Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Goldman Sachs Global Energy Conference 2013
46 slides from Occidental Petroleum's conference presentation, Jan 8, 2013
Slide 1: Occidental Petroleum Corporation
Occidental Petroleum Corporation Goldman Sachs Global Energy Conference 2013 Stephen I. Chazen President and Chief Executive Officer January 8 - 9, 2013
Slide 2: Slide 2
Slide 3: Investor Relations contacts
Christopher G. Stavros Vice President and Treasurer 212-603-8184 | chris_stavros@oxy.com Christopher M. Degner Senior Director - Investor Relations 212-603-8185 | christopher_degner@oxy.com Anthony J. Cottone Manager - Investor Relations 212-603-8188 | anthony_cottone@oxy.com
Slide 4: Oil & Gas - Improved Capital Efficiency & Operating Cost Reduction Program
Oil & Gas - Improved Capital Efficiency & Operating Cost Reduction Program Oil & Gas - Improved Capital Efficiency & Operating Cost Reduction Program
Slide 5: Oil & Gas - Improved Capital Efficiency & Operating Cost Reduction Program
Oil & Gas - Improved Capital Efficiency & Operating Cost Reduction Program Oil & Gas - Improved Capital Efficiency & Operating Cost Reduction Program
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Slide 7: Oxy's US Operated Rig Activity
Oxy’s US Operated Rig Activity
Slide 8: First Nine Months 2012 Results - Summary
First Nine Months 2012 Results - Summary YTD 2012 YTD 2011 • Income from continuing operations $4,271 $4,999 • EPS (diluted) from continuing operations $5.26 $6.14 • Net Income $4,262 $5,137 • Reported EPS (diluted) $5.25 $6.31 • Worldwide oil and gas production volumes (mboe/d) +5% 762 728 • US oil
Slide 9: What Is Our Philosophy & Strategy?
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
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Slide 11: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase
Slide 12: Consistent Dividend Growth
Consistent Dividend Growth • Our ability to pay dividends is indicated by our free cash flow generation. • In February 2012 the Board of Directors increased the company’s dividend by 17% to an annualized rate of $2.16 per share, compared to the previous annual rate of $1.84. • We have now increased
Slide 13: Consistent Dividend Growth
Consistent Dividend Growth Note: Dividends paid as per the Record Date ($/share)
Slide 14: 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 Colombia Libya Oman UAE Yemen Bolivia Qatar Iraq Bahrain United States Permian Basin California
Slide 15: Oxy Is Primarily a Domestic Oil Producer
Oxy Is Primarily a Domestic Oil Producer Oil & Gas Production 9 months - 2012 (Million barrels of oil equivalent) 61% 39% 60% 29% 11% Oxy Is Primarily a Domestic Oil Producer
Slide 16: Key Performance Metrics - Production Growth
Key Performance Metrics - Production Growth • Total U.S. production in 3Q12 was 469 mboe/d, up 7 mboe/d from 2Q12 the 8th consecutive quarterly domestic volume record for Oxy. Year-over-year, production grew by 8%, or 33 mboe/d, of which 30 mb/d was oil growth. +30 mb/d oil production growth Key Per
Slide 17: Peer Company - Income per Boe of Production
Peer Company - Income per Boe of Production (Nine Months ended 9/30/12) Integrated O&G Large Cap Independent E&P S/Mid Cap Oil Focused E&P
Slide 18: Capital Spending
Capital Spending • These expenditures include capital for: – the Al Hosn Shah gas project which is expected to start production in late 2014; – gas and CO 2 processing plants and pipelines to maintain or expand the capacity of these facilities to handle future production increases; – the chemical se
Slide 19: 4Q12 Outlook - Capital Program
4Q12 Outlook - Capital Program 4Q12 Outlook - Capital Program
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Slide 21: Peer Company - U.S. Capital Spending per Boe of Production
Peer Company - U.S. Capital Spending per Boe of Production (Nine Months ended 9/30/12) Integrated O&G Large Cap Independent E&P S/Mid Cap Oil Focused E&P
Slide 22: 4Q12 Outlook - Oil and Gas Production
4Q12 Outlook - Oil and Gas Production • Over the past year, we have achieved our goal of increasing domestic production by 6 to 8 mboe/d quarter-over-quarter. – We expect our 4Q12 oil production to grow by about this much. – However, the expected decline in gas production resulting from the change i
Slide 23: Oil & Gas Volume Growth Drivers
Oil & Gas Volume Growth Drivers • Base 5 - 8% Compounded Average Annual Growth – Current California risked prospects – Non-CO 2 & CO 2 in the Permian – Oman • Upside from Existing Holdings – New California conventional and unconventional prospects – Permian exploration – Williston Basin & Rockies –
