Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Bernstein Strategic Decisions Conference 2015
38 slides from Occidental Petroleum's conference presentation, May 28, 2015
Slide 1: Occidental Petroleum Corporation
OCCIDENTAL PETROLEUM CORPORATION Stephen I. Chazen President & CEO Bernstein Strategic Decisions Conference 2015 May 28, 2015
Slide 2: Key Messages & Strategy
Key Messages & Strategy Overriding Goal is to Maximize Total Shareholder Return • We believe this can be achieved through a combination of: • Oil and gas production growth of 5% to 8% per year over the long-term; − Executing on our capital program with a focus on growing our U.S. oil production • Al
Slide 3: Why own Oxy?
Why own Oxy? Large Integrated Majors Independent E&Ps Company Market Cap ($B) Company Market Cap ($B) XOM $361 COP $80 CVX $197 Oxy EOG $49 RDS $195 Uniquely APC $44 BP $131 Positioned APA $23 TOT $125 PXD $23 ENI $66 MRO $19 Characteristics Characteristics • Low or no growth • Generally higher grow
Slide 4: Medium-Term Objectives
Medium-Term Objectives CASH FLOW GROWTH Permian Resources production growth Al Hosn project start-up Gradual Commodity price recovery Cash Flow Neutral after capital spending and COST SAVINGS dividend outlays by 4Q 2015 at around $60/bbl oil ~$400 million of captured cost savings year-to-dat
Slide 5: Succession Plan Announced
Succession Plan Announced • Oxy’s board of directors has approved a CEO succession plan and promoted Vicki A. Hollub to Senior Executive Vice President of Occidental and President – Oxy Oil and Gas, responsible for operations in the United States, Middle East region and Latin America. • The board pl
Slide 6: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Share Repurchase 5. Acquisitions 6
Slide 7: History Of Returning Cash To Shareholders
History Of Returning Cash To Shareholders ($ in Billions) Share Period ending 2014 Cash Dividends Repurchases Combined 3 – years $5.9 $4.0 $9.9 5 – years $8.5 $4.4 $12.9 10 – years $12.4 $8.5 $20.9 1Q – 2015 $0.5 $0.2 $0.7 – Additionally, over the 10 years ending 2014: • We reinvested $45 billion of
Slide 8: Confidence In Cash Flow = Dividend Increase
Confidence In Cash Flow = Dividend Increase • Raised the dividend by 4+%, the 13th year of consecutive increases. • Expect to be able to continue to grow our dividend for many years into the future. – The new ethylene cracker which comes on in 2017 will provide a substantial boost in our distributab
Slide 9: Delivering Consistent Dividend Growth
Delivering Consistent Dividend Growth ($/share) $22.00 $20.39 $20.00 $18.00 $17.39 $16.00 $14.51 $14.00 $11.95 $12.00 $9.79 $10.00 $7.95 $8.00 $6.48 $6.00 $5.16 $3.96 $4.00 $3.02 $2.88 $3.00 $2.22 $2.56 $1.84 $2.16 $2.00 $1.57 $1.47 $1.02 $1.21 $1.31 $0.50 $0.65 $0.80 $0.94 $0.55 $0.50 $0.52 $0.00 2
Slide 10: Active Share Repurchase Program
Active Share Repurchase Program • Over the last 5 quarters we have repurchased 28.4 million shares of our stock and have ~69 million shares remaining under our current program authorization. • We will continue to repurchase shares subject to the stock price and market conditions and expect to ultima
Slide 11: Oxy Runs A Focused Business
Oxy Runs A Focused Business Oil and Gas Focus Areas United States • Leading position OxyChem in the Permian Basin. High FCF, moderate • Permian Resources growth business. is a growth driver. Oxy Midstream • Al Hosn Project, Integrated pipeline and MENA Oman and Qatar. marketing business to • Additio
Slide 12: Oxy is Primarily an Oil Producer
Oxy is Primarily an Oil Producer Oil & Gas Production First Quarter 2015 (Million barrels of oil equivalent) By Geography By Commodity 5.6 10% 29.3 14.1 38.3 28.7 50% 24% 66% 50% U.S. International Oil NGLs Gas 12
Slide 13: Delivering on Production Growth
Delivering on Production Growth • U.S. oil production grew 14% in 1Q15 on a year-over-year basis.* • Increased Permian Resources production guidance to 105 - 108 MBOED. • Al Hosn expected to average 25 MBOED in 2Q15 and 35 MBOED for FY 2015. • In the U.S., we expect oil production growth of 8% this
