Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Bernstein's 35th Annual Strategic Decisions Conference (May 2019)
29 slides from Occidental Petroleum's conference presentation, May 29, 2019
Slide 1: Bernstein's 35th Annual Strategic Decisions Conference
Bernstein’s 35th Annual Strategic Decisions Conference Occidental Petroleum Corporation May 29, 2019 Vicki Hollub Chief Executive Officer
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements Any statements in this presentation about Occidental Petroleum Corporation’s (“Occidental”) expectations, beliefs, plans or forecasts, including statements regarding the proposed transaction between Occidental and Anadarko Petroleum Corporation (“Anad
Slide 3: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 3
Slide 4: Oxy's Existing Integrated Portfolio
Oxy’s Existing Integrated Portfolio Oil & Gas OxyChem Midstream Focused in world class Leading manufacturer of Integrated infrastructure and basins with a history of basic chemicals and marketing provides access to maximizing recovery significant cash generator global markets Permian Conventional •
Slide 5: 2018 Highlights – Delivering on Our Value Proposition
2018 Highlights – Delivering on Our Value Proposition Focused on Returns Cash Flow Generation Operational Excellence Integrated Business Sector leading returns, CFFO before working cap. Permian achieved lowest 164% all-in reserve achieved 14% ROCE and exceeded capex and operating costs per b
Slide 6: Anadarko Combined Company
World Class Global Asset Portfolio With Focus Q4 2018A Production (Mboed) 7 Oman 8 Qatar 9 UAE 10 Colombia 30 year production 2nd Largest Oil Producer 30 Year Joint Venture Llanos Norte Basin and history in Oman in Offshore Qatar with ADNOC Magdalena Basin 41% Status Oxy 700 58% Quo 4 5 1% 3 2 1 6 1
Slide 7: 2018 Return On Capital and Return Of Capital
2018 Return On Capital and Return Of Capital 20% Returned $3.6 B to shareholders in 2018, including $1.3 B of share repurchases 15% OXY Since 2002, returned $34 B of Total Capital through 1Q19 Sector leading returns, achieved 14% ROCE 10% and 27% CROCE in 20182 ROCE (%) 5% 0% -5% 0% 2% 4% 6% 8
Slide 8: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 8
Slide 9: Transaction Merits
Transaction Merits • Highly accretive to CFPS and Free CFPS after dividends • $3.5 B free cash flow improvements through synergies and capital reduction • $10 - 15 B of planned portfolio optimization and free cash flow support rapid deleveraging; $8.8 B already announced • Oxy’s shale, Enhanced Oil
Slide 10: Oxy & Anadarko: Creating A High Return Cash Generating Energy Company
Substantial Scale Industry-Leading Returns Disciplined Growth Oxy & Anadarko: >$100 B 20%+ 2021 PF $3.12/share Growing Dividend and Enterprise Value CROCE1 Creating A High Attractive mix of U.S. unconventional, global Strong mix of stable free cash 5% flow, world-class growth, Full-cycle production
Slide 11: Premier, Complementary Global Asset Portfolio
Premier, Complementary Global Asset Portfolio #1 Producer in the Permian Largest Private Surface and Mineral Acreage Owner in Wyoming #1 in CO2 EOR Projects Top 3 Producer of PVC, Chlorine, and #1 Producer in the DJ Basin Caustic Soda #1 Producer in the Uinta Basin Leading
Slide 12: Significant Identified Synergies with Potential Upside
Significant Identified Synergies with Potential Upside Expected Pre-Tax Annual Synergies and Capital Reduction ($ B) $1.5 $3.5 Capital Synergies: $0.9 B $0.9 Opex/G&A Synergies: $1.1 B $0.6 Capital Reduction: $1.5 B $0.5 Permian Capital and Opex Savings Procurement & Supply Chain General Overhead &
Slide 13: Delivering Value
Delivering Value Pro Forma Per Common Share Accretion1 • Continued commitment 2020 +40% 2021 +30% to return of capital through growing the dividend and share repurchases over time >10X >4X • Debt reduction via portfolio optimization CFPS 2 Capex2 Dividend Preferred Free CFPS CFPS 2 Capex 2 Dividend
