Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q4 2019 Earnings Presentation
44 slides from Occidental Petroleum's earnings presentation, Feb 28, 2020
Slide 1: Fourth Quarter Earnings Conference Call
Fourth Quarter Earnings Conference Call Occidental Petroleum Corporation February 28, 2020
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements about Occidental Petroleum Corporation’s (“Occi
Slide 3: Core Differentiators
Core Differentiators Low Cost Carbon Reduction Operator Leadership • Best in class operator with top wells • Leader in carbon capture utilization and • Safety performance leadership sequestration (CCUS) development • Unmatched reservoir characterization • World’s largest handler of CO2 for EOR and s
Slide 4: Occidental Agenda: Fourth Quarter Highlights
• Fourth Quarter Highlights Occidental • • Financial Results and Guidance Closing Remarks 4
Slide 5: Fourth Quarter 2019 Highlights
Fourth Quarter 2019 Highlights $1.5 B 1.4 MMBOED $2.0 B Closed Asset Divestitures Continued to Demonstrate Capability as a Debt Repayment Premier Operator - Exceeded 4Q Total Production Guidance Midpoint by 78 MBOED 5
Slide 6: Value Capture Progress
Value Capture Progress $1.2 B On track Annualized Synergies to meet $7.0 B or exceed Debt Reduction targets $10.2 B 1 Announced Divestitures 1.Net of expected taxes 6
Slide 7: Rapid Value Capture – Silvertip – TX Delaware
Rapid Value Capture – Silvertip – TX Delaware Demonstrated Life of Field Value Creation Developing the best wells for lower cost Subsurface Drilling Completion Production Expect to recover 7% more oil per 22% reduction in downtime from Q3 18% improvement in drill days $1.9 MM savings per well sectio
Slide 8: Measures of Success
Measures of Success Divest $15 B • Non-core asset divestitures Assets • Optimize SG&A Capture $2+ B • Integrate Oxy’s distinctive operational expertise with differentiating legacy Anadarko Annual Cost Synergies practices for full synergy capture MILESTONES $1.5 B Capital 2020+ • Returns-based capita
Slide 9: Occidental Agenda: Financial Results and Guidance
• Fourth Quarter Highlights Occidental • • Financial Results and Guidance Closing Remarks 9
Slide 10: 4Q19 Results
4Q19 Results Reported 4Q19 Reported versus Guidance Midpoint Mboed Reconciliation Adjusted EPS ($0.30) Rockies: improved uptime, higher OBO Reported diluted EPS ($1.50) production, and higher than expected non-op and +35 royalty barrels 4Q19 CFFO before working capital $2.2 B Permian Resources: impr
Slide 11: 1Q and Full-Year 2020 Guidance Estimates
1Q and Full-Year 2020 Guidance Estimates Oil & Gas OxyChem Corporate 1Q20 Production $150 MM pre-tax income in 1Q20 FY 2020 Domestic tax rate: 22% • Total Company: 1,375 – 1,395 Mboed $650 - $700 MM pre-tax income in FY FY 2020 International tax rate: 34% • Permian Resources: 457 - 465 Mboed 2020 In
Slide 12: Occidental Agenda: Closing Remarks
• Fourth Quarter Highlights Occidental • • Financial Results and Guidance Closing Remarks 12
Slide 13: Core Differentiators
Core Differentiators Low Cost Carbon Reduction Operator Leadership • Best in class operator with top wells • Leader in carbon capture utilization and • Safety performance leadership sequestration (CCUS) development • Unmatched reservoir characterization • World’s largest handler of CO2 for EOR and s
Slide 14: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 14
Slide 15: Synergy Tracker – On Track to Meet or Exceed Targets
Synergy Tracker – On Track to Meet or Exceed Targets Annualized Pre-Tax Annual Synergies Synergies Identified and Capital and Capital Reduction Reduction Achieved Captured ($ B)1 4.0 Target $1.5 B $3.5 B 3.5 Identified 3.0 Captured 2.5 $0.9 B 2.0 1.5 $1.1 B 1.0 0.5 - Overhead/Opex Synergies Capital
Slide 16: Debt Repayment Tracker