Slide 14: 2015E Capital Budget Down Sharply vs. 2014
2015E Capital Budget Down Sharply vs. 2014 33% decline in 2015 capital budget Domestic O&G Domestic O&G Chemicals 42% Chemicals 43% U.S. 6% 10% Midstream Permian 9% Resources U.S. Permian Exploration 22% Midstream Resources 6% 10% 30% Exploration 4% Other International Domestic International 37% 20%
Slide 15: Capital Efficiency Continues to Improve
Capital Efficiency Continues to Improve Organic F&D Costs* • Through the success of our drilling ($ / BOE) U.S. Total program and capital efficiency initiatives, we lowered our F&D costs over recent $21.90 $20.48 $20.24 years. $18.66 $16.89 • We expect our DD&A expense to be ~$15 / BOE in 2015, a de
Slide 16: Capital Spending Ramps Down Through Year
Capital Spending Ramps Down Through Year • Total company capital expenditures for 2015 Capital Budget the 1Q15 were $1.7 bn and we expect our quarterly expenditures to continue to ramp $1.7 bn down through the year. • Based on our lower pace of spending in Permian 1Q15 and continued cost efficiency
Slide 17: Capital Program 2015 Evolution
Capital Program 2015 Evolution 2015 Capital Budget and Domestic Drilling Rigs • As we capture price savings from suppliers and improve efficiencies, 100% Capital we are able to do more with less Budget spending. Domestic • Given our large acreage position and 75% Drilling Rigs deep inventory, we hav
Slide 18: Permian Basin Is The Core Domestic Asset
Permian Basin Is The Core Domestic Asset • Largest oil producer and operator in Permian Basin. • Significant investments in infrastructure to support the upstream provide low operating costs, advantaged realized prices and competitive advantages. • ~60% of Oxy’s Permian oil production is from CO2 re
Slide 19: Oxy is the Largest Permian Basin Producer
Oxy is the Largest Permian Basin Producer Cumulative Total Operated Production, Thousand BOEPD % of total 2.3 million BOEPD Source: IHS Energy Feb and Mar 2014, 6 MCF/BOE excluding estimated CO2 production. 19
Slide 20: Permian Resources Drilling Inventory
Permian Resources Drilling Inventory Lowering economic hurdle point by improving well productivity, time to market and costs 100% Drilling Inventory (~44 yrs) 1. Investing in characterization Based on Q4 Costs and optimization to improve 81% well productivity. (~ 36 yrs) Avalon Better Well Productiv
Slide 21: Permian Resources Summary
Permian Resources Summary Increased 2015 production guidance from 100 MBOED to 105 - 108 MBOED Production (MBOED) Average Rig Count Horizontal Vertical 4 5 4 7 25 21 17 19 13 2Q14 3Q14 4Q14 1Q15 Remainder 2015 Wells Drilled / Online 120 107 Drilled Online 98 150 84 126 75 57 64 48 87 85 86 75 71 70
Slide 22: Permian Resources Summary: Well Count
Permian Resources Summary Achieved 17% increase in BOED and 22% increase in BOPD vs. Q414 1Q 2015 WELL ACTIVITY 126 Wells Online Total Production 1Q 2015 (BOED) 98,000 120 Oil Production (BOPD) 62,000 vs. 4Q-2014 22% Increase 100 vs. 1Q-2014 68% Increase Well Count 80 Capital Expenditures $728MM 60
Slide 23: Step Change in Efficiency – Total Time To Market Is Down 50%
Step Change in Efficiency – Our Total Time To Market Is Down 50% • Faster drilling • Less idle time • More frac stages per day • Integrated planning (# of Days) • Infrastructure investments in water handling, storage, gathering and takeaway • Step change in capital efficiency should allow for increa
Slide 24: Domestic Drilling Rig Evolution For 2015
Domestic Drilling Rig Evolution For 2015 • Some of the captured cost savings have been re-deployed into higher activity levels than planned for the remainder of 2015. 2015E Domestic Drilling Rigs 35 31 31 30 25 20 15 14 13 13 11 10 10 9 5 0 1Q15 2Q15E 3Q15E 4Q15E January Plan Current Outlook 24
Slide 25: Move to Manufacturing Mode Has Significantly Reduced Well Costs
Move to Manufacturing Mode Has Significantly Reduced Well Costs Manufacturing Mode Drilling / Completions WELL COST DRILL DAYS Delaware WC-A 4,500‘ HZ Delaware WC-A 4,500’ $12.0 $10.9 50 45 43 $10.0 $8.3 40 GROSS WELL COST $MM $8.0 $5.6 35 31 $6.5 30 26 $6.0 $4.7 25 $3.0 20 $4.0 16 14 15 $5.3 $2.0 $
