Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q3 2019 Earnings Presentation
45 slides from Occidental Petroleum's earnings presentation, Nov 5, 2019
Slide 1: Third Quarter Earnings Conference Call
Third Quarter Earnings Conference Call Occidental Petroleum Corporation November 05, 2019
Slide 2: Cautionary Statements
Cautionary Statements 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 (“Occi
Slide 3: Occidental Petroleum
Occidental Petroleum • Third Quarter Highlights • 2020 Production and Capital • Synergy Capture Update • Permian Execution • Financial Summary and Guidance • Closing Remarks 3
Slide 4: Built For Full Cycle Success
Built For Full Cycle Success Diversified Portfolio Complementary businesses drive cash flow Permian Resources growth Permian EOR High-return short-cycle cash flow generating DJ Basin assets Powder River Gulf of Mexico Decades of high-margin inventory Oman Low decline assets U.A.E. Dolphin Large scal
Slide 5: 3Q19 Highlights
3Q19 Highlights Transaction Close Completed acquisition of Anadarko ahead of schedule Completed $3.9 B sale of Mozambique; divested Plains interests for net proceeds of Divestitures $650 MM; closing of other announced divestitures on track $4.9 B of total debt repayments; $4.4 B 2020 term loan fully
Slide 6: Occidental Petroleum
Occidental Petroleum • Third Quarter Highlights • 2020 Production and Capital • Synergy Capture Update • Permian Execution • Financial Summary and Guidance • Closing Remarks 6
Slide 7: 2020 Capital Budget
2020 Capital Program by Asset2 ($ B) 2020 Capital Budget Permian Resources Permian EOR $9.0 B Rockies OxyChem Key Program Highlights $0.4 International Exploration & Corporate $0.1 GOM Marketing & Other • 2019 spending expected to be within $0.7 Midstream $0.3 Africa capital budget of $8.6 B, which
Slide 8: Occidental Petroleum
Occidental Petroleum • Third Quarter Highlights • 2020 Production and Capital • Synergy Capture Update • Permian Execution • Financial Summary and Guidance • Closing Remarks 8
Slide 9: Capital Synergies to be Delivered by 2021
Capital Synergies to be Delivered by 2021 10 Capital Synergies Capital Reduction 9 Capital Synergies $9.0 B $0.9 B • Drill, Complete, & Equip: Design & Execution Savings 8 $1.5 B ― Permian Basin $500 MM 7 ― DJ Basin $105 MM 6 $6.6 B ― Other Domestic $50 MM 5 • Facilities & Equipment $110 MM 4 • Addi
Slide 10: ~$605 MM Well Cost Savings
2021 Well Cost Capital Synergy Detail TX Del Per Well Savings $3.1 MM ~$605 MM Multi-well pad drilling Drilling optimization $0.4 MM $0.5 MM Approximate Net Well Cost Savings Completion design $0.8 MM Wells 110 Commercial improvements $0.8 MM Surface facility consolidation $0.6 MM Total Permian Syne
Slide 11: Best-in-Class Capital Intensity
Best-in-Class Capital Intensity ~50% Improvement in Capital Intensity on Legacy Anadarko Permian Assets Permian Resources Capital Intensity $47 $ MM/Mboepd Oxy’s world-class Permian Resources portfolio, unique $43 subsurface capability, and efficient capital execution significantly improve capital i
Slide 12: $1.1 B Overhead and Opex Synergies Captured by 2021
$1.1 B Overhead and Opex Synergies Captured by 2021 3.5 Overhead Synergies 3.0 $3.1 B • Workforce Alignment $0.9 B ― Executive $110 MM 2.5 ― Employee/Contractor $385 MM • Asset Rationalization $225 MM 2.0 $2.2 B • Real Estate and Other $180 MM $900 MM 1.5 1.0 Procurement and supply chain integration
