Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q1 2013 Earnings Presentation
37 slides from Occidental Petroleum's earnings presentation, Apr 25, 2013
Slide 1: First Quarter 2013 Earnings Conference Call
EXHIBIT 99.4 Occidental Petroleum Corporation First Quarter 2013 Earnings Conference Call April 25, 2013 1
Slide 2: First Quarter 2013 Earnings - Highlights
First Quarter 2013 Earnings - Highlights • Core Income - $1.4 billion in 1Q13 vs. $1.6 billion in 1Q12 or $1.5 billion in 4Q12. – EPS $1.69 (diluted) vs. $1.92 (diluted) in 1Q12 or $1.83 in 4Q12. – Compared to 4Q12, current quarter results reflected higher realized oil prices, reduced operating expe
Slide 3: Oil & Gas Segment
First Quarter 2013 Earnings - Oil & Gas Segment • Higher realized oil prices and lower operating expenses offset Variance Analysis - 1Q13 vs. 4Q12 by lower Middle East/North Africa volumes and higher DD&A rates. ($ in millions) • Lower sales volumes in Middle East / North Africa, mostly due to timin
Slide 4: Oil & Gas Segment Production Costs
First Quarter 2013 Earnings - Oil & Gas Segment Production Costs • 1Q13 production costs were $13.93 per barrel, compared with $14.99 per barrel for FY 2012. – Lower costs were attributable to our domestic operations where production costs were $3.37 per barrel lower in the first quarter of 2013 fro
Slide 5: Oil & Gas Segment Production Volumes
First Quarter 2013 Earnings - Oil & Gas Segment Production Volumes 1Q13 1Q12 4Q12 • Oil and Gas Production (mboe/d) 763 755 779 • Approximately 13,000 barrels of the total sequential decrease in quarterly production came from Qatar and Dolphin where the planned maintenance impacted production. • The
Slide 6: Oil & Gas Segment Production Volumes
First Quarter 2013 Earnings - Oil & Gas Segment Production Volumes • Latin America volumes were 31 mboe/d, which was 1 mboe/d lower compared to 4Q12 and 5 mboe/d higher than 1Q12. – The reduction from 4Q12 was due to a heightened level of insurgent activity impacting production. • In the Middle East
Slide 7: Oil & Gas Segment
First Quarter 2013 Earnings - Oil & Gas Segment 1Q13 1Q12 Reported Segment Income ($mm) $1,920 $2,504 WTI Oil Price ($/bbl) $94.37 $102.93 Brent Oil Price ($/bbl) $112.64 $118.35 NYMEX Gas Price ($/mcf) $3.37 $2.83 Oxy’s Realized Prices Worldwide Oil ($/bbl) $98.07 $107.98 -9% year-over-year Worldwi
Slide 8: Oil & Gas Segment Realized Prices
First Quarter 2013 Earnings - Oil & Gas Segment Realized Prices • Realized oil prices for 1Q13 represented 104% of the average WTI price and 87% of the average Brent price. • Realized NGL prices were 43% of the average WTI price and realized domestic gas prices were 91% of the average NYMEX price. •
Slide 9: Taxes, Exploration Expense and DD&A
First Quarter 2013 Earnings - Oil & Gas Segment Taxes, Exploration Expense and DD&A • Taxes other than on income, which are generally related to product prices, were $2.63 per boe for 1Q13, compared with $2.39 per boe for the full year of 2012. – The 2013 amount includes California greenhouse gas ex
Slide 10: Chemical Segment
First Quarter 2013 Earnings - Chemical Segment • The sequential quarterly Variance Analysis - 1Q13 vs. 4Q12 decrease was due to higher ($ in millions) ethylene costs and increased competitive activity, particularly in the domestic caustic soda markets, partially offset by higher VCM and PVC prices.
