Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q1 2024 Earnings Presentation
45 slides from Occidental Petroleum's earnings presentation, May 8, 2024
Slide 1: First Quarter Earnings Conference Call
05.08.24 First 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: Zero In on Value: Key Takeaways
ZERO IN ON VALUE 3 Key Takeaways Operational excellence on • Organizational expertise leading to operational momentum display • On track to deliver 2024 plan Exemplary • Extending Delaware productivity leadership to secondary horizons appraisal • Positive implications for financial returns and Tier
Slide 4: Outline
4 OUTLINE First Quarter Highlights Cash Flow Enhancements Financials Closing Comments Marco Polo
Slide 5: Strong Execution Across All Segments
FIRST QUARTER HIGHLIGHTS 5 STRONG EXECUTION ACROSS ALL SEGMENTS Oil & Gas Midstream 1,172 +$100 MM Mboed Production Adjusted Pre-Tax Income Outperformance Financial OxyChem $2.4 B $260 MM Operating Cash Flow1 Adjusted Pre-Tax Income 1BEFORE WORKING CAPITAL; SEE THE RECONCILIATIONS TO COMPARABLE GAAP
Slide 6: Subsurface Expertise Turning Secondary Horizons into Tier 1 Opportunities
SUBSURFACE EXPERTISE TURNING SECONDARY 6 HORIZONS INTO TIER 1 OPPORTUNITIES Oxy Delaware Leading the Way – Driving Inventory Improvement Secondary Wells Continue Outperformance and Expansion 500 …nearly matching Oxy’s record- ✓ Accelerating financial returns through near-term inventory high-grading
Slide 7: Oil & Gas Update
FIRST QUARTER HIGHLIGHTS 7 OIL & GAS UPDATE NEW WELLS IMPROVING BASIN PERFORMANCE, UNLOCKING INVENTORY Delaware Basin appraisal of secondary Bone Springs horizons drives improving view of development potential with >780 Mbo produced from 4 wells in first 3 months Accelerated ramp up of 20 well p
Slide 8: Outline
8 OUTLINE First Quarter Highlights Cash Flow Enhancements Financials Closing Comments Marco Polo
Slide 9: Expanding Resilient Cash Flow, Enhancing Shareholder Value
EXPANDING RESILIENT CASH FLOW, 9 ENHANCING SHAREHOLDER VALUE >$1 B of incremental annual FCF expected by 2H 2026 from no-decline components beyond oil and gas $1,000 ~$325 MM OxyChem • Plant enhancements and Battleground modernization / expansion Incremental FCF ($ MM) Midstream ~$400 MM • Contract
Slide 10: Outline
10 OUTLINE First Quarter Highlights Cash Flow Enhancements Financials Closing Comments Ingleside Marco Polo
Slide 11: First Quarter 2024 Results
FINANCIALS 11 FIRST QUARTER 2024 RESULTS Reported Production versus Mboed Reported Guidance Midpoint Reconciliation ROCKIES Adjusted diluted EPS1 $0.63 Strong new well performance, better +14 production uptime, and higher OBO volumes Reported diluted EPS1 $0.75 in the DJ Basin PERMIAN CFFO before wo
Slide 12: Second Quarter and Full-Year 2024 Guidance
FINANCIALS 12 SECOND QUARTER AND FULL-YEAR 2024 GUIDANCE (EXCLUDES ANY CROWNROCK COMPONENTS) OIL & GAS 2Q24 FY 2024 MIDSTREAM2 2Q24 FY 2024 Total Company Production (Mboed) 1,232 - 1,272 1,220 - 1,280 Pre-tax Income $(185) - $(85) MM $(640) - $(440) MM Permian Production (Mboed) 574 - 592 569 - 599
Slide 13: Outline
13 OUTLINE First Quarter Highlights Cash Flow Enhancements Financials Closing Comments Marco Polo
Slide 14: Differentiating Value Catalysts
DIFFERENTIATING VALUE CATALYSTS 14 World-class operator with a premier diversified portfolio, driving incremental shareholder value with a trio of enhancements Amplifying oil price leverage via 01 high-margin upstream assets Free cash flow step-change from 02 durable, non-oil and gas sources Practic
Slide 15: Appendix
15 Appendix
Slide 16: Appendix Contents
16 APPENDIX Financial Information Oil & Gas Update Asset Overview Low Carbon Ventures Abbreviations and Definitions
Slide 17: CrownRock Update
CROWNROCK DAWSON BORDEN 1717 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 Cur
Slide 18: Cash Flow Priorities
2024 ONGOING FOCUS 18 CASH FLOW Maintain Production Base Preserve asset base integrity PRIORITIES and longevity Sustainable & Growing Dividend Apply technical and Through-the-cycle sustainability operational excellence to with long-term growth potential preserve and enhance premier asset base in CUR
Slide 19: Shareholder Return Priorities
SHAREHOLDER RETURN PRIORITIES 19 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 20: Cash Flow Sensitivities
FINANCIAL INFORMATION 20 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 21: Diluted Share Count Example
FINANCIAL INFORMATION 21 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 22: 2024 Capital Plan
CAPITAL BUDGET – FEB 2024 Capital $ B 2023 Actuals 2024 Plan 22 2024 CAPITAL PLAN Oil & Gas2 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 fo
Slide 23: Appendix Contents
23 APPENDIX Financial Information Oil & Gas Update Asset Overview Low Carbon Ventures Abbreviations and Definitions
Slide 24: Domestic Onshore Assets
OIL & GAS UPDATE 24 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 EOR PR Basin EOR Facil
Slide 25: Top-Tier Well Performance: Delaware Continues to Improve
TOP-TIER WELL PERFORMANCE DELAWARE CONTINUES TO IMPROVE 25 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: +218% 100 2018 to 2023:
Slide 26: Leading Delaware Basin Well Performance
OIL & GAS UPDATE 26 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 12-month cum. Oil, Mbbl Average 6-month cum.
