Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Credit Suisse First Boston Energy Summit 2004
37 slides from Occidental Petroleum's conference presentation, Feb 5, 2004
Slide 1: Occidental Petroleum Corporation
Occidental Petroleum Corporation Dale Laurance President Occidental Petroleum Corporation 2004 CREDIT SUISSE FIRST BOSTON ENERGY SUMMIT Vail, Colorado February 5, 2004
Slide 2: Performance Goals
Performance Goals • Top Quartile Total Return to Shareholders • Top Quartile Financial Performance – Return on equity – Return on capital employed • Top Quartile Operational Performance – Profits per BOE – Free cash flow per BOE – Finding and development costs per BOE
Slide 3: Overall Business Strategy
Overall Business Strategy Oil and Gas • Focus on large, “legacy” oil and gas assets in U.S., Middle East and Latin America • Harvest cash Chemicals • Maintain strong balance sheet Balance Sheet
Slide 4: Oil & Gas Business Model
Oil & Gas Business Model • Create value throughout the oil & gas business cycle – Exploration – Enhanced recovery – Acquisitions
Slide 5: Return on Equity
Return on Equity Oxy’s Ranking Within Oil & Gas Industry: 1997-2002* 1997 1998 1999 2000 2001 2002 1 1 1 1 1 OXY 2 2 2 OXY OXY 2 3 3 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5 6 6 6 6 6 6 7 7 7 7 7 7 8 8 8 8 8 8 9 9 9 9 9 9 10 OXY OXY 10 10 10 11 11 11 11 11 11 OXY 12 12 12 12 12 13 13 13 13 13 13 * Based on r
Slide 6: Return on Equity
Return on Equity 22.2 2000-2002 Average 20.4 (Percentage) 18.7 15.7 15.2 13.2 12.3 11.7 10.1 8.1 7.3 7.1 6.5 OXY XOM UCL APA BR AHC CVX BP KMG DVN APC MRO COP Income applicable to common shares in 2000-2002 divided by average equity during the year - per SEC filings.
Slide 7: Return on Capital Employed
Return on Capital Employed Oxy’s Ranking Within Oil & Gas Industry: 1997-2002* 1997 1998 1999 2000 2001 2002 1 1 1 1 1 1 2 2 2 2 2 OXY 3 3 3 3 OXY 3 4 4 4 4 4 4 5 5 5 OXY 5 5 6 6 6 6 6 6 7 7 7 7 7 7 8 8 8 8 8 8 9 OXY OXY 9 9 9 10 10 10 10 10 10 11 11 11 11 11 11 12 12 12 12 12 12 OXY 13 13 13 13 13
Slide 8: Return on Capital Employed
Return on Capital Employed 17.9 2000-2002 Average (Percentage) 13.7 11.0 10.9 9.9 9.8 9.3 8.3 6.7 5.9 5.5 4.9 4.7 XOM OXY APA UCL BP BR CVX AHC KMG MRO DVN APC COP Total 2000-2002 income before interest expense divided by average capital employed (average debt plus equity); interest is added back af
Slide 9: 2000-2002 Average Profitability
2000-2002 Average Profitability* 9.64 $/BOE 6.92 6.28 5.80 5.38 5.33 4.97 4.77 4.29 4.18 3.76 3.64 3.18 OXY APA XOM BP COP CVX BR UCL MRO APC KMG AHC DVN * Exploration & production income after taxes and before interest and non-recurring impairments – divided by BOE sales.