Slide 13: Synergy Tracker – On Track to Meet or Exceed Targets
Synergy Tracker – On Track to Meet or Exceed Targets Annualized Pre-Tax Synergies Annual Synergies Identified and and Capital Capital Reduction Reduction Achieved Captured ($1B) ($ B) 4.0 Target $1.5 B $3.5 B 3.5 Identified 3.0 Captured 2.5 $0.9 B 2.0 1.5 $1.1 B 1.0 0.5 - Overhead/Opex Synergies Cap
Slide 14: Occidental Petroleum
Occidental Petroleum • Third Quarter Highlights • 2020 Production and Capital • Synergy Capture Update • Permian Execution • Financial Summary and Guidance • Closing Remarks 14
Slide 15: Permian Execution Excellence
Permian Execution Excellence Permian Resources Subsurface Technical Basin-leading • Next generation 4D frac model enhancing landing, spacing, and Excellence Wells minimizing parent-child impacts > Oxy has the most top 100 wells in the Delaware Basin1 Operational D&C Efficiency & Speed Outperformance
Slide 16: Leading Delaware Basin Well Performance
Leading Delaware Basin Well Performance 6 Month Cumulative Oil Top 100 Wells1 12 Month Cumulative Oil Top 100 Wells2 Oxy’s subsurface expertise delivers Basin leading wells Oxy has >20%+ of the best wells, while drilling less than for less cost: 30 7% of total Delaware Basin wells 30 Competitors use
Slide 17: Occidental Petroleum
Occidental Petroleum • Third Quarter Highlights • 2020 Production and Capital • Synergy Capture Update • Permian Execution • Financial Summary and Guidance • Closing Remarks 17
Slide 18: 3Q19 Results
3Q19 Results Reported 3Q19 Pro Forma Production1 Mboed Legacy Oxy 737 Adjusted EPS $0.11 Legacy Anadarko 654 Reported diluted EPS ($1.08) Total Combined Oxy 1,391 3Q19 CFFO before working capital $0.3 B Excluding 3Q19 merger related costs $2.1 B 3Q19 Reported versus Guidance Midpoint Mboed Reconcili
Slide 19: 4Q 2019 Guidance Estimates
4Q 2019 Guidance Estimates Oil & Gas Segment DD&A – 4Q19 • 4Q19 Production • Oil & Gas: $14.60 / boe > Total production of 1,312 – 1,336 Mboed • OxyChem and Marketing & Other Midstream: $170 MM > Permian Resources production of 449 – 459 Mboed Marketing & Other Midstream – 4Q19 > International produ
Slide 20: Debt Reduction Tracker
Applying Asset Divestiture Proceeds + FCF Debt Reduction to Debt Reduction ($ B) Tracker 10 ~$10.0 B Contracted/Pending Close Net proceeds of $10-15 B 9 Midland JV from asset divestitures will 8 be applied to debt reduction 7 Remaining 6 Africa • $8.8 B – Africa assets sold to Total1 5 $4.9 B • $650
Slide 21: Occidental Petroleum
Occidental Petroleum • Third Quarter Highlights • 2020 Production and Capital • Synergy Capture Update • Permian Execution • Financial Summary and Guidance • Closing Remarks 21
Slide 22: Leader in Lower Permian Emissions Intensity
Leader in Lower Permian Emissions Intensity Strategically Focused on Greenhouse Gas Emissions Reductions Low Emission Intensity with Leading Basin Production Low Emission Intensity with More Producing Wells 50 Permian Greenhouse Gas Intensity (mt CO2e per Mboe) 50 500 Permian Greenhouse Gas Intensit
Slide 23: Innovative and Sustainable Energy Leader