Applying Asset Divestiture Proceeds and Debt Repayment Free Cash Flow to Debt Repayment Tracker 11 ~$10.2 B 10 Non-Core Asset Sale Net proceeds of $15 B from Real Estate Sale asset divestitures will be 9 Plains Interests Midland JV applied to debt repayment 8 ~$7.0 B 7 • $8.8 B – Africa assets sold
Slide 17: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 17
Slide 18: 2020 Capital Efficiency Plan
2020 Capital Efficiency Plan 2020 Capital Program by Asset 2020 Capital Program by Type $5.2 - 5.4 B Facilities 20% $0.1 $0.2 Marketing & Midstream $0.3 $0.4 Exploration & Corporate D&C 60% Base Maintenance 9% Oil & Gas $0.5 OxyChem OBO 7% $0.7 Permian EOR Exploration 4% $0.9 GoM 2020 Production (Mb
Slide 19: 2020 Capital Budget – Domestic Unconventional Assets
2020 Capital Budget – Domestic Unconventional Assets Permian Resources Rockies $2.2 B 15 Gross 9 - 10 Net 270 – 295 $0.9 B 3 Gross 3 - 4 Net 225 – 250 Capex Rigs Rigs Wells Online Appraisal Capex Rigs Rigs Wells Online Appraisal 100% 100% Base Maint Base Maint Powder Powder OBO River Basin Midland O
Slide 20: Best-in-Class Capital Intensity
Best-in-Class Capital Intensity ~50% Improvement in Capital Intensity on Legacy Anadarko Permian Assets Permian Resources Capital Intensity $ MM/Mboepd $47 Oxy’s world-class Permian Resources portfolio, unique $43 subsurface capability, and efficient capital execution significantly improve capital i
Slide 21: Conventional Assets Milestones
Conventional Assets Milestones 2019 2020 2021 2022 • Constellation and Hadrian • Progress Subsea • Subsea Debottlenecking North Platforms Online • Eastern GoM Tie-back Online GoM • Eastern GoM Exploration Debottlenecking Evaluations • Exploration Wells Project Online • Exploration Wells • Exploratio
Slide 22: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 22
Slide 23: 2020 Oil Hedges
2020 Oil Hedges Three-Way Costless Collar $80 Short Call Details $74.16 $75 Summary December 2019 derivative instruments $70 2020 Settlement Short Put $65 $45 Long Put Three-way collars (Oil MBBL/day) 350 $55 Average price per barrel (Brent oil pricing) Realized Price ($/bbl) $60 Ceiling sold price
Slide 24: Cash Flow Sensitivities
Cash Flow Sensitivities Oil & Gas • Annualized cash flow changes ~$260 MM per ~$1.00 / bbl change in oil prices > ~$240 MM per ~$1.00 / bbl change in WTI prices > ~$20 MM per ~$1.00 / bbl change in Brent prices • Annualized cash flow changes ~$185 MM per ~$0.50 / Mmbtu change in natural gas prices •
Slide 25: Oxy Consistently Returns Capital to Shareholders
Oxy Consistently Returns Capital to Shareholders Over $35 B of Total Capital Returned Since 2002 5,000 $3.50 ✓ Dividend Sustainable Long-term at $40 WTI 4,500 ✓ Consecutive Dividend Growth Since 2002 - 12% CAGR $3.00 $ MM Returned to Common Shareholders 4,000 ✓ Over 95% of Market Capitalization Retu
Slide 26: WES Operating as an Independent Company
WES Operating as an Independent Company Changes at a Glance • Effective Dec. 2019, WES’s management team transferred from Oxy to WES with additional employees to transfer in 2020 • Oxy will provide limited administrative services to WES for up to two years • Rights of WES unitholders to replace WES’
Slide 27: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 27
Slide 28: Improvement in Permian Resources Hz Unconventional Well Performance
Basin Leading Improvement in Permian Resources Hz Unconventional Well Performance Well Performance 180 Day Cum Improvement 1st Year Cum Improvement ✓ +199% from 2015 to 2019 ✓ +164% from 2015 to 2019 • 4D Frac Modeling 400 ✓ +23% from 2018 to 2019 ✓ +18% from 2018 to 2019 2019 • Seismic and 350 Geom
Slide 29: Leading Delaware Basin Well Performance
Leading Delaware Basin Well Performance 6 Month Cumulative Oil Top 100 Wells 1 12 Month Cumulative Oil Top 100 Wells 2 Oxy’s subsurface expertise delivers Basin leading wells Oxy has >20% of the best wells, while drilling less than for less cost: 7% of total Delaware Basin wells Competitors use 24%
Slide 30: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 30
