Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Investor Day (May 2010)
182 slides from Occidental Petroleum's investor day presentation, May 19, 2010
Slide 1: Occidental Petroleum Corporation
Occidental Petroleum Corporation Dr. Ray R. Irani Chairman and Chief Executive Officer May 19, 2010
Slide 2: Oxy Goal
Oxy Goal Top quartile total shareholder return as compared to peers
Slide 3: Key Elements to Achieve Goal
Key Elements to Achieve Goal • Grow production 5-8% compounded over a multi-year period • Maintain return-based focus – 15+% after tax for U.S. assets – 20+% after tax for foreign assets • Increase dividend payout annually • Low level of financial risk
Slide 4: Additional Elements to Achieve Goal
Additional Elements to Achieve Goal • Strong Health, Environment and Safety performance • Bulk of the assets in the United States • Maintain oil focus with significant natural gas exposure • Capture new projects in the Middle East • Make property acquisitions in the U.S. for growth
Slide 5: Actual Worldwide Production
Actual Worldwide Production Thousand BOE/Day Notes: 1) From continuing operations; 2) This schedule reflects what production volumes would have been for the past 5 years if all production had been represented on a pre-tax basis. 7.9% CAGR
Slide 6: Worldwide Production Outlook
Worldwide Production Outlook 1,033 1,118 6.2% Base CAGR
Slide 7: Additional Middle East Opportunities
Additional Middle East Opportunities • Abu Dhabi • Oman • Iraq
Slide 8: Today's Focus
Today’s Focus • Sandy Lowe, President, Oxy Oil & Gas - International Production – Latin America – Bahrain – Oman – Iraq • Bill Albrecht, President, Oxy Oil & Gas - USA – Permian CO 2 Growth – Deep Inventory of Drilling Projects
Slide 9: Today's Focus
Today’s Focus • Anita Powers, EVP Worldwide Exploration – California Conventional Exploration • Todd Stevens, VP - California Operations – California Unconventional Plays
Slide 10: Today's Focus
Today’s Focus • Steve Chazen, President & Chief Financial Officer – Midstream & Chemicals – Production Forecast – Capital Forecast – Acquisition Strategy – Cash Flow Priorities – Investment Attributes • Questions & Answers
Slide 11: International Oil & Gas
International Oil & Gas Sandy Lowe President, Oxy Oil & Gas - International Production May 19, 2010
Slide 12: International Producing Areas
Colombia Libya Oman UAE Yemen Argentina Bolivia Qatar Iraq Bahrain Focus Areas International Producing Areas
Slide 13: Latin America Net Production
Latin America Net Production • 2010 Outlook 79 • 2014 Outlook 95 - 105 $75 WTI Mboepd
Slide 14: Colombia BU Highlights
! ! ! Covenas Ayacucho Vasconia Colombia BU Highlights Llanos Basin - 3 B boe Remaining Oil In Place (ROIP) • Cano Limon - 15 infill wells in 2010 • New Fields on trend with Cano Limon – Some stratigraphic reserves upside – 2 exploration wells this year • 2010 Gross 80 Mbopd, Net 23 Mbopd • 2014 exp
Slide 15: Argentina Asset - Overview
Oxy Argentina Concessions Province Concessions Proved Reserves (MMboe) Current Net Production (Mboepd) Santa Cruz 15 118 39 Chubut 1 3 2 Mendoza 7 9 4 TOTAL 23 130 45 Cuyo Basin Neuquen Basin San Jorge Basin Atlantic Ocean Argentina Asset - Overview Argentina Cuyo Basin Neuquen Basin San Jorge Basin
Slide 16: Argentina - 2010
Argentina - 2010 • 6 B boe ROIP • Oxy Argentina currently operates – 2,200 active wells – 85% oil – 26 waterflood projects, 13 gas plants • 2010 plan – Sign 10 year contract extension, adding over 72 MMboe of proven reserves – Production growth of 8% over 2009 – Drill 140 wells and perform 100 worko
Slide 17: Argentina - Future Plans
Argentina - Future Plans • Contract extension increases the term to 2025 • Opportunity to fully develop and exploit these prolific reservoirs • Continue production growth at 9% per year through 2014 • Perform near field, low risk exploration - 10 wells per year • Drill 140 development wells per year