Innovative and Sustainable Energy Leader Operating • Best in class operator with top wells • Industry leading safety record Low cost operator • Unmatched reservoir characterization and subsurface ability • Infrastructure advantage to realize lower operating costs Decades of high Sustainable World Cl
Slide 24: Appendix Contents
Appendix Contents • Financial Information • Acreage and Overview • Well Performance and Cost • Governance 24
Slide 25: Oxy Consistently Returns Capital to Shareholders
Oxy Consistently Returns Capital to Shareholders Over $35 B of Total Capital Returned Since 2002 5,000 $3.50 ✓ Dividend Sustainable Long-term at $40 WTI 4,500 ✓ Consecutive Dividend Growth Since 2002 - 11% CAGR1 $3.00 4,000 ✓ Over 90% of Market Capitalization Returned to Shareholders $ MM Returned t
Slide 26: Cash Flow Sensitivities
Cash Flow Sensitivities Oil & Gas • Annualized cash flow changes ~$260 MM per ~$1.00 / bbl change in oil prices > ~$240 MM per ~$1.00 / bbl change in WTI prices > ~$20 MM per ~$1.00 / bbl change in Brent prices • Annualized cash flow changes ~$35 MM per ~$0.10 / Mmbtu change in natural gas prices •
Slide 27: Pro Forma Production – 3Q19 and FY2019
Pro Forma Production – 3Q19 and FY2019 Net MBOED 3Q Actuals Net MBOEPD FY Guide Total Company 1,391 Total Company 1,359 - 1,365 Legacy Oxy 737 Legacy Oxy 726 - 729 Legacy Anadarko 654 Legacy Anadarko 633 - 636 Permian Resources 457 Permian Resources 436 - 438 Legacy Oxy 300 Additional Domestic 643 -
Slide 28: 2019 Cash Flow and Cash Balance Reconciliation
2019 Cash Flow and Cash Balance Reconciliation $B $5.9 ($2.0) ($4.1) $21.5 ($27.9) $10.0 ($4.9) $3.9 $5.4 $3.0 Beginning CFFO Before Preferred Proceeds from Working Dividends & Capital Cash Debt Ending Cash Cash Balance Working Stock Long-Term Capital & Share Expenditures Component Repayment Balance
Slide 29: Significant Identified Synergies with Potential Upside
Significant Identified Synergies with Potential Upside Expected Pre-Tax Annual Synergies and Capital Reduction ($ B) $1.5 $3.5 Capital Synergies: $0.9 B $0.9 Overhead/Opex Synergies: $1.1 B $0.6 Capital Reduction: $0.5 $1.5 B Permian Capital and Opex Savings Procurement & Supply Chain General Overhe
Slide 30: Anadarko Acquisition – Sources of Financing
Anadarko Acquisition – Sources of Financing Weighted Average Cash Yield Less than 5% Cash Cost $B Yield Term Loans1 $8.8 3.0% Bonds Issued1 $13.0 3.1% Berkshire Preferred $10.0 8.0% Total Cash Cost $31.8 4.6% Other Consideration $B Oxy Equity2 $7.4 Anadarko Debt (Assumed)3 $10.7 WES Debt (Consolidat
Slide 31: Appendix Contents
Appendix Contents • Financial Information • Acreage and Overview • Well Performance and Cost • Governance 31
Slide 32: Oxy’s Combined Integrated Portfolio
Oxy’s Combined Integrated Portfolio Oil & Gas OxyChem Oxy Midstream and WES Focused in world class Leading manufacturer of Integrated infrastructure and basins with a history of basic chemicals and marketing provides access to maximizing recovery significant cash generator global markets 1.4 MMboed1
Slide 33: Largest U.S. Acreage Holder
Largest U.S. Acreage Holder 14.4 MM Net Total U.S. Acres Rockies Permian 1.5 MM Acres 3.1 MM Acres Powder River Basin – 0.4 MM Permian Unconventional – 1.7 MM DJ Basin – 0.9 MM Excludes acreage outside of active operating Permian Conventional – 1.4 MM areas Uinta Basin 0.2 MM Gulf of Mexico Land Gra
