Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Investor Day (February 2006)
159 slides from Occidental Petroleum's investor day presentation, Feb 23, 2006
Slide 1: 2006 Analyst Meeting
February 23, 2006 Dr. Ray R. Irani Chairman of the Board, President & Chief Executive Officer 2006 Analyst Meeting Part 1
Slide 2: Sustainable Growth & Financial Returns
Sustainable Growth & Financial Returns • Oil & gas production growth – Large pipeline of projects – High quality assets with good returns – Volume growth of 5-7 percent • Disciplined capital program – Maintain top quartile financial returns – Maintain “A” credit rating 2
Slide 3: Oxy Financial Returns (2001-2005)
Oxy Financial Returns (2001-2005) 5-Year Average ROE ……………………….…. 28% ROCE ………………………... 19% Oxy Returns In Top Quartile Among Industry Peers Amerada Hess ConocoPhillips Anadarko Devon Apache ExxonMobil BP Kerr-McGee Burlington Marathon Chevron See Appendix for GAAP reconciliation. 3
Slide 4: Total Returns (2001-2005)
Total Returns (2001-2005) Primary Goal : Generate Top Quartile Total Returns Percent Oxy ……………………………………………. 279 S&P 500 Oil & Gas E&P Index …………….. 166 S&P 500 Oil & Gas Integrated Index ………. 59 * Data Source: Bloomberg 4
Slide 5: Current Projects in Pipeline
Current Projects in Pipeline • Argentina • Dolphin • Mukhaizna • California • Permian • Libya 5
Slide 6: Strategy
Strategy • Focus on core areas • US - California & Permian Basin • Middle East-North Africa • Latin America • Maintain strong balance sheet – Maintain investment discipline • Create value – Acquire assets with upside potential – Capture EOR projects with large volumes of oil in place • Maximize free
Slide 7: Competitive Advantages
Competitive Advantages • Economies of scale • Infrastructure • Operating experience • Large technical data base • Strong regional relations 7
Slide 8: Today's Program
Today’s Program • Company overview & chemicals outlook – Steve Chazen • Western Hemisphere - Oil & Gas – John Morgan • Eastern Hemisphere – Oil & Gas – Casey Olson • Financial outlook & worldwide production outlook – Steve Chazen • Wrap up – Ray Irani 8
Slide 9: Key Points
Key Points • Project pipeline – Deliver sustainable production growth of 5-7 percent through 2010 • Additional high quality growth opportunities during the outlook period - and beyond • Maintain top quartile financial returns 9
Slide 10: 2006 Analyst Meeting
February 23, 2006 Stephen I. Chazen Senior Executive Vice President & Chief Financial Officer 2006 Analyst Meeting Part 2
Slide 11: Company Overview
Company Overview 11
Slide 12: Overview
Overview • Returns are key • Financial strength driven by domestic business • Growth driven by international business • Both sectors are highly profitable 12
Slide 13: Return on Equity
Return on Equity Percentage 41 28 28 22 21 17 2001 2002 2003 2004 2005 5 Year See Appendix for GAAP reconciliation. Average 13
Slide 14: Return on Capital Employed
Return on Capital Employed Percentage 33 20 19 15 13 11 2001 2002 2003 2004 2005 5 Year See Appendix for GAAP reconciliation. Average 14
Slide 15: 2005 After-Tax Earnings
2005 After-Tax Earnings $ Millions $1,435 (36%) $2,530 (64%) Domestic International 15
Slide 16: 2005 Cash From Operations
2005 Cash From Operations Before Capital ($ Millions) $2,060 (39%) $3,275 (61%) Domestic International 16
Slide 17: 2005 Cash Flow Sources
2005 Cash Flow Sources $ Millions (2004) Before Capital After Capital Chemicals Chemicals (14%) (12%) (17%) (13%) $1,028 $855 $6,374 $4,138 Oil & Gas Oil & Gas (86%) (88%) (83%) (87%) 17
Slide 18: Chemicals Overview
Chemicals Overview • Financial asset – Consistently profitable business – Generates free cash flow • Domestic asset – Not closely related to oil & gas business • Economic growth drives demand – Construction, automotive, consumer goods • Margin business – Natural gas is primary feedstock 18
Slide 19: Chemicals Overview
Chemicals Overview • Focus on single business – Chloro-vinyls • Major factor in industry • Large, cost competitive assets 19
Slide 20: Chemicals - Core Earnings
Chemicals - Core Earnings $ Millions 780 475 415 330 225 175 55 2001 2002 2003 2004 2005 3-Yr 5-Yr Average Average See Appendix for GAAP reconciliation. 20
Slide 21: Chemicals – Free Cash Flow
Chemicals – Free Cash Flow $ Millions 855 555 505 420 305 245 180 2001 2002 2003 2004 2005 3-Yr 5-Yr Average Average See Appendix for GAAP reconciliation. 21
Slide 22: Chemical Sales' Components