Slide 18: Middle East/North Africa Net Production
Middle East/North Africa Net Production • 2010 Outlook 286 • 2014 Outlook 358 - 381 $75 WTI Mboepd
Slide 19: Libya Re-Development Plan
Libya Re-Development Plan Benghazi Tripoli • 7 B boe ROIP • Nafoora Augila Field – 255 new wells and 32 workovers – Install 1 MMBD processing & water injection facilities and 100 MW power • Blocks 103 and 74/29 Fields – 96 new wells – Install 500 MBD processing & water injection facilities and 50 MW
Slide 20: Yemen
OXY Exploration OXY Non Operated Production OXY Operated Production Oil Fields / Gas Fields Pipeline Oil Fields / Gas Fields Pipeline Yemen • 2 B bo ROIP • Block S-1 producing 9 Mbopd gross • East Shabwa producing 60 Mbopd gross • Masila producing 71 Mbopd gross – Contract expires 12/2011 – Extensio
Slide 21: Qatar - Oil & Gas Fields
Qatar - Oil & Gas Fields Qatar Al Rayyan Gas Project Idd El Shargi North Dome (ISND) Idd El Shargi South Dome (ISSD) Saudi Arabia Bahrain • Idd El Shargi North Dome (ISND) - 4 B bo ROIP • Idd El Shargi South Dome (ISSD) - 800 MM bo ROIP • Al Rayyan - 300 MM bo ROIP • 2010 Gross Production 118 Mbopd,
Slide 22: Qatar - ISND - Enhancing Production
Qatar - ISND - Enhancing Production Qatar Idd El Shargi North Dome (ISND) Saudi Arabia Bahrain • ISND - applying modern technology – Gross Production - 105 Mbopd – Extensive Horizontal Drilling – Tight matrix waterflood – Multi-lateral production – Early use of multi-lateral source water to injectio
Slide 23: Qatar Projects
Qatar Projects • Phase 1 1994 - 2001 – Drilled 77 Wells – Added gas lift and water injection facilities – Multi-lateral production and injection • Phase 2 2002 - 2005 – Drilled 50 Wells – Added power, gas compression and water injection facilities • Phase 3 2007 - 2010 – Drilled 70 wells – Minor fac
Slide 24: Today 1994
TODA’ ODAY 1994
Slide 25: Oxy Qatar Gross Oil Production
Oxy Qatar Gross Oil Production Oxy operated since 1994 previous operators
Slide 26: Dolphin Project
Dubai Taweelah Jebel Ali Abu Dhabi Al Ain Fujayrah Umm Sa’id Doha Al Hawailah Qatar Saudi Arabia United Arab Emirates Oman Iran 48” Export Pipeline Dolphin Project • Delivering 2.0 Bcfd to UAE and 200 MMcfd to Oman markets • Gross Production over 530 Mboepd • Consistently above anticipated gas / liq
Slide 27: Dolphin Gas Project - Oxy Metrics
Ras Laffan Plant Dolphin Gas Project - Oxy Metrics • Oxy share 24.5% • 2010 Gross production 537 Mboepd, Net production 64 Mboepd • Fee income for UAE distribution and 3rd party sales increasing • 2014 expected Gross production 535 Mboepd, Net 39 Mboepd
Slide 28: $Millions
‘$Millions 300 250 200 160 100 50 2009 2014 Long Term Avg ~~ aS
Slide 29: Oxy Oman History
Oxy Oman History ! Muscat Oman Saudi Arabia UAE • Oxy commenced operation of the Safah field in 1984 • Over 500 wells drilled and 30 fields discovered in Blocks 9 and 27 • Mukhaizna acquired in 2005 • Block 62 acquired in 2008 • 1,300 total wells drilled in Oman • 2010 Gross production 190 Mboepd, N
Slide 30: Oman Gross Production Growth 1984 - 2010
Oman Gross Production Growth 1984 - 2010 Mboepd
Slide 31: Oman Blocks
Oman Blocks 9 & 27 Block 9 Block 27 Safah Field 3D Seismic Coverage • 2.1 B boe ROIP • Gross Production currently at record 91 Mboepd • Exploration – Near field, low risk – Added ~50Mmboe over last five years – Multi-year inventory – Expect to discover ~10 Mmboe gross per year Oil Discovery or Produ
Slide 32: Oman Block KM - 1H1
Oman Block 62 KM - 1H1 Oman Block 62 Maradi Huraymah Field Rasafah Discovery Habiba Discovery Fushaigah Discovery • Oxy is partnered with Oman Oil Company and Mubadala • Develop Maradi Huraymah Field • Appraise 3 gas discoveries – 5 wells – 2 drilled at Habiba – Encouraging logs and cores, testing i
Slide 33: Oman - Mukhaizna
