Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q2 2013 Earnings Presentation
40 slides from Occidental Petroleum's earnings presentation, Jul 30, 2013
Slide 1: Second Quarter 2013 Earnings Conference Call
EXHIBIT 99.4 Occidental Petroleum Corporation Second Quarter 2013 Earnings Conference Call July 30, 2013 1
Slide 2: Second Quarter 2013 Earnings - Highlights
Second Quarter 2013 Earnings - Highlights Results • Total Production (Boe/d) 772,000 • Operating costs On track • Capital program On track • Core earnings $1.3 billion • Core diluted EPS $1.58 • YTD CFFO before WC $6.4 billion • Cash balance @ 6/30/2013 $3.1 billion See Significant Items Affecting E
Slide 3: Quarter-over-Quarter Impacts
Second Quarter 2013 Earnings - Highlights Quarter-over-Quarter Impacts • Improved oil and gas results. + Increased oil volumes, primarily in MENA. + Increased domestic realized oil and gas prices. – Lower international realized oil prices. • Lower marketing and trading income. • Higher equity compen
Slide 4: Oil & Gas Segment Earnings
Second Quarter 2013 Earnings - Oil & Gas Segment Earnings 2Q13 vs. 1Q13 ($ in millions) $246 Core Results • 2Q13 $2.1 B • 1Q13 1.9 B • 2Q12 2.0 B 4 4
Slide 5: Oil and Gas Total Production
Second Quarter 2013 Earnings - Oil and Gas Total Production Company-wide Oil & Gas Production (Mboe/d) 19 2 (7) (3) (2) 772 766 763 2Q13 Impacts (Mboe/d) • Permian weather & 3 gas plant turnarounds • Colombia activity 4 5 5
Slide 6: Oil and Gas Domestic Production
Second Quarter 2013 Earnings - Oil and Gas Domestic Production Domestic Oil & Gas Production (Mboe/d) 478 (2) (1) (5) 470 462 2Q13 Impacts (Mboe/d) • Permian weather - 2 oil impact • Plant turnaround - 1 gas impact 6 6
Slide 7: Oil & Gas Realized Prices
Second Quarter 2013 Earnings - Oil & Gas Realized Prices Realized Prices Benchmark Prices Worldwide Worldwide Domestic Nat. Oil ($/bbl) NGLs ($/bbl) Gas ($/mmbtu) WTI Brent NYMEX 2Q13 $97.91 $38.78 $3.82 $94.22 $103.35 $4.00 Benchmark % 104% * 41% * 95% 1Q13 $98.07 $40.27 $3.08 $94.37 $112.64 $3.37
Slide 8: Oil & Gas Production Costs
Second Quarter 2013 Earnings - Oil & Gas Production Costs Production Costs ($/boe) FY12 1Q13 2Q13 YTD13 Domestic $17.43 $14.06 $14.28 $14.17 Total $14.99 $13.93 $13.40 $13.66 • ~$500 million annualized domestic cost savings versus full year 2012. 8 8
Slide 9: Chemical Segment Core Earnings
Second Quarter 2013 Earnings - Chemical Segment Core Earnings 2Q13 vs. 1Q13 Guidance ($ in millions) 3Q13 expected to be ~$170 mm Core Results • 2Q13 $144 mm • 1Q13 159 mm • 2Q12 194 mm * Higher energy and feedstock costs. 9 9
Slide 10: Midstream Segment Earnings
Second Quarter 2013 Earnings - Midstream Segment Earnings 2Q13 vs. 1Q13 ($ in millions) Core Results • 2Q13 $48 mm • 1Q13 215 mm • 2Q12 77 mm 10 10
Slide 11: YTD 2013 Cash Flow
Second Quarter 2013 Earnings - YTD 2013 Cash Flow YE2012 vs. YTD2013 ($ in millions) $150 YTD’13 Debt / Capital 15% Return on Equity 13% Return on Capital Employed* 11% Cash Flow From Operations before Working Capital changes $6,000 $3,100 Beginning Cash $1,600 12/31/12 * Note: Annualized; See attac
Slide 12: Key Performance Metrics - Domestic Production
Second Quarter 2013 Earnings - Key Performance Metrics - Domestic Production • Occidental’s domestic oil and gas segment continued to execute on our liquids production growth strategy. − 2Q13 domestic production of 470 mboe/d, consisting of 338 mboe/d of liquids and 792 mmcf/d of gas. − Planned plan
Slide 13: Capital Efficiency & Operating Cost Reduction Program
Second Quarter 2013 Earnings - Capital Efficiency & Operating Cost Reduction Program • Focused drilling program in our core areas − Reduced our domestic well costs by 21% and operating costs by ~19% relative to 2012, ahead of previously stated targets of 15% well cost improvement and total oil and g
Slide 14: California Oil & Gas
Second Quarter 2013 Earnings - California Oil & Gas 14 14
Slide 15: California Operations Highlights
Second Quarter 2013 Earnings - California Operations Highlights • Largest producer of natural gas and oil and gas on a gross operated BOE basis. • Largest oil & gas mineral acreage holder, with more than 2.1 mm net acres. • Diverse geologic characteristics and numerous reservoir targets, range from