Chemical Sales’ Components Percentage of Total Sales 2003 2004 2005 Energy & Feedstock 54 56 55 Plant Costs 19 15 14 SG&A 13 11 9 DD&A 7 7 5 Segment Income 7 11 17 100 100 100 22
Slide 23: Key to Success - Quality Assets
Key to Success - Quality Assets • Size • Location • Technology • Environmental stewardship 23
Slide 24: North American Chlor-Alkali Producers
North American Chlor-Alkali Producers Market Share (%) Dow ………………….. 30 OxyChem .…………... 25 PPG ………………….. 13 Olin …………………… 7 Formosa ...…………... 6 Pioneer ………………. 4 Georgia Gulf ………… 3 Others ...……………... 12 100 24
Slide 25: North American PVC Producers
North American PVC Producers Market Share (%) Shintech …………….. 28 OxyChem .…………... 23 Georgia Gulf ………… 14 Formosa .……………. 14 Westlake ……………. 8 Others ...………...…... 13 100 25
Slide 26: Key Initiatives
Key Initiatives • Vulcan acquisition • Elimination of mercury technology • Shutdown/consolidation of small plants • Pasadena PVC modernization • Emissions reduction 26
Slide 27: Chemical Companies Comparisons
Chemical Companies Comparisons Percent of Sales EBIT EBITDA OxyChem – 22.2 20.7 19.4 19.4 OxyChem - 16.7 18.4 17.3 15.7 15.5 14.0 13.4 13.9 13.0 11.9 11.6 11.2 12.0 11.8 10.6 9.9 8.1 8.0 7.6 8.2 7.2 2.9 an a ow s s ll lin e an C ke f ul de ct aa ov es FM O la G m m du D on N H an t st ts ia es ro &
Slide 28: Chemicals – 2006 Outlook
Chemicals – 2006 Outlook • Relatively stable margins • Full year of Vulcan operations & realization of synergies 28
Slide 29: Worldwide Oil & Gas Operations
Worldwide Oil & Gas Operations Russia . Elk Hills Hugoton Libya Long Beach .Horn Mountain Permian Basin Qatar . U.A.E.. Permian Basin Pakistan Oman Yemen Colombia Ecuador Peru Argentina 29
Slide 30: 2005 Oil & Gas Results
2005 Oil & Gas Results $ Millions Core Earnings Capital $753 $197 (12%) (9%) $2,024 $3,558 $1,068 $971 (32%) (56%) (48%) (43%) US Middle East & Other Latin America See Appendix for GAAP reconciliation. 30
Slide 31: 2005 Oil & Gas Sales' Components
2005 Oil & Gas Sales’ Components $ Millions (2004) Segment Income $6,335 61% (57%) $1,215 DD&A $2,865 11% (14%) Operating Costs 28% (29%) 31
Slide 32: Reserve Factors to Consider
Reserve Factors to Consider • Libya – Costs incurred --- $257 million – Booked only 2005 production • No reserve carryover into 2006 • Mukhaizna – Costs incurred --- $137 million – Booked minimal 2005 reserves • Dolphin – Unbooked reserves --- 50 million BOE • Permian Basin acquisitions – Significan
Slide 33: Reserves Replacement
Reserves Replacement Worldwide Worldwide Reserve Additions Production (Million BOE) (Million BOE) 2001 244 173 2002 263 188 2003 368 200 2004 268 207 2005 390 207 3-Year Average 342 205 5-Year Average 306 195 See Appendix for GAAP reconciliation. 33
Slide 34: Reserves Replacement
Reserves Replacement Million BOE Organic Organic Growth Acquisitions Total (% Total) 2005 251 139 390 64 2004 231 37 268 86 2003 261 107 368 71 2002 195 68 263 74 2001 240 4 244 98 3-Year Average 248 94 342 72 5-Year Average 236 70 306 77 See Appendix for GAAP reconciliation. 34
Slide 35: Reserve Replacement
Reserve Replacement Million BOE Improved Acquisitions Recovery 2001 4 143 2002 68 142 2003 107 102 2004 36 121 2005 139 139 See Appendix for GAAP reconciliation. 35
Slide 36: Finding & Development Costs
Finding & Development Costs Costs Reserve Incurred Additions ($ Millions) (Million BOE) 2001 1,171 244 2002 1,223 263 2003 1,584 368 2004 1,785 268 2005 4,382 390 3-Year Average 2,584 342 5-Year Average 2,029 307 See Appendix for GAAP reconciliation. 36
Slide 37: Finding & Development Costs
Finding & Development Costs Costs Incurred ($ Million) Organic Organic Growth Acquisitions Total (% Total) 2005 2,202 2,180 4,382 50 2004 1,631 154 1,785 91 2003 1,216 368 1,584 77 2002 1,031 192 1,223 84 2001 1,089 82 1,171 93 3-Year Average 1,683 901 2,584 65 5-Year Average 1,434 595 2,029 71 37
Slide 38: Pro-forma Yearend 2005 Proved Reserves
Pro-forma Yearend 2005 Proved Reserves Oil Gas BOE (Million BOE) (Billion CF) (Million BOE) Oxy 2,127 3,478 2,707 Vintage 303 678 416 Assets held for sale (42) (180) (72) Total Oxy Proforma 2,388 3,976 3,051 See Appendix for GAAP reconciliation. 38
Slide 39: Pro-forma Yearend 2005 Proved Reserves
Pro-forma Yearend 2005 Proved Reserves 2,095 Million BOE Reserve Life = 13.1 years 480 409 67 United States Middle East/ Latin America Other North Africa See Appendix for GAAP reconciliation. 39
Slide 40: U.S. Oil & Gas Operations Overview
U.S. Oil & Gas Operations Overview Production Production Reserves Reserves (MBOE/Day) (% Total) (MMBOE) (% Total) 2005 345 61 2,026 75 2004 339 60 1,844 73 2003 345 63 1,804 73 2002 326 63 1,755 76 2001 315 66 1,698 76 See Appendix for GAAP reconciliation. 40
