Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q1 2012 Earnings Presentation
35 slides from Occidental Petroleum's earnings presentation, Apr 26, 2012
Slide 1: First Quarter 2012 Earnings Conference Call
Occidental Petroleum Corporation First Quarter 2012 Earnings Conference Call April 26, 2012
Slide 2: First Quarter 2012 Earnings – Highlights
First Quarter 2012 Earnings – Highlights • Net Income - $1.6 Billion in 1Q12 vs. $1.5 Billion in 1Q11 – EPS $1.92 (diluted) vs. $1.90 (diluted) in 1Q11. • Several factors lowered earnings during 1Q12 by about 5 cents per diluted share, including: – higher insurgent activity in Colombia resulting in
Slide 3: Oil & Gas Segment Variance Analysis – 1Q12 vs. 1Q11
First Quarter 2012 Earnings – Oil & Gas Segment Variance Analysis – 1Q12 vs. 1Q11 • Core Results for 1Q12 of $2.5 B vs. $2.5 B in 1Q11 ($ in millions) * Includes higher foreign exchange losses and higher ad valorem taxes 3
Slide 4: Oil & Gas Production
First Quarter 2012 Earnings – Oil & Gas Production 1Q12 1Q11 Oil and Gas Production Volumes (mboe/d) 755 730 • 1Q12 production of 755 mboe/d was the highest in the Company’s history and was up over 3% from 1Q11. • We are the largest liquids producer in the US lower 48 states and grew our oil product
Slide 5: Oil & Gas Production
First Quarter 2012 Earnings – Oil & Gas Production • In the Middle East region: – Libya production was 20 mb/d, which included additional entitlements related to the post-2011 civil-unrest period. – In Iraq, we produced 5 mb/d, a decrease of 4 mb/d from 4Q11 volumes. The lower volume is directly rel
Slide 6: Oil & Gas Production
First Quarter 2012 Earnings – Oil & Gas Production • As a result of higher year-over-year average oil prices and other factors affecting production sharing and similar contracts, 1Q12 production was lower by 10 mboe/d from 1Q11. • These factors did not materially affect production compared to 4Q11.
Slide 7: Oil & Gas Segment – Realized Prices
First Quarter 2012 Earnings – Oil & Gas Segment – Realized Prices • 1Q12 realized prices were mixed for our products compared to 4Q11. • Our worldwide crude oil realized price was $107.98 per barrel, an increase of 8%, worldwide NGLs were $52.51 per barrel, a decrease of about 5%, and domestic natur
Slide 8: Oil & Gas Segment
First Quarter 2012 Earnings – Oil & Gas Segment 1Q12 1Q11 Reported Segment Earnings ($mm) $2,504 $2,468 WTI Oil Price ($/bbl) $102.93 $94.10 Brent Oil Price ($/bbl) $118.35 $104.96 NYMEX Gas Price ($/mcf) $2.83 $4.27 Oxy’s Realized Prices Worldwide Oil ($/bbl) $107.98 $92.14 + 17% year-over-year Wor
Slide 9: Oil & Gas Segment – Production Costs and Taxes
First Quarter 2012 Earnings – Oil & Gas Segment – Production Costs and Taxes • Oil and gas cash production costs were $14.00 a boe for 1Q12, compared with last year's twelve-month costs of $12.84 a boe and 4Q11 costs of $14.22 per boe. – The cost increase reflects higher well maintenance activity. •
Slide 10: Chemical Segment Variance Analysis – 1Q12 vs. 4Q11
First Quarter 2012 Earnings – Chemical Segment Variance Analysis – 1Q12 vs. 4Q11 • Core Results for 1Q12 were $184 mm vs. $144 mm in 4Q11. – The sequential quarterly improvement was primarily due to stronger domestic demand for PVC brought about in part by the unseasonably mild weather, resulting in
Slide 11: Chemical Segment Variance Analysis – 1Q12 vs. 1Q11
First Quarter 2012 Earnings – Chemical Segment Variance Analysis – 1Q12 vs. 1Q11 • Core Results for 1Q12 were $184 mm vs. $219 mm in 1Q11. – The year-over-year decrease was primarily a result of lower export volumes and higher raw material costs, in large part caused by a rapid increase in ethylene
Slide 12: Midstream Segment Variance Analysis – 1Q12 vs. 4Q11