Slide 16: 2013 Strategic Objectives
Second Quarter 2013 Earnings - California Operations - 2013 Strategic Objectives 2013 Objectives • Deliver predictable outcome given constraints of working in California. • Advance projects with solid returns, low execution risk and long term growth. • Reducing drilling and completion costs to impro
Slide 17: New Organizational Structure
Second Quarter 2013 Earnings - California Operations - New Organizational Structure • Restructured business units to create teams organized around the unique characteristics of each asset group, resulting in a 5th business unit dedicated to managing heavy oil properties. • Created 3 technical teams
Slide 18: Operating Efficiency
Second Quarter 2013 Earnings - California Operations - Operating Efficiency • Significantly reduced operating costs as well as drilling costs in California, exceeding our targets. – Expect to save at least $175 million this year in operating costs. 18 18
Slide 19: Capital Efficiency
Second Quarter 2013 Earnings - California Operations - Capital Efficiency • Improved capital efficiency by ~15% compared to 2012 – Locked in drilling programs – Revised well designs – Optimized drilling equipment and fluids to reduce drill time – Improved contracting strategies 19 19
Slide 20: Capital Program
Second Quarter 2013 Earnings - California Operations - Capital Program California 2013 Capital - $1.5 bn Sufficient inventory to sustain this strategy for at least 5 years, likely 10+ years, with flexibility to adjust liquids vs. gas production based on market conditions. 20 20
Slide 21: Water Floods - Los Angeles Basin
Second Quarter 2013 Earnings - California Operations - Water Floods Los Angeles Basin • Water floods are a core competency of Oxy. • Several new projects in progress and a number of floods where we are engaged in redevelopment, expansion or optimization activities. • Wilmington Field • Huntington Be
Slide 22: Wilmington Field Water Flood
Second Quarter 2013 Earnings - California Operations - Water Floods Wilmington Field Water Flood • Most water flood capital directed to optimize our most developed project, the giant Wilmington Field. – 135 new wells including 35 horizontal wells. – Horizontal wells can have average IP rates over 3x
Slide 23: Water Floods - Huntington Beach and Buena Vista
Second Quarter 2013 Earnings - California Operations - Water Floods • Huntington Beach Field Redevelopment – Adding two new fit-for-purpose rigs, one designed for drilling in urban areas. – Expect to begin drilling towards year end 2013. – 128 well locations identified, providing 4-5 years of invent
Slide 24: Steam Floods
Second Quarter 2013 Earnings - California Operations - Steam Floods • Steam flood activities have been a focus in 2013 – Highly profitable, taking advantage of the gas versus oil price spread where cheap gas is used to generate steam, which is then injected to produce oil. • These projects can deliv
Slide 25: Steam Floods - Kern Front and Lost Hills
Second Quarter 2013 Earnings - California Operations - Steam Floods • Kern Front and Lost Hills Lost Hills Kern Front − 2 largest steam floods − > 1 billion barrels of original oil in place; ~ 870 million barrels oil remaining in place Bakersfield − Added 2 rigs and expect to drill ~200 wells in 2H1
Slide 26: Steam Floods - Capital and Growth Timing
Second Quarter 2013 Earnings - California Operations - Steam Floods • Total steam flood spending will constitute ~25% of total California capital in 2013. – Expect to drill >1,500 steam flood wells over the next 5 years. • With shift of capital to water and steam flood opportunities, we expect a lag
Slide 27: Unconventional
Second Quarter 2013 Earnings - California Operations - Unconventional • In addition to shale plays, our “unconventional” opportunities include reservoirs that have low permeability, which require special recovery processes to flow. Sacramento • ~1/3rd of our California production San is from unconve
