Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q4 2023 Earnings Presentation
57 slides from Occidental Petroleum's earnings presentation, Feb 15, 2024
Slide 1: Fourth Quarter Earnings Conference Call
02.15.24 Fourth Quarter Earnings Conference Call
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS 2 Forward-looking statements This presentation contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements about Occidental Petroleum Corporation’s (“Oc
Slide 3: Outline
3 OUTLINE 2023 and Fourth Quarter Highlights Cash Flow and Shareholder Return Priorities 2024 Capital Plan Financials Closing Comments Marco Polo
Slide 4: 2023 Achievements
HIGHLIGHTS 4 2023 ACHIEVEMENTS Delivering on a differentiated long-term shareholder value strategy through superior assets and operations while leading in the emerging lower carbon world Operational Excellence • Record program well productivity rates in the Delaware, DJ, and Midland Basins • Al Hosn
Slide 5: Fourth Quarter 2023 Performance
HIGHLIGHTS 5 FOURTH QUARTER 2023 PERFORMANCE Oil & Gas OxyChem 1,234 Mboed Production $250 MM Highest Quarterly Production Pre-Tax Income in over Three Years Financial Strategic $1.1 B Closed Acquisition of Free Cash Flow Carbon Engineering $710 MM Announced Acquisition Adjusted Income of CrownRock
Slide 6: Oil & Gas Update
FOURTH QUARTER HIGHLIGHTS 6 OIL & GAS UPDATE NEW WELLS DELIVERING RECORD PERFORMANCE, UNLOCKING INVENTORY New Mexico well (Top Spot) delivered industry-wide New Mexico record 6-month cumulative production of 770 Mboe Delaware Basin appraisal of 2nd and 3rd Bone Spring formation in Reeves Co., TX
Slide 7: Top 10 Horizontal Wells in Delaware Basin
TOP 10 HORIZONTAL WELLS 7 IN DELAWARE BASIN CONTINUING TO RAISE THE BAR WITH INDUSTRY-LEADING WELLS First 6-Month Cumulative Production, Mboe 0 250 500 750 1,000 #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 SOURCE: ENVERUS PRISM DATA AS OF 2/13/24, HORIZONTAL DELAWARE BASIN WELLS WITH 6-MONTH PRODUCTION AVAILABLE
Slide 8: Outline
8 OUTLINE 2023 and Fourth Quarter Highlights Cash Flow and Shareholder Return Priorities 2024 Capital Plan Financials Closing Comments Ingleside Marco Polo
Slide 9: CrownRock Update
CROWNROCK DAWSON BORDEN 99 UPDATE MARTIN HOWARD Transaction Summary NM TX Purchase Price: ~$12.0 B1 2024E Production: 170 Mboed2 Undeveloped Locations: ~1,700 STERLING MIDLAND Effective Date: January 1, 2024 GLASSCOCK Valuation Drivers Emphasis Placed on FCF Generation UPTON REAGAN High-Margin Curre
Slide 10: Cash Flow Priorities
2024 ONGOING FOCUS 10 CASH FLOW Maintain Production Base Preserve asset base integrity PRIORITIES and longevity Sustainable & Growing Dividend Through-the-cycle sustainability Apply technical and with long-term growth potential operational excellence to preserve and enhance CURRENT FOCUS premier ass
Slide 11: Shareholder Return Priorities
SHAREHOLDER RETURN PRIORITIES 11 Divestiture proceeds1 and ECF after Retire debt Sustainable and common dividend allocated to debt opportunistically growing dividend reduction until principal debt <$15.0 B and at maturity >$4.5 B debt repayments within ECF after common dividend 12 months of CrownRoc
Slide 12: Outline
12 OUTLINE 2023 and Fourth Quarter Highlights Cash Flow and Shareholder Return Priorities 2024 Capital Plan Financials Closing Comments Marco Polo
