Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Credit Suisse 2008 Energy Summit
33 slides from Occidental Petroleum's conference presentation, Feb 7, 2008
Slide 1: Credit Suisse 2008 Energy Summit
February 2008 Stephen I. Chazen President and Chief Financial Officer Credit Suisse 2008 Energy Summit
Slide 2: Full Year 2007 Results
($ in millions, except EPS data) FY2007 FY2006 Reported Net Income $5,400 $4,191 Reported EPS (diluted) $6.44 $4.87 Core Results* $4,405 $4,116 Core EPS (diluted) $5.25 $4.78 + 10% year-over-year Oil and Gas production (mboe/day) 570 545 +5% year-over-year Capital Spending $3,497 $2,987 Cash Flow fr
Slide 3: Three Distinct Business Models/Strategies
Stable Cash Business US Oil & Gas Stable production and long-lived reserves Lower risk and good returns High Capital efficiency Generates large amounts of free cash flow to fund growth Growth Business Middle East/North Africa and Latin American Oil and Gas Strong production growth High returns Other
Slide 4: Worldwide Oil & Gas Operations
Hugoton California Permian Basin Colombia Libya Oman UAE Yemen Qatar Argentina Bolivia Worldwide Oil & Gas Operations
Slide 5: Worldwide Production Outlook
Thousand BOE/Day Assumes $80 WTI Price 466 2005 545 2006 570 2007 630 2008E Note: As a result of PSC contracts, a -/+ $5 per barrel change in oil prices impacts production by +/- 4 mb/day Worldwide Production Outlook Midpoint 2008 growth = 9.6%
Slide 6: Reserves Replacement
Million BOE Organic Growth Acquisitions Total Reserve Replace % Worldwide Production (million boe) 2007 182 60 242 116 209 2006 187 326 513 257 200 2005 231 139 370 216 171 2004 201 40 241 145 166 2003 229 107 336 202 166 Reserves Replacement 3-Year Average 5-Year Average
Slide 7: Oil & Gas Capital Program
($ in millions) 2007 2008E Growth Capital 1,100 1,400 Base Capital 2,100 2,200 Total Oil & Gas Capital 3,200 3,600 Oil & Gas Capital Program
Slide 8: US Oil & Gas Operations – Stable Cash
Long Beach Hugoton Bravo Dome Oxy Permian Houston Los Angeles Bakersfield Sheep Mountain Elk Hills & California Properties * See attached for GAAP reconciliation. US Oil & Gas Operations – Stable Cash 2007 net production* 359 mboe/day 63% of worldwide total 2007 reserves* 2.15 billion boe 75% of wor
Slide 9: US Oil & Gas Operations – Stable Cash
Thousand BOE/Day US Oil and Gas Production 331 354 359 2005 2006 2007 Key Operations/Assets: Permian Basin California/Elk Hills Field 2007 Financial Data Pre-tax Income $4.1 Billion After-tax Cash** $2.5 Billion Capital $1.4 Billion ROANCC 20% ROANCC = Return On Average Net Capitalized Costs. **See
Slide 10: Permian Basin Operations
Bravo Dome Salt Creek Denver City Unit Hugoton Sheep Mountain Lubbock Midland Hobbs Indian Basin Area Sharon Ridge Cogdell Seminole Oxy Acreage CO 2 Pipelines New Centurion Pipelines Old Centurion Pipelines To Cushing, OK Large resource base Low decline rate & long-lived properties Significant cash
Slide 11: California Operations
Bakersfield Long Beach Elk Hills THUMS Ventura Los Angeles Tidelands California Production 2007: 131 mboe per day Elk Hills Production (2007) 88 mboe/day Elk Hills Drilling rate: 260+ wells/yr. Shallow oil zone Further shale development EOR Opportunities Nitrogen flood CO 2 pilots Consolidation Oppo
Slide 12: Plains Exploration Transactions
Properties acquired for $1.55 Billion Occidental will purchase: 50% working interest in PXP's oil & gas properties located in the Permian Basin, West Texas and New Mexico which Oxy will operate. 50% working interest in PXP’s Piceance Basin oil & gas assets. PXP will operate and Oxy expects the prope
Slide 13: Middle East/North Africa Oil & Gas – Growth
* See attached for GAAP reconciliation. Middle East/North Africa Oil & Gas – Growth 2007 net production* 135 mboe/day 24% of worldwide total Qatar UAE Oman Yemen Libya 2007 reserves* 468 million boe 16% of worldwide total
Slide 14: Middle East/North Africa Oil & Gas – Growth
Thousand BOE/Day Middle East/North Africa Oil and Gas Production 103 119 135 2005 2006 2007 Key Operations/Assets: Dolphin Project Qatar ISND Oman/Mukhaizna Libya 2007 Financial Data Pre-tax Income $2.9 Billion After-tax Cash $0.8 Billion Capital $1.1 Billion ROANCC** 26% **ROANCC = Return On Averag
Slide 15: UAE / Qatar – Dolphin Project
Oxy’s interest is 24.5% Gas delivery to UAE markets began last July Project expected to be fully operational this month Net Production (mboe/d) 2007 Exit Rate 43 1Q ’08E 53 1Q ’08E inc. $90 - $100 mm at $90 oil price Net capital $1.1 B at 12/31/07 ROCE similar to Middle East/North Africa region UAE
Slide 16: Oman – Mukhaizna Project
Project Status 173 total new wells drilled in 2006 & 2007 Implemented a pattern steam flood 2007 production exit rate nearly tripled from Sept ‘05 Increase gross production to 150,000 barrels/day 2008 Work Program $350 – $375 mm (Net) Drill approximately 175 wells Steam flood expansion continues Oma
Slide 17: Libya Exploration & Development
