fr
Slide 19: Latin America Oil & Gas Operations
19 Latin America Oil & Gas Operations Colombia Bolivia Argentina 2007 net production* • 76 mboe/day • 13% of worldwide total 2007 reserves* • 244 million boe • 9% of worldwide total * See attached for GAAP reconciliation.
Slide 20: Latin America Oil & Gas Operations
20 Latin America Oil & Gas Operations Key Operations/Assets: – Colombia – Argentina 2007 Financial Data1 Pre-tax Income $0.7 Billion After-tax Cash $0.3 Billion Capital $0.6 Billion ROANCC** 14% 0 20 40 60 80 100 120 Latin America Incremental Production 32 72 76 2005 2006 2007 Thousand BOE/Day Latin
Slide 21: Colombia Operations
21 Colombia Operations • Politically Stable Country • 1H08 production – 36 mboe/day • Caño Limon – Legacy Oil Field – Near Field Exploration Success – Contract Life Extended to Field Economic Limit • La Cira-Infantas – EOR Project With Large Remaining Reserves – Commercial phase of development & pro
Slide 22: Argentina Operations
22 Argentina Operations • 1H08 production – 32 mboe/day • Carrying out an extensive workover program • Inventory of more than 700 drilling locations • Near field exploration program continues to be successful and has identified new drilling opportunities • Will expand drilling in these and other are
Slide 23: Other Value Enhancing Initiatives
23 Other Value Enhancing Initiatives • Chemicals Operations • Midstream Assets – Pipelines • Dividend Growth • Share Repurchase
Slide 24: Chemicals Operations
24 Pre-tax Earnings $764 $586 $601 Free Cash Flow1 $823 $662 $655 Capital Spending $225 $190 $251 3-Year* 5-Year* Average Average 2007 Period ending 12/31/07* ($ Millions) Chemicals Operations 1 See attached for GAAP reconciliation. 1H08 $323 $393 $94
Slide 25: Midstream, Marketing and Other
25 Midstream, Marketing and Other Midstream assets reclassified out of the Oil and Gas segment • The assets are comprised of the following businesses: Marketing, Gas processing plants, Pipelines, Power generation, CO2 source fields and facilities Midstream Data 1H08 1H07 Core Results $284 $143 2007
Slide 26: Capital Allocation Philosophy
26 Capital Allocation Philosophy • New projects must meet expectations for good returns • Return Targets* • Domestic – 15+% • International – 20+% • Compare new projects & asset acquisitions with share repurchases • Make decisions based on creating long-term value for shareholders *Assumes Moderate
Slide 27: Gross Cash Flow Uses
27 Gross Cash Flow Uses 43 5 — 42 10 100 2004 36 31 — 26 7 100 2005 Capital Acquisitions Share Repurchase Debt Reduction & Cash Dividends 2006 Percentage of Total 41 26 21 3 9 100 2007 40 16 14 21 9 100 1H08 36 45 17 (6) 8 100
Slide 28: Business Risk Factors
28 Business Risk Factors Low Middle Risk Factor Exploratory Commodity Political Engineering Reinvestment Financial High Level of Risk Acceptable to Occidental
Slide 29: Creating Shareholder Value – Dividends
29 Creating Shareholder Value – Dividends 2002 2003 2004 2005 2006 2007 2008E $0.52 $0.55 $0.645 $0.80 Annual Dividend Payout per share $0.50 $0.94 CAGR = 15.9% Establishing a track record of consistent dividend increases • Includes 28% dividend increase announced on May 1st (annual rate of $1.28) $
Slide 30: Creating Shareholder Value – Share Repurchase
30 • Spent $889 mm to repurchase 11.4 mm shares this year through 6/30/08 at an average price of $78.01 per share. • In February 2008 and July 2008, the Board increased the number of shares authorized for repurchase from 55 mm to 75 mm, and from 75 mm to 95 mm, respectively. • Under the program, Oxy
Slide 31: Creating Shareholder Value
31 Creating Shareholder Value Change In Equity Market Value Change In Shareholders’ Equity 6.3 3.3 3.2 2.9 Oxy’s Shareholder Equity versus Equity Market Value 1 – Year 3 – Year 5 – Year 10 – Year • Building a History of Generating Shareholder Value ($ in millions) Market Value per $ of Equity Retain
Slide 32: Summary - Corporate Strategy/Philosophy
32 Summary - Corporate Strategy/Philosophy • Focus on core areas – long-term production growth of 5 - 8% CAGR • US - Permian Basin, California, and Piceance Basin • Middle East/North Africa • Latin America • Maintain strong balance sheet – Maintain “A” credit rating – Maintain investment discipline
Slide 33: Occidental Petroleum Corporation forward-looking statements
33 Occidental Petroleum Corporation 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 uncertainties that could significantly affect expected results. Factors that could cause results
Slide 34: Slide 34
Slide 35: Appendix
Appendix ) oxy ¢ 36
Slide 36: Production Outlook 2008 To 2010
36 UNITED STATES California 126 3 17 25 Midcontinent and Rockies 32 2 11 18 Permian 200 1 5 10 Total United States 358 6 33 53 LATIN AMERICA Argentina 32 13 25 40 Other Latin America 40 4 - - Total Latin America 72 17 25 40 MIDDLE EAST / NORTH AFRICA Dolphin E&P 51 (5 ) (13) (15) Libya 22 (13 ) (12)
Slide 37: Reserves Replacement and GAAP Reconciliation
37 Reserves Replacement 2007 2006 2005 2004 2003 3-Year Average 5-Year Average 182 187 231 201 229 200 206 60 326 139 40 107 175 134 242 513 370 241 336 375 340 116 257 216 145 202 194 187 Organic Growth Acquisitions Total Reserve Replace % Million BOE 209 200 171 166 166 193 182 Worldwide Productio
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