! Muscat Oman Saudi Arabia UAE Oman - Mukhaizna • World Class Steam flood • 2 B bo ROIP • Discovered in 1975 in South Central Oman • Cold production commenced 1992 • Oxy assumed operation September 1, 2005 at 8,500 Bopd • Steam flood commenced May 2007 • Current Gross Production: 100,000 Bopd • Targ
Slide 34: Water Treatment Plant - 2010
Water Treatment Plant - 2010 MECHANICAL VAPOR COMPRESSORS • 7 TRAINS - LARGEST EVER BUILT • CONDITION WATER FOR BOILER FEED • 43 MBWPD PER TRAIN
Slide 35: Bahrain Field Development Plan
Bahrain Field Development Plan • Increase long term gross oil production from 30,000 to over 100,000 Bopd • Increase total sales gas rate from 1.1 Bcfd to over 2 Bcfd • Gross oil production expected to be 70,000 to 75,000 Bopd by 2014 • Gross gas production expected to be 1.6 Bcfd by 2014
Slide 36: Bahrain Field Development
Bahrain Field Development • 7 B bo ROIP • 17 TCF remaining gas in place (RGIP) • JV with OXY, Mubadala & Nogaholding • 19 Reservoirs • Development includes several new reservoirs including steam flood of heavy oil 1.5 B bbl heavy oil 28 TCF gas 6.8 B bbl light oil
Slide 37: Bahrain Work Activities
Bahrain Work Activities • Drilling over 2,500 wells – Increase the rig fleet - building up to 6 drilling rigs and 6 workover rigs • Implement new recovery processes – Waterfloods – Steam injection • Increase fluid and gas handling capacity – Expanding and adding new tank batteries and manifolds – Ad
Slide 38: Iraq - Zubair Field
Iran Kuwait Iraq Iraq - Zubair Field • Agreement Signed January 2010 allows Oxy to: – Produce oil – Take payment in kind – Book reserves • Over 20 B bo ROIP • Gross production of 200 Mbopd by year end, 1.2 MMbopd in 7 years • Base Rate - 182 Mbopd • Rehabilitation Plan of activities submitted April
Slide 39: Iraq - Contract Features
Iraq - Contract Features • Contract allows for quick cost recovery • At current prices, payback occurs in 4 years, sooner if prices rise • Maximum cash outlay at risk is $800 million • Ultimate recovery net to Oxy is 210 MMBO at current prices
Slide 40: Iraq - Current Activities
Iraq - Current Activities • Consortium presence of 40 personnel currently in Zubair increasing to 150 by year end • Consortium working with the Iraqi South Operating Company (SOC) to form the Zubair Field Operating Division (ZFOD) • Anticipate Zubair 10% gross production increase and Rehabilitation
Slide 41: International Net Production
International Net Production Middle East / Africa 286 358-381 Latin America 79 95-105 TOTAL 365 453-486 2010 2014 Outlook Estimate MBOEPD
Slide 42: International Summary
International Summary - 5 years Grow: • Oman gross production from 190 to 240 Mboepd • Bahrain gross oil production from 30 to 75 Mbopd • Bahrain gross gas production from 1.1 to 1.6 Bcfd • Argentina gross production from 50 to 85 Mboepd • Iraq gross production from 182 to 880 Mbopd Continue generat
Slide 43: United States Production Operations
United States Production Operations Bill Albrecht President, Oxy Oil & Gas - USA May 19, 2010
Slide 44: Overview
Overview • Permian – Primary Development – CO 2 Growth Opportunities • California – Elk Hills Development – Other California • Mid-Continent – Piceance Overview – Hugoton Overview • Domestic Summary
Slide 45: Permian
PERMIAN
Slide 46: Permian Overview
Permian Overview • Oxy’s largest business unit • 180,000 BOEPD • Largest oil producer in Texas • Largest oil producer in Permian (20% of total) • Largest operator in Permian (of 1,500+ operators) • 10,000+ interest owners • 100,000 square mile area • Acreage – 3,600,000 gross – 2,200,000 net • 1.1 B
Slide 47: Permian Basin Growth Opportunities
Permian Basin Lubbock Texas New Mexico Oklahoma Bravo Dome CO 2 Source Midland Permian Growth Opportunities Permian Basin • Primary Development (1,000+ locations) – Plan a 6-7 rig program – Dora Roberts Wolfberry – Continued southeast New Mexico exploitation – Deeper added plays • CO 2 Growth – Exis