Slide 41: International Oil & Gas Operations Overview
International Oil & Gas Operations Overview Production Production Reserves Reserves (MBOE/Day) (% Total) (MMBOE) (% Total) 2005 223 39 681 25 2004 227 40 688 27 2003 202 37 667 27 2002 189 37 556 24 2001 161 34 543 24 See Appendix for GAAP reconciliation. 41
Slide 42: 2006 Analyst Meeting
February 23, 2006 John Morgan President Oxy Oil & Gas – Western Hemisphere 2006 Analyst Meeting Part 3
Slide 43: U.S. Operations
U.S. Operations Hugoton Elk Hills & Bakersfield Bravo Dome California Properties Los Angeles Long Beach Oxy Permian Houston Horn Mountain 43
Slide 44: 2005 U.S. Production
2005 U.S. Production Thousand BOE/Day Permian ……......….. 189 California ……….…. 116 Hugoton/Other…….. 40 Total ……………….. 345 44
Slide 45: Permian Basin
Permian Basin • Large resource New base Mexico • Low decline rate Dallas Area & long-lived of properties Operations Texas • Significant cash Houston generation • Natural area for consolidation 45
Slide 46: Permian – Oxy Reserves & Production
Permian – Oxy Reserves & Production Million BOE Cumulative Net Production Altura Acquisition Net Proved Reserves 357 224 288 162 43 102 855 1,211 1,013 1,078 1,083 968 955 89 2000 2001 2002 2003 2004 2005 46
Slide 47: Permian - Production History
Permian - Production History Thousand BOE/Day 189 176 172 162 164 121 2000 2001 2002 2003 2004 2005 47
Slide 48: Permian – Oxy Oil Infrastructure
Permian – Oxy Oil Infrastructure Bravo Bravo Dome Dome Oklahoma Centurion Pipeline Amarillo Amarillo New • 1,300 miles long Mexico Lubbock Indian Lubbock Salt Salt Creek Creek • 3.3 million barrels Basin Denver Denver City City Unit Unit Area Hobbs Hobbs Cogdell Cogdell storage Sharon Sharon Ridge R
Slide 49: Permian – Oxy CO2 Infrastructure
Permian – Oxy CO2 Infrastructure Bravo Bravo Dome Dome Oklahoma New Amarillo Amarillo • Bravo Dome field Mexico Lubbock Lubbock • Pipelines Salt Salt Creek Creek Indian Basin Denver Denver City City Unit Unit Area Cogdell Cogdell Hobbs Hobbs • Gas processing plants Sharon Sharon Ridge Ridge Midland
Slide 50: Permian – World Class EOR Operator
Permian – World Class EOR Operator Recovery Methods Primary 10% Waterflood CO2 30% 60% 50
Slide 51: CO2 Flood Process
CO2 Flood Process Additional Drive Miscible Oil CO2 Water CO2 Oil Water Zone Bank Recovery 51
Slide 52: Permian – Oxy CO2/EOR Production Growth
Permian – Oxy CO2/EOR Production Growth Thousand Barrels/Day 90 80 70 60 50 40 30 20 10 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 52
Slide 53: Permian – CO2 Development Projects
Permian – CO2 Development Projects BAILEY LAMB HALE FLOYD MOTLEY 2006 Plan SUNDOWN ANTON SLAUGHTER IRISH • New CO2 floods (CVX) COCHRAN HOCKLEY LUBBOCK CROSBY DICKENS IGOE SMITH LEVELLAND LUBBOCK – North Cowden SLAUGHTER HT BOYD FRAZIER SALT CREEK PRENTICE WILLARD YOAKUM OWNBY TERRY ADAIR (AHC) LYNN
Slide 54: Permian – CO2 Development Projects
Permian – CO2 Development Projects BAILEY LAMB HALE FLOYD MOTLEY Five Year Plan SUNDOWN ANTON SLAUGHTER IRISH (CVX) COCHRAN HOCKLEY LUBBOCK CROSBY DICKENS IGOE • $100 million/year capital SMITH LEVELLAND SLAUGHTER LUBBOCK HT BOYD FRAZIER SALT CREEK program PRENTICE YOAKUM OWNBY TERRY LYNN GARZA KENT
Slide 55: New Incremental CO2 Enhanced Oil Production
New Incremental CO2 Enhanced Oil Production Thousand Barrels/Day 40 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 55
Slide 56: Permian – Adding Value to Acquired Assets: Indian Basin
Permian – Adding Value to Acquired Assets Indian Basin Area • Improving lift New systems Mexico Hobbs • Optimizing gathering system Indian Basin Area • 2006 – 8 wells in current Texas producing zones & deeper targets 56
Slide 57: Permian – Adding Value to Acquired Assets: Cogdell
Permian – Adding Value to Acquired Assets Cogdell Area Texas Salt Salt Creek Creek • Active workover KENT KENT program CO. CO. Oxy Field Office • Improve Salt Creek injection performance * Cogdell SCURRY SCURRY • CO2 flood expansion CO. CO. phases at Sharon Sharon 0 10 Sharon Ridge Ridge Miles Ridge
Slide 58: Permian – 2006 Development Summary
Permian – 2006 Development Summary Bravo Bravo Dome Dome Oklahoma • Drill ~320 wells Amarillo Amarillo New • Exit rate impact Mexico – 16,000 - 18,000 barrels/day Indian Lubbock Lubbock Salt Salt Creek Creek Basin Denver Denver City City Unit Unit Area Cogdell Cogdell Hobbs Hobbs Sharon Sharon Ridge
Slide 59: Permian - Production Outlook
