Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Credit Suisse 2010 Energy Summit
40 slides from Occidental Petroleum's conference presentation, Feb 4, 2010
Slide 1: Credit Suisse 2010 Energy Summit
February 4, 2010 Stephen I. Chazen President and Chief Financial Officer Credit Suisse 2010 Energy Summit February 4, 2010 Stephen I. Chazen President and Chief Financial Officer Credit Suisse 2010 Energy Summit
Slide 2: Full Year 2009 Results - Summary
2 ($ in millions, except EPS data) 2009 2008 • Core Results 1 $3,083 $7,348 • Net Income $2,915 $6,857 • Reported EPS (diluted) $3.58 $8.34 • Capital Spending $3,581 $4,664 • ROE 10.3% 27% • ROCE 9.6% 25% 1 See attached for GAAP reconciliation. 2 ($ in millions, except EPS data) Full Year 2009 Resul
Slide 3: Corporate Strategy/Philosophy
3 Corporate Strategy/Philosophy • Focus on core areas - - long-term production growth of 5 - 8% CAGR • US - Permian Basin, California, and Midcontinent Gas • Middle East/North Africa • Latin America • Maintain strong balance sheet – Maintain “A” credit rating – Maintain investment discipline – Creat
Slide 4: What Are Our Goals & Current Objectives?
4 *Assumes Moderate Product Prices What Are Our Goals & Current Objectives? • Allocate and deploy capital with a focus on achieving strong financial returns. • Pursue only those opportunities which meet our standards for ROCE and complement our existing assets. – Return Targets* • Domestic - 15+% •
Slide 5: Worldwide Oil & Gas Operations
5 Worldwide Oil & Gas Operations Worldwide Oil & Gas Operations 5
Slide 6: Worldwide Production Outlook
6 Thousand BOE/Day Thousand BOE/Day 519 601 633 675 2005 2006 2007 2008 Note: This schedule reflects what production volumes would have been for the past 5 years if all production had been represented on a pre -tax basis. Importantly this forecast is based only on existing projects and does not cont
Slide 7: Business Risk Factors
7 ü ü Low ü ü Middle Risk Factor Exploratory Commodity Political Engineering Reinvestment Financial High Level of Risk Acceptable to Occidental Level of Risk Acceptable to Occidental ü ü Business Risk Factors 7
Slide 8: 2009 Reserve Replacement
8 2009 Reserve Replacement • We estimate that we replaced approximately 206% of our oil and gas production in 2009. • We estimate that we replaced approximately 206% of our oil and gas production in 2009. • 2009 year-end proved reserves were 3.23 billion BOE, an increase of 8%. • 2009 year-end prove
Slide 9: Reserve Replacement
9 2009 2009 2008 2008 2007 2007 2006 2006 2005 2005 3-Year Average 3-Year Average 5-Year Average 5-Year Average 323 323 126 126 182 182 180 180 241 241 210 210 210 210 160 160 210 210 60 60 326 326 139 139 143 143 179 179 483 483 336 336 242 242 506 506 380 380 353 353 389 389 206 206 153 153 116 11
Slide 10: 2010 Capital Expenditure Outlook
10 Growth Capital Base Capital Total Oil & Gas, and Midstream Capital 1,030 2,310 3,340 1,570 2,485 4,055 2009 2010E ($ in millions) ($ in millions) • We currently anticipate total year 2010 capex to be about $4.3 billion compared to $3.6 billion spent in 2009. • We currently anticipate total year 2
Slide 11: Pipeline of Future Growth Projects
11 Pipeline of Future Growth Projects • California - Oxy is the largest acreage holder in the state, and is continuing to pursue recent exploration successes. • Permian Basin - - opportunity to deploy additional sources of CO 2 to improve recovery and boost oil production. • Midcontinent Gas - most
Slide 12: US Oil & Gas Operations
12 2009 net production • 377 mboe/day • 58% of worldwide total 2009 reserves • 2.07 billion boe • 64% of worldwide total US Oil & Gas Operations 12
Slide 13: US Oil and Gas Production
13 331 354 359 2005 2006 2007 Thousand BOE/Day Thousand BOE/Day US Oil and Gas Production US Oil and Gas Production **ROANCC = Return On Average Net Capitalized Costs. 361 377 2008 2009 A-T Cash = Income from continuing operations after US income taxes, plus DD&A, and minus exploration and developme
