Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q3 2022 Earnings Presentation
46 slides from Occidental Petroleum's earnings presentation, Nov 9, 2022
Slide 1: Third Quarter Earnings Conference Call
11.09.22 Third 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 Third Quarter Highlights Financials Closing Remarks
Slide 4: Third Quarter 2022
4 THIRD QUARTER 2022 Strong Operational Shareholder Low-Carbon Strategy Execution Driving Free Return Framework Progressing with Cash Flow Generation Rapidly Advancing Enhanced Policy Support Zero In On Value
Slide 5: Shareholder Return Framework
COMPLETE 5 SHAREHOLDER RETURN Increased quarterly common dividend to Repaid $9.6 B of principal and reduced gross FRAMEWORK $0.13 per share debt <$19 B1 Near-term debt targets achieved 2022 – IN PROGRESS Continue to reduce debt Completed >85% of Repurchase $3 B with the goal of $3 B share repurchase
Slide 6: Third Quarter 2022 Performance Highlights
HIGHLIGHTS 6 THIRD QUARTER 2022 PERFORMANCE $3.6 B $1.5 B1 $1.8 B1 Free Cash Flow Balance Sheet Shares Generation Improvement Repurchased OIL & GAS OXYCHEM LCV Production of Pre-Tax Income Construction of 1,180 Mboed of $580 MM World’s Largest DAC Plant Underway NOTE: FREE CASH FLOW EXCLUDES WORKING
Slide 7: Oil & Gas Update
HIGHLIGHTS 7 OIL & GAS UPDATE Oxy record quarterly productivity for Delaware Basin; average 30-day IP ~3,600 boed for the 46 wells online in 3Q22 Record Permian production from Python development in Loving County, TX ◦ Python 13H delivered 30-day IP over 11,000 boed and 60-day cumulative product
Slide 8: Roadmap to Commercial Developments
CCUS TECHNOLOGY AND MARKET ADVANCEMENT 8 ROADMAP TO COMMERCIAL DEVELOPMENTS VOLUNTARY & COMPLIANCE POLICY 2021 – 2024 2025 – 2030 DE-RISK & INNOVATE MANUFACTURING MODE CURRENT DIRECT AIR MAR 2022 CAPTURE & REVENUE SEQUESTRATION $250 – 450/t $400 – 630/t $400 – 630/t IRA 45Q Enhancements DAC to EOR:
Slide 9: Up to 30 DAC Mega Hub Development Secured
A HISTORIC AND MOMENTOUS CARBON CAPTURE PROJECT 9 UP TO 30 DAC MEGA HUB DEVELOPMENT SECURED Finalized agreement with King Ranch to secure acreage that enables potential 30 MTPA DAC mega-hub 106,000 acres / 166 sq. miles ~3 billion tonnes available sequestration volume Kleberg County, Texas Up
Slide 10: Outline
10 OUTLINE Third Quarter Highlights Financials Closing Remarks
Slide 11: Third Quarter 2022 Results
FINANCIALS 11 THIRD QUARTER 2022 RESULTS Reported Production versus Reported Mboed Guidance Midpoint Reconciliation Adjusted diluted EPS1 $2.44 GULF OF MEXICO Less weather downtime than expected and +21 better performance from Horn Mountain West Reported diluted EPS1 $2.52 ROCKIES Improved base perf
Slide 12: Fourth Quarter Guidance
FINANCIALS 12 FOURTH QUARTER GUIDANCE OIL & GAS OXYCHEM CORPORATE – 4Q22 4Q22 Production 4Q22 pre-tax income: ~$425 MM •FY Domestic tax rate: 22% • Total Company: 1,200 - 1,260 Mboed •FY International tax rate: 45% • Oil / Gas %: ~54.0 / ~24.0 MIDSTREAM & MARKETING1 •Overhead expense: ~$575 MM2 • Pe
Slide 13: Outline