First Quarter 2012 Earnings – Midstream Segment Variance Analysis – 1Q12 vs. 4Q11 • Core Results for 1Q12 were $184 mm vs. $144 mm in 4Q11. – The improvement in earnings was in the marketing and trading businesses. ($ in millions) 12
Slide 13: Taxes
First Quarter 2012 Earnings – Taxes • The worldwide effective tax rate was 42% for 1Q12. The increase over our guidance was due to higher Libya liftings. • Our 1Q12 US and foreign tax rates are included in the “Investor Relations Supplemental Schedules.” 13
Slide 14: 2012 YTD Cash Flow
First Quarter 2012 Earnings – 2012 YTD Cash Flow – Cash flow from operations for 1Q12 was $2.8 billion, representing a $600 million increase from 1Q11. We also used about $300 million of cash for working capital during the quarter. $6,600 $2,400 ($ in millions) Cash Flow From Operations $2,800 $75 $
Slide 15: 1Q12 Capital Expenditures
First Quarter 2012 Earnings – 1Q12 Capital Expenditures • Capital expenditures for 1Q12 were $2.4 billion, slightly lower than the run rate incurred in 4Q11. • Year-to-date capital expenditures by segment were 84% in oil and gas, 14% in midstream and the remainder in chemicals. 15
Slide 16: Shares Outstanding & Debt/Capital
First Quarter 2012 Earnings – Shares Outstanding & Debt/Capital Shares Outstanding (mm) 1Q12 3/31/12 Weighted Average Basic 810.5 Weighted Average Diluted 811.3 Basic Shares Outstanding 810.5 Diluted Shares Outstanding 811.3 3/31/12 12/31/11 Debt/Capital 13% 13% 16
Slide 17: Key Performance Metrics
First Quarter 2012 Earnings – Key Performance Metrics • Occidental’s 1Q12 production set an all time record for the Company and, for the sixth consecutive quarter, the domestic oil and gas segment produced record volumes. • 1Q12 domestic production of 455 mboe/d, consisting of 316 mb/d of liquids an
Slide 18: Key Performance Metrics
First Quarter 2012 Earnings – Key Performance Metrics • Focusing on total return to our shareholders, in February, we increased our annual dividends by $0.32, or by 17%, to $2.16 per share. • Our annualized return on equity for the first three months of 2012 was 16% and return on capital employed wa
Slide 19: Capital Program
First Quarter 2012 Earnings – Capital Program • In 1Q12, our capital spending was $2.4 billion. • The current capital run rate may come down over the course of the year as certain projects, such as the Elk Hills gas plant, are completed. • In addition, as indicated in the last quarter’s conference c
Slide 20: Capital Program Domestic Operations – California
First Quarter 2012 Earnings – Capital Program Domestic Operations – California • The rig count at the end of the 1Q12 was about the same as the 31 we were running at year-end 2011. We expect the rig count to remain at current levels through the middle of the year; • Relative to last year, we are see
Slide 21: Capital Program Domestic Operations – California
First Quarter 2012 Earnings – Capital Program Domestic Operations – California • Our traditional Elk Hills production on a BOE basis has declined 14% since we began this program, while the remainder of our California production, representing our conventional, steam and shale programs, has increased
Slide 22: California Total Production Volumes
First Quarter 2012 Earnings – California Total Production Volumes • Our traditional Elk Hills production on a BOE basis has declined 14% since we shifted our development program focusing on opportunities outside traditional Elk Hills. While the remainder of our California production, representing ou
Slide 23: California Liquids Production Volumes
First Quarter 2012 Earnings – California Liquids Production Volumes • Essentially all of the production increase outside traditional Elk Hills came from liquids. Excluding the traditional Elk Hills, liquids production was up about 35%, or about 17 mb/d. As we previously discussed, we are shifting ou
Slide 24: California Total Production Volumes