Slide 48: Permian Primary Development
Permian Primary Development Shallow (4,000-10,000 feet) • Non-traditional pays, e.g., “Wolfberry” play at Dora Roberts (250 well program) • Historically uneconomic pays with horizontal drilling applications, e.g., Delaware and Bone Springs sands Delaware Sands “Wolfberry” Delaware Sands (Oil) 200+ l
Slide 49: Permian Deep Added Plays
Devonian Potential Added Plays Devonian (Oil) Deep (10,000-15,000 feet) • Horizontal Devonian opportunities • Ellenburger oil and deeper Ellenburger gas • Morrow sand opportunities on southeast New Mexico acreage • These deeper plays are on acreage Oxy already owns Delaware Sands Fusselman Ellenburg
Slide 50: Permian Added Plays
Permian Added Plays • Added plays inventory – ~1,000 locations and 90-100 MMBOE net risked reserves • Infill drilling inventory – ~1,100+ locations, greater than a 10-year inventory at existing drilling pace • Higher oil prices bringing new opportunities (1,100 additional locations, 25-40 MMBOE) whi
Slide 51: Permian Basin CO2 Floods EOR Production is Growing
Permian Basin CO 2 Floods EOR Production is Growing Note: Based on data obtained from the O&GJ 2010 Biannual EOR Survey 22% of Permian Basin’s Oil Production
Slide 52: Permian Basin CO2 Floods Number of Active Projects
Permian Basin CO 2 Floods Number of Active Operated CO 2 Projects 14 other companies • Permian Basin CO 2 Floods • First floods initiated 35 years ago • Over 50 CO 2 floods in Permian Basin Note: Based on data obtained from the O&GJ 2010 Biannual EOR Survey
Slide 53: Permian Basin CO2 Floods EOR Production
Permian Basin CO 2 Floods Operated CO 2 Projects EOR Production, BOPD 14 other companies • Permian Basin CO 2 Floods • First floods initiated 35 years ago • Over 50 CO 2 floods in Permian Basin Note: Based on data obtained from the O&GJ 2010 Biannual EOR Survey
Slide 54: Permian Oil Production
Permian Oil Production CO 2 Flood Waterflood Primary 60% 30% 10%
Slide 55: Examples of CO2 Flood Response
Examples of CO 2 Flood Response 1-2 yrs. avg. response time
Slide 56: Examples of CO2 Flood Response
Examples of CO 2 Flood Response 1-2 yrs. avg. response time
Slide 57: Examples of CO2 Flood Response
Examples of CO 2 Flood Response 1-2 yrs. avg. response time
Slide 58: Examples of CO2 Flood Response
Examples of CO 2 Flood Response 1-2 yrs. avg. response time
Slide 59: Examples of CO2 Flood Response
Examples of CO 2 Flood Response 1-2 yrs. avg. response time
Slide 60: CO2 Surveillance - Step Change
CO 2 Surveillance - Step Change Pattern Layout Evaluated more than 50 parameters for each pattern Facilitated by new generation of tools Traditional Process New Process Typical pattern = One injector and four producers 1800 CO 2 Patterns Applied at Pattern Level • Flood specific tools • Only applied
Slide 61: Permian CO2 Surveillance
Permian CO 2 Surveillance Results of Surveillance Effort • Constructed new tools to enable review of 1,600 patterns in two months • Re-allocated CO 2 to better performing patterns • Defined 3,000+ BOPD improvement with equal volume of CO 2 injected • Developed skills to maintain efficiency
Slide 62: EOR Opportunities
4.6 BBO 0.8 BBO 1.4 BBO 1.0 BBO EOR Opportunities 3P Reserves EOR Likely EOR Potential Residual 7.8 BBO Net Remaining • 4.1 BBO have been produced, • leaving 7.8 BBO net remaining
Slide 63: Reserves and CO2 Requirements
Net Reserves* (MMBOE) Net CO 2 Required (TCF) Developed 570 2.8 Undeveloped TOTAL 430 1,000 2.2 5.0 Reserves and CO 2 Requirements “The next billion barrels” * 3P Reserves
Slide 64: CO2 Growth Opportunities
CO 2 Growth Opportunities • Currently produce 1.7 BCF/day (0.5 TCF/year) • Short term CO 2 purchase opportunities (1.1TCF) – More opportunity to purchase additional CO 2 volumes – Recently contracted for additional 100 MMCFD • Oxy produced CO 2 (1.6 TCF) – Can add CO 2 by drilling more wells • Addit
