Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Shareholder Meeting (May 2006)
35 slides from Occidental Petroleum's shareholder meeting presentation, May 5, 2006
Slide 1: 2005 review and outlook
EXHIBIT 99.1 By almost every measure, 2005 was an excellent year for Oxy. For the next few minutes, I want to review the highlights that made 2005 the best year in Oxy’s history and give a preview of the steps we’re taking to enhance future shareholder value. 1
Slide 2: 2005 – Record Results
2005 – Record Results Record High Reported Net Income $5.3 Billion Record High Operating Cash Flow $5.3 Billion Record Low Debt $3.0 Billion Record High Stockholders’ Equity $15.0 Billion Record High Oil & Gas Production 207 Million BOE Record High Year-End Proved Oil & Gas Reserves 2.7 Billion BOE
Slide 3: 2005 Profitability
2005 Profitability $/BOE 19.45 18.09 16.3315.78 13.8613.5613.52 13.38 13.35 12.90 11.84 7.96 OXY APC APA MRO DVN ECA XOM CVX COP KMG BP AHC For the seventh consecutive year, Oxy led the industry in profits per barrel. Our 2005 profit of $19.45 per barrel was 42 percent higher than the average among
Slide 4: 2005 Cash Flow
2005 Cash Flow $/BOE 16.40 12.00 10.8710.62 10.33 9.42 7.82 7.26 7.10 5.02 3.03 1.15 OXY MRO XOM COP CVX BP APC DVN KMG APA AHC ECA Oxy also has led the industry for seven straight years in cash flow per barrel. Oxy’s cash flow of $16.40 per barrel was more than double the industry average of $7.69.
Slide 5: Oxy Net Income & Oil Prices
Oxy Net Income & Oil Prices Net Income 5,281 ($ Millions) Average WTI Price ($/Barrel) 2,568 1,527 1,154 989 56.56 31.03 41.40 25.97 26.08 2001 2002 2003 2004 2005 Oxy’s net income in 2005, as shown in the green columns, was five times higher than in 2001. As our income grew by a factor of 5, the go
Slide 6: Total Debt
Total Debt $ Millions 6,354 4,890 4,759 4,570 3,905 3,019 2000 2001 2002 2003 2004 2005 As our net income and cash flow were rising, we also made steady progress in reducing debt. As you can see here, Oxy’s total debt declined from more than $6 billion at the end of 2000 to $3 billion at the end of
Slide 7: Common Shareholders’ Equity
Common Shareholders’ Equity $ Millions 15,032 10,550 Mukhaizna, Oman 7,929 6,318 5,634 4,774 2000 2001 2002 2003 2004 2005 Over that same 2000 to 2005 period, shareholders’ equity more than tripled to $15 billion. 7
Slide 8: 2003-2005 Average Return on Equity
2003-2005 Average Return on Equity Percentage 35.0 31.4 29.3 26.3 24.6 24.2 24.1 22.1 21.0 20.6 20.1 17.2 KMG OXY XOM CVX ECA MRO APA COP BP DVN APC AHC We focus on generating consistently high returns on equity because this drives superior shareholder returns. As this chart shows, Oxy’s three-year
Slide 9: Oxy Yearend Closing Stock Price
Oxy Yearend Closing Stock Price $/Share 79.88 58.36 Dolphin Project United Arab Emirates 42.24 24.25 26.53 28.45 21.63 16.88 1998 1999 2000 2001 2002 2003 2004 2005 2006 Our strong performance also is reflected in our rising stock price. Oxy’s stock price has nearly tripled from year-end 2002 throug
Slide 10: 2001 - 2005 Total Return
2001 - 2005 Total Return Percentage 279 Eden Yuturí 157 133 122 110 89 59 59 57 45 38 OXY MRO APA COP DVN AHC CVX BP KMG XOM APC From your standpoint as investors, the most important performance indicator is the total return to shareholders. All the oil companies have benefited from higher prices, b
Slide 11: Comparative Total Returns
Comparative Total Returns Oxy $400 Peer Group $379 S&P 500 $300 $200 $229 $100 $103 $0 2000 2001 2002 2003 2004 2005 This chart compares Oxy’s cumulative total return with the cumulative total return of the S&P 500 Index and our Proxy peer group. The peer group includes Amerada Hess, Anadarko, Apach
Slide 12: Oxy Shareholders (3/31/06)