Slide 10: 2000-2002 Free Cash Flow
2000-2002 Free Cash Flow* 9.37 $/BOE 6.01 5.52 5.47 5.30 5.05 4.24 4.13 3.96 3.64 3.59 3.16 0.15 OXY AHC XOM MRO BR APA CVX BP DVN UCL KMG COP APC * Exploration & production income after taxes and before interest, plus DD&A, plus exploration expense, less capital (excluding acquisitions) – divided b
Slide 11: Production Replacement
Production Replacement 184% 140% 140% 2001 2002 2003
Slide 12: Finding & Development Costs
Finding & Development Costs $/BOE – All Sources $4.80 $4.65 $4.53 $4.27 2001 2002 2003 2001-2003 Average
Slide 13: Finding & Development Costs
Finding & Development Costs 2000-2002 Average All Sources 12.17 ($/BOE) 10.01 7.93 7.98 8.14 7.05 7.32 5.66 4.41 4.48 4.56 4.09 4.14 OXY COP XOM BP CVX APA BR KMG DVN APC UCL MRO AHC * COP adjusted for Conoco purchase
Slide 14: 2002 Proven Reserves by Country
2002 Proven Reserves by Country 1,756 Million BOE 199 104 67 57 47 47 34 US Qatar Ecuador Oman Yemen Colombia Russia Pakistan
Slide 15: Production
Production Thousand BOE/Day 2002 2003 % Increase U. S. A. 326,000 345,000 6 Middle East 93,000 94,000 NM Latin America 48,000 57,000 19 Other 48,000 51,000 7 Total 515,000 547,000 6
Slide 16: 2003 Acquisitions
2003 Acquisitions Permian Basin • Proven reserves • Approximately 103 million BOE • Purchase price • Approximately $3.10/BOE
Slide 17: Latin America – New Projects
Latin America – New Projects Colombia OCP Pipeline Block 15 Quito Eden Yuturi Ecuador Peru Ecuador Oxy Net Production 2003 25,000 Barrels/Day Oxy Net Production 2004 Forecast 45,000 Barrels/Day
Slide 18: Middle East – New Projects
Middle East – New Projects Dol phi n ISND Pro ject Dubai Qatar ISSD Abu Dhabi Oman Saudi Arabia United Arab Emirates Dolphin Oxy’s Interest …………………...……………… 24.5% Oxy Net Reserves Estimate …..…..... 300 MM BOE Oxy Net Production Estimate ....... 65,000 BOE/Day
Slide 19: Oil & Gas Production Forecast
Oil & Gas Production Forecast Thousand BOE/Day 620 590 575 547 8% 515 8% 10% 11% 476 10% 12% 9% 10% 10% 9% 9% 26% 7% 17% 22% 18% 17% th Rate 18% al G row age Annu ver 5% A 66% 64% 63% 63% 58% 55% 2001 2002 2003 2004E 2005E 2006E U.S. Middle East Latin America Other
Slide 20: Future Growth Projects
Future Growth Projects • Exploration – Current plans to drill 30-40 wells in 2004 • EOR/Redevelopment – Continued application of EOR techniques • Elk Hills • Permian • Qatar – New opportunities in & around core areas • Oman gas project (mid-2004) • Acquisition – Consolidation opportunities in & arou
Slide 21: Chemicals
Chemicals • Role of chemicals business – Generate free cash flow – Average annual free cash flow 1993 – 2002 • $260 million/year * • $290 million/2003 * See Addendum for non-GAAP reconciliation
Slide 22: Non-core Investments
Non-core Investments $ Millions 1/28/04 $680 39.5 million shares (22%) $280 9.0 million shares (12%) $960 $2.50 Implied Value ($/Oxy Share)
Slide 23: Total Debt & Capitalization Ratio
Total Debt & Capitalization Ratio Total Debt - $ Millions Debt/Cap - Percentage 6,354 57 46 43 4,890 4,759 4,570 37 2000 2001 2002 2003 2000 2001 2002 2003
Slide 24: Interest Expense
Interest Expense $ Millions 546 • Impact of $272 million in pre-tax interest savings 432 – Net improvement of $0.45 per share 320 - Horn Mountain - 272* 2000 2001 2002 2003 *Excludes $61 million debt repayment fee
Slide 25: Dividend Increase
Dividend Increase • 2002 Board of Directors Actions – Increased 2003 dividend rate by 4% to $1.04/share – Announced plans to evaluate dividend policy annually
