Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q3 2013 Earnings Presentation
45 slides from Occidental Petroleum's earnings presentation, Oct 29, 2013
Slide 1: Occidental Petroleum Corporation Third Quarter 2013 Earnings Conference Call
EXHIBIT 99.4 Occidental Petroleum Corporation Third Quarter 2013 Earnings Conference Call October 29, 2013 1
Slide 2: Third Quarter 2013 Earnings - Highlights
Third Quarter 2013 Earnings - Highlights Results • Total production (Boe/d) 767,000 • Domestic oil production (Bbl/d) 267,000 • Operating costs Better • Capital program Better • Core earnings $1.6 billion • Core diluted EPS $1.97 • YTD CFFO before WC $9.4 billion • Cash balance @ 9/30/2013 $3.8 bill
Slide 3: Third Quarter 2013 Earnings - Highlights
Third Quarter 2013 Earnings - Highlights Quarter-over-Quarter Impacts • Improved oil and gas results + Higher realized oil prices + Higher domestic oil sales volumes – Lower MENA oil sales volumes • Higher marketing and trading income • Higher Chemicals core earnings* Core Diluted EPS* $1.97 $1.58 $
Slide 4: Oil & Gas Segment Earnings
Third Quarter 2013 Earnings - Oil & Gas Segment Earnings 3Q13 vs. 2Q13 ($ in millions) ($25) Core Results •3Q13 $2.4 B •2Q13 2.1 B •3Q12 2.0 B 4 4
Slide 5: Oil and Gas Total Production
Third Quarter 2013 Earnings - Oil and Gas Total Production Company-wide Oil & Gas Production (Mboe/d) 4 2 2 (7) 772 (6) 766 767 3Q13 Impacts (Mboe/d) •Libya labor issues (4) •Qatar maintenance (5) •Colombia activity 2 5 5
Slide 6: Oil and Gas Domestic Production
Third Quarter 2013 Earnings - Oil and Gas Domestic Production Domestic Oil & Gas Production (Mboe/d) 2 (2) 6 476 469 470 6 6
Slide 7: Oil & Gas Realized Prices
Third Quarter 2013 Earnings - Oil & Gas Realized Prices Realized Prices Benchmark Prices Worldwide Worldwide Domestic Nat. Oil ($/bbl) NGLs ($/bbl) Gas ($/mmbtu) WTI Brent NYMEX 3Q13 $103.95 $40.53 $3.27 $105.83 $109.71 $3.62 Benchmark % 98%* 38% * 90% 2Q13 $97.91 $38.78 $3.82 $94.22 $103.35 $4.00 B
Slide 8: Oil & Gas Production Costs
Third Quarter 2013 Earnings - Oil & Gas Production Costs Production Costs ($/boe) FY12 1Q13 2Q13 3Q13 YTD13 Domestic $17.43 $14.06 $14.28 $14.65 $14.33 Total $14.99 $13.93 $13.40 $13.60 $13.64 • ~$500 million annualized domestic cost savings versus full year 2012 8 8
Slide 9: Chemical Segment Core Earnings
Third Quarter 2013 Earnings - Chemical Segment Core Earnings 3Q13 vs. 2Q13 Guidance ($ in millions) 4Q13 expected to be ~$100 mm Core Results •3Q13 $ 181 mm •2Q13 144 mm •3Q12 162 mm * Lower energy and feedstock costs. 9 9
Slide 10: Midstream Segment Earnings
Third Quarter 2013 Earnings - Midstream Segment Earnings Core Results •3Q13 $212 mm ($ in millions) •2Q13 48 mm •3Q12 156 mm 10 10
Slide 11: YTD 2013 Cash Flow
Third Quarter 2013 Earnings - YTD 2013 Cash Flow YE2012 vs. YTD2013 ($ in millions) $6,400 YTD’13 Debt / Capital 15% Return on Equity 14% Return on Capital Employed* 12% Cash Flow From Operations before Working Capital changes $9,400 $3,800 Beginning Cash $1,600 12/31/12 * Note: Annualized; See atta
Slide 12: 2013 Production Outlook
Third Quarter 2013 Earnings - 2013 Production Outlook • Domestically, we are on track to achieve our second half oil growth average of 6,000 to 8,000 barrels per day increase over the first half average. • Natural gas and NGL volumes will decline modestly in 4Q13 due to lower drilling on gas propert
Slide 13: 2013 Capital Outlook
Third Quarter 2013 Earnings - 2013 Capital Outlook • Our annual capital is expected to be about $9 billion, about $600 million lower than the $9.6 billion program we have previously discussed. • Of this reduction, approximately $200 million resulted from achieving better than planned efficiencies in
Slide 14: 4Q13 Guidance Summary
Third Quarter 2013 Earnings - 4Q13 Guidance Summary Oil & Gas Segment • Domestic Production – Oil - 6,000 - 8,000 bopd growth for 2H13 over 1H13 – NGLs - modest decline – Natural gas - modest decline • International – Production volumes - similar to 3Q13 – Sales volumes - increase in 4Q13 to recoup
Slide 15: MENA Overview
Third Quarter 2013 Earnings - MENA Overview • Over $20 bln free cash flow in last 15 years. • Currently generating $1.6 bln free cash flow (excluding Al Hosn Gas). • Expect to generate over $2.0 bln annual free cash flow after Al Hosn start-up. • Invested $9 bln of capital since 2010, 75% in Oman, A
Slide 16: MENA Overview
