Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Howard Weil 39th Annual Energy Conference (March 2011)
33 slides from Occidental Petroleum's conference presentation, Mar 29, 2011
Slide 1: Howard Weil 39th Annual Energy Conference
Stephen I. Chazen President and Chief Operating Officer March 29, 2011 March 29, 2011 Occidental Petroleum Corporation Howard Weil 39 th Annual Energy Conference
Slide 2: Full Year 2010 Results - Summary
FY2010 FY2009 • Core Results $4,664 $3,192 • Core EPS (diluted) $5.72 $3.92 • Net Income $4,530 $2,915 • Reported EPS (diluted) $5.56 $3.58 • Oil and Gas production volumes (mboe/d) & excl. Argentina; +5.2% 706 671 • Capital Spending $3,940 $3,245 • Cash Flow from Operations $9,349 $5,807 • ROE 14.7
Slide 3: What Is Our Philosophy & Strategy?
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
Slide 4: Business Risk Factors
Business Risk Factors ü ü Low ü ü Middle Risk Factor Exploratory Commodity Political Engineering Reinvestment Financial High ü ü Level of Risk Acceptable to Occidental Business Risk Factors
Slide 5: Adjusted 1Q11 Oil & Gas Production/Sales Guidance
Adjusted 1Q11 Oil & Gas Production/Sales Guidance 740 - 750 (15) (7) (7) (1) (7) (7) Previous 1Q11 Guidance Libya & Yemen; and slower capital spending in Iraq Impact of weather in Permian and Midcontinent Oil price impact (thousand boe/d) Oil & Gas Production Oil & Gas Sales Note: Previous guidance
Slide 6: Oil Reserves Concentrated in the U.S.
Oil Reserves Concentrated in the U.S. (Percentage of Oxy’s worldwide proved oil reserves) Note: excludes Argentina as the sale of this asset closed in February 2011.
Slide 7: Standard Measure of Discounted Future Net Cash Flows (SEC PV-10)
Standard Measure of Discounted Future Net Cash Flows (SEC PV-10) (Percentage of Oxy total company value) Note: excludes Argentina as the sale of this asset closed in February 2011.
Slide 8: Worldwide Oil & Gas Producing Areas
Worldwide Oil & Gas Producing Areas
Slide 9: Capital Spending - 2011 Outlook
Capital Spending - 2011 Outlook • We expect capital spending for the total year 2011 to be about $6.1 billion compared to the total 2010 capital of $3.9 billion. • Both amounts exclude Argentina and the Shah Field Development Project. • Oxy's share of the Shah Field development capital will total ab
Slide 10: Capital Spending - 2011E vs. 2010 Actual
Capital Spending - 2011E vs. 2010 Actual
Slide 11: Oil & Gas Volume Growth Drivers
Oil & Gas Volume Growth Drivers • Base 5 - 8% Growth – CO 2 in Permian – Current California risked prospects – Recent domestic properties acquisitions (Williston Basin, South TX gas) – Oman – Iraq • Upside from Existing Holdings – New California conventional and unconventional prospects – Permian ex
Slide 12: Summary of Recent Transactions (announced 12/10/10)
Summary of Recent Transactions (announced 12/10/10) • Divestment of Oxy’s Argentine oil and gas operations to Sinopec for after-tax proceeds of approximately $2.6 billion • Oxy purchased oil and gas properties in South Texas and North Dakota for about $3.2 billion • Oxy increased its interest in Gen
Slide 13: Impact of Transactions
Impact of Transactions • These new acquisitions and the sale of Argentina will: – be immediately accretive to our earnings, ROCE and cash flow after capital; – provide greater certainty in achieving both our short-term and long-term average annual production growth outlook of 5 to 8%; – increase the
Slide 14: Oxy - Shell South Texas Assets Transaction
Oxy - Shell South Texas Assets Transaction • 100k gross, 92.8k net acres • Production ~200 mmcfe/d of gas equivalent • 360+ Bcfe proven developed reserves – ~840 Bcfe of identified add’l resource potential • Over 550 active wells • LOE of $0.47 - 0.74 per Mcfe • Condensate & NGLs are ~30% of total r
Slide 15: Oxy - North Dakota Assets Transaction
Oxy - North Dakota Assets Transaction • Purchased ~174,000 contiguous net acres in ND within the southern extents of the Bakken and Three Forks Formations. • Operated working interests avg. 63% with avg. NRI of ~83%. • Net risked reserve potential in excess of 250 mmboe from the Middle Bakken and Up
Slide 16: Oxy North Dakota - Williston Basin
Oxy North Dakota - Williston Basin NORTH DAKOTA South Coteau Nesson Anticline Elm Coulee Field Parshall- Sanish Fields Russian Creek Burke Ward McLean Mercer Stark Oliver Williams Divide Roosevelt McKenzie Mountrail Dunn Billings Renville Richland Morton MT ND Dawson Golden Valley Other Notable Area
Slide 17: Permian Basin Overview
Permian Basin Overview • Approximately 1.2 billion BOE of proved reserves at year end 2010 • 2010 production of 197,000 boe/d • Largest oil producer in Permian (~16% share of total) • Largest operator in Permian (of 1,500+ operators) • ~66% of Oxy’s Permian oil production is from CO 2 related EOR pr
Slide 18: Permian - 2011 Program Summary
Permian - 2011 Program Summary • 2011 Capital program ~$850 mm • Plan to drill 300+ wells this year • Average 13-rig program in 2011 • Drilling program is front-end loaded to exploit quick production first • 130+ workover/maintenance rigs operating, two-thirds more than a year ago • Extensive Wolfbe
Slide 19: Typical Permian CO Project Cost Structure
Typical Permian CO 2 Project Cost Structure * $75 / Bbl Marker Price
Slide 20: California Overview
California Overview Los Angeles Los Angeles Bakersfield Bakersfield Oxy Acreage California Overview • Largest acreage holder in CA with 1.6 mm acres, majority of which are net mineral interests. • ~768 mm BOE of proved reserves at year end 2010, of which 73% are oil. • 2010 production of 139 mboe/d.
