Occidental Petroleum Corporation · NYSE:OXY

Occidental Petroleum — Q1 2015 Earnings Presentation

37 slides from Occidental Petroleum's earnings presentation, May 6, 2015

  1. Slide 1: First Quarter 2015 Earnings Conference Call

    OCCIDENTAL PETROLEUM CORPORATION First Quarter 2015 Earnings Conference Call May 6, 2015

  2. Slide 2: Succession Plan

    First Quarter 2015 Earnings Succession Plan • 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 Ameri

  3. Slide 3: Dividend Increase

    First Quarter 2015 Earnings Dividend Increase • Dividend increase of ~4% for 13th consecutive year • We should 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 distributable cash flow. –

  4. Slide 4: Delivering Consistent Dividend Growth

    First Quarter 2015 Earnings 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.

  5. Slide 5: Objectives

    First Quarter 2015 Earnings Objectives CASH FLOW GROWTH  Permian Resources production growth  Al Hosn project start-up  Commodity price recovery Operating Cash Flow to cover dividend outlays and growth COST SAVINGS capital program by 4Q 2015 at around $60/bbl oil  ~$400 million of captured cost

  6. Slide 6: Oxy's Permian Resources Drilling Inventory

    First Quarter 2015 Earnings Oxy’s Permian Resources Drilling Inventory Horizontal well locations that will deliver returns in excess of cost of capital for various WTI price ranges* 100% (~44 yrs) 81% Avalon (~ 36 yrs) Delaware 61% Bone Spring (~27 yrs) Spraberry 37% Wolfcamp D (~16 yrs) Wolfcamp C

  7. Slide 7: 2015 Production Outlook

    First Quarter 2015 Earnings 2015 Production Outlook • U.S. oil production grew 14% year over year* • 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 United States, we expect oil production growth of 8

  8. Slide 8: 2015 Capital Program Evolution

    First Quarter 2015 Earnings 2015 Capital Program Evolution 2015 Capital Budget and Domestic Drilling Rigs • As we capture price savings from suppliers and improve efficiencies, we 100% Capital are able to do more with less Budget spending. Domestic • Our capital run rate in 1Q15 was 75% Drilling Rig

  9. Slide 9: Cash Flow Priorities

    First Quarter 2015 Earnings Cash Flow Priorities • We have ~69 million shares remaining under our current authorization. • We will continue to repurchase shares subject to the stock price and market conditions and expect to ultimately repurchase the entire amount. Shares Outstanding (mm) 12/31/14 3/

  10. Slide 10: Highlights

    First Quarter 2015 Earnings Highlights Results • Domestic oil production (Bbl/d) 198,000 14% year / year growth* • Total company production (BOED) 645,000 • Core earnings** $31 million • Core diluted EPS** $0.04 • 2015 CFFO from Continuing Ops $566 million • 2015 CFFO before Working Capital $1,121 m

  11. Slide 11: Oil & Gas Segment Pre-Tax Core Earnings

    First Quarter 2015 Earnings Oil & Gas Segment Pre-Tax Core Earnings PRE-TAX 1Q15 vs. 4Q14 Core Results ($ in millions) • 1Q15 $57 mm • 4Q14 $0.7 B 736 (934) • 3Q14 $1.6 B 52 (21) 57 123 101 Lower Operating Lower DD&A Lower 4Q14 Sales Price Sales Volumes Lower Lower DD&A Exploration AllLower Others 1

  12. Slide 12: Oil and Gas Total Company Production

    First Quarter 2015 Earnings Oil and Gas Total Company Production Total company oil and gas production volumes averaged 645,000 BOED, an increase of 29,000 BOE in daily production from 4Q 2014. Company-wide Oil & Gas Production (MBOED) 18 645 9 (4) 6 616 4Q14 Permian Other Domestic Colombia MENA 1Q15

  13. Slide 13: Oil and Gas Domestic Production

    First Quarter 2015 Earnings Oil and Gas Domestic Production Met our domestic oil production growth guidance with a year over year increase of 25,000 BOD or about 14% led by our Permian Resources assets. Domestic Oil & Gas Production (MBOED) 9 (4) 326 321 302 1Q14 4Q14 Oil Natural Gas & 1Q15 NGLs Not