Permian - Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 200 175 150 125 100 75 50 25 0 2005 2006 2007 2008 2009 2010 59
Slide 60: California Operations
California Operations NEVADA • Elk Hills Sacramento San Francisco • Long Beach San Joaquin Valley • Vintage Assets Bakersfield Elk Hills Ventura Existing Oxy Properties Long Beach Vintage Property Additions 60
Slide 61: 2005 California Production
2005 California Production Thousand BOE/Day Elk Hills ......……………. 90 Long Beach/Other…...... 26 Vintage Proforma …..… 10 Total ……………..…...... 126 61
Slide 62: California – Elk Hills Profile
California – Elk Hills Profile Existing Oxy Properties Vintage Property Additions • Large resource Kern Front Bakersfield Elk Hills • Reserve growth Ventura • EOR opportunities Long Beach Thums 62
Slide 63: Elk Hills – Oxy Reserves & Production
Elk Hills – Oxy Reserves & Production Million BOE Cumulative Net Production Net Proved Reserves 268 235 203 169 96 132 61 26 505 439 437 441 444 462 399 410 1998 1999 2000 2001 2002 2003 2004 2005 63
Slide 64: Elk Hills – Oxy Net Gas Production
Elk Hills – Oxy Net Gas Production Million Cubic Feet/Day 300 Actual Production 250 Original Forecast 200 150 100 50 0 1998 1999 2000 2001 2002 2003 2004 2005 64
Slide 65: Elk Hills – 2006 Development Plan
Elk Hills – 2006 Development Plan Existing Oxy Properties Vintage Property Additions • Drill 270 wells Kern Front Bakersfield – Shallow oil zone Elk Hills – Shale development • EOR Ventura – Nitrogen flood Long Beach – CO2 pilots Thums 65
Slide 66: Elk Hills – Historical Shale Development
Elk Hills – Historical Shale Development Thousand BOE/Day Recent Success 30 • Reservoir characterization 25 – Increasing target 20 • Stimulation 15 – Expanding development 10 5 • EOR evaluation – Increasing recovery potential 0 98 99 00 01 02 03 04 05 66
Slide 67: Elk Hills – Future Shale Development
Elk Hills – Future Shale Development Thousand BOE/Day 2006 Plan 35 33 • Drill 70+ wells 31 • Workover 180+ wells 29 • Pilot CO2 27 25 06E 07E 08E 09E 10E 11E 67
Slide 68: Elk Hills Nitrogen Injection Project
Elk Hills Nitrogen Injection Project Air Intake Gas and NGL Sales Compressor Oil Sales Cryogenic N2 Rejection Nitrogen Unit Plant Recycled Gas Produced Gas N2 Injection N2 Injection Pushes Extra Oil Out Of The Reservoir N2 Displaces High-Value Natural Gas N22 Gas Natural Gas NET OIL PRODUCTION Addit
Slide 69: Elk Hills CO2 Pilots
Elk Hills CO2 Pilots • Engineering 2004 – Core work – Reservoir modeling • Phase 1 (Q1 2005) – Oil mobilized • Phase 2 (Q2 2005) – Expanded pilot • Analysis ongoing • Sourcing evaluations 69
Slide 70: California – Vintage Assets
California – Vintage Assets Existing Oxy Properties Vintage Property Additions • Vintage Assets – Ventura Basin Kern Front • Large resource Elk Hills Bakersfield • 6 wells and technical work – San Joaquin Basin • Integration • Exploration -- 4 wells Santa Barbara Ventura – Sacramento Valley • Gas ex
Slide 71: California – Long Beach
California – Long Beach • Large resource • Unique operating environment • Drill 55 wells in 2006 • Stable production 71
Slide 72: California - Production Outlook
California - Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 150 125 100 75 50 25 0 2005 2006 2007 2008 2009 2010 72
Slide 73: U.S. Proved Reserves
U.S. Proved Reserves Million BOE 2,026 1,804 1,844 1,755 1,698 2001 2002 2003 2004 2005 Permian California Other 73
Slide 74: U.S. Production Outlook
U.S. Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 400 350 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 Permian California Other US Variance 74
Slide 75: U.S. – 2006 Capital Outlook
U.S. – 2006 Capital Outlook $ Millions Projects Permian …………………………….. 430 California …………………………… 500 Other …………………………….…. 270 Total ……………………………..….….. 1,200 75
Slide 76: Latin America Operations
Latin America Operations Colombia Ecuador • Successful history Peru Bolivia • Resource rich area Argentina • Vintage assets 76
Slide 77: 2005 Latin America Production
2005 Latin America Production Thousand BOE/Day Oxy Ecuador ......…………….. 42 Colombia ….….…………. 32 Vintage Proforma Argentina ……………….. 37 Bolivia …………………… 3 Total ………………………… 114 2006 Outlook………………... 120+ 77
Slide 78: Colombia Operations
Colombia Operations Colombia Covenas CNA Pipeline Ayacucho Venezuela Oleoducto de Colombia Caño Limon Barranca Barranca Arauca Arauca Bucaramanga La Cira Infantas Caricare Vasconia Vasconia 78
Slide 79: Colombia – La Cira Infantas Overview