Slide 28: Unconventional - Elk Hills
Second Quarter 2013 Earnings - California Operations - Unconventional • Drilled ~1,300 unconventional wells in California since 1998. • >1,000 of these are in and around Elk Hills, including the Monterey and other key shale plays. • 2013 plan includes 53 unconventional wells from multiple shale play
Slide 29: Unconventional - Rose Field
Second Quarter 2013 Earnings - California Operations - Unconventional • Pursuit of Unconventional Opportunities outside Elk Hills includes the Rose Field. • Acquired in late 2009, drilled 1 appraisal well in 2011, 8 development wells in 2012 and 6 horizontal wells in 2013. • Very good results with a
Slide 30: Elk Hills
Second Quarter 2013 Earnings - California Operations - Elk Hills • Have almost doubled proved Elk Hills Field reserves since acquisition in 1998. • Goal is to reduce the underlying 25% base decline rate by as much as half. − EOR projects (steam, water, polymer, CO2 floods) could be implemented over
Slide 31: Exploration
Second Quarter 2013 Earnings - California Operations - Exploration • >100 exploration wells drilled over past 5 years. • Two thirds have found hydrocarbons and a large portion of these resulted in commercial production. • 3D seismic has been acquired over a significant portion of our acreage contrib
Slide 32: Conventional Gas Properties
Second Quarter 2013 Earnings - California Operations - Conventional Gas Properties Sacramento Basin • Established sizeable conventional natural gas position in the Sacramento Basin. – >318,000 net acres. – ~66 MMcf/d of dry gas production. – Largest operator in region (80%+). • Optimize production w
Slide 33: California Operations - Summary
Second Quarter 2013 Earnings - California Operations - Summary • Large inventory of diverse projects. – Water floods – Steam floods – Additional EOR (CO2, polymer floods, etc.) – Unconventional • Similar mix of projects in near-term with larger portion of capital allocated to lower decline projects
Slide 34: Summary - Progress toward 2013 Goals
Second Quarter 2013 Earnings - California Operations - Summary Progress toward 2013 Goals: • $1.5 billion capital program and expect to generate free cash flow of over $1 billion. – With continued improvements in permitting, should be able to grow capital budget to $2.0 billion in 2014, with further
Slide 35: 2013 Production Outlook
Second Quarter 2013 Earnings - 2013 Production Outlook • Domestically, we continue to expect solid growth in our oil production for the year. − Based the nature and timing of our drilling program, such as steam flood drilling in California, and the timing of gas plant maintenance turnarounds in the
Slide 36: 2013 Production Outlook - International
Second Quarter 2013 Earnings - 2013 Production Outlook • Internationally, we expect more cost pool depletions in our contracts in Qatar and Yemen, which will result in less cost recovery barrels from those locations. • However, we expect total international production to be about flat in 2H13 compar
Slide 37: 2013 Capital Outlook
Second Quarter 2013 Earnings - 2013 Capital Outlook • The first six months' capital spending was $4.2 billion, with $2.2 billion spent in the second quarter. • We expect the second half of the year spending rate to be higher. Our annual spending level is expected to be generally in line with the $9.
Slide 38: Strategic Business Review and Plains All American GP Offering
Second Quarter 2013 Earnings • With regard to our strategic business review, we presented various options to our Board of Directors. • Our review of these options is not yet complete, so the Board will continue to evaluate the alternatives. We expect to have additional information regarding our plan
Slide 39: 2H13 Guidance Summary
Second Quarter 2013 Earnings - 2H13 Guidance Summary Oil & Gas Segment • Domestic Production – Oil - 6,000 to 8,000 bopd growth – NGLs - modest decline – Natural gas - modest decline • International – Production volumes - similar to 2Q13 – Sales volumes - increase in 2H13 to recoup over half the und
Slide 40: Conference Call Q&A
Second Quarter 2013 Earnings Conference Call Q&A 40