Slide 11: Midstream Segment
First Quarter 2013 Earnings - Midstream Segment Variance Analysis - 1Q13 vs. 4Q12 ($ in millions) • Over 70 % of the sequential quarterly increase resulted from improved marketing and trading performance. • The remainder of the increase came from Results for 1Q13 were improved margins in the $215 mm
Slide 12: Income Taxes
First Quarter 2013 Earnings - Income Taxes • The worldwide effective tax rate on core income was 38% for the 1Q13. – included a benefit resulting from the relinquishment of an international exploration block. • Our 4Q12 U.S. and foreign tax rates are included in the Investor Relations Supplemental S
Slide 13: Cash Flow
First Quarter 2013 Earnings - 2013 Cash Flow • In 1Q13, we generated $2.9 billion of cash flow from operations before changes in working capital. Working capital changes reduced our cash flow from operations by approximately $200 million to $2.7 billion. $4,300 Cash Flow From ($ in millions) Operati
Slide 14: Cash Flow
First Quarter 2013 Earnings - 2013 Cash Flow • Capital expenditures for 1Q13 were $2.1 billion. – 1Q13 capital spend was $440 million lower than 4Q12, with about half of the decrease in the oil and gas business . • 1Q13 capital expenditures by segment were 80% in oil and gas, 15% in midstream and th
Slide 15: Shares Outstanding, Debt/Capital, ROE & ROCE
First Quarter 2013 Earnings - Shares Outstanding, Debt/Capital, ROE & ROCE Shares Outstanding (mm) 1Q13 3/31/13 Weighted Average Basic 804.7 Weighted Average Diluted 805.2 Shares Outstanding 805.6 1Q13 3/31/13 Debt / Capital 16% Return on Equity* 13.4% Return on Capital Employed* 11.4% Note: Annuali
Slide 16: Key Performance Metrics - Production
First Quarter 2013 Earnings - Key Performance Metrics - Production • Occidental’s domestic oil and gas segment produced record volumes for the tenth consecutive quarter and continued to execute on our liquids production growth strategy. • 1Q13 domestic production of 478 mboe/d, consisting of 342 mbo
Slide 17: Capital Efficiency & Operating Cost Reduction Program
First Quarter 2013 Earnings - Capital Efficiency & Operating Cost Reduction Program • We are executing a focused drilling program in our core areas and to date we are running ahead of our full-year objectives in our program to improve domestic operational and capital efficiencies. − For example, we
Slide 18: Capital Efficiency & Operating Cost Reduction Program
First Quarter 2013 Earnings - Capital Efficiency & Operating Cost Reduction Program Production Costs ($/boe) 18 18
Slide 19: 2013 Domestic Program
First Quarter 2013 Earnings - 2013 Domestic Program • Three main objectives of 2013 domestic program. • Delineate our core drilling areas in the Permian Basin − Accumulated more than 1.7 million net acres covering both established and emerging plays. − Focused on delineating incremental opportunitie
Slide 20: 2013 Domestic Program - Permian Basin
First Quarter 2013 Earnings - 2013 Domestic Program - Permian Basin • Delineate our core areas in the Permian Basin − $1.9 billion capital program to deliver growth from oil production − ~2/3 of capital will be spent in non-CO2 business • Expect to drill ~300 wells, 90% of which will be focused in f
Slide 21: Acreage in Select Permian Plays
First Quarter 2013 Earnings - 2013 Domestic Program - Permian Basin Acreage in Select Permian Plays (Thousands of Acres) Delaware Basin Gross Oxy Share Avalon 340 120 Bone Spring 1 Sand 560 220 Bone Spring 2 Sand 530 210 Bone Spring 3 Sand 420 140 Wolfbone 180 55 Wolfcamp Shale 570 200 Delaware Shal
Slide 22: 2013 Domestic Program - Permian Basin
First Quarter 2013 Earnings - 2013 Domestic Program - Permian Basin • Wolfberry − Solid, core play for many years and represents the largest proportion of activity. − Mix of infill wells in already established core areas, and step out wells in emerging play areas. − Expect step out wells in these em
Slide 23: 2013 Domestic Program - Permian Basin
First Quarter 2013 Earnings - 2013 Domestic Program - Permian Basin • Emerging Wolfbone play in Reeves County, Texas − Throughout 2012, we were able to acquire a meaningful, contiguous acreage position. We drilled a handful of wells in 2012 and will increase our activity this year as we further deli
Slide 24: Drive Capital Efficiency