Colombia – La Cira Infantas Overview • Colombia’s largest oil field – Remaining oil in place • 3 billion+ barrels – Current production • 5,400 Barrels/Day (18% recovery rate) • Phased EOR pilots – Commerciality decision in 2008 • Expected reserves – 80 million barrels net @ full development • Expect
Slide 80: Colombia – La Cira Infantas EOR
Colombia – La Cira Infantas EOR Waterflood Redevelopment • Reactivation of idle wells & workovers • Infill & horizontal drilling • Waterflood redevelopment Steamflood Pilot • Gas & steam flooding Gas Injection & Horizontal Drilling 80
Slide 81: Ecuador
Ecuador Colombia • Business as usual – Meeting production OCP Pipeline targets Block 15 Quito Eden Yuturi • Ongoing discussions Ecuador with government Peru 81
Slide 82: Ecuador Operations
Ecuador Operations Colombia • Net production 42,000 BOE/Day OCP Pipeline Block 15 Quito Eden Yuturi • Development opportunities Ecuador Peru • Exploration opportunities 82
Slide 83: Argentina – Vintage Properties
Argentina – Vintage Properties • Current production Argentina • 37,000 BOE/Day Buenos Aires • San Jorge Basin • 15 of 22 concessions Vintage Properties • 219 million BOE proved reserves (12/31/2005) • Strong track record driven by 3D seismic 83
Slide 84: Argentina - Vintage Production
Argentina - Vintage Production Thousand Barrels/Day 40 35 30 25 20 15 10 5 0 95 96 97 98 99 00 01 02 03 04 05 84
Slide 85: Argentina – San Jorge Basin
Argentina – San Jorge Basin Comodoro Rivadavia Oxy Blocks Argentina Oil Gas Pipelines Proved Undeveloped Reserves Caleta Olivia Koluel Kayke 85
Slide 86: Argentina – Growth
Argentina – Growth • Inventory of 700 drilling locations – 145 wells planned in 2006 – Ramp up in future years • Identified 28 waterflood projects – Additional technology driven opportunities • Exploration – 2 exploration blocks • Consolidation opportunities – Mature areas ripe for consolidation 86
Slide 87: Argentina - Production Outlook
Argentina - Production Outlook Thousand Barrels/Day 70 60 50 40 30 20 10 0 05 06E 07E 08E 09E 10E 11E 87
Slide 88: Latin America Production Outlook
Latin America Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 180 160 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 Minimum Variance 88
Slide 89: Latin America Additional Growth Opportunities
Latin America Additional Growth Opportunities • Colombia – EOR/exploration • 5,000 - 10,000 BOE/Day • Argentina – Development/consolidation • 15,000 - 20,000 BOE/Day 89
Slide 90: Latin America – 2006 Capital Outlook
Latin America – 2006 Capital Outlook $ Millions Major Projects Colombia ……………..…….…….… 130 Ecuador …………………………….. 90 Argentina …………………………… 180 Total …………………………………….. 400 90
Slide 91: 2006 Goals
2006 Goals • Permian – Increase production to 200,000 BOE/Day • Execute development program for acquired assets • Implement CO2 flood projects • Elk Hills – Maintain production @ 90,000 BOE/Day • Increase liquid production to offset gas decline – Continue shale drilling program for future growth – E
Slide 92: 2006 Analyst Meeting
February 23, 2006 Casey Olson President Oxy Oil & Gas – Eastern Hemisphere 2006 Analyst Meeting Part 4
Slide 93: Middle East / North Africa Operations
Middle East / North Africa Operations Libya Qatar UAE Oman Yemen 93
Slide 94: Middle East / North Africa Production
Middle East / North Africa Production Thousand BOE/Day • 2005 ……………………………. 103 • 2006 Outlook ………………….. 122 – Full year of Libya production – Yemen / Vintage 94
Slide 95: Qatar – ISND / ISSD Operations
Qatar – ISND / ISSD Operations • ISND (North Dome) Arabian Gulf – OXY - 1994 – 1994 gross production •• 19,000 19,000 Bbls/Day Bbls/Day ISND – 1998 gross production Doha •• 120,000 120,000 Bbls/Day Bbls/Day Qatar ISSD Mesaieed • ISSD (South Dome) – OXY - 1998 – Developed as ISND satellite Saudi Arab
Slide 96: Oman – Blocks 9 / 27
Oman – Blocks 9 / 27 Block 9 – 30 Years Arabian Gulf Fujairah Gulf of Oman Al Ain Sohar • OXY – 65% / Operator UAE • 2005 Gross Production 9 27 – Oil • 67,000 Bbls/Day Saudi Arabia – Gas • 117,000 MCF/Day Block 27 Oman PDO Block 6 • Recent discovery Arabian Sea • Drilling / development Salalah 96
Slide 97: Oman Block 9 - Gross Operated Production
Oman Block 9 - Gross Operated Production Thousand Barrels/Day 90 80 70 60 50 40 30 20 10 0 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 97
Slide 98: Oxy Yemen Blocks
Oxy Yemen Blocks • Blocks 14 / 10 OXY EXPLORATION OXY PRODUCTION – Masila – 38% OIL FIELD – E. Shabwa – 40.4% VINTAGE BLOCK PIPELINE – 2005 Gross Production • 200,000 b/d East Shabwa • Block: S1 – Vintage – 75% / Operator Ras Isa Masila – Gross Production Sana’a 20 • 2005 - 9,000 b/d Ash Shihr S1 •