Third Quarter 2013 Earnings - MENA Overview • Drilled several types of wells • Expect MENA net production of throughout region. >260 mboe/d in 2013 – Onshore oil wells (Oman) • Al Hosn start-up should add net – Shallow water offshore oil wells production of >60 mboe/d at full (Qatar) operational sta
Slide 17: MENA Overview - Strategic Goals
Third Quarter 2013 Earnings - MENA Overview Strategic Goals • Continue to be a growing, profitable and vibrant business in the Middle East • Region. Continue to be a preferred strategic partner with the host countries where we operate. • Expand our Middle East area business by partnering with local
Slide 18: MENA Overview
Third Quarter 2013 Earnings - MENA Overview 18 18
Slide 19: Oman
Third Quarter 2013 Earnings - Oman • Present in Oman for 34 years. • Operate Blocks 9, 27, 62 (Northern Oman) and 53 (Mukhaizna). • Largest independent oil producer with highly skilled and loyal national staff. • Over 81% of employees are Omani nationals including the President of our Oman business
Slide 20: Oman Gross Production
Third Quarter 2013 Earnings - Oman Oman Gross Production Oxy Operated since 1994 previous operators 20 20
Slide 21: Northern Oman
Third Quarter 2013 Earnings - Northern Oman Northern Oman Blocks 9 & 27 • Development wells, exploration success and water flood technology. • Increase in gross production from 92 to 106 mboe/d since 2010. • Large pipeline hub and gas plant at Safah. • Gross avg. operating costs at ~$5.50 / boe. • D
Slide 22: Northern Oman
Third Quarter 2013 Earnings - Northern Oman Block 9 • Over next 5 years, plans include 400 development and water injection wells, ~50 exploration wells and expanding the waterfloods over a greater area. • Expect annual drilling capital between $250 mm to $300 mm per year. • Development program will
Slide 23: Northern Oman - Highly Successful Exploration
Third Quarter 2013 Earnings - Northern Oman Highly Successful Exploration • Discoveries this year have average production of 3 mboe/d with >70% oil. • Nearing completion of new, 2,000 square mile 3D seismic program. • Should yield many attractive prospects. • Over next 5 years, expect to drill more
Slide 24: Mukhaizna
Third Quarter 2013 Earnings - Mukhaizna Mukhaizna • One of world’s largest steamflood projects, ranked 3rd in the world and larger than any US steamflood. • Assumed operation in 2005 and have increased gross production from 8 to 125 mbo/d. • Between 2005 - 2012, produced 160 mm barrels of oil. • Dri
Slide 25: Mukhaizna
Third Quarter 2013 Earnings - Mukhaizna Production Processing • Expect to drill 340 wells in 2013. • Recent production rates have been as high as 830 bopd with an average for 2013 of around 330 bopd. • Plan to drill ~300 wells in 2014. • 6 rigs running. Mechanical Vapor Compressor Units • Delineatin
Slide 26: Qatar
Third Quarter 2013 Earnings - Qatar • Idd El Shargi North Dome (ISND), Idd El Shargi South Dome (ISSD), Al Rayyan, Dolphin project. • Expect returns well in excess of 20%. • In nearly 20 years, have invested $4.3 bln and produced 680 MM bbls of oil. • Significant free cash flow. • 2013 gross product
Slide 27: Qatar Gross Production
Third Quarter 2013 Earnings - Qatar Qatar Gross Production Oxy operated since 1994 previous operators 27 27
Slide 28: Qatar
Third Quarter 2013 Earnings - Qatar • Will drill 17 wells at ISND in 2013 from jack-up rigs in water depth of ~130 feet. • Have drilled 268 horizontal producing wells since 1994, and over 100 horizontal water injectors. • Recent production rates as high as 4,500 bo/d with an average for 2013 of ~1,4
Slide 29: Dolphin
Third Quarter 2013 Earnings - Dolphin • Flagship project in the region. Iran Block 12 • Two offshore platforms in the North Field Al of Qatar bringing gas to the onshore Rayyan plant in Ras Laffan. Dolphin • Process wet gas into condensate, Al NGLs and sulfur; dry gas exported Hawailah 48” Export to
Slide 30: United Arab Emirates
Third Quarter 2013 Earnings - United Arab Emirates Iran • Presence in UAE since 2000 with regional Block 12 hub based in Abu Dhabi supporting Al MENA assets with Engineering, Rayyan Geoscience, Business Development, Dolphin Operations and other functions. Al Hawailah • Dolphin pipeline expanded to 4
Slide 31: Al Hosn
Third Quarter 2013 Earnings - Al Hosn Al Hosn Gas Project • Plant will be able to process ~1 Bcfd of gas from the field and separate it into sales gas, condensate, NGLs and sulfur. • Oxy’s net production expected to be 200+ MMSCFD of sales gas and 20+ MBOEPD of NGLs and condensate. • By the end of 2