Oxy Shareholders (3/31/06) Million %/ %/ Shares Total Cumulative Top 10 Institutional Shareholders: BZW Barclays Global Investors 25,750 6.0 6.0 Barrow Hanley Mewhinney & Strauss 20,000 4.7 10.7 Davis Select Advisers 15,900 3.7 14.4 State Street Bank & Trust 14,500 3.4 17.8 Wellington Management/Van
Slide 13: 2005 Highlights – Texas & New Mexico
2005 Highlights – Texas & New Mexico We enhanced our industry-leading position in the Permian Basin in Texas and New Mexico through a series of acquisitions. These acquisitions have further strengthened Oxy’s dominant position in this important producing area. Our Permian operations are the largest
Slide 14: Top 10 Texas Oil Producers
Top 10 Texas Oil Producers 2005 Gross Operated Production (Thousand Barrels/Day) 174.5 56.7 56.5 30.7 29.6 23.6 22.5 21.9 20.4 15.5 OXY CVX KMI APA XOM PXD AHC XTO APC COP As you can see, Oxy is by far the largest oil producer in Texas, with production three times greater than Chevron which is the n
Slide 15: 2005 Highlights – U.S.
2005 Highlights – U.S. Our California assets, which are expected to produce 125,000 equivalent barrels per day this year, together with our Permian operations, comprise the core of Oxy’s domestic oil and gas business that will continue to generate income and cash for many years to come. 15
Slide 16: 2005 Highlights – Libya
2005 Highlights – Libya Let’s now turn to Libya. Since it’s difficult to grasp the magnitude of geographic areas outlined on a map, we thought we’d give you a little help by superimposing a map of Texas over a map of Libya. The purple blocks show Oxy’s historic producing areas that we operated from
Slide 17: 2005 Highlights – Oman
2005 Highlights – Oman Last year, we also were awarded a contract by the Government of Oman to operate the giant Mukhaizna oil field. It took 3 to 4 years of technical work and persistent negotiation to convince the Government that replacing the previous operator would significantly expand and accel
Slide 18: 2005 Highlights – Argentina
2005 Highlights – Argentina Our acquisition of Vintage Petroleum has given Oxy a sizeable operation in Argentina that has significant growth potential. We are especially excited about the opportunities to significantly increase production, particularly in our properties in the southern part of the c
Slide 19: Worldwide Proved Reserves
Worldwide Proved Reserves Billion BOE 2.71 2.47 2.53 2.24 2.31 2.17 1.54 1.47 1.39 1.43 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 When a company achieves these kind of results, investors want to know if and how we can sustain that high level of performance in the future. I’m confident we can
Slide 20: Oil & Gas Production Growth
Oil & Gas Production Growth Thousand 850 BOE/Day 740 568 Yemen 2005 2010 2010 Minimum Target After a careful review of our assets, we expect to grow our production by an average of about 6 percent per year through 2010. That rate of growth would increase in our base production to a MINIMUM of 740,00
Slide 21: Chemicals – Cash Flow
Chemicals – Cash Flow $ Millions 855 505 305 245 180 2001 2002 2003 2004 2005 Let’s turn briefly to our chemical operations which also had an excellent year in 2005. The primary mission of our chemical business is to generate cash flow in excess of capital expenditures. Over the past 5 years, our ch
Slide 22: Chemicals Profit Margins
Chemicals Profit Margins 2005 Operating Profits as 16.7 Percent of 14.0 Sales 13.9 13.0 13.4 11.6 11.8 11.2 8.0 7.6 8.2 7.2 2.9 Our strategy for managing our chemical business is similar to our strategy for managing our oil and gas operations. We focus on optimizing profitability and cash flow on a
Slide 23: Q1 2005 & 2006 Comparison