13 OUTLINE Third Quarter Highlights Financials Closing Remarks
Slide 14: Zero In On Value
14 ZERO IN ON VALUE COMPLEMENTARY SHAREHOLDER STRENGTHENING PATHWAY TO BUSINESSES RETURNS FINANCIAL PROFILE NET ZERO • Oil & Gas • Sustainable Common Dividend • Prioritizing Debt Reduction • Direct Air Capture • OxyChem • Share Repurchase Program • Investment Grade Ambition • Carbon Sequestration •
Slide 15: Appendix
15 Appendix
Slide 16: Appendix Contents
16 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Update
Slide 17: Cash Flow Priorities Continued
17 Maintain Production Base CONTINUED 2022 Preserve asset base integrity FOCUS and longevity CASH FLOW Debt Reduction PRIORITIES Lower expenses and enhance balance sheet flexibility Excess cash flow continues to be Sustainable & Growing Dividend CURRENT allocated to balance Through-the-cycle sustain
Slide 18: 2022 Capital Budget
INITIAL CAPITAL ALLOCATION – FEB 2022 18 2022 CAPITAL BUDGET $3.9 B - $4.3 B CAPITAL PROGRAM BY ASSET CAPITAL PROGRAM BY TYPE Facilities 20% $0.2 Exploration & Corporate $0.3 - $0.5 D,C&E 58% Oil & Gas Base Maintenance 7% Midstream & Marketing $0.3 (includes LCV) Exploration 4% $0.5 OxyChem OBO & Ot
Slide 19: Balance Sheet Improvement Drives Shareholder Value
FINANCIAL INFORMATION 19 BALANCE SHEET IMPROVEMENT DRIVES SHAREHOLDER VALUE $100 $90 Enterprise Value ($ B) PRIORITIZING DEBT REDUCTION $80 Market capitalization becomes 38% 38% 39% a larger percentage of $70 Enterprise Value as debt is 18% 20% 17% reduced $60 7% 13% $50 16% 20% 27% 18% 36% 21% 41
Slide 20: Cash Flow Sensitivities
FINANCIAL INFORMATION 20 CASH FLOW SENSITIVITIES OIL & GAS MIDSTREAM & MARKETING Annualized cash flow changes ~$225 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 ◦ ~$205 MM per $1.00 / bbl change in WTI price ◦ ~35-da
Slide 21: Appendix Contents
21 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Update
Slide 22: Domestic Onshore Assets
OIL & GAS UPDATE 22 DOMESTIC ONSHORE ASSETS PERMIAN 2022 ACTIVITY ROCKIES 2022 ACTIVITY $1.9 B - $2.1 B ~18 Gross ~11 Net 310 - 330 $0.4 B ~2 Gross ~2 Net 70 - 75 Capex Rigs Rigs Wells Online Capex Rigs Rigs Wells Online 100% OBO EOR OBO 100% OBO EOR EOR OBO Base Maint Powder Midland Base Maint Rive
Slide 23: Top Tier Well Performance Continues
TOP TIER WELL PERFORMANCE CONTINUES DELAWARE TO IMPROVE BASIN WELL 400 PRODUCTIVITY 350 Superior-quality inventory combined with 300 subsurface expertise Cumulative Mboe drives continuous 250 improvement and value 200 270 Day Cumulative 150 Improvement 2015 to 2022: +220% 100 2018 to 2022: +29% 50 2
Slide 24: Leading Delaware Basin Well Performance
OIL & GAS UPDATE 24 LEADING DELAWARE BASIN WELL PERFORMANCE AVERAGE 6-MONTH CUMULATIVE OIL BY OPERATOR1 AVERAGE 12-MONTH CUMULATIVE OIL BY OPERATOR2 Oxy is 32% above the 6-month basin average Oxy is 25% above the 12-month basin average 180 250 Average 12-month cum oil, Mbbl Average 6-month cum oil,
Slide 25: Domestic Inventory and Well Costs