Slide 99: Current Growth Projects
Current Growth Projects • UAE / Qatar – Dolphin gas development and pipeline • Oman – Mukhaizna enhanced oil recovery • Libya – Enhanced oil recovery in existing assets 99
Slide 100: UAE / Qatar – Dolphin Project (Phase I)
UAE / Qatar – Dolphin Project (Phase I) • $4 billion gross capital – Oxy share 24.5% • First gas @ year-end 2006 • Estimated Oxy reserves – 300 million BOE • Oxy net production – 55-60,000 BOE/day 100
Slide 101: UAE Gas Supply/Demand Forecast
UAE Gas Supply/Demand Forecast Billion Cubic Feet/Day 14 Supply (includes Dolphin’s 3.2 BCF/Day 12 10 8 6 Demand 4 2 0 2006 2007 2008 2009 2010 2011 2012 2013 101
Slide 102: UAE / Qatar – Dolphin Project (Phase II)
UAE / Qatar – Dolphin Project (Phase II) • Offshore facilities • Gas plant expansion • 1.2 bcf / day • Timeframe – 2010+ 102
Slide 103: Oman – Mukhaizna Project Overview
Oman – Mukhaizna Project Overview Gross Capital - $ 3 Billion • 1800+ wells Arabian Gulf Fujairah • Central processing Gulf of Oman facility Al Ain Sohar • Water treatment plant UAE 9 • Steam generation 27 facilities • Pipelines Saudi Arabia 2006 Work Program & Budget Mukhaizna Oman • $450-$500 MM (
Slide 104: Steam Flood Process
Steam Flood Process Production Well Injection Well Oil & Water Steam Shale Steam Zone Steam Zone Gravity Gravity Drainage Drainage of of Hot Hot Oil Oil Shale
Slide 105: Oman – Mukhaizna Production Targets
Oman – Mukhaizna Production Targets Arabian Gulf Fujairah Gulf of Oman • 2006 – 12,500 b/d Al Ain Sohar UAE 9 27 • 2008 – 50,000 b/d Saudi Arabia • 2011 – 150,000 b/d Mukhaizna Oman PDO Block 6 • 30,000 b/d net Arabian Sea Salalah 105
Slide 106: Mukhaizna Today
Mukhaizna Today 106
Slide 107: Mukhaizna Tomorrow
Mukhaizna Tomorrow 107
Slide 108: Oxy Libya Holdings
Oxy Libya Holdings Tunisia Tripoli 35 36 Benghazi 52 59 EPSA II 53 NC143 EPSA II NC145 NC29 Egypt NC144 103 102 NC74 106 EPSA II 124 NC150 131 Libya New Exploration Acreage 163 Original Exploration Acreage Original Producing Acreage Algeria Niger Chad 108
Slide 109: Scope of Oxy Libya Projects
Scope of Oxy Libya Projects Tunisia Tripoli 35 36 Benghazi 52 59 EPSA II 53 NC143 EPSA II NC145 NC29 Egypt NC144 103 102 NC74 106 EPSA 124 NC150 131 Libya 163 EPSA II/85 Exploration 11 Million Acres EPSA IV Exploration Niger Chad 19 Million Acres 109
Slide 110: Libya – 2005 Bid Rounds
Libya – 2005 Bid Rounds 2-1-2 17-3 17-4 40-3-4 Tunisia Tripoli 35 36 42-1-3 44 42-2-4 Benghazi 52 59 53 EPSA II NC143 EPSA II NC145 EPSA I NC29 Egypt 82-3 82-4 EPSA II NC144 94 81-1 81-2 Concessions 102, 103 102-3 102-4 106 EPSA I NC74 123-3b 123-3a EPSA 85 123-1 123-2 124 121-2 NC150 131 147-3-4 Li
Slide 111: Libya - 2005 Bid Round Comparison
Libya - 2005 Bid Round Comparison • Round 1 – 15 blocks • Round 2 – 26 blocks • Round 1 blocks 4X larger than Round 2 blocks • Minimum work programs equal for blocks in each Round • Lowest production share – Round 1 - 10.8% – Round 2 - 6.8% • 15 winning bids below 10.8% 111
Slide 112: Libya – 2006 Exploration Program
Libya – 2006 Exploration Program • Seismic Tunisia Tripoli 35 36 Benghazi – 10,000 kms EPSA II NC143 52 53 59 EPSA II NC29 NC145 Egypt NC144 102 103 NC74 106 • Drill 6 Wells 124 EPSA II – 5 onshore 131 NC150 Libya – 1 offshore 163 New Exploration Acreage Algeria Original Exploration Acreage Original
Slide 113: Libya – Area 106
Libya – Area 106 2006 Plan • 2D Seismic – 1,709km • 3D Seismic – 750km2 • Drill 2-3 Wells in Q3 Planned Existing 113
Slide 114: Libya – Area 124
Libya – Area 124 2006 Plan • 2D Seismic – 951km • 3D Seismic – 500km2 • Drill 1-2 Wells in Q4 Planned Existing 114
Slide 115: Middle East / North Africa Production Outlook
Middle East / North Africa Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 250 225 200 175 150 125 100 75 50 25 0 2005 2006 2007 2008 2009 2010 Minimum Variance 115
Slide 116: ME / NA – 2006 Capital Outlook
ME / NA – 2006 Capital Outlook $ Millions ME / NA Projects Oman ….260 Dolphin...255 Qatar….. 250 Libya ….. 175 Yemen….160 Total ……………1,100 116
Slide 117: 2006 Goals
2006 Goals • Increase base production • Dolphin “First Gas” – Average 45-50,000+/- net BOE/Day in 2007 • Mukhaizna development schedule • Significant exploration success – Libya • Multiple new development projects 117
Slide 118: Middle East / North Africa New Project Profile
Middle East / North Africa New Project Profile (Not Included in 2006 – 2010 Production Outlook) • Incremental growth opportunities – Field Development (EOR - IOR) • Libya • Oman • UAE • Algeria • Qatar – Exploration – Libya 118