  14. Slide 14: Oil & Gas Realized Prices

    First Quarter 2015 Earnings Oil & Gas Realized Prices Realized Prices Benchmark Prices Worldwide Worldwide Domestic Nat. Oil ($/bbl) NGLs ($/bbl) Gas ($/mmbtu) WTI Brent NYMEX 1Q15 $48.50 $17.96 $2.49 $48.63 $55.17 $3.07 WTI % 100% 37% 81%* Brent % 88% 32% 4Q14 $71.58 $27.39 $3.56 $73.15 $76.98 $3.9

  15. Slide 15: Oil & Gas Operating Costs

    First Quarter 2015 Earnings Oil & Gas Operating Costs Production Costs ($ / BOE) 1Q14 2Q14 3Q14 4Q14 FY 2014 1Q15 $12.94 $13.34 $13.45 $14.18 $13.50 $13.36 DD&A ($ / BOE) 1Q14 2Q14 3Q14 4Q14 FY 2014 1Q15 $16.12 $16.64 $16.90 $18.09 $16.97 $15.35 Taxes other than Income ($ / BOE) 1Q14 2Q14 3Q14 4Q14

  16. Slide 16: Chemical Segment Core Earnings

    First Quarter 2015 Earnings Chemical Segment Core Earnings 1Q15 vs. 4Q14 PRE-TAX ($ in millions) Guidance Core Results 2Q15 expected to be ~$185 mm. • 1Q15 $139 mm $160 ($92) • 4Q14 $160 mm • 3Q14 $140 mm $8 $139 $89 ($26) 4Q14 Sales Price Sales Volume / Mix Operations / All Others 1Q15 Manufacturin

  17. Slide 17: Midstream, Marketing & Other Segment Core Earnings

    First Quarter 2015 Earnings - Midstream, Marketing & Other Segment Core Earnings PRE-TAX 1Q15 vs. 4Q14 Guidance ($ in millions) 2Q15 expected $168 ($83) to be ~$100 mm. Core Results • 1Q15 ($5) mm • 4Q14 $168 mm ($73) • 3Q14 $155 mm ($14) ($3) ($5) 4Q14 Pipelines Marketing Gas Plants Power ($5) 1Q15

  18. Slide 18: 1Q 2015 Cash Flow

    First Quarter 2015 Earnings 1Q 2015 Cash Flow 1Q15 1Q 2015 Debt / Capital 17% ($ in millions) ROE* 0% $1,100 ($1,000) ROCE* 0% ($1,700) $7,800 ($550) ($200) ($50) $5,400 Restricted Cash Restricted Cash $4,000 $3,265 Beginning Cash CFFO Before Change in Capital Dividends Share Acquisitions & Ending C

  19. Slide 19: 1Q 2015 Cash Flow

    First Quarter 2015 Earnings 1Q 2015 Cash Flow • As we ramped down activity in the first quarter, our capital accruals declined and our net working capital declined. • We used about $1.0 billion in 1Q15 for payments related to the higher capital and operating expenses that were accrued at year end 20

  20. Slide 20: Capital Program

    First Quarter 2015 Earnings Capital Program • Total company capital expenditures for the 2015 Capital Budget 1Q15 were $1.7 billion and we expect our quarterly expenditures to continue to ramp $1.7 bn down through the year. • Oil and gas spent $1.5 billion, with Permian Permian Resources expenditure

  21. Slide 21: Plains GP and California Resources Corporation shares

    First Quarter 2015 Earnings • As a reminder, we currently hold shares in the Plains GP and California Resources Corporation with an aggregate value of about $3 billion. • With respect to CRC, we continue to own 71.5 million shares currently valued at about $600 million. • We are required to dispose

  22. Slide 22: 2Q15 Production Outlook

    First Quarter 2015 Earnings 2Q15 Production Outlook • 2Q15 US Production Outlook – Oil production for 2Q15 to grow by 5,000 BOD with the increase coming from Permian Resources. – Permian Resources is expected to grow its overall volumes by more than 7,000 BOED in 2Q15. – Midcontinent gas production

  23. Slide 23: Full Year 2015 Production Outlook

    First Quarter 2015 Earnings Full Year 2015 Production Outlook • We have raised our FY 2015 guidance for production growth to a range of 60,000 to 80,000 BOED, an increase of 20,000 BOED versus our previous guidance • FY15 US Production Outlook – We expect full-year production in Permian Resources to

