Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Lehman Brothers Nineteenth Annual CEO Energy/Power Conference (September 2005)
46 slides from Occidental Petroleum's conference presentation, Sep 7, 2005
Slide 1: Occidental Petroleum Corporation – Lehman Brothers CEO Energy/Power Conference
Occidental Petroleum Corporation September 7, 2005 STEVE CHAZEN Senior Executive Vice President & Chief Financial Officer Lehman Brothers Nineteenth Annual CEO Energy/Power Conference
Slide 2: Occidental Petroleum Corporation
Occidental Petroleum Corporation Equity Market Capitalization $33 billion as of 8/31/05 4 th largest U.S. oil & gas company Proven Reserves of 2.5 billion barrels oil equivalent 2004 Results: WTI = $41.40 per bbl Net Income $2.6 billion Cash From Operations $3.9 billion Return on Equity 27.8% Return
Slide 3: Six Month 2005 Results
Six Month 2005 Results Net Income – Core/Reported Earnings per Share – Core/Reported Cash from Operations Stockholders’ Equity *ROCE (%) *ROE (%) Total Shareholder Return $1.717/$2.382 Billion $4.28/$5.94 $2.4 Billion $12.7 Billion 32 41 32.9% Consolidated Results *Annualized through first half of 2
Slide 4: Financial Performance Criteria
Financial Performance Criteria Return on Capital Employed Measures Efficient Use of Capital Return on Equity Total Return to Stockholders Stock Price Change Plus Dividend
Slide 5: Return On Capital Employed
20 Return On Capital Employed Percent 15 15 11 15 12 11 9 2004 2002 - 2004 2000 - 2004 1995 - 2004 S&P 500 Oil & Gas Index Oxy Data Source: Bloomberg
Slide 6: Return On Common Equity
Return On Common Equity Percent 28 22 22 15 25 17 17 12 2004 2002 - 2004 2000 - 2004 1995 - 2004 S&P 500 Oil & Gas Index Oxy Data Source: Bloomberg
Slide 7: Total Returns
Total Returns 2000-2004 1995-2004 % Without Dividend % With Dividend 350 203 286 192 212 164 242 181 Six Months 2005 170 38 (1) (4) 220 56 (11) 4 33 20 (18) (6) Data Source: Bloomberg
Slide 8: What's Been Oxy Strategy
What’s Been Oxy Strategy: Focused Operations Focused Value Creation Disciplined Financial Philosophy
Slide 9: Worldwide Operations
Worldwide Operations Long Beach Permian Basin Horn Mountain Hugoton Elk Hills Colombia Ecuador Libya Russia Pakistan Oman U.A.E . Yemen Qatar . . .
Slide 10: 2004 Proven Reserves by Country
2004 Proven Reserves by Country Million BOE 1,844 348 58 63 49 42 24 US Qatar Yemen Russia Pakistan Oman Colombia 104 Ecuador See Appendix for GAAP reconciliation.
Slide 11: Worldwide Production
Thousand BOE/Day 515 476 566 547 461 425 438 395 Worldwide Production
Slide 12: Production & Reserve Additions
Production & Reserve Additions 173 244 188 263 200 368 207 268 Million BOE 2004 2003 2002 2001 Production Additions See Appendix for GAAP reconciliation.
Slide 13: Sources of Worldwide Reserve Additions
Million BOE Sources of Worldwide Reserve Additions 1,170 244 263 368 268 969 See Appendix for GAAP reconciliation.
Slide 14: Worldwide Proven Reserves
2001 2002 2,241 2,311 Worldwide Proven Reserves Million BOE 2003 1,698 543 1,755 556 US International 1,804 667 2,471 - Horn Mountain - 2004 1,844 688 2,532 R/P = 12.2 See Appendix for GAAP reconciliation.