Slide 65: Additional CO2 Supply vs. Demand
Additional CO 2 Supply vs. Demand • Should Piñon development cease, currently developed CO 2 would continue to be available to Oxy at similar rates • If Century Plant CO 2 delivery schedule not met, adequate CO 2 supply exists today on the market to cover the shortfall • Penalties paid for non-deliv
Slide 66: Permian - Century CO2 Plant Project
Permian - Century CO 2 Plant Project • Plant design – Inlet = 675 MMCFD – Train I = 260 MMCFD CO 2 – Train II = 180 MMCFD CO 2 • Expected start up: – Train I - 4 th Quarter 2010 – Train II - Early 2012
Slide 67: Permian CO2 Floods (with additional CO2)
Permian CO 2 Floods (with additional CO 2 ) • Flood Expansions: Slaughter (in 6 Units) Levelland (3 Units) Wasson (ROZ, 3 Units) Seminole (ROZ, Hess) South Hobbs North Cowden ROZ Expansions (numerous projects) • New CO 2 Floods : West Seminole Sharon Ridge Clearfork Reservoirs • Slug Size Increases
Slide 68: Typical CO2 Project Cost Structure
Typical CO 2 Project Cost Structure * $75 / Bbl Marker Price
Slide 69: Permian - Summary
Permian - Summary • Primary development – Deep inventory of 2,000+ drilling locations, mostly oil, with 150+ MMBOE risked reserve exposure – Locations on acreage Oxy already owns • CO 2 growth – 1-3 billion BBLS net of enhanced recovery reserves expected from Oxy Operated CO 2 floods – Significant i
Slide 70: California
CALIFORNIA
Slide 71: California Overview
California Overview • 143,000 BOEPD • 780 MMBOE net proved reserves (24% of Oxy total) • Main producing assets are Elk Hills, Wilmington, and other assets in the San Joaquin, Ventura, Sacramento and LA basins • #1 natural gas producer and #2 oil producer in the state • Largest fee mineral owner in t
Slide 72: Elk Hills Key Facts
Elk Hills Key Facts • Took over operations in February 1998 • Approximately 78% ownership • 538 million BOE proved reserves (70% of CA total) • Produced 400 million BOE (1998-2009) • ~125% production replacement • Largest CA gas & NGL producer • 5 th largest CA oil producer • Largest gas plant in CA
Slide 73: California Development
California Development Elk Hills • Development Drilling – Continued focus on Stevens sands and shales (60+ wells in 2010) – Re-focused effort on eastern shallow oil zone development (129 wells and 57 workovers) – Maintain a 7-rig program
Slide 74: Elk Hills Drilling Location Inventory
Elk Hills Drilling Location Inventory Drilling Inventory Shallow Oil 1,060 Stevens Sands & Shales 700 Total 1,760
Slide 75: Elk Hills Gas Plant Expansions
Elk Hills Gas Plant Expansions Gas Plant Capacity MMCFD Current 420 Late 2Q 2010 Skid Plant 90 Q1 2012 Cryo Plant 200 Total 710 • 200 MMCFD plant-largest that could be built in 20-24 months • Awarded contract for the plant, and work has begun • Deeper NGL recovery, high sales gas quality • Largest,
Slide 76: California Development - Kern County Discovery
California Development - Kern County Discovery • Currently have 24 wells capable of producing ~45 MBOEPD – Currently gas plant constrained – When 90 MMCFPD skid mounted facility is brought online, it will be filled • Planning to drill an additional 20 wells in 2010 (oil focused) • Extension opportun
Slide 77: California Development - North Shafter
California Development - North Shafter • North Shafter Field – Acquired 58% in 2004, and the remainder in 2009 – Now 100% Oxy – 140+ MMBOEIP – 7.3% current Recovery Factor – 44 active wells – Potential to reduce 80 acre well spacing to 40 acres • New Concept – California’s first cemented liner, plug
Slide 78: California Development - Heavy Oil
California Development - Heavy Oil • Producing: – 580 Wells, 22 MMbo Net • Undeveloped: – 720 Wells, 42 MMbo Net Historical Steam Development Proved Undeveloped Probable Undeveloped