Slide 14: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 14
Slide 15: Continuous Improvement in Permian Resources Well Performance
Continuous Improvement in Permian Resources Hz Unconventional Well Performance Permian Resources Well Performance 250 147% Improvement since 2015 • Subsurface 25% Improvement from 2017 to 2018 200 2018 Characterization Cumulative Mboe • Data Analytics 2017 150 • Innovative Well 2016 Designs 100
Slide 16: Oxy's Play Leading Delaware Basin Performance
Oxy’s Play Leading Delaware Basin Performance Average 6 Month Cumulative Oil by Operator Oxy’s Subsurface Knowledge, Data 160 Analytics and Execution Drive Basin Leading Results 140 120 Top Delaware Basin Operator 100 • 74% better 6 month production than APC Cumulative Mbo 80 • Oxy pumps less pr
Slide 17: Delaware Basin – Synergistic Assets
Delaware Basin – Synergistic Assets Oxy is competitively advantaged with experience in Delaware Basin geology and regional supply logistics Oxy Aventine - Maintenance and Logistics Hub • APC’s acreage is located in the middle of Oxy’s core development areas and on trend with Delaware Greater Sand Du
Slide 18: Top Permian Basin Wells
Top 100 Permian Basin Wells 6 Month Cumulative Oil Top 100 Wells Basin Leading Wells with Less Proppant Oxy has 23% of the Best Wells, While Only Competitors use 27% more Proppant: >$500 M Drilling 4% of Total Permian Wells Incurring Incremental Cost per Well and 25 3,500 Increased Parent/Child Risk
Slide 19: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 19
Slide 20: Transaction Details
Transaction Details Oxy formally enters agreement to acquire Anadarko on May 9, 2019 –$59.00 cash and 0.2934 Oxy shares per Anadarko share –Equity purchase price of $38 B Structure –Total transaction value of $57 B (including Western Midstream debt and non-controlling interest) Formal agreement
Slide 21: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 21
Slide 22: Anticipated Timeline
Anticipated Timeline May 9, 2019: Oxy formally Distribute 2H 2019 enters Receive SEC proxy Acquisition is agreement to comments statement/ complete acquire prospectus Anadarko Prepare and Prepare and Proxy file HSR, Form file solicitation S-4 and proxy amendments period of statement/ to Form S-4 30
Slide 23: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 23
Slide 24: Oxy and Anadarko Integration
Oxy and Anadarko Integration Integration Approach Progress Develop comprehensive Designed integration understanding of current architecture Today operating models and plan integration Deployed top talent to lead integration teams, supported by external experts Integrate, stabilize, and Deal Clos
Slide 25: Integration Objectives
Integration Objectives Deliver Execute a Build a World Class Value Flawless Day-1 Occidental + • Leverage opportunities broadly • Focus on continuing operations • Create a combined operating across functions, geography, and protecting the base model to support our global and business business strate
Slide 26: Occidental Petroleum
Occidental Petroleum • OXY & APC: Positioned for Success • Sustainable Value Creation • Delivering Through Superior Execution • Transaction Overview • Anticipated Timeline: Closing 2H19 • Pathway to Integration • Disciplined Financial Position 26
Slide 27: Cash Flow Priorities for Combined Company
Cash Flow • Maintain low cost production Maintenance Capital Priorities for base Combined • Maintain and grow current Company Sustainable Dividend dividend per share at a sustainable level • Reduce combined capital spend Growth Capital to support annual production growth of 5% • Deleverage to align
Slide 28: Portfolio Optimization
Portfolio Optimization •$10 – 15 B Planned divestitures of non-core assets $10 – 15 B •Within 12 – 24 months • Expected to fast-track synergy achievement, integration, and deleveraging •Total to purchase Africa assets: Algeria, Ghana, Mozambique and South Africa • Binding agreement $8 B •$8.8 B Gros
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