Slide 15: Finding & Development Costs
Finding & Development Costs 3-year Average (2002-2004) BP plc Marathon Oil ExxonMobil Chevron Corporation Apache Corporation Burlington Resources ConocoPhillips Anadarko Petroleum Unocal Corporation Devon Energy Amerada Hess Kerr-McGee Corporation 5.42 5.71 6.05 6.77 6.95 7.00 8.20 8.58 9.35 9.72 15
Slide 16: 2002-2004 Free Cash Flow
2002-2004 Free Cash Flow* $/BOE * Combined (consolidated and other interests) exploration & production income after taxes and before interest, plus DD&A and exploration expense, less capital (excluding acquisitions and ARO costs) – divided by BOE sales. See Appendix for GAAP reconciliation OXY: 2004
Slide 17: Focused Value Creation Strategy
Focused Value Creation Strategy Maintain Strong Balance Sheet Disciplined Capital Expenditure Program Selective Acquisitions Moderate Predictable Reserve/Production Growth Chemicals Provides Excess Cash Flow Review Non-Core Investments Review Dividend Policy Annually
Slide 18: Balance Sheet
Balance Sheet 6,354 4,890 2000 2001 2002 4,759 4,774 5,634 6,318 Total Debt - $ Millions Total Equity - $Millions 2000 2001 2002 4,570 2003 2003 7,929 2004 3,905 2004 10,550 57 46 43 37 27 Debt/Cap - Percentage 3,461 2Q 2005 2Q 2005 12,706 21
Slide 19: 2005 Capital Expenditures
2005 Capital Expenditures ($MM) Oil & Gas US $ 775 Middle East 560 Latin America 160 Other International 10 Exploration 280 Chemicals 165 1,950 Dolphin 360 $ 2,310 Net Acquisition Capital $ 1,200
Slide 20: Selective Acquisitions
Selective Acquisitions Natural Consolidator Permian Basin California Vulcan Chlor-Alkali Plants
Slide 21: Permian Basin Acquisitions
Permian Basin Acquisitions Spent $1.2 Billion on Three Asset Acquisitions (Net of Asset Sales) Projected Production Impact Estimated Year-End 2005 Exit Rate of 26,000 BOE/Day Total Proved Reserves for All Three Permian Acquisitions (Net of Asset Sales) At Least 130 Million BOE First Half 2005
Slide 22: Oxy's Permian Basin Production
Oxy’s Permian Basin Production Thousand BOE/Day 172 1Q-05 172 198 with 1H-05 acquisitions 26
Slide 23: Additional Permian Opportunities Still Exist
198 56 22 18 19 OXY* CVX COP PDX UCL AHC APA 29 Additional Permian Opportunities Still Exist Top 10 Permian Oil Producers (Thousand Barrels/Day) Data Source: IHS Energy KMI XTO 48 29 18 *production adjusted for recent acquisitions/divestitures XOM* 50
Slide 24: Chemical Highlights
Chemical Highlights Generate Cash Flow In Excess of Capital Expenditures Through the Business Cycle Primary Mission of Oxy’s Chemicals Business Generated Nearly $3 Billion of Cash Flow After Capital During the Last 10 Years Generated Over $500 Million of Cash Flow After Capital in 2004
Slide 25: Ingleside, Texas LNG Terminal
Ingleside, Texas LNG Terminal* *Conceptual Illustration
Slide 26: Ingleside, Texas LNG Terminal
FERC Approval Granted in Late July $450 Million LNG Receiving Terminal and Related 26-Mile Pipeline 1 BCF/Day Send-Out Capacity To Be Integrated with Oxy’s Existing Ingleside Chemical and Power Facilities Includes NGL Recovery Unit & Vaporization Facility Expected Start-up late 2008 Ingleside, Texas
Slide 27: Dividends
Dividends 2002-2004 Dividend Payments Totaled Nearly $1.2 Billion Annual Payout Rates Per Common Share 2002 = $1.00 2003 = $1.04 2004 = $1.10 2005 = $1.24 Dividend Policy Evaluated Annually Cash Dividends Paid Continuously Since 1975
Slide 28: What's Ahead?
What’s ahead? Success Riding on Two Factors Add New Projects in Core Areas to Provide Growth Maintain Strong Asset Base to Generate Cash to Support Growth Stay Focused on the Fundamentals Maintain Financial Discipline and Focus Execute Our Strategy Create Long-Term Value
Slide 29: Production Growth Projects
Production Growth Projects Oman: Mukhaizna Oil Field Qatar: ISND / ISSD Dolphin Libya Permian Basin / California Exploration Current Plans to Drill 30-40 Wells in 2005 Awarded 9 Exploration Blocks in Libya in January
Slide 30: Oman - Mukhaizna Oil Field
Oman - Mukhaizna Oil Field Oxy Active in Oman Since 1979 2nd Quarter 2005 Production 29,000 BOE/Day Oxy Signs 30-Year Production Sharing Contract for Oman’s Mukhaizna Oil Field
Slide 31: Oman - Mukhaizna Oil Field