Slide 34: U.S. Onshore Overview
U.S. Onshore Overview Rockies Land Grant Permian 1.5 MM Acres 7.0 MM Acres1 3.1 MM Acres 3Q19 Net Pro Forma Production Oil NGLs Gas Total (MBOED) (MBBLD) (MMCFD) Permian Resources 255 107 570 457 Permian EOR 116 30 45 154 DJ Basin 115 64 641 286 Other Domestic 15 9 236 63 Total 501 210 1,492 960 1In
Slide 35: Gulf of Mexico Overview
Gulf of Mexico Overview Gulf of Mexico 1.0 MM Acres 3Q19 Net Pro Forma Production Total Oil (MBOED) 127 NGLs (MBBLD) 10 Gas (MMCFD) 88 Total 152 35
Slide 36: International Overview
International Overview Colombia U.A.E. Oman 2.0 MM Acres 1.5 MM Acres 6.0 MM Acres 3Q19 Net Production Oil NGLs Gas Total (MBOED) (MBBLD) (MMCFD) Latin America 32 - 8 33 Al Hosn 14 25 246 80 Dolphin 7 8 171 44 Oman 66 - 133 88 Qatar 34 - - 34 Total 153 33 558 279 36
Slide 37: WES Overview
WES Overview Premier Asset Portfolio 24 6 Gathering Natural Gas DJ BASIN Systems Pipelines WHITE CLIFFS FRONT RANGE 73 13 Processing & Crude Oil/NGL SADDLEHORN DELAWARE BASIN TEXAS EXPRESS Treating Facilities Pipelines WHITETHORN PANOLA RED BLUFF EXPRESS WES Assets CACTUS II MT. BELVIEU FRAC 30+ 16,
Slide 38: Appendix Contents
Appendix Contents • Financial Information • Acreage and Overview • Well Performance and Cost • Governance 38
Slide 39: Basin Leading Well Performance
Basin Leading Improvement in Permian Resources Hz Unconventional Well Performance Well Performance 180 Day Cum Improvement 1st Year Cum Improvement • 4D Frac Modeling ✓ +200% from 2015 to 2019 ✓ +124% from 2015 to 2018 350 ✓ +24% from 2018 to 2019 ✓ +20% from 2017 to 2018 • Seismic and 2018 Geomecha
Slide 40: Oxy’s Play Leading Delaware Basin Performance
Oxy’s Play Leading Delaware Basin Performance Average 12 Month Cumulative Oil by Operator • Oxy’s Subsurface Knowledge, Data Analytics, and 250 Execution Drive Basin Leading Results 200 • Top Delaware Basin Operator > Highest average 12 month cumulative oil production in the Delaware Basin Cumulativ
Slide 41: TX Delaware Legacy Anadarko Capital Well Cost Synergies
TX Delaware Legacy Anadarko Capital Well Cost Synergies TX Delaware Per Well Savings ($ MM) (Avg Lateral Length 8,950’) $3.1 MM Targeted Well Cost Synergies by 2021 Well D,C,E Production Facilities Drilling, Completion, Hookup Synergies 14 13.1 • Multi-well pad savings - $0.4 MM > Zipper fracs, full
Slide 42: DJ Basin Capital Well Cost Synergies
DJ Basin Capital Well Cost Synergies DJ Basin Per Well Savings ($ MM) $0.6 MM Targeted Well Cost Synergies by 2021 (Avg. Lateral Length 8,186’) Well D,C,E Production Facilities Drilling, Completion, Hookup Synergies 5 • Completion optimization - $0.3 MM 4.2 > Frac fluid optimization, less proppant,
Slide 43: Appendix Contents
Appendix Contents • Financial Information • Acreage and Overview • Well Performance and Cost • Governance 43 43
Slide 44: Highly Skilled and Diverse Board Provides Strategic Oversight
Highly Skilled and Diverse Board Provides Strategic Oversight Focused on Creating Shareholder Value ✓ Board recently announced its intention to recommend, at Independence the 2020 Annual Meeting, proposals to amend Occidental’s charter to: ▪ Lower the threshold ownership requirement to call a specia
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