Slide 119: Middle East / North Africa New Project Profile
Middle East / North Africa New Project Profile (Not Included in2006 – 2010 Production Outlook) • 2 - 4 significant new projects • Target 20% ROR @ moderate oil prices 119
Slide 120: Middle East / North Africa New Project Profile
Middle East / North Africa New Project Profile (Not Included in 2006 – 2010 Production Outlook) • Exposure to additional production – Full field development • 100, 000 - 125, 000 net BOE/Day ( 2010+) – Net Oxy 2010 exit rate • 50, 000 - 75, 000 net BOE/Day – Exploration • 20, 000 - 40,000 net BOE/Da
Slide 121: 2006 Analyst Meeting
February 23, 2006 Stephen I. Chazen Senior Executive Vice President & Chief Financial Officer 2006 Analyst Meeting Part 5
Slide 122: Focus on Top Quartile Returns
Focus on Top Quartile Returns Key Drivers • Existing properties • Acquisitions • New projects • Capital structure management 122
Slide 123: U.S. Oil & Gas Financial Overview
U.S. Oil & Gas Financial Overview Capital Net WTI Employed Income Return ($/Barrel) ($ Billion) ($ Million) (%) 2005 56.56 10.64 2.58 26 2004 41.40 8.88 1.80 20 2003 31.03 8.91 1.40 16 2002 26.08 8.71 .83 10 2001 25.97 8.71 1.45 17 123
Slide 124: International Oil & Gas Financial Overview
International Oil & Gas Financial Overview Capital Net WTI Employed Income Return ($/Barrel) ($ Billion) ($ Million) (%) 2005 56.56 3.93 1.38 40 2004 41.40 2.96 0.98 37 2003 31.03 2.34 0.65 30 2002 26.08 1.98 0.62 35 2001 25.97 1.52 0.35 23 124
Slide 125: 2006-2010 Capital Program
2006-2010 Capital Program • Based on current holdings only • 2006 peak year • Significant investment for growth during next 5 years 125
Slide 126: Capital Expenditures (2005-2010)
Capital Expenditures (2005-2010) $ Million 2005 2006 2007 2008 2009 2010 US 957 1,200 1,200 1,100 1,000 1,000 International 1,131 1,400 1,200 1,100 900 900 Subtotal 2,088 2,600 2,400 2,200 1,900 1,900 Exploration 160 300 300 300 300 300 Total Oil & Gas 2,248 2,900 2,700 2,500 2,200 2,100 Chemicals 1
Slide 127: Oil & Gas Capital Expenditures (2006-2010)
Oil & Gas Capital Expenditures (2006-2010) $ Million 2006 2007 2008 2009 2010 Base 2,070 1, 950 1,765 1,460 1,465 Growth 830 750 735 740 635 Total 2,900 2,700 2,500 2,200 2,100 127
Slide 128: Oil & Gas Growth Capital (2006-2010)
Oil & Gas Growth Capital (2006-2010) $ Million 2006 2007 2008 2009 2010 Exploration 300 300 300 300 300 Argentina 100 150 100 75 75 Dolphin 255 90 160 315 210 Mukhaizna 175 210 175 50 50 Total 830 750 735 740 635 128
Slide 129: 2001–2004 Exploration Expense
2001–2004 Exploration Expense $/BOE OXY $0.93 Industry Average E&P $1.26 Major Integrated $0.65 129
Slide 130: Exploration Expense
Exploration Expense $/BOE 2005 $1.63 2006 $1.22 2007 $1.14 2008 $1.09 2009 $1.08 2010 $1.05 130
Slide 131: Worldwide Production Outlook
Worldwide Production Outlook • Does not depend on exploration success • Does not include future acquisitions • Does not include new EOR/development projects • Range reflects timing differences 131
Slide 132: Historic Worldwide Production
Historic Worldwide Production Thousand Barrels/Day 600 500 3 % C AGR 5 . 400 300 200 100 0 1997 1998 1999 2000 2001 2002 2003 2004 132
Slide 133: Worldwide Production Outlook
Worldwide Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 800 700 600 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 US Eastern Hemisphere Latin America Variance 133
Slide 134: Worldwide Production Outlook
Worldwide Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 800 785 755 760 720 700 670 700 700 700 680 600 650 500 568 7 .6% = an ce 400 ri Va % = 4.6 300 i m um Min 200 100 0 2005 2006 2007 2008 2009 2010 Minimum Variance 134
Slide 135: Worldwide Production Outlook
Worldwide Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 800 700 600 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 US Eastern Hemisphere Latin America Mature/Non-Operated Variance 135
Slide 136: Oil Price Sensitivity
Oil Price Sensitivity PSC WTI Price Production Impact ($/Barrel) (Barrels/Day) $40 + 10,000 $60 - 8,000 136
Slide 137: Acquisitions Must Be Accretive To Value
Acquisitions Must Be Accretive To Value • Acquire assets based on upside potential – Permian (2001-2005) • Acquired 1,163 MBOE proved reserves • Extensions, discoveries & improved recovery – Added 341 MBOE proved reserves – Elk Hills (1998-2005) • Acquired 425 MBOE proved reserves • Extensions, disc
Slide 138: Reserve Additions