Oman - Mukhaizna Oil Field Current Production 10,000 Barrels of Oil/Day (Gross) Future Investment $2 Billion (Gross) Future Production Target 150,000 Barrels of Oil/Day (Gross) Ultimate Recovery 1 Billion Barrels Over Project Life Project Overview
Slide 32: Dolphin Gas Project
Dolphin Gas Project Projected Start – late 2006 Invest Gross Capital of $4 Billion (2004-2006) Oxy’s Share is 24.5% Estimated Net Reserves: 300 Million BOE (assumes 2 BCF/Day Gas Production)
Slide 33: Dolphin Gas Project
Dolphin Gas Project Oxy’s Peak Net Production Oxy’s Production 275 Million Cubic Ft./Day 20,000 Barrels Liquids/Day Equals 65,000 BOE/Day Contracts in Place for 2 Billion Cubic Ft./Day Phase 2 Working on Contracts for an Additional Billion Cubic Feet/Day Scheduled Start-Up 2009 – 2010
Slide 34: Return to Libya
Return to Libya We Have Returned to our Historical Assets Immediate impact will be to add 12,000 to 15,000 BOE/day of production to 2005 exit rate Oxy’s net working interest in Libya covers approximately 130,000 square kilometers Exploration Work program proceeding on nine blocks awarded earlier thi
Slide 35: Return to Libya
Return to Libya EPSA II NC143 EPSA II NC145 EPSA II NC144 EPSA 85 NC150 EPSA I NC74 EPSA I NC29 Concessions 102, 103 B C A B F Concession Blocks EPSA I (Zueitina) EPSA II Exploration (Oxy) EPSA 85 Exploration (Oxy) EPSA IV #1 Exploration (Oxy) EPSA IV #2 Bid Round Libya Tunisia Algeria Niger Chad Eg
Slide 36: Conclusion
Conclusion Strong, Flexible Balance Sheet Continued Oil & Gas Production Growth Long-Lived Domestic Oil & Gas Reserve Base New, High Potential Exploration Opportunities Solid Base for Future Growth And Profitability
Slide 37: Occidental Petroleum Corporation
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 to
Slide 38: Slide 38
Slide 39: Appendix
Appendix
Slide 40: Worldwide Proven Reserves GAAP Reconciliation
US International Worldwide 2004 OIL GAS BOE OIL GAS BOE OIL GAS BOE Consolidated Subsidiaries 1,494 2,101 1,844 499 874 645 1,993 2,975 2,489 Other Interests - - - 43 - 43 43 - 43 Worldwide 1,494 2,101 1,844 542 874 688 2,036 2,975 2,532 2003 Consolidated Subsidiaries 1,500 1,826 1,804 490 759 617 1
Slide 41: 2004 Proven Reserves by Country GAAP Reconciliation
Consolidated Subsidiaries Other Interests Worldwide OIL GAS BOE OIL GAS BOE OIL GAS BOE United States 1,494 2,101 1,844 - - - 1,494 2,101 1,844 Qatar 237 668 348 - - - 237 668 348 Ecuador 104 - 104 - - - 104 - 104 Oman 46 100 63 - - - 46 100 63 Colombia 67 - 67 (9) - (9 ) 58 - 58 Russia - - - 49 - 4
Slide 42: Worldwide Production and Proved Reserve Additions
(Million BOE) Consolidated Subsidiaries Other Interests Worldwide OIL GAS BOE OIL GAS BOE OIL GAS BOE PRODUCTION 2000 117 259 160 8 - 8 125 259 168 2001 124 241 164 9 - 9 133 241 173 2002 142 229 180 8 - 8 150 229 188 2003 153 221 190 10 - 10 163 221 200 2004 159 233 198 9 - 9 168 233 207 Proved Res
Slide 43: Sources of Reserve Additions GAAP Reconciliation
(Million BOE ) Consolidated Subsidiaries Other Interests Worldwide OIL GAS BOE OIL GAS BOE OIL GAS BOE 2004 Revisions 5 241 45 5 (9) 3 10 232 48 Improved Recovery 88 185 120 1 - 1 89 185 121 Extensions and Discoveries 30 191 61 2 - - 2 32 191 63 Purchases 39 7 40 (4) - (4 ) 35 7 36 162 624 266 4 (9
Slide 44: Oil & Gas: Cash Flow 2004
2004 Occidental Petroleum Consolidated Statement of Cash Flows Cash flow from operating activities $ 3,878 Cash flow from investing activities (2,288 ) Cash flow from financing activities (824 ) Change in cash $ 766 2004 Consolidated Other Subsidiaries Interests Worldwide FAS 69 GAAP Oil & Gas resul
Slide 45: Oil & Gas: Cash Flow Annual Average 2002-2004
Annual Average 2002 - 2004 Occidental Petroleum Consolidated Statement of Cash Flows Cash flow from operating activities $ 3,017 Cash flow from investing activities (2,002 ) Cash flow from financing activities (599 ) Change in cash $ 416 Annual Average 2002 - 2004 Consolidated Other Subsidiaries Int
Slide 46: Return on Capital Employed (ROCE)
December 31 June 30 2005 2004 2005 Annualized GAAP measure – earnings applicable $ 2,568 $ 2,382 to common shareholders Interest expense 239 108 Tax effect of interest expense (84) (38) Earnings before tax-effected interest expense $ 2,723 2,452 GAAP stockholders’ equity $10,550 $ 12,706 Debt GAAP d