Slide 27: Top Horizontal Wells in Delaware Basin
TOP 10 HORIZONTAL WELLS 27 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 02/13/24, HORIZONTAL DELAWARE BASIN WELLS WITH 6-MONTH PRODUCTION AVAILAB
Slide 28: Well Design Driving Major DJ Basin Well Productivity Gains
WELL DESIGN DRIVING MAJOR DJ BASIN WELL PRODUCTIVITY GAINS 28 PRODUCTIVITY 300 Data-driven well design 250 and operational expertise drive continuous Cumulative Mboe improvement and value 200 1 Year Cumulative 150 Improvement 2015-16 to 2023: +105% 100 2017-21 to 2023: +65% 2022 to 2023: +31% 50 0 0
Slide 29: Technical Excellence Driving Midland Well Step-Change in Performance
TECHNICAL EXCELLENCE DRIVING MIDLAND WELL STEP-CHANGE IN PERFORMANCE 29 PRODUCTIVITY 300 Subsurface 250 characterization, operational focus, and Cumulative Mboe optimized DSU design 200 catalysts for elevated performance 150 1 Year Cumulative 100 Improvement 2014-16 to 2023: +87% 50 2017-21 to 2023:
Slide 30: High-Graded U.S. Onshore Portfolio
HIGH-GRADED U.S. Onshore Unconventional Gross Operated Inventory 30 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 31: Appendix Contents
31 APPENDIX Financial Information Oil & Gas Update Asset Overview Low Carbon Ventures Abbreviations and Definitions
Slide 32: Oxy's Combined Integrated Portfolio
OXY’S COMBINED INTEGRATED PORTFOLIO 32 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 31 Rockies 1,172
Slide 33: OxyChem Market Leading Position
OXYCHEM 2,500 Pre-Tax Income1 33 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 2016 2017
Slide 34: OxyChem Projects Update
OXYCHEM PROJECTS UPDATE 34 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 35: Midstream & Marketing Guidance Reconciliation
MIDSTREAM & MARKETING 35 GUIDANCE RECONCILIATION PHYSICAL MIDSTREAM & LCV BUSINESSES 1Q24 Guide 1Q24 Actuals 2Q24 Guide • 1Q24 income below guidance primarily $200 due to losses on equity investments; Quarterly Pre-Tax Income ($ MM) 2Q24 guidance reflects completion of $150 Dolphin plant turnaround
Slide 36: One of the Largest U.S. Acreage Holders
ONE OF THE LARGEST U.S. ACREAGE HOLDERS 36 9.5 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 37: U.S. Onshore Overview
U.S. ONSHORE OVERVIEW 37 1Q24 NET PRODUCTION ROCKIES Oil NGLs Gas Total 1.0 MM ACRES (Mbod) (Mbbld) (MMcfd) (Mboed) Permian 323 136 645 567 Rockies & Other Dmstc. 89 100 584 286 Total 412 236 1,229 853 OPTIMIZED ADVANCED DEPLOY STRATEGIC PERMIAN D EV ELOPMENT SUBSURFACE + POWERFUL + INFRASTRUCTURE S
Slide 38: Gulf of Mexico Overview
GULF OF MEXICO OVERVIEW 38 ALABAMA GULF OF MEXICO MISSISSIPPI TOTAL ACREAGE 1.1 MM TEXAS LOUISIANA 1Q24 NET PRODUCTION MARLIN Oil (Mbod) 75 HORN MOUNTAIN NGLs (Mbbld) 6 HOLSTEIN CONSTITUTION Gas (MMcfd) 55 CAESAR/TONGA BOOMVANG MARCO POLO Total (Mboed) 90 GUNNISON HEIDELBERG LUCIUS NOTE: AS OF 03/31
Slide 39: International Overview
INTERNATIONAL OVERVIEW 39 U.A.E.1 1Q24 NET PRODUCTION 2.5 MM ACRES Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Algeria & Other Intl. 25 4 14 31 Al Hosn 16 27 295 92 Dolphin 6 7 140 36 Oman 59 - 63 70 ALGERIA OMAN Total 106 38 512 229 0.5 MM ACRES 6.0 MM ACRES MENA NOTE: AS OF 03/31/2024; ACREA
Slide 40: Appendix Contents
40 APPENDIX Financial Information Oil & Gas Update Asset Overview Low Carbon Ventures Abbreviations and Definitions
Slide 41: Emerging Low-Carbon Businesses
LOW CARBON VENTURES 41 EMERGING LOW-CARBON BUSINESSES COMMERCIALIZING CCUS AND DAC DECARBONIZATION SOLUTIONS Expected 2024 Net Capital Expenditures1 $600 MM • Continued construction of STRATOS (DAC 1); expected to be commercially operational mid-2025 • Preparation for DAC and sequestration hub in So
Slide 42: DAC Investment Principles
LOW CARBON VENTURES DAC INVESTMENT PRINCIPLES 42 • 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 MM a
Slide 43: Appendix Contents
43 APPENDIX Financial Information Oil & Gas Update Asset Overview Low Carbon Ventures Abbreviations and Definitions
Slide 44: Abbreviations and Definitions
ABBREVIATIONS AND DEFINITIONS 44 Abbreviations B – Billion DOE – Department of Energy LCV – Low Carbon Ventures BBL – Barrel DSU – Drilling Spacing Unit MBO – Thousand Barrels of Oil BE – Breakeven EBITDA – Earnings Before Interest, Tax, Depreciation, MBOE – Thousand Barrels of Oil Equivalent and Am
Slide 45: Oxy Zero In
VB OXY ZERO IN”