Reserve Additions Million BOE Improved Recovery 2001 143 2002 142 2003 102 2004 121 2005 139 See Appendix for GAAP reconciliation. 138
Slide 139: Future Acquisitions
Future Acquisitions • Expect to acquire additional reserves / production – Permian – California 139
Slide 140: Permian Opportunities
Permian Opportunities • 40,000 owners • History of annual acquisitions 140
Slide 141: Top Permian Oil Producers
Top 10 Permian Oil Producers 195 2005 Gross Operated Production (Thousand BOE/Day) 74 56 30 30 26 25 24 19 17 OXY CVX KMI APA AHC COP XTO PDX XOM DVN Source: 2005 IHS Energy Data. 141
Slide 142: California Operations
California Operations • Relatively concentrated • Relatively few buyers 142
Slide 143: California Operated Production
California Operated Production 230 2004 210 (Thousand BOE/Day) 176 50 17 10 10 8 7 5 Aera CVX OXY Plains Berry Seneca Rosetta Venoco Breitburn XOM 143
Slide 144: Return Targets
Return Targets* New Projects & Acquisitions Domestic …………………... 15+% International ………………. 20+% * Assumes moderate product prices 144
Slide 145: 5-Year U.S. Acquisition Target
5-Year U.S. Acquisition Target Thousand BOE/Day 2001-2005 actual …………… 52 2006-2010 target ……………. 35 – 50 145
Slide 146: Vintage Status
Vintage Status • Assets held for sale – 75 confidentiality agreements in place – Production • 19,000 BOE/Day • Not included in production outlook – Reserves • 72 million BOE – Second Quarter closing target 146
Slide 147: Financial Policy
Financial Policy • Priority cash flow uses – Reinvestment – Dividends & share repurchases – Debt reduction 147
Slide 148: Gross Cash Flow Uses
Gross Cash Flow Uses Percentage of Total 2003 2004 2005 Capital 43 43 42 Debt Reduction & Cash 26 42 30 Acquisitions 19 5 20 Dividends 12 10 8 100 100 100 148
Slide 149: Why Debt Will Remain Low
Why Debt Will Remain Low • Taxes • “A” Rating International Projects • Flexibility • Large projects are multi-year 149
Slide 150: Moody's Debt – Proved Reserves Ratio
Moody’s Debt – Proved Reserves Ratio Debt/ Proved Developed Moody’s Rating Reserves Aaa <$1.00 Aa $1.00 – $2.00 A $2.00 - $3.00 Baa $3.00 - $5.00 Pro-Forma Oxy (12/31/05) $1.62 See Appendix for GAAP reconciliation. 150
Slide 151: Dividend Policy
Dividend Policy • Annual payout rates/common share 2002 $1.00 2003 $1.04 2004 $1.10 2005 $1.29 2006 $1.44 • Dividend policy evaluated at least annually • Reflects management’s view of long-term free cash flow outlook at significantly lower oil prices 151
Slide 152: Share Repurchases
Share Repurchases • Initial repurchase – 10 million shares • Additional repurchases after Vintage asset sales Shares Outstanding Millions Actual Year-end 2005 402 Pro-forma Vintage Acq. 430 Target 400 • Additional repurchases possible from free cash flow • Purpose of share repurchase – Increase valu
Slide 153: 2006 Analyst Meeting
February 23, 2006 Dr. Ray R. Irani Chairman of the Board, President & Chief Executive Officer 2006 Analyst Meeting Part 6
Slide 154: Worldwide Production Outlook
Worldwide Production Outlook Thousand Barrels/Day (Assumes $50 WTI Price) 800 785 755 760 720 700 670 700 700 700 680 600 650 500 568 % = 7.6 400 iance r Va .6% 4 300 u m= im Min 200 100 0 2005 2006 2007 2008 2009 2010 Minimum Variance 154
Slide 155: 2010 Production Range
2010 Production Range • Future growth opportunities – Libya • EOR projects • Exploration – Other large international projects – Permian Basin & California acquisitions • Swap/sell mature non-operated properties 155
Slide 156: Additional Growth Opportunities
Additional Growth Opportunities Thousand BOE/Day Base Production ………………………… 700 - 785 New EOR/development projects Middle East/North Africa ………….... 50 - 75 Latin America…………….................. 20 - 30 Exploration ………………………………. 20 - 40 Domestic acquisitions ………………….. 35 - 50 Mature non-operated …………
Slide 157: Creating Shareholder Value
Creating Shareholder Value • New projects must meet expectations for good returns • Compare new projects & asset acquisitions with share repurchases • Make decisions based on creating long-term value for shareholders 157
Slide 158: Focus on Key Metrics
Focus on Key Metrics • Focus on Top Quartile performance – Continue to improve quality of assets – Optimize profit/BOE – Optimize free cash flow/BOE – Maintain top quartile finding & development costs – Grow reserves – Maintain “A” credit rating – Keep ROE & ROCE in top quartile – Generate top quart
Slide 159: Occidental Petroleum Corporation
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 results to