7,000 Domestic Onshore Operated Inventory 25 DOMESTIC Total Gross Operated Locations 6,079 6,000 INVENTORY 5,000 4,399 AND WELL 4,000 COSTS 3,000 2,000 1,599 1,000 Depth of low-breakeven - inventory demonstrates Breakeven <$30 Breakeven <$40 Breakeven <$50 quality and quantity of Permian Resources R
Slide 26: Appendix Contents
26 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Update
Slide 27: Oxy's Combined Integrated Portfolio
OXY’S COMBINED INTEGRATED PORTFOLIO 27 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 52 1.18 MMboed Ro
Slide 28: OxyChem Market Leading Position
OXYCHEM 2,500 Pre-Tax Earnings (EBIT)1 28 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 2010 2011
Slide 29: Battleground Membrane Conversion
OXYCHEM 29 29 BATTLEGROUND MEMBRANE CONVERSION • 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 technology expected to improve m
Slide 30: Midstream & Marketing Guidance Reconciliation
MIDSTREAM & MARKETING 30 GUIDANCE RECONCILIATION PHYSICAL MIDSTREAM BUSINESS • 3Q22 income slightly below guidance primarily 3Q22 Guide 3Q22 Actuals 4Q22 Guide driven by lower sulfur prices at Al Hosn. 4Q22 $200 guidance lower than 3Q22 due to seasonal Quarterly Pre-Tax Income ($ MM) impact of power
Slide 31: One of the Largest U.S. Acreage Holders
ONE OF THE LARGEST U.S. ACREAGE HOLDERS 31 9.4 MM Net Total U.S. Acres Rockies Permian 1.2 MM Acres 2.8 MM Acres Powder River Basin – 0.4 MM Permian Unconventional – 1.4 MM DJ Basin – 0.8 MM Excludes acreage outside of active Permian Conventional – 1.4 MM operating areas Other Onshore Gulf of Mexico
Slide 32: U.S. Onshore Overview
U.S. ONSHORE OVERVIEW 32 Rockies Permian 1.2 MM Acres 2.8 MM Acres 3Q22 Net Production Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Permian 303 126 561 523 Rockies & Other Dmstc. 79 96 572 270 Total 382 222 1,133 793 NOTE: AS OF 09/30/2022; ACREAGE AMOUNTS REPRESENT NET ACRES
Slide 33: Gulf of Mexico Overview
GULF OF MEXICO OVERVIEW 33 Gulf of Mexico 0.8 MM Acres MARLIN 3Q22 Net Production HORN MOUNTAIN Oil (Mbod) 126 NANSEN HOLSTEIN NGLs (Mbbld) 11 CONSTITUTION BOOMVANG MARCO POLO CAESAR/TONGA Gas (MMcfd) 84 GUNNISON HEIDELBERG Total (Mboed) 151 LUCIUS NOTE: AS OF 09/30/2022; ACREAGE AMOUNTS REPRESENT N
Slide 34: International Overview
INTERNATIONAL OVERVIEW 34 U.A.E. 2.5 MM Acres 3Q22 Net Production Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Algeria & Other Intl. 44 5 15 52 Al Hosn 14 26 265 84 Dolphin 6 8 146 38 Oman 50 - 70 62 Total 114 39 496 236 Algeria Oman 0.5 MM Acres 6.0 MM Acres NOTE: AS OF 09/30/2022; ACREAGE AMO
Slide 35: Appendix Contents
35 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Update
Slide 36: Pathway to Net Zero
PATHWAY TO NET ZERO 36 Oxy has set the following goals, among others, to achieve net zero across our total emissions inventory in accordance with the Paris Agreement1: 2024 2032 2040 2050 BEYOND Reduce total operational Facilitate geologic storage Achieve net-zero Achieve net zero for our Capture an
Slide 37: Strategic Investment Approach