First Quarter 2012 Earnings – California Total Production Volumes OCCIDENTAL PETROLEUM TOTAL CALIFORNIA PRODUCTION VOLUMES Volumes in MBOEPD Change from Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q4'10 vs Q1'12 Traditional Elk Hills 63 56 56 56 54 54 -14% Rest of California 70 75 79 85 91 91 30% Total Cali
Slide 25: California Liquids Production Volumes
First Quarter 2012 Earnings – California Liquids Production Volumes OCCIDENTAL PETROLEUM TOTAL CALIFORNIA PRODUCTION VOLUMES Liquids in MBOEPD; Gas Volumes in MMCFPD Change from Liquids Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q4'10 vs Q1'12 Traditional Elk Hills - Liquids 41 37 37 36 35 35 -15% Rest of
Slide 26: Capital Program Domestic Operations – Permian
First Quarter 2012 Earnings – Capital Program Domestic Operations – Permian • The rig count at the end of 1Q12 was 26, three more than we were running at year-end 2011. – We expect our rig count to remain at about this level during the year; • We have significant acreage positions in a number of pla
Slide 27: Oxy Acreage in Select Permian Basin Plays
First Quarter 2012 Earnings – Oxy Acreage in Select Permian Basin Plays Acreage in Select Permian Basin Plays Thousands of Acres Oxy Acreage in Likely Oxy Acreage Limits Net Working Net Working Play Gross Interest Gross Interest Delaware Basin Bone Spring 560 200 260 90 Delaware 380 130 80 30 Wolfca
Slide 28: Capital Program Domestic Operations – Midcontinent and Other
First Quarter 2012 Earnings – Capital Program Domestic Operations – Midcontinent and Other • In Williston, our rig count was 13 at March 31, down from 14 at year-end 2011. • We expect that our rig count will be about 6 by the end of 2012. As mentioned in last quarter’s conference call, we have shift
Slide 29: Capital Program International Operations
First Quarter 2012 Earnings – Capital Program International Operations • The Al Hosn Shah gas project is approximately 38% complete and is progressing as planned. – This project made up about 10% of our total capital program for 1Q12. – If spending continues at current levels, we will see higher tha
Slide 30: Oil and Gas – 2Q12 Production Outlook
First Quarter 2012 Earnings – Oil and Gas – 2Q12 Production Outlook • As we look ahead to 2Q12, we expect oil and gas production to be as follows: – We expect our domestic production to grow by 3 to 4 mboe/d each month from the current quarterly average of 455 mboe/d, which would correspond to a 6 t
Slide 31: Oil and Gas – 2Q12 Production Outlook
First Quarter 2012 Earnings – Oil and Gas – 2Q12 Production Outlook • The Middle East region production is expected to be as follows: – Production has resumed in our operations in Libya and averaged 20 mb/d in 1Q12, including entitlements from the post-2011 civil- unrest period. • We expect 2Q12 vol
Slide 32: 2Q12 Outlook – Oil and Gas
First Quarter 2012 Earnings – 2Q12 Outlook – Oil and Gas • We expect sales and production volumes in 2Q12 to be about equal, subject to the scheduling of liftings. • A $5.00 change in global oil prices would impact our PSC daily volumes by about 3 mboe/d. • We expect exploration expense to be about
Slide 33: 2Q12 Outlook – Chemicals & Taxes
First Quarter 2012 Earnings – 2Q12 Outlook – Chemicals & Taxes • The chemical segment 2Q12 earnings are estimated to be about $175 million. – We expect lower natural gas prices and improvements in the exports of vinyl chloride monomer (VCM) and polyvinyl chloride (PVC) to be offset by several planne
Slide 34: Summary
First Quarter 2012 Earnings – Summary • To summarize: We closed the quarter with an all time record total Company production and the sixth consecutive record domestic oil and gas production. • As the largest liquids producer in the lower 48 states, we increased our liquids production by 6 mb/d from
Slide 35: Q&A
First Quarter 2012 Earnings – Q&A 35