30-year agreement for major redevelopment projects signed in November 2007, subject to Libyan government approval. Covers approximately 2.5 billion bbls of recoverable oil reserves. Planned gross capex of $5 B over 5 years (Oxy share $1.9 B) Plan to increase gross production from current rate of 100
Slide 18: Latin America Oil & Gas Operations – Growth
Colombia Bolivia Argentina * See attached for GAAP reconciliation. Latin America Oil & Gas Operations – Growth 2007 net production* 76 mboe/day 13% of worldwide total 2007 reserves* 244 million boe 9% of worldwide total
Slide 19: Latin America Oil & Gas Operations – Growth
Thousand BOE/Day Latin America Oil and Gas Production 32 72 76 2005 2006 2007 Key Operations/Assets: Colombia Argentina 2007 Financial Data Pre-tax Income $0.7 Billion After-tax Cash $0.3 Billion Capital $0.5 Billion ROANCC** 14% **ROANCC = Return On Average Net Capitalized Costs. A-T Cash = Net inc
Slide 20: Colombia Operations
Covenas Ayacucho Bucaramanga Vasconia Arauca Politically Stable Country Production (mboe per day) 2007: 37 Caño Limon Legacy Oil Field Near Field Exploration Success Contract Life Extended to Field Economic Limit La Cira-Infantas EOR Project With Large Remaining Reserves Commercial phase of developm
Slide 21: Argentina Operations
Brazil Cuyo Basin Uruguay Neuquen Basin Argentina San Jorge Basin Oxy Blocks Inventory of 700 drilling locations 2008E: 220 to 240 wells 2007: 156 wells 2007 production – 36 mboe/day Completion of 8 waterflood projects initiated in 2007 Additional technology driven opportunities Consolidation opport
Slide 22: Other Value Enhancing
Chemicals Operations Midstream Assets – Pipelines Dividend Growth Share Repurchase Cost Reduction Program Other Value Enhancing
Slide 23: Chemicals Operations
($ Millions) Period ending 12/31/07 3-Year 5-Year Average Average 2007 Pre-tax Earnings $764 $586 $601 Free Cash Flow* $823 $662 $655 Capital Spending $225 $190 $251 * See attached for GAAP reconciliation. Chemicals Operations
Slide 24: Capital Allocation Philosophy
New projects must meet expectations for good returns Return Targets* Domestic – 15+% International – 20+% Compare new projects & asset acquisitions with share repurchases Make decisions based on creating long-term value for shareholders *Assumes Moderate Product Prices Capital Allocation Philosophy
Slide 25: Business Risk Factors
Level of Risk Acceptable to Occidental Risk Factor Low Middle High Exploratory ü Commodity ü Political ü Engineering ü Reinvestment ü Financial ü Business Risk Factors
Slide 26: Gross Cash Flow Uses
Percentage of Total 2003 2004 2005 2006 2007 Capital 45 43 36 41 40 Acquisitions 19 5 31 26 16 Share Repurchase — — — 21 14 Debt Reduction & Cash 23 42 26 3 21 Dividends 13 10 7 9 9 100 100 100 100 100 Gross Cash Flow Uses
Slide 27: Creating Shareholder Value – Dividends
Annual Dividend Payout per share Establishing a track record of consistent dividend increases $0.50 $0.52 $0.55 $0.645 $0.80 $0.94 $1.00 Creating Shareholder Value – Dividends
Slide 28: Share Repurchase Program
Spent $1.13 billion to repurchase 20.6 million shares during 2007 at an average price of $54.75 a share. Repurchased 51.2 mm shares since program inception in February 2006 at an average price of $50.84 a share. 6.3 million shares remained under the current 55 mm share repurchase authorization as of
Slide 29: Cost Reduction Program
Oxy has embarked on a Cost Reduction Program The impact of the Program: It will affect operating and G&A costs; Restructuring charge taken in 2007 totaling $25 mm; Expect a similar amount to be taken in 2008; Improvements made in our procurement function; Combined savings realized from this program
Slide 30: Summary - Corporate Strategy/Philosophy
Focus on core areas – long-term production growth of 5 - 8% CAGR US - California & Permian Basin Middle East/North Africa Latin America Maintain strong balance sheet Maintain “A” credit rating Maintain investment discipline Create value Capture EOR projects with large volumes of oil in place Acquire
Slide 31: Creating Shareholder Value
Oxy’s Shareholder Equity versus Equity Market Value ($ in millions) Change In Equity Market Value Change In Shareholders’ Equity Market Value per $ of Equity Retained 1 – Year $22,560 $3,571 6.3 3 – Year $40,420 $12,226 3.3 5 – Year $52,867 $16,505 3.2 10 – Year $53,571 $18,537 2.9 Financial Data fo
Slide 32: Forward-looking statements
Statements in this presentation that contain words such as "will," "expect" or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause results to differ materially include, but a
Slide 33: Reconciliation to GAAP: ROCE and Core Results
Occidental Petroleum Corporation Return on Capital Employed (% ) ($ Millions) Reconciliation to Generally Accepted Accounting Principles (GAAP) GAAP measure - earnings applicable to common shareholders 4,191 5,400 Interest expense Tax effect of interest expense (46 ) (70 ) Earnings before tax-effect
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