BUILDING A CCUS PLATFORM ACROSS THE CARBON CAPTURE VALUE CHAIN 37 STRATEGIC INVESTMENT APPROACH Oxy is leveraging its carbon management expertise, experience and infrastructure to accelerate the global development and commercialization of CCUS technologies, scale carbon markets and develop innovativ
Slide 38: OLCV Investment
BUILDING A CCUS PLATFORM ACROSS THE CARBON CAPTURE VALUE CHAIN 38 OLCV TECHNOLOGY, PROJECTS, AND PLATFORMS ZERO-EMISSION CO2 CAPTURE & PIPELINES & CO2 CARBON TRACKING CARBON UTILIZATION & POWER REMOVAL GAS PROCESSING SEQUESTRATION METHODOLOGIES AND PRODUCTS TOOLS OXY EXISTING OXYCHEM PERMIAN CO2 PIP
Slide 39: Direct Air Capture
HIGHLIGHTS DIRECT AIR CAPTURE DEPLOYING CARBON ENGINEERING TECHNOLOGY TO REMOVE CO2 FROM THE FIRST FACILITY EXPECTED TO REMOVE UP ATMOSPHERE AT SCALE TO 500,000 TONNES OF CO2 ANNUALLY FIRST COMMERCIAL DAC EXPECTED OPERATIONAL IN LATE 2024 FIRST COMMERCIAL DAC FACILITY TO BE BUILT IN THE PERMIAN BASI
Slide 40: Progress Toward DAC 1
DIRECT AIR CAPTURE 40 PROGRESS TOWARD DAC 1 LICENSE TO BUILD Exclusive DAC and AIR TO FUELS™ license for U.S. deployment. OLCV has a worldwide agreement as the execution partner for all DAC and AIR TO FUELS™ deployments INNOVATION CENTRE Carbon Engineering Innovation Centre was built to develop and
Slide 41: 1PointFive DAC Development
1POINTFIVE DAC DEVELOPMENT 41 IRA enables an updated DAC development base case of 100 plants by 2035 Global net-zero support scenario – potential for 135 DAC plants with increase in global policy incentives and demand led by net-zero business targets Estimated # of plants online DE-RISKING & INNOVAT
Slide 42: Market Expansion for Capture Projects
IRA IMPACT ON POINT-SOURCE CAPTURE 42 MARKET EXPANSION FOR CAPTURE PROJECTS The increase in 45Q enables a greater volume of CO2 to be economically captured through point-source projects Current 45Q @ $85/t Previous 45Q @ $50/t $/MT >$70 $60–$70 Existing CO2 Pipelines $50–$60 <$50 CO2 Sources Best CO
Slide 43: DAC & Sequestration Hub Development
43 DAC & SEQUESTRATION HUB DEVELOPMENT KEY UPDATES ACREAGE POSITION BEYOND THE PERMIAN Acres / Sequestration Multiple land/pore space access Location Square Miles Capacity (Tonnes) agreements executed giving us access to >265,000 acres / >400 square miles King Ranch, TX 106,000 / 166 2.8 B Avail
Slide 44: Illustrative DAC Economic Modeling
DIRECT AIR CAPTURE 44 ILLUSTRATIVE DAC ECONOMIC MODELING TAM MODEL REVENUE MODEL COST MODEL Total Addressable Market (TAM) Carbon removal credit volumes DAC 1 LCOC expected to be in the range of $400 to Net carbon removal credit sales approximates $500/t $250/t LCOC: 5,000 million tonnes of carb
Slide 45: Oxy to Utilize Clean Energy Generated by NET Power's First Plant
OXY TO UTILIZE CLEAN ENERGY GENERATED BY NET POWER’S FIRST UTILITY SCALE PLANT Oxy expected to be the primary offtaker of clean energy generated by NET Power using a transformational technology that inherently captures nearly all emissions. PLANT TO GENERATE ~300 MW OF ~860K TONNES/YEAR CO2 FOR CLEA
Slide 46: Oxy Zero In
VB OXY ZERO IN”