First Quarter 2013 Earnings - 2013 Domestic Program - Drive Capital Efficiency • Drive capital efficiency, particularly in core drilling programs. • Four elements to our overall capital efficiency strategy. − Locking in drilling programs. − Modifying well objectives and design. − Improving operation
Slide 25: Capital Efficiency
First Quarter 2013 Earnings - 2013 Domestic Program - Capital Efficiency • Locking in drilling programs. • Results in significant efficiencies. − Fit-for-purpose drilling rigs in each core area. − Minimize the number of drill site contractors. − Minimize drilling and mobilization times and rig move
Slide 26: Capital Efficiency
First Quarter 2013 Earnings - 2013 Domestic Program - Capital Efficiency • Modification of well objectives and designs. • In our Wolfberry program: • Two casing strings instead of three, which has saved ~$250,000 per well. • Reduced costs by 47% per frac stage per Wolfberry well, without any degrada
Slide 27: Capital Efficiency
First Quarter 2013 Earnings - 2013 Domestic Program - Capital Efficiency • Improving operational execution. • Numerous incremental changes in all businesses and significant improvements in the Permian and Williston business units. − Optimizing use of water in completion operations by using flowback
Slide 28: Capital Efficiency
First Quarter 2013 Earnings - 2013 Domestic Program - Capital Efficiency • Progress in the Williston, Permian and Elk Hills. • Reduction in stimulation contract pricing and fluid hauling costs. • Williston − Reduced well costs from $10 million to $8.2 million currently, in the top quartile in the pl
Slide 29: Operating Cost Reductions
First Quarter 2013 Earnings - 2013 Domestic Program - Operating Cost Reductions • Enhancing cash margins through reductions in operating costs • Additional steps specific to reducing our operating costs, especially in the areas of downhole maintenance and workovers. • Workover activity − Eliminating
Slide 30: Operating Cost Reductions
First Quarter 2013 Earnings - 2013 Domestic Program - Operating Cost Reductions • Enhancing cash margins through reductions in operating costs • Maintenance crews − Evaluating and prioritizing most efficient crews. − More direct on-location supervision, optimized scheduling and tighter controls over
Slide 31: Operating Cost Reductions
First Quarter 2013 Earnings - 2013 Domestic Program - Operating Cost Reductions • Enhancing cash margins through reductions in operating costs – Compared to the 2012 levels, downhole maintenance and workover costs have dropped 36% and surface operations by ~16%, contributing to a 19% reduction of op
Slide 32: 2013 Domestic Program - Summary
First Quarter 2013 Earnings - 2013 Domestic Program - Summary • We are still in the early stages of this process and, therefore, our data is based on a relatively small portion of our overall program. • In addition, we executed a relatively trouble-free drilling program in the first quarter. • Given
Slide 33: Dividends
First Quarter 2013 Earnings - Dividends • In February we increased our dividend 18.5% to an annual rate of $2.56 per share, from the previous annual rate of $2.16 per share. • We have now increased our dividend every year for 11 consecutive years, and a total of 12 times during that period. • This 1
Slide 34: Production Outlook
First Quarter 2013 Earnings - 2013 Production Outlook • Domestically, we continue to expect solid growth in our oil production for the year. − As a result of the nature and timing of our drilling program, such as steam flood drilling in California, we expect 2Q13 liquids growth to be modest with hig
Slide 35: Production Outlook
First Quarter 2013 Earnings - 2013 Production Outlook • Internationally, excluding Iraq, at current prices we expect production to be higher in 2Q13, back to around the 4Q12 levels, with the increase coming mainly from the resumption of production in Qatar. − Iraq's production is directly correlated
Slide 36: Capital Outlook
First Quarter 2013 Earnings - 2013 Capital Outlook • 1Q13 capital spending was $2.1 billion. • We expect the second quarter rate to be higher. • Our annual spending levels are unchanged and expected to be in line with the $9.6 billion program discussed on the 4Q12 conference call. 36 36
Slide 37: Conference Call Q&A
First Quarter 2013 Earnings Conference Call Q&A 37