Slide 32: MENA Summary
Third Quarter 2013 Earnings - MENA Summary • Currently looking to sell a minority interest in our MENA operations. • Believe this will give us an exciting opportunity to possibly partner with key regional players. • This sale will reduce the Middle East/North Africa share in our overall portfolio. •
Slide 33: MENA Summary
Third Quarter 2013 Earnings - MENA Summary • We are well positioned to meet each of our strategic goals in the region: • We have a highly profitable, vibrant and growing business; • Developed strong and lasting relationships with host countries and will continue to be a preferred strategic partner;
Slide 34: Strategic Review
Third Quarter 2013 Earnings - Strategic Review • Recently announced the initial phase of the Company’s strategic review to streamline and focus our operations in order to better execute the Company’s long-term strategy and enhance value for our shareholders. • As part of the initial actions, Oxy’s B
Slide 35: Strategic Review
Third Quarter 2013 Earnings - Strategic Review • These are the first formal steps in our effort to streamline the business, concentrate in areas where we have depth and scale and improve overall profitability. − Our goal is to become a somewhat smaller company with more manageable exposure to politi
Slide 36: Capital Efficiency & Operating Cost Reduction Program
Third Quarter 2013 Earnings - Capital Efficiency & Operating Cost Reduction Program • Embarked on aggressive plan to improve our operational efficiency across all cost categories; continue to run ahead of full-year objectives. − Reduced our domestic well costs by 22% and operating costs by ~18% rela
Slide 37: California
Third Quarter 2013 Earnings - California • Large and diverse portfolio of opportunities with more than 2.1 million net acres. • Reduced overall operating expenses by more than $4.00/boe. < – Improvement in operating and drilling costs has exceeded our targets. – Expect combined savings of at least $
Slide 38: Permian Non-CO2
Third Quarter 2013 Earnings - Permian Non-CO2 Permian Basin Primary Plays • Accumulated more than 1.7 million net acres covering both relatively established and emerging plays, anchored by our core, high-free cash flow generating CO2 flood reservoirs. • Recently created an exploitation team whose ma
Slide 39: Permian Non-CO2
Third Quarter 2013 Earnings - Permian Non-CO2 Acreage in Select Permian Plays • As a result of these efforts, we can now shift (Thousands of Acres) our development strategy and expect to spend an additional $500 million of capital next year largely directed toward increased drilling of horizontal we
Slide 40: Colombia
Third Quarter 2013 Earnings - Colombia • Our 30+ year history of operating in Colombia has provided us with unique insight around heavy oil production and mature oil field development opportunities. • Historically this has been among Oxy’s most profitable operations. • The experience associated with
Slide 41: MENA
Third Quarter 2013 Earnings - MENA • In our Middle East/North Africa business, the majority of the value in terms of our production, income and cash flow is derived from three key countries - Oman, Qatar and the U.A.E. The majority of our regional capital is also deployed in these countries. • We fe
Slide 42: Chemicals - OxyChem Ingleside Ethylene Cracker
Third Quarter 2013 Earnings - Chemicals OxyChem Ingleside Ethylene Cracker • We plan to pursue a 50/50 joint venture with Mexichem to build a world scale ethylene cracker at the OxyChem plant in Ingleside, TX. • Construction on the Ingleside cracker project is expected to begin in mid-2014 with the
Slide 43: Chemicals - OxyChem's Operations
Third Quarter 2013 Earnings - Chemicals OxyChem’s Operations Significant benefit: Increased integration from • As part of a long-term the well head to VCM strategic supply Market production and sales relationship with Propane/Butane /C5+ Mexichem, essentially Gas Gas NGL Ethane all of the ethylene F
Slide 44: Midstream - BridgeTex Pipeline
Third Quarter 2013 Earnings - Midstream Bridge Tex Pipeline • The BridgeTex pipeline continues on track for scheduled start-up in mid-2014. • The roughly 450-mile-long pipeline will be capable of transporting approximately 300,000 barrels per day of crude oil between the Permian region and the Gulf
Slide 45: Third Quarter 2013 Earnings Conference Call Q&A
Third Quarter 2013 Earnings Conference Call Q&A 45