Slide 13: 2024 Capital Plan: Energy and Chemicals Businesses
2024 CAPITAL PLAN 13 ENERGY AND CHEMICALS BUSINESSES $6.0 B $6.0 $5.75 B $5.8 B $5.0 $4.0 $3.0 $2.0 Short-cycle and Exploration Mid-cycle Investments $1.0 ~$320 MM Decrease ~$480 MM Increase $- 2023 Onshore Exploration Permian EOR, Gulf of Mexico OxyChem 2024 Capital Range 2024 Unconventional Midstr
Slide 14: 2024 Capital Plan: Emerging Low-Carbon Businesses
2024 CAPITAL PLAN 14 EMERGING LOW-CARBON BUSINESSES COMMERCIALIZING CCUS AND DAC Artist Rendering of DECARBONIZATION SOLUTIONS STRATOS, the first industrial-scale Direct Air Capture facility Expected Net Capital Expenditures1 $600 MM • Continued construction of STRATOS (DAC 1); expected to be commer
Slide 15: Outline
15 OUTLINE 2023 and Fourth Quarter Highlights Cash Flow and Shareholder Return Priorities 2024 Capital Plan Financials Closing Comments Marco Polo
Slide 16: Fourth Quarter 2023 Results
FINANCIALS 16 FOURTH QUARTER 2023 RESULTS Reported Production versus Mboed Reported Guidance Midpoint Reconciliation Adjusted diluted EPS1 $0.74 ROCKIES Strong base and new well performance, +19 Reported diluted EPS1 $1.08 higher OBO volumes INTERNATIONAL CFFO before working capital $2.5 B Higher up
Slide 17: First Quarter and Full-Year 2024 Guidance
FINANCIALS 17 FIRST QUARTER AND FULL-YEAR 2024 GUIDANCE (EXCLUDES ANY CROWNROCK COMPONENTS) OIL & GAS 1Q24 FY 2024 MIDSTREAM2 1Q24 FY 2024 Total Company Production (Mboed) 1,155 - 1,195 1,220 - 1,280 Pre-tax Income $(210) - $(110) MM $(750) - $(550) MM Permian Production (Mboed) 551 – 571 569 - 599
Slide 18: Shareholder Value Enhancements
FINANCIALS 18 SHAREHOLDER VALUE ENHANCEMENTS Near-Term Baseline Mid-Cycle Investments Ongoing Financial Improvements Drive Sustainability Strengthening • OxyChem – Battleground modernization • Low decline conventional Oil and Gas • Balance Sheet – Defined principal and expansion and enhancements to
Slide 19: Outline
19 OUTLINE 2023 and Fourth Quarter Highlights Cash Flow and Shareholder Return Priorities 2024 Capital Plan Financials Closing Comments Marco Polo
Slide 20: Differentiated Portfolio
DIFFERENTIATED PORTFOLIO 20 Oxy’s premier diversified assets and distinguished operational capabilities create a runway for sustainable shareholder value accretion OIL & GAS OXYCHEM • Diversified portfolio with deep, improving inventory • Sector earnings leader with resilient free cash flow • Operat
Slide 21: Appendix
21 Appendix
Slide 22: Appendix Contents
22 APPENDIX Financial Information Oil & Gas Update Asset Overview DAC Development Summary Sustainability Abbreviations and Definitions
Slide 23: Cash Flow Sensitivities
FINANCIAL INFORMATION 23 CASH FLOW SENSITIVITIES OIL & GAS MIDSTREAM & MARKETING Annualized cash flow changes ~$230 MM per $1.00 / Annualized cash flow changes ~$65 MM per $0.25 / bbl bbl change in oil prices change in Midland to MEH spread ◦ ~$210 MM per $1.00 / bbl change in WTI price ◦ ~35-da
Slide 24: Diluted Share Count Example
FINANCIAL INFORMATION 24 DILUTED SHARE COUNT EXAMPLE Basic Shares Outstanding + Incremental Diluted Shares = Total Diluted Outstanding Shares Incremental diluted shares include June 2020 warrants, Berkshire Hathaway warrants, and performance awards Treasury method assumes proceeds from exercised
Slide 25: 2024 Capital Plan