Slide 26: Comparative Total Returns
Comparative Total Returns 3 Years (12/31/00 - 12/31/03)* (Percent) 93.1 36.4 32.4 19.9 14.4 14.1 13.7 2.6 1.6 (4.9) (22.6) (22.8) (26.8) OXY APA MRO COP BP BR CVX UCL XOM DVN KMG AHC * Data Source: Bloomberg APC
Slide 27: Comparative 2003 Total Returns
Comparative 2003 Total Returns (12/31/02 - 12/31/03)* 61.1 (Percent) 53.0 50.4 39.8 35.3 31.3 26.5 25.2 23.8 20.6 9.3 7.5 (1.0) MRO OXY APA COP CVX BR BP DVN UCL XOM KMG APC AHC * Data Source: Bloomberg
Slide 28: Corporate Governance
Corporate Governance • Governance Metrics International (GMI) – Oxy awarded top corporate governance score • One of 15 US and 2 Canadian companies out of 1,000 US and 600 international companies to receive a top rating of 10.0 • Institutional Shareholder Services (ISS) – Oxy ranks in top 5% of S&P 5
Slide 29: Summary
Summary • Disciplined growth – Oil & gas production growth averaging 5% per year – # 1 in profits & free cash flow/BOE – # 1 in return on equity – Top quartile returns on capital employed – Top quartile replacement costs – Competitive dividend • Business strategy successful – Profitable growth – Dis
Slide 30: Addendum
Addendum
Slide 31: Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) Reconciliation to Generally Accepted Accounting Principles (GAAP) Annual Average 2000-2002 GAAP measure – earnings applicable ($ Millions) to common stockholders ------------------------------ $ 1,238 Interest Expense ------------------------------------------- 393
Slide 32: Oil & Gas: Free Cash Flow/BOE
Oil & Gas: Free Cash Flow/BOE Reconciliation to Generally Accepted Accounting Principles (GAAP) Annual Average Occidental Petroleum consolidated 2000-2002 statement of cash flow ($ Millions) Cash flow from operating activities ------------------ $ 2,338 Cash flow from investing activities ----------
Slide 33: Chemicals: Free Cash Flow
Chemicals: Free Cash Flow Reconciliation to Generally Accepted Accounting Principles (GAAP) Annual Average Occidental Petroleum consolidated 1993-2002 statement of cash flow ($ Millions) Cash flow from operating activities --------------------- $ 1,427 Cash flow from investing activities -----------
Slide 34: FASB Part – Costs Incurred
Occidental Petroleum Corporation FASB 69 Part 2 – Costs Incurred ($ Millions) For the Year Ended December 31, 2003 United Latin Middle Other Other Worldwide States America East Eastern Total Interests 3 Total Property Acquisition Costs Proved Properties 345 - 19 - 364 - 364 4 - - - 4 - 4 Unproved Pr
Slide 35: FASB Part – Proved Developed and Undeveloped Reserves Summary
Occidental Petroleum Corporation FASB 69 Part 4 – Proved Developed and Undeveloped Reserves Summary For the Year Ended December 31, 2003 (Million BOE) United Latin Middle Other Other Worldwide States America East Eastern Total Interests 3 Total BOE Reserves Balance @ 12/31/02 1,755 158 322 34 2,269
Slide 36: Finding and Development Costs & Reserve Replacement
Occidental Petroleum Corporation Finding and Development Costs & Reserve Replacement For the Year Ended December 31, 2003 United Latin Middle Other Other Worldwide States America East Eastern Total Interests Total Finding and Development Costs $4.57 $7.53 $3.76 $21.00 $4.47 $0.50 $4.27 Calculation::
Slide 37: Forward-looking statement
Forward-looking statement Statements in this presentation that contain words such as “will” or “expect”, 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 to differ materially
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