  24. Slide 24: 2Q15 & FY 2015 Guidance Summary

    First Quarter 2015 Earnings 2Q15 & FY 2015 Guidance Summary Oil & Gas Segment Price Sensitivity Pre-tax Income Impact (Quarter) • 2015 total production is expected to be Oil +/- $1/bbl = +/- $30 mm between 650,000 – 670,000 BOED*. NGL +/- $1/bbl = +/- $7 mm • 2015 domestic oil production growth of 8

  25. Slide 25: Permian Resources Summary

    First Quarter 2015 Earnings – Permian Resources Summary Achieved 17% increase in BOED and 22% increase in BOPD vs Q4 14 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 C

  26. Slide 26: Permian Resources Drilling Inventory

    First Quarter 2015 Earnings – Permian Resources Drilling Inventory Lowering economic hurdle point by improving well productivity, time to market and cost 100% Drilling Inventory (~44 yrs) 1. Investing in characterization and Based on Q4 Costs optimization to improve well 81% productivity Better Well

  27. Slide 27: Manufacturing Mode: Drilling / Completions

    First Quarter Earnings – Permian Resources Manufacturing Mode: Drilling / Completions Move to Manufacturing Mode Significantly Reduced Well Cost 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

  28. Slide 28: Manufacturing Mode: Drilling / Completions

    First Quarter Earnings – Permian Resources Manufacturing Mode: Drilling / Completions Move to Manufacturing Mode Significantly Reduced Well Cost 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 CO

  29. Slide 29: Delaware Basin: Opportunities

    First Quarter 2015 Earnings – Permian Resources 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

  30. Slide 30: Delaware Basin: Activity

    First Quarter 2015 Earnings – Permian Resources Delaware Basin: Activity ACTIVE RIGS WELL ACTIVITY 15 60 10 WELL COUNT RIG COUNT 40 35 33 HZ 27 27 HZ 5 HZ HZ 20 13 HZ 0 0 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 Vertical 1 1 2 Drill 34 49 41 47 45 Horizontal 11 14 10 Online 35 33 40 42 64 30

  31. Slide 31: Delaware Basin: Performance

    First Quarter 2015 Earnings – Permian Resources Delaware Basin: Performance WELL PERFORMANCE – WOLFCAMP A/B 1,800 BOED / 1000’ 1,600 313 Q1 15 232 1,400 323 Q4 14 234 1,200 325 Q3 14 251 1,000 BOED 323 Q1-Q2 14 800 230 0 100 200 300 400 600 24 Hour 30 Day 400 Q1 15 Highlights - BOEPD and (BOEPD Per

  32. Slide 32: Midland Basin: Opportunities

    First Quarter 2015 Earnings – Permian Resources 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 W

  33. Slide 33: Midland Basin: Activity

    First Quarter 2015 Earnings – Permian Resources Midland Basin: Activity ACTIVE RIGS WELL ACTIVITY 15 60 10 RIG COUNT Well Count 40 26 23 HZ 5 20 HZ 17 15 12 HZ HZ HZ 0 0 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 Vertical 4 4 2 Drill 33 38 34 38 41 Horizontal 8 10 11 Online 32 26 31 31 62 33

  34. Slide 34: Hobbs: CO2 Flood and Expansion Areas

    First Quarter 2015 Earnings – Permian EOR Hobbs: CO2 Flood and Expansion Areas North Hobbs North Hobbs: • Phase 1 added 35 MMBOE (Injection Started in 2003) • Phase 2A Project develop 13.7 MMBOE at $13.82 per BOE (Injection Starts in 6/2016) South Hobbs: • Phase 1 & 2 develop 28 MMBOE at $10.60 per

  35. Slide 35: Denver Unit: Battery Development

    First Quarter 2015 Earnings – Permian EOR Denver Unit: Battery 5 Development Waterflood Primary CO2 Battery 5 Redevelopment Project: • Develops both Main Oil Column & Residual Oil Zone • Requires deepening 150 wells • Develops 21 MMBOE net at a $4.80 per BOE 35

  36. Slide 36: Permian Resources Guidance

    First Quarter Earnings – Permian Resources Guidance • Continue to execute focused development strategy for the remainder PRODUCTION of 2015 Permian Resources − Operate average of 13 rigs (higher than planned) − Expect to drill 150 wells − Continue to pursue step changes in well productivity and cost

  37. Slide 37: First Quarter 2015 Earnings Conference Call Q&A

    FIRST QUARTER 2015 EARNINGS CONFERENCE CALL Q&A

Occidental Petroleum — Q1 2015 Earnings Presentation on 6ix