Slide 14: Permian Basin and Midcontinent Gas
14 New Mexico New Mexico Colorado Colorado Bravo Dome Bravo Dome Salt Creek Salt Creek Hugoton Hugoton Sheep Mountain Sheep Mountain Kansas Kansas • Large resource inventory — Oxy holds 2.2 mm net acres • Large resource inventory — Oxy holds 2.2 mm net acres • 2009 production of 185 mboe/day • 2009
Slide 15: Permian - Century CO2 Plant Project
15 SandRidge Acreage 1,300 mi 2 3D 5 phases Oxy Pakenham Oxy JM - - Brown Bassett Oil Pipelines CO 2 Pipelines County County NGL Pipelines Terrell (Oxy) Mitchell Gray Ranch New Plant “Century” Pikes Peak Pinon Field SD Plant Gas Plants McCamey Hub CO 2 Pipelines TX Permian - - Century CO 2 Plant Pro
Slide 16: Middle East/North Africa Oil & Gas
16 Qatar UAE Oman Yemen Libya 2009 net production • 254 mboe/day • 35% of worldwide total 2009 reserves • 924 million boe • 29% of worldwide total Bahrain Middle East/North Africa Oil & Gas 16
Slide 17: Middle East/North Africa Oil and Gas Production
17 157 175 198 2005 2006 2007 Thousand BOE/Day Thousand BOE/Day Middle East/North Africa Middle East/North Africa Oil and Gas Production Oil and Gas Production **ROANCC = Return On Average Net Capitalized Costs. 238 254 2008 2009 A-T Cash = Income from continuing operations after foreign income taxe
Slide 18: Oman - Mukhaizna Project
18 Oxy Blocks Oxy Blocks Oman - Mukhaizna Project • Continuing large scale steam flood EOR project - drilled 665+ wells thru 2009 • Gross production at year-end 2009 was more than 10x higher vs. Sept. 2005 • Expect to drill approximately 320 new wells in 2010 • Exceeded target 2009 production exit r
Slide 19: Oman - Gas Project
19 • PSA signed on 11/24/08 – Newly formed contract area - “Habiba” - - Block 62 – 20-year agreement covers 2,269 km 2 – Development of four gas fields – Exploration potential • Partners – Oxy (operator) 48%, Mubadala 32%, Oman 20% • Development Plan – First production in 2010 – Gross production app
Slide 20: Bahrain Field Development Project
20 • Oxy, Mubadala, and NOGA announced the creation of a new joint operating company, Tatweer Petroleum, which will serve as operator for the Bahrain Field. • The company will operate under a Development and Production Sharing Agreement (DPSA) signed and approved in late 2009. • Oxy will hold a 48%
Slide 21: Iraq - Zubair Field
21 Iran Saudi Arabia Syria Kirkuk Reserves 17B Bai Hassan Reserves 5B Mansuriya Reserves 1.6TCF West Qurna 1 ExxonMobil/Shell Reserves 6B Rumaila BP/CNPC Reserves 21B Akkas Reserves 2.5TCF Iraq Zubair Eni/Oxy/Kogas Reserves 4.2B+ Missan Reserves 2.2B Iraq - Zubair Field 21
Slide 22: Iraq - Zubair Field
22 Iraq - Zubair Field • Oxy is part of an Eni-led consortium that has been awarded the license for development of the giant Zubair oil field in Iraq. • Iraq holds the world’s second-largest reserves of oil with about 115 billion barrels estimated - second only to Saudi Arabia. • We are now one of t
Slide 23: California - Kern County Discovery
23 *Production and producing wells as of each of the quarterly earnings disclosure dates. California - Kern County Discovery California - Kern County Discovery KERN COUNTY DISCOVERY AREA KERN COUNTY DISCOVERY AREA 4Q09 3Q09 2Q09 1Q09 4Q09 3Q09 2Q09 1Q09 Gross Production* Gross Production* – Natural
Slide 24: California - Kern County Discovery
24 San Joaquin Valley OXY Producing Properties Exploration Acreage Elk Hills Long Beach & Tidelands San Francisco Sacramento Bakersfield Los Angeles Sacramento Valley California - Kern County Discovery California - Kern County Discovery • Cumulative gross production since the start of production thr
Slide 25: California Exploration
25 California Exploration California Exploration • Excluding the Kern County discovery: • Excluding the Kern County discovery: – Over the course of a couple of years, we have drilled 39 exploration wells seeking non-traditional hydrocarbon bearing zones in California. – Over the course of a couple o
Slide 26: Other Value Enhancing Initiatives