Slide 79: Oxy Long Beach Overview
Oxy Long Beach Overview Wilmington Field • Among Top 10 largest oilfields in North America – 6-8 Billion barrels in place – 2+ Billion recovered to date • Significant redevelopment upside • Oxy partnering with State, City of Long Beach, and the Port of Long Beach
Slide 80: Oxy Long Beach Development
Oxy Long Beach Development • Steadily growing field ownership – Current stake in over 80% of properties • Tidelands is a service contract; THUMS Long Beach is a PSC • Converted a portion of Tidelands contract to a PSC through deal with Port of Long Beach • Currently negotiating with the State to do
Slide 81: California - Summary
California - Summary • Primary development – Current inventory of 3,700+ drilling locations – Locations on HBP or Oxy owned fee minerals – Recent Kern county discovery does not materially change gas/oil production mix – Long Beach is a growth opportunity with recent increases in equity ownership • I
Slide 82: Mid-Continent
MID-CONTINENT
Slide 83: Mid-Continent Gas Business Unit
Mid-Continent Gas Business Unit
Slide 84: Piceance Position Overview
Cascade Creek Collbran Valley Piceance Position Overview Oxy Acreage Legend 65 Miles • ~120,000 net acres • ~ 640 mmboe total resource base (> 3.8 TCFE) • ~ 6,000 undrilled locations
Slide 85: Piceance Development
Piceance Development • Prudent development approach short term, because of low current gas prices – One rig program currently • Excellent acreage – Own legacy fee acreage with low royalty (15,000 acres <1% royalty) • Focused operations – Reduced unit operating costs by 40+% in 2009 – Specialized Pic
Slide 86: Piceance Development Economics
NYMEX Price Realized Price ($/MMBTU) Capital ($MM) Reserves/Well (BCFE) ROR $4.00/MMBTU $3.62 $2.1 1.6 19% $6.00/MMBTU $5.36 $2.1 1.6 40% Piceance Development Economics
Slide 87: Hugoton - Oil Drilling Opportunities
Chase Council Grove Wabaunsee Shawnee Lansing Kansas City Marmaton Cherokee Atoka Morrow Chester St. Genevieve Summer Heebner 2500’ 4000’ 6000’ Hugoton - Oil Drilling Opportunities Legacy Acreage Recently Acquired Acreage Shallow Formations Gas Lower Formations Oil + Gas • 185 miles long by 45 miles
Slide 88: Mid-Continent Gas - Summary
Mid-Continent Gas - Summary • Primary development – Prudent approach to gas drilling – 3.8 TCFE Resource – 6,000+ drilling locations – Low royalty burden enhances economics – Recent Hugoton acquisition doubles acreage position and adds significant oil location inventory • Production – Expect to grow
Slide 89: Domestic Summary
DOMESTIC SUMMARY
Slide 90: Domestic Drilling Location Inventory
Drilling Inventory Mid-Continent 6,500 Other California 1,870 Permian Primary 1,350 Elk Hills Shallow Oil 1,060 Permian ROZ deepenings 800 Elk Hills Stevens 700 Kern County discovery 50 TOTAL 12,330 Domestic Drilling Location Inventory
Slide 91: Domestic Net Production
Domestic Net Production Permian 184 185 180 220-230 California 128 134 151 212-222 Mid-Continent 49 57 60 80-100 TOTAL 361 376 391 512-552 CAGR, % 6.4 - 8.0 2010 2014 2008 2009 Outlook Estimate MBOEPD
Slide 92: Domestic Summary
Domestic Summary • Stable, low decline base production • Deep inventory of drilling projects, mostly oil, across all domestic business units (12,000+ locations) • Large inventory of existing and new CO 2 floods with adequate CO 2 supplies secured • California continues to be a major production growt
Slide 93: California Conventional Exploration
California Conventional Exploration Anita Powers EVP Worldwide Exploration May 19, 2010
Slide 94: Conventional Reservoirs
Conventional Reservoirs Source: Modified from Schlumberger These are the reservoirs that are capable of natural flow and will produce economic volumes of oil and gas without special recovery techniques.