FINANCIAL INFORMATION Capital $ B 2023 Actuals 2024 Plan 25 2024 CAPITAL PLAN Oil & Gas Chemicals $5.0 $0.5 $4.8 – $5.0 $0.7 Sustaining Capital1 Midstream & Corporate $0.3 $0.3 ~$400 MM change from 2023: Energy and Chemicals Subtotal $5.8 $5.8 - $6.0 • Sustaining capital increased to ~$3.9 B for Low
Slide 26: Appendix Contents
26 APPENDIX Financial Information Oil & Gas Update Asset Overview DAC Development Summary Sustainability Abbreviations and Definitions
Slide 27: Domestic Onshore Assets
OIL & GAS UPDATE 27 DOMESTIC ONSHORE ASSETS PERMIAN 2024 ACTIVITY ROCKIES 2024 ACTIVITY ~$2.6 B ~21 Gross ~10 Net 380 - 420 ~$0.9 B ~2 Gross ~2 Net 160 – 180 Capex Rigs Rigs Wells Online Capex Rigs Rigs Wells Online 100% OBO OBO 100% EOR Base Maint PR Basin PR Basin Base Maint PR Basin EOR EOR Facil
Slide 28: Delaware Basin Well Productivity
TOP-TIER WELL PERFORMANCE DELAWARE CONTINUES TO IMPROVE 28 BASIN WELL 500 PRODUCTIVITY 450 Superior-quality 400 inventory combined with subsurface expertise 350 Cumulative Mboe drives continuous 300 improvement and value 250 1 Year Cumulative 200 Improvement 150 2015 to 2023: +225% 100 2018 to 2023:
Slide 29: Leading Delaware Basin Well Performance
OIL & GAS UPDATE 29 LEADING DELAWARE BASIN WELL PERFORMANCE AVERAGE 6-MONTH CUMULATIVE OIL BY OPERATOR1 AVERAGE 12-MONTH CUMULATIVE OIL BY OPERATOR2 Oxy is 64% above the 6-month basin average Oxy is 49% above the 12-month basin average 250 300 250 Average 6-month cum. Oil, Mbbl Average 12-month cum.
Slide 30: DJ Basin Well Productivity
WELL DESIGN DRIVING MAJOR DJ BASIN WELL PRODUCTIVITY GAINS 30 PRODUCTIVITY 250 Data-driven well design and operational expertise 200 drive continuous Cumulative Mboe improvement and value 150 1 Year Cumulative Improvement 100 2015-16 to 2023: +102% 2017-21 to 2023: +61% 50 2022 to 2023: +32% 0 0 30
Slide 31: Midland Basin Well Productivity
TECHNICAL EXCELLENCE DRIVING MIDLAND WELL STEP-CHANGE IN PERFORMANCE 31 PRODUCTIVITY 250 Subsurface characterization, 200 operational focus, and Cumulative Mboe optimized DSU design catalysts for elevated 150 performance 100 1 Year Cumulative Improvement 2014-16 to 2023: +93% 50 2017-21 to 2023: +39
Slide 32: High-Graded U.S. Onshore Portfolio
HIGH-GRADED U.S. Onshore Unconventional Gross Operated Inventory 32 U.S. ONSHORE 12,000 CrownRock 10,800 PORTFOLIO 10,000 Oxy Permian Unconventional 7,600 8,000 Rockies Acquisition of CrownRock 6,000 6,000 will increase Oxy’s sub- 4,000 3,700 $40 breakeven inventory 2,000 by >25% - Breakeven <$40 Br
Slide 33: 2023 Reserves
OIL & GAS UPDATE 33 2023 RESERVES 700 MMboe Reserves Additions Excluding Price Revisions 183% 3-Year Average Reserves Replacement Ratio $5.72 3-Year Average F&D Cost per BOE 3,817 153 29 3,982 429 (446) Organic All-In 69% Proved 130% RRR 137% RRR Developed $9.27 F&D $9.68 F&D 73% Liquids Year-End Pr
Slide 34: Appendix Contents
34 APPENDIX Financial Information Oil & Gas Update Asset Overview DAC Development Summary Sustainability Abbreviations and Definitions
Slide 35: Oxy's Combined Integrated Portfolio
OXY’S COMBINED INTEGRATED PORTFOLIO 35 Oil & Gas OxyChem Oxy Midstream Focused in world class Leading manufacturer of basic Integrated infrastructure and basins with a history of chemicals and significant cash marketing provide access to global maximizing recovery generator markets 38 Rockies 1,234
Slide 36: OxyChem Market Leading Position