Slide 21: California - 2011 Program Summary
California - 2011 Program Summary THUMS (Long Beach) Oxy Properties Ventura Basin Los Angeles Elk Hills Buena Vista San Joaquin Basin • 2011 Capital program ~$1.3 billion, up ~50% vs. 2010. • Plan to drill 500+ new development wells. • Shifting our drilling to oil wells which we expect to result in
Slide 22: California Unconventional “Shale” Program
California Unconventional “Shale” Program • We have ~520 geologically viable (so-called de-risked) shale drilling locations in CA excluding traditional Elk Hills. • Of these, ~250 are both outside of Elk Hills proper and the Kern County Discovery Area. • Based on a conservative view of the permittin
Slide 23: California “Shale” Summary and Play Comparison
Play Depth (ft) Thickness (ft) Porosity (%) Permeability (mD) TOC (%) CA “Shales” 3,500’ - 16,000’ 500’ - 3,500’ 5 - 30% <0.0001 - 2 0.1 - 12% Bakken 7,000’ - 11,000’ 20’ - 100’ 3 - 12% 0.05 - 0.5 2 - 18% Eagle Ford 8,000’ - 14,000’ 75’ - 300’ 3 - 15% <0.0001 - .003 0.6 - 7% California “Shale” Summa
Slide 24: Summary of Full Year 2010 Cash Flow
Summary of Full Year 2010 Cash Flow Operating Cash Flow from Continuing Operations $9,100 (excluding Argentina) Beginning Cash $1,200 12/31/09 ($ in millions) – Free cash flow from continuing operations after capex and dividends but before acquisition activity and debt retirements was ~$4.3 billion.
Slide 25: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase
Slide 26: Finding & Development Costs per Barrel
Finding & Development Costs per Barrel F&D Costs Actual as a % of 6:1 * Prices ** WTI Price * Oil / Gas Energy Content (Industry convention) ** Gas converted to BOE @ WTI Oil Price / NYMEX Gas Price 2010 $20.25 $24.18 30% 3-Year Average $16.38 $20.25 25% (2008 - 2010) 5-Year Average $16.66 $19.52 26
Slide 27: Return on Assets
Return on Assets Net Income Return on Assets U.S. 16% International 35% Total E&P 21% Cash Flow* Return on Assets U.S. 24% International 53% Total E&P 31% * Net Income + DD&A 5 Year Average 5 Year Average See attached for GAAP reconciliation (2006 - 2010)
Slide 28: Dividend Growth
Dividend Growth Annual dividend to increase to $1.84 per share or 21% effective with the 4/15/11 payment
Slide 29: Acquisition Strategy
Acquisition Strategy • Company’s core business is acquiring assets that can provide future growth through improved recovery. – Foreign contracts – Domestic add-ons – Small incremental additions to production in short term • Generate returns of at least 15% in the US and 20% overseas. • Overall avera
Slide 30: Oxy — Investment Attributes
Oxy — Investment Attributes • 5 - 8% base annual production growth • Opportunity for additional volume growth • Returns on invested capital significantly in excess of Company’s cost of capital • Annual increases in dividends • Significant financial flexibility for opportunities in distressed periods
Slide 31: Creating Shareholder Value
Creating Shareholder Value Oxy’s Shareholder Equity versus Equity Market Value 1 - Year 3 - Year 5 - Year 10 - Year Change in Equity Market Value ($ in millions) Market Value per $ of Equity Retained Change in Shareholder Equity Financial Data for period ended December 31, 2010. $13,685 $3,325 $16,1
Slide 32: Cautionary Statement
Cautionary Statement Portions of this presentation contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are
Slide 33: Reconciliation to Generally Accepted Accounting Principles (GAAP)
Occidental Petroleum Corporation Occidental Petroleum Corporation Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Twelve Months Ended December 31, ($ Millions) Diluted Diluted EPS EPS Reported Income $ 4,530 $ 5.56 $ 2,915 $ 3.58 Add: significant items affecting earnings As
Occidental Petroleum — Howard Weil 39th Annual Energy Conference (March 2011) on 6ix