Slide 95: Occidental Petroleum - Why California
Occidental Petroleum • Why California – High potential, underexplored – Dominant position – Favorable geology, many plays – Kern County Discovery – Just started, multi year inventory
Slide 96: California Oil and Gas Overview
California Oil and Gas Overview Sources: California Division of Oil, Gas & Geothermal Resources Gibson Consulting Oxy Fee/Lease 2 Billion BOE 20 Billion BOE 3 Billion BOE 10 Billion BOE Major Producing Basins Sacramento Sacramento San Francisco San Francisco Los Angeles Los Angeles Bakersfield Baker
Slide 97: California Exploration History
California Exploration History Discovery Year Drill Oil and Gas Seeps Drill Surface Features 2D Seismic Small Discoveries Since mid 1970’s • Little exploration activity • Few discoveries Why? • Super major focus? • Shift to EOR? • Limited potential? • Too little exploration ? Sources: California Div
Slide 98: USGS Undiscovered Upside Resources
USGS Undiscovered Upside Resources USGS National Assessment of Oil and Gas Update (2008) * Excludes Federal Waters Total US Onshore 90 BBOE California Only 11 BBOE (12%) Conventional Oil and Gas - L/48
Slide 99: California Exploration Drilling
California Exploration Drilling Sources: EIA, IHS wells with recorded spud dates and Oxy estimated spud As a percentage of the Total U.S. Exploration
Slide 100: Occidental Petroleum - Why California
Occidental Petroleum • Why California – High potential, underexplored – Dominant position – Favorable geology, many plays – Kern County Discovery – Just started, multi year inventory
Slide 101: Oxy Land Position Today
Oxy Land Position Today Competitor data estimated by Oxy 4Q 2009 Oxy 1.3 Competitor A 0.4 Competitor B 0.3 Competitor C 0.3 Competitor D 0.1 California Net Acreage Million Acres Sacramento Sacramento Los Angeles Los Angeles Bakersfield Bakersfield South San Joaquin Valley Oxy Fee/Lease
Slide 102: 1998 Fee Holdings
1998 1998 Fee Holdings • Elk Hills Acquisition in 1998 Elk Hills Field Kern Front Field Bakersfield Taft
Slide 103: 1998 - 2005 Fee Holdings
1998 - 2005 1998 Fee Holdings 1999-2005 Lease/Fee Additions 1998-2005 3D Seismic 1998-2005 Exploration Wells • Elk Hills Acquisition in 1998 • Learn, build, explore close-in Elk Hills Field Kern Front Field Bakersfield Taft
Slide 104: 1998 - 2010 Holdings
1998 - 2010 Bakersfield Taft Elk Hills Field Kern Front Field 1998 Fee Holdings 1999-2005 Lease/Fee Additions 2005-2010 Lease/Fee Additions 1998-2005 3D Seismic 2005-2010 3D Seismic 1998-2005 Exploration Wells 2005-2010 Exploration Wells* • Elk Hills Acquisition in 1998 • Learn, build, explore close
Slide 105: Occidental Petroleum - Why California
Occidental Petroleum • Why California – High potential, underexplored – Dominant position – Favorable geology, many plays – Kern County Discovery – Just started, multi year inventory
Slide 106: Favorable Geology
Favorable Geology Oxy Fee/Lease San Francisco San Francisco Los Angeles Los Angeles Major Producing Basins Sacramento Sacramento Bakersfield Bakersfield Multiple Reservoirs Rich Marine Oil and Gas Source Rocks Tectonics Form Variety of Trap Types
Slide 107: Conventional Exploration Plays
Conventional Exploration Plays Producing Intervals AGE PLEISTOCENE PLIOCENE MIOCENE OLIGOCENE EOCENE CRETACEOUS UPPER MyBP Reservoir Source Anticlines Simple Complex Normal Faulted Closures Stratigraphic Reverse Pinch-out Facies Change
Slide 108: Oxy California Play Focus
Oxy California Play Focus • Targeting Oil Prone Plays and Areas • Integrate Well, Seismic, Outcrop and Analog Data • Forensic geology - not all information resides on a workstation • Challenge what is known • No magic bullets - Just good solid geoscience 47 Plays Identified San Joaquin Ventura L.A.