OXYCHEM 2,500 Pre-Tax Earnings (EBIT)1 36 MARKET LEADING POSITION 2,000 • 23 owned facilities worldwide 1,500 $ MM • Integrated assets capture benefits of favorable market conditions 1,000 • Top-tier global producer in every product 500 produced 0 ◦ Largest merchant caustic soda seller in 2014 2015
Slide 37: OxyChem Projects Update
OXYCHEM PROJECTS UPDATE 37 BATTLEGROUND MODERNIZATION & EXPANSION PROJECT Modernization and expansion of the Battleground plant expected to increase cash flow through improved margins and higher product volumes, while enhancing operational flexibility: • Conversion from diaphragm to membrane technol
Slide 38: Midstream & Marketing Guidance Reconciliation
MIDSTREAM & MARKETING 38 GUIDANCE RECONCILIATION 4Q23 Guide 4Q23 Actuals 1Q24 Guide PHYSICAL MIDSTREAM BUSINESS $200 • 4Q23 income below guidance primarily Quarterly Pre-Tax Income ($ MM) due to losses on equity investments; $150 1Q24 guidance reflects impacts of annual plant turnaround for Dolphin
Slide 39: One of the Largest U.S. Acreage Holders
ONE OF THE LARGEST U.S. ACREAGE HOLDERS 39 9.3 MM Net Total U.S. Acres ROCKIES 1.0 MM ACRES PERMIAN 2.8 MM ACRES POWDER RIVER UNCONVENTIONAL 0.3 MM POWDER RIVER 1.4 MM DJ BASIN CONVENTIONAL 0.7 MM 1.4 MM Excludes acreage outside of active DJ BASIN operating areas OTHER ONSHORE GULF OF MEXICO TOTAL A
Slide 40: U.S. Onshore Overview
U.S. ONSHORE OVERVIEW 40 4Q23 NET PRODUCTION ROCKIES Oil NGLs Gas Total 1.0 MM ACRES (Mbod) (Mbbld) (MMcfd) (Mboed) Permian 338 138 674 588 Rockies & Other Dmstc. 87 98 600 285 Total 425 236 1,274 873 OPTIMIZED ADVANCED DEPLOY STRATEGIC PERMIAN D EV ELOPMENT SUBSURFACE + POWERFUL + INFRASTRUCTURE ST
Slide 41: Gulf of Mexico Overview
GULF OF MEXICO OVERVIEW 41 ALABAMA GULF OF MEXICO MISSISSIPPI TOTAL ACREAGE 0.9 MM TEXAS LOUISIANA 4Q23 NET PRODUCTION MARLIN Oil (Mbod) 105 HORN MOUNTAIN NGLs (Mbbld) 10 HOLSTEIN CONSTITUTION Gas (MMcfd) 72 CAESAR/TONGA BOOMVANG MARCO POLO Total (Mboed) 127 GUNNISON HEIDELBERG LUCIUS NOTE: AS OF 12
Slide 42: International Overview
INTERNATIONAL OVERVIEW 42 U.A.E.1 4Q23 NET PRODUCTION 2.5 MM ACRES Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Algeria & Other Intl. 32 3 15 38 Al Hosn 16 27 295 92 Dolphin 6 8 156 40 Oman 54 - 60 64 ALGERIA OMAN Total 108 38 526 234 0.5 MM ACRES 6.0 MM ACRES MENA NOTE: AS OF 12/31/2023; ACREA
Slide 43: Appendix Contents
43 APPENDIX Financial Information Oil & Gas Update Asset Overview DAC Development Summary Sustainability Abbreviations and Definitions
Slide 44: DAC Development Drivers
DAC DEVELOPMENT SUMMARY 44 DAC DEVELOPMENT DRIVERS • Carbon Engineering (CE) DAC technology offers revolutionary scalability Technology • CE Innovation Centre identifying improvements for DAC 1+ • Synergies across Carbon Engineering, Oxy Major Projects, and OxyChem • U.S. passed Bipartisan Infrastru
Slide 45: Innovation and Partnerships Expected to Reduce Cost of Capture
DAC DEVELOPMENT SUMMARY INNOVATION AND PARTNERSHIPS 45 EXPECTED TO REDUCE COST OF CAPTURE Cost of Capture1 Illustrative DAC Cost Reduction ($/t) Cost down innovation examples Key technology innovations, $500 manufacturing and supply • Improved air contactor geometry resulting in fewer chain efficien
Slide 46: DAC CDR Voluntary Market Demand Scenarios