Slide 26: Move to Manufacturing Mode Has Significantly Reduced Well Costs
Move to Manufacturing Mode Has Significantly Reduced Well Costs Manufacturing Mode Drilling / Completions WELL COST WELL COST SCR Spraberry 10,000‘ HZ New Mexico Bone Spring HZ $10.0 $9.7 $8.0 $7.9 $7.0 $6.6 $8.0 $7.2 GROSS WELL COST $MM $6.0 $5.7 GROSS WELL COST $MM $5.7 $5.5 $6.0 $5.0 $2.9 $4.6 $4
Slide 27: Permian – Delaware Basin Opportunities
Permian – Delaware Basin Opportunities Delaware Basin OXY Acreage Benches • Majority of Wolfcamp locations are Bell Canyon Cherry Canyon in our operated areas of Reeves Brushy Canyon County. Avalon 1st Bone Spring 2nd Bone Spring • Current Bone Spring locations are 3rd Bone Spring located primarily
Slide 28: Permian – Midland Basin Opportunities
Permian – Midland Basin Opportunities OXY Acreage Midland Basin Benches Yates Grayburg • Majority of Wolfcamp locations San Andres are in our operated areas of Clear Fork Upper Spraberry Martin, Midland and Andrews Middle Spraberry Counties. Lower Spraberry A Wolfcamp B C • Wolfcamp A & B and Sprabe
Slide 29: Permian Resources Production Guidance
Permian Resources Production Guidance • Continue to execute focused development strategy PRODUCTION (MBOED) • For the remainder of 2015: − Operate average of 13 rigs (higher than planned) − Expect to drill 150 wells − Continue to pursue step changes in well productivity and cost structure 120 107 −
Slide 30: Permian EOR – Consistent Generator of Cash
Permian EOR – Consistent Generator of Cash • ~150,000 BOEPD of low cost CO2 Supply and Processing production. • Most active and largest EOR operator in the Permian Basin with 30 active floods. • Over 40 years of successful CO2 flooding experience. • High working interest in over 350 properties. • Op
Slide 31: Permian EOR Has A Low Cost Structure
Permian EOR Has A Low Cost Structure Permian EOR can operate at cash costs as low as $22 per BOE 2015 Permian EOR Cost Structure 2015 Permian EOR Cost Structure $55 WTI, $3.00 NYMEX $35 WTI, $2.00 NYMEX $35 $35 $30 $30 $2.7 $25 $4.0 $25 $4.7 $1.8 $20 $20 $ / BOE $ / BOE $3.2 $4.7 $15 $2.2 $15 $4.0 $
Slide 32: Oxy Permian Gathering / Takeaway
Oxy Permian Gathering / Takeaway Cushing Centurion Central/ SENM/ Midland Basins DE Basins Basin Slaughter Colorado City Seaway WTG Midland- BridgeTex South LongHorn Houston Cactus 2Q15 Owned 3rd Party Corpus Christi BridgeTex Started Up in Late Sept 2014 32
Slide 33: Long-term Growth Investments
Long-term Growth Investments • Some of the longer lead time investments we have been making over the past couple of years will start contributing to our results this year. – Continued preferential access and commitment to the BridgeTex pipeline which started in late September will improve our Permia
Slide 34: Al Hosn Gas Project Continues To Ramp Up
Al Hosn Gas Project Continues To Ramp Up • We completed the Al Hosn gas project, on budget and on time. • It is currently producing ~25,000 BOED (net to Oxy) and will ramp up through the year. • FY 2015 volumes from Al Hosn should average ~35,000 BOED (net to Oxy) with more than 40% of production co
Slide 35: Future Growth – Chemicals
Future Growth – Chemicals OxyChem Ingleside Ethylene Cracker • We have formed a 50/50 JV with Mexichem to build a world scale ethylene cracker at the OxyChem plant in Ingleside, TX. • Construction on the Ingleside cracker project began mid-2014 with the facilities to become commercially operational
Slide 36: Future Growth – Ingleside Energy Center
Future Growth – Ingleside Energy Center OxyChem Plant • Terminaling - LPG: 60-100 MB/d (2Q 2015) - Crude/Condensate: 200-300 MB/d (1H 2016) - Storage: 2 - 4 MM BBLS • Future processing options Provides flexibility and avoids congested ship channel 36
Slide 37: Cautionary Statement
Cautionary Statement 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. Words such as "estimate," "project," "predict," "will," "would," "shoul
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