Q1 2005 & 2006 Comparison Q1 2005 Q1 2006 Change Oil & Gas Production 565,000 BOE/Day 636,000 BOE/Day + 13% Oil & Gas Income $1.35 Billion $2.00 Billion + 48% Chemicals Income $214 Million $248 Million + 16% We recently announced our financial and operational results for this year’s first quarter. W
Slide 24: Q1 2005 & 2006 Comparison
Q1 2005 & 2006 Comparison Q1 2005 Q1 2006 Change Net Income $846 Million $1.23 Billion + 45% Earnings/Share $2.11/Share $2.90/Share + 37% On a consolidated basis, net income compared to last year’s first quarter is up by 45 percent to more than $1.2 billion. Earnings per share are up by 37 percent t
Slide 25: Fortune Ranking
Fortune Ranking Our performance is resulting in additional recognition by the market. In Fortune magazine’s annual edition profiling America’s 500 largest companies, Oxy was number one among the 21 companies within the mining and oil producing category based on revenues and profits. 25
Slide 26: Business Week Ranking
Business Week Ranking Criteria 1 & 3 Year Total Return Sales Growth Profit Growth Profit Margins Return on Equity Debt to Capital Ratio As many of you know, each April, BusinessWeek publishes its annual survey of 50 “Top Performers” among the S&P 500 companies. BusinessWeek ranks the companies based
Slide 27: Business Week Ranking
Business Week Ranking Based on these criteria, we’re pleased to report that Oxy ranked sixth overall for the second year in a row. Oxy is the ONLY company ranked in the top ten both years - as well as in 3 of the last 5 years. Furthermore, Oxy is the ONLY oil company ranked in the top ten. Only two
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Slide 29: Forward-looking statements
Portions of this presentation contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Forward-looking statements are generally accompanied by words such as “estimate”, “project”,
Slide 30: Worldwide Production and Proved Reserve
Worldwide Production and Proved Reserve Reconciliation to Generally Accepted Accounting Principles (GAAP) Consolidated Subsidiaries Other Interests Worldwide MBBL MMCF MBBL MMCF MBBL MMCF OIL GAS BOE OIL GAS BOE OIL GAS BOE PRODUCTION PER DAY For the Quarter Ended Quarter 1 - 2006 492 708 610 21 28
Slide 31: Oil & Gas - Profitability
Oil & Gas - Profitability Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Year Ended December 31, 2005 ($ Millions, Except$/BOE) Consolidated Other Subsidiaries Interests Worldwide Revenues 10,069 286 10,355 Production costs 1,724 203 1,927 Exploration expenses 337 (2) 335
Slide 32: Oil & Gas - Cash Flow
Oil & Gas - Cash Flow Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Year Ended December 31, 2005 ($ Millions, Except$/BOE) Occidental Petroleum Consolidated Statement of Cash Flows 2005 Cash flow from operating activities 5,337 Cash flow from investing activities (3,161)
Slide 33: Chemicals Free Cash Flow
Chemicals Free Cash Flow Reconciliation to Generally Accepted Accounting Principles (GAAP) ($ Millions) 2001 2002 2003 2004 2005 Occidental Petroleum Consolidated Statement of Cash Flows Cash flow from operating activities 2,566 2,100 3,074 3,878 5,337 Cash flow from investing activities (651) (1,69
Slide 34: Chemical - Percent of Sales
Chemical - Percent of Sales Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Year Ended December 31, 2005 ($ Millions, Except % of Sales) Sales Oil and Gas 10,416 Chemical 4,641 Other 151 15,208 Chemicals $ AMT % of Sales Segment income 607 Less: significant items affecting
Slide 35: Worldwide Production and Proved Reserve Additions
Worldwide Production and Proved Reserve Additions Million BOE Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Year Ended December 31, 2005 Consolidated Subsidiaries Other Interests Worldwide OIL GAS BOE OIL GAS BOE OIL GAS BOE PRODUCTION BOE/D United States 253 553 345 - -
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