Slide 24: California Overview
California Overview California Overview Los Angeles Los Angeles Bakersfield Bakersfield Oxy Acreage • Largest acreage holder in CA with ~1.7 mm acres, majority of which are net mineral interests • 3Q12 production of 147 mboe/d • Diverse geologic characteristics and numerous reservoir targets • Devel
Slide 25: California Conventional Exploration
California Conventional Exploration • World Class Province – 35+ Billion BOE discovered – 5 of top 12 U.S. oil fields • Significant Remaining Potential – Large undiscovered resources – Multiple play and trap types • Underexplored • Oxy – Major producer – Largest acreage holder – Successful explorer
Slide 26: California Unconventional "Shale" Program
California Unconventional “Shale” Program • Multi-year inventory of drill sites in CA, many of which are both outside of Elk Hills proper & the Kern County Discovery Area • 30-day initial production rate for these wells is between 300 and 400 BOE per day • For the shale wells outside Elk Hills, ~80%
Slide 27: California Update
California Update • Total CA production growth on a BOE basis is slower than we thought it would be, in part due to the Elk Hills decline, permitting issues and more recently low gas prices. • On a positive note, overall performance of the new resources has been consistent with expectations, includi
Slide 28: California Liquids Production
California Liquids Production • In mid-2010, we shifted our development program to conventional and unconventional opportunities outside of the traditional and more mature Elk Hills areas. Liquids Production Volumes +20 mb/d production growth
Slide 29: California Gas Processing Plant
California Gas Processing Plant • Over the last several years we have spent $370 mm on the new Elk Hills gas plant. • The plant went into operation in early July and, notwithstanding initial startup issues, is positively affecting our operational efficiency and production including higher liquids yi
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Slide 31: Permian Basin Overview
Permian Basin Overview • 3Q12 production of 209 mboe/d • Largest oil producer in Permian (~15% net share of total) • Largest operator in Permian (of 1,500+ operators) • ~64% of Oxy’s Permian oil production is from CO 2 related EOR projects - Oxy’s most profitable business • Drilled ~409 wells on ope
Slide 32: Permian non-CO2 Business
Permian non-CO 2 Business Acreage in Select Permian Plays (Thousands of Acres) • Permian non-CO 2 business is one of Oxy’s fastest growing assets; • Since beginning delineation and development efforts in 2010, we have grown production by +25%; • As a result of the significant activity by us and our
Slide 33: Map of Select Permian Basin Plays
Map of Select Permian Basin Plays
Slide 34: Abu Dhabi - Al Hosn Gas Project (Shah Field)
Abu Dhabi - Al Hosn Gas Project (Shah Field) • 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, located onshore ~180 km so. west of Abu
Slide 35: Abu Dhabi - Al Hosn Gas Project (Shah Field)
Abu Dhabi - Al Hosn Gas Project (Shah Field)
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Slide 37: Abu Dhabi - Al Hosn Gas Project (Shah Field)
Abu Dhabi - Al Hosn Gas Project (Shah Field)
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Slide 39: Oxy Oman Gross Production Growth
Oxy Oman Gross Production Growth
Slide 40: Summary of YTD 2012 Cash Flow
Summary of YTD 2012 Cash Flow – Working capital reduced our nine-month cash flow from operations of $9.2 billion by ~$660 mm to $8.5 billion. ~$510 mm of working capital use occurred in 3Q12. Capex was $7.7 billion for the first nine months, of which $2.6 billion was spent in 3Q12; YTD capex was 82%
Slide 41: Gross Cash Flow Uses
Gross Cash Flow Uses Gross Cash Flow Uses Dividends Debt Reduction & Cash Share Repurchase Acquisitions Capital Percentage of Total - - - Sub-Total 5-yr avg.
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Slide 43: Acquisition Strategy
Acquisition Strategy • Company’s core business is acquiring assets that can provide future growth through improved recovery. – Foreign contracts – Domestic add-ons – Small incremental additions to production in short term • Generate returns of at least 15% in the US and 20% overseas. • Overall avera
Slide 44: Oxy - Investment Attributes
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
Slide 45: 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 46: Occidental Petroleum Corporation
Occidental Petroleum Corporation
Occidental Petroleum — Goldman Sachs Global Energy Conference 2013 on 6ix