26 Other Value Enhancing Initiatives • Chemicals Operations – consistent free cash generator • Midstream Assets - Marketing and Pipelines – adds value and is complimentary to Oil & Gas operations • Dividend Growth – consistent track record of dividend increases 26
Slide 27: Chemicals Operations
27 3-Year* 5-Year* Average Average 2009 Period ending 12/31/09* ($ millions) 1 See attached for GAAP reconciliation. 1 See attached for GAAP reconciliation. Chemicals Operations Pre-tax Earnings $583 $688 $389 Free Cash Flow 1 $657 $758 $480 Capital Spending $230 $221 $205 27
Slide 28: Midstream Data
28 The assets are comprised of the following businesses: Marketing; Gas processing plants; Pipelines; Power generation, and; CO 2 source fields and facilities. The assets are comprised of the following businesses: Marketing; Gas processing plants; Pipelines; Power generation, and; CO 2 source fields
Slide 29: Full Year 2009 Cash Flow
29 $7,600 $40 $1,065 $1,750 $1,230 Available Cash Capex Net Debt Issuance Dividends Acquisitions & Foreign Bonuses Ending Cash Balance 12/31/09 Cash Flow From Operations $5,800 ($ in millions) Beginning Cash $1,800 12/31/08 $3,600 Other $5 Debt Issuance $740 Debt Reduction $700 Full Year 2009 Cash F
Slide 30: Uses of Capital - In Order of Priority
30 2009 ($ in millions) Uses of Capital - (In Order of Priority) 1. Base/Maintenance Capital - $2,550 2. Dividends - $1,065 3. Growth Capital - $1,030 4. Acquisitions - - $1,750 5. Share Repurchase - $ - 30
Slide 31: Creating Shareholder Value - Dividends
31 $0.52 $0.52 $0.55 $0.55 $0.645 $0.645 $0.80 $0.80 Annual Dividend Payout per share $0.50 $0.50 $0.94 $0.94 An established track record of consistent dividend increases An established track record of consistent dividend increases $1.21 $1.21 $1.31 $1.31 Creating Shareholder Value - Dividends 31
Slide 32: Creating Shareholder Value
32 Change In Change In Equity Market Value Equity Market Value Change In Change In Shareholders’ Equity Shareholders’ Equity 9.5 9.5 2.6 2.6 2.3 2.3 2.3 2.3 Oxy’s Shareholder Equity versus Equity Market Value 1 - Year 1 - Year 3 - Year 3 - Year 5 - Year 5 - Year 10 - Year 10 - Year • Building a Hist
Slide 33: Future Growth Areas to Watch
33 Future Growth Areas to Watch • Bahrain - - • Oman/Mukhaizna - - • Middle East - • California - - • Permian Basin - • Midcontinent Gas - 33
Slide 34: Forward-looking statements
34 Occidental Petroleum Corporation 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 actual
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35 35
Slide 36: Appendix
36 Appendix 36
Slide 37: Gross Cash Flow Uses
37 40 5 — 44 11 100 2004 34 31 — 27 8 100 2005 Capital Acquisitions Share Repurchase Debt Reduction & Cash Dividends 2006 Percentage of Total Percentage of Total 41 26 21 3 9 100 2007 40 16 14 21 9 100 2008 39 40 13 — 8 100 2009 54 27 — 3 16 100 Gross Cash Flow Uses 37
Slide 38: California - Kern County Discovery: Conventional vs. Non-conventional
38 California - Kern County Discovery California - Kern County Discovery Conventional vs. Non-conventional - What does this mean? Conventional vs. Non-conventional - What does this mean? • Oxy’s discovery is Conventional, which means it is non-shale, is analogous to a deep water discovery, and bears
Slide 39: California - Kern County Discovery: Conventional vs. Non-conventional
39 California - Kern County Discovery California - Kern County Discovery Conventional vs. Non-conventional - What does this mean? Conventional vs. Non-conventional - What does this mean? • In a Non-conventional play drilling efficiencies and cost burden determines the outcome. In a Conventional disc
Slide 40: Reconciliation to Generally Accepted Accounting Principles (GAAP)
40 40 Occidental Petroleum Corporation Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Twelve Months Ended December 31, ($ Millions) 2009 2008 Diluted Diluted EPS EPS Reported Income $ 2,915 $ 3.58 $ 6,857 $ 8.34 Add: significant items affecting earnings Asset impairments 1
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