DAC DEVELOPMENT SUMMARY 46 DAC CDR VOLUNTARY MARKET DEMAND SCENARIOS As DAC costs reduce, CDR market demand and partnership opportunities expected to increase DAC CDR demand (Mtpa) OXY OXY DAC CDR: $300/t OWNERSHIP % RETURNS • Accelerated cost reduction expected to drive CDR market 50 Mtpa ± 10 50 e
Slide 47: DAC CDRs Expected to Be Economic Alternative to SAF
DAC DEVELOPMENT SUMMARY 47 DAC CDRs EXPECTED TO BE ECONOMIC ALTERNATIVE TO SAF CO2 abatement using SAF costs ~$750/t2 Beginning in 2027, CORSIA DAC CDRs expected to cost less than abatement using SAF requires airlines to offset their emissions1 Reduction in aviation CO2 emissions by 2050, Mtpa • SAF
Slide 48: DAC Investment Principles
DAC DEVELOPMENT SUMMARY DAC INVESTMENT PRINCIPLES 48 • Developing competitive-returns business with cash flow stability Returns Focused • DAC 2+ to meet return threshold for FID Demand-Driven • Market demand to drive development pace Development • Low-carbon program net capital expected to be ≤$600
Slide 49: DAC Commercial Development Assumptions
DAC COMMERCIAL DEVELOPMENT ASSUMPTIONS 49 DAC 1 DAC 2 Nth Voluntary and Compliance REVENUE Policy CDR PRICE1 $400 – 630/t $400 – 630/t Value Based IRA 45Q Enhancements DAC to EOR: $130/t 45Q CREDIT2 $180/t $180/t Policy/Scope Driven DAC to Sequestration: $180/t Co-Captured CO2 to Sequestration: $85/
Slide 50: Appendix Contents
50 APPENDIX Financial Information Oil & Gas Update Asset Overview DAC Development Summary Sustainability Abbreviations and Definitions
Slide 51: Oxy's Net-Zero Strategy and Goals
51 OXY’S NET-ZERO STRATEGY AND GOALS In 2020, Oxy adopted the following goals to achieve Net Zero across our total emissions inventory in accordance with the goals of the Paris Agreement1: Net-zero emissions in our operations and energy use (Scope 1 and 2) before 2040, with an ambition to achieve be
Slide 52: Recent Emissions Reduction Progress
SUSTAINABILITY 52 RECENT EMISSIONS REDUCTION PROGRESS • Reduced routine flaring by 67%2 in our global oil and gas operated assets since joining the World Bank’s Zero Routine Flaring initiative in 2020 1 • Achieved Zero Routine Flaring across U.S. operations in 2022 with sustained zero routine flarin
Slide 53: Sustainability Strategy
53 SUSTAINABILITY STRATEGY SUSTAINABILITY INVESTMENTS RECOGNITIONS WATER STEWARDSHIP • The Board approved the Company’s • Recognized by Fortune in both 2022 and • In 2022, 95% of the total water withdrawn updated Health, Safety, Environmental and 2023 as one of the World’s Most Admired by Oxy’s U.S.
Slide 54: Water Stewardship Achievements
South Curtis Ranch produced water recycling facility in Midland County, Texas WATER 54 STEWARDSHIP ACHIEVEMENTS Reduce water withdrawn from freshwater sources • 95% of the total water withdrawn by Oxy’s U.S. oil and gas operations came from non- fresh sources, of which 94% was produced water Recycle
Slide 55: Appendix Contents
55 APPENDIX Financial Information Oil & Gas Update Asset Overview DAC Development Summary Sustainability Abbreviations and Definitions
Slide 56: Abbreviations and Definitions
ABBREVIATIONS AND DEFINITIONS 56 Abbreviations B – Billion EBITDA – Earnings Before Interest, Tax, Depreciation, MBOE – Thousand Barrel Oil Equivalent BE – Breakeven and Amortization MBOED – Thousand Barrel Oil Equivalent per Day BO – Barrel of Oil ECF – Excess Cash Flow MM – Millions BPD – Barrels
Slide 57: Oxy Zero In
VB OXY ZERO IN”