Slide 31: Pro Forma Production – Full Year 2019 and 2020 Guide
Pro Forma Production – Full Year 2019 and 2020 Guide Net MBOED FY 2019 Pro Forma Net MBOED FY 2019 Pro Forma Total Company 1,382 International ex. Qatar1 247 Legacy Oxy 732 Total Company ex. Qatar1 1,346 Legacy Anadarko 650 Permian Resources 443 Net MBOED FY 2020 Guide Legacy Oxy 292 Total Company 1
Slide 32: Largest U.S. Acreage Holder
Largest U.S. Acreage Holder 14.4 MM Net Total U.S. Acres Rockies Permian 1.5 MM Acres 3.1 MM Acres Powder River Basin – 0.4 MM Permian Unconventional – 1.7 MM DJ Basin – 0.9 MM Excludes acreage outside of active operating Permian Conventional – 1.4 MM areas Uinta Basin 0.2 MM Gulf of Mexico Land Gra
Slide 33: U.S. Onshore Overview
U.S. Onshore Overview Rockies Land Grant Permian 1.5 MM Acres 7.0 MM Acres1 3.1 MM Acres 4Q19 Net Production Oil NGLs Gas Total (MBOED) (MBBLD) (MMCFD) Permian Resources 273 106 580 476 Permian EOR 117 29 41 153 DJ Basin 120 73 727 314 Other Domestic 15 9 223 61 Total 525 217 1,571 1,004 1Includes 0
Slide 34: Gulf of Mexico Overview
Gulf of Mexico Overview Gulf of Mexico 1.0 MM Acres 4Q19 Net Production Total Oil (MBOED) 117 NGLs (MBBLD) 10 Gas (MMCFD) 86 Total 141 34
Slide 35: International Overview
International Overview Colombia U.A.E. Oman 2.0 MM Acres 1.5 MM Acres 6.0 MM Acres 4Q19 Net Production Oil NGLs Gas Total (MBOED) (MBBLD) (MMCFD) Latin America 34 - 8 35 Al Hosn 14 26 257 83 Dolphin 7 8 166 43 Oman 67 - 152 92 Total 122 34 583 253 35
Slide 36: Midland Basin Joint Venture with Ecopetrol
Midland Basin Joint Venture with Ecopetrol Deal Structure Midland Basin Strategic Partnership • Oxy and Ecopetrol successfully closed strategic partnership to develop ~97,000 net acres in the Midland Basin on November 13 • JV ownership 51% Oxy / 49% Ecopetrol on all new wells drilled • JV excludes e
Slide 37: New Mexico Continues to Deliver 10,000' Well Performance
New Mexico Continues Well Performance Continues to Improve to Deliver 10,000’ Well Performance 500 • Continued improvement in well 450 performance Cumulative Mboe 400 Industry Leading Well Performance 350 300 • Higher sectional recovery • Customized section development to 250 200 through flow-unit o
Slide 38: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 38
Slide 39: Highly Skilled and Diverse Board Provides Strategic Oversight
Highly Skilled and Diverse Board Provides Strategic Oversight Focused on Creating Shareholder Value ✓ Andrew Gould elected to the board effective March 1, 2020 Independence1 ▪ Former Chairman and Chief Executive Officer of Schlumberger Ltd. ✓ Board announced its intention to recommend, at the 2020 A
Slide 40: Success Starts With Safety
Success Starts With Safety Employee + Contractor IIR1 Oxy’s culture is built on safety 2017 2018 2019 Safety remains top priority during integration .39 .39 .29 Expanding process safety/risk programs Best safety performance ever in 2019 2 Enhancing systems and tools to identify and mitigate risks St
Slide 41: New Mexico Water Recycling Program
New Mexico Water Recycling Program Water infrastructure drives value and New Mexico Recycled Water environmental benefits • Less than 1% fresh water used in 2019 2019 • Average $3.05 savings per barrel1 • Targeting more than 85% recycled water and less than 1% fresh water used in 2020 2018 Expanding
Slide 42: Appendix
• Synergy Capture and Debt Repayment Update • 2020 Budget Appendix • Financial Information • Well Performance • Asset Overview • Governance and HES • OxyChem 42
Slide 43: OxyChem: Market Leading Position
OxyChem: Market Leading Position OxyChem at a Glance Earnings Highlights • Winner of Tennessee Valley Authority (TVA) Carbon Reduction Award • Positive cash flow generation throughout cycle > OxyChem in New Johnsonville, Tennessee had lowest carbon emissions rates in 2018 along with largest year-ove
Slide 44: Occidental
Occidental