Slide 109: Oxy Play Grouping
Limited Potential One-Offs Ideal Traditional Bread & Butter High Potential ? Emerging Discovery Play Oxy Play Grouping Prospect Size Limited Potential One-Offs Ideal Traditional Bread & Butter High Potential ? Emerging Discovery Play
Slide 110: California Field Sizes
California Field Sizes Field Size (MMBOE) Oxy Play Type and Prospect Exposure Sources: California Division of Oil, Gas & Geothermal Resources Occidental Estimates
Slide 111: Occidental Petroleum - Why California
Occidental Petroleum • Why California – High potential, underexplored – Dominant position – Favorable geology, many plays – Kern County Discovery – Just started, multi year inventory
Slide 112: Discovery Play
Discovery Play Mix of Sand and Silts Gross: 1,500 ft. Net Pay: 600-1000 ft. Upper Reservoirs IP ~ 10-30 MMCF/d 36 bc/MMcf, 1,100 BTU Lower Reservoirs IP ~ 100-2000 BO/d 1-3 MMCF/d Clastic Zone SP Log Rock Fluid Gross: 2,300 ft. Net Pay: 1,000 ft. IP ~ 100-500 BO/d 0.3 - 2 MMCF/d SP Log Rock Fluid “S
Slide 113: Kern County Discovery
Kern County Discovery Gas Condensate Zone Oil Zone • 24 wells drilled to date • Observed tighter intervals on edges of field – Modified completions of 6 wells • Increased flow rates • Ex: Low flow to >1,000+ BOEPD – 2 horizontal wells planned 2010 • Exploit thick laminated pay intervals • Field limi
Slide 114: Kern County Discovery
Kern County Discovery Gross Production Actual Forecast Discovery Volumes (Net MMBOE) Results after 24 Wells: Produced + Proved 88 Probable 47 Possible 40 - 115 End 1Q ‘10 175 - 250 2010 Step-Out Plan 100 - 150 Total Net Potential 275 - 400 Gross Potential 350 - 500
Slide 115: Occidental Petroleum - Why California
Occidental Petroleum • Why California – High potential, underexplored – Dominant position – Favorable geology, many plays – Kern County Discovery – Just started, multi year inventory
Slide 116: California Exploration Program
California Exploration Program * Includes recompletions and deepenings
Slide 117: Exploration Going Forward
Exploration Going Forward * includes Deepenings and Recompletions 14-20 Wells 3-5 Wells 3-5 Wells San Francisco San Francisco Los Angeles Los Angeles Sacramento Sacramento Bakersfield Bakersfield Major Producing Basins Oxy Fee/Lease 2011 - 14 Annual Program # Wells* 3D Seismic - 200-400 km 2 per yea
Slide 118: California Conventional Exploration
California Conventional Exploration • Tremendous potential – Attractive risk profile (Oxy 1 in 3 success rate) • Dominant land position • Kern County Discovery – 175 - 250 MMBOE net discovered with significant upside • Discovery Play – 7-10 prospects/year – Each prospect • 100 - 125 MMBOE, average •
Slide 119: California Unconventional
California Unconventional Todd Stevens VP - California Operations May 19, 2010
Slide 120: Unconventional Reservoirs
Unconventional Reservoirs “These are the reservoirs that cannot be produced at economic flow rates or that do not produce economic volumes of oil and gas without assistance from massive stimulation treatments or special recovery processes and technologies.” Source: Schlumberger Presentation
Slide 121: Agenda
Agenda • California “Shale” Background • Oxy’s “Shale” Program • California “Shale” Technical Attributes • California “Shale” Analogs • Summary
Slide 122: Locator Map
Locator Map “Shale” Production “Shale” Production Los Angeles Los Angeles Bakersfield Bakersfield Oxy Acreage
Slide 123: Stratigraphic Column - Major Producing Basins
Stratigraphic Column - Major Producing Basins BASIN: SACRAMENTO LOS ANGELES AGE FORMATION MEMBER / ZONE MEMBER / ZONE MEMBER / ZONE PLEISTOCENE PLIOCENE MIOCENE OLIGOCENE EOCENE CRETACEOUS UPPER TEMBLOR MONTEREY myBP JURASSIC GAS SANDS FORBES PHACOIDES / VEDDER CARNEROS / OLCESE SAN JOAQUIN MEMBER /
Slide 124: California Shales - Target Zones
California “Shales” - Target Zones Antelope Santos/Salt Creek Kreyenhagen Sacramento Santos Sandstone Reservoirs / Conventional Plays Source Rocks and “Shales” / Unconventional Plays
Slide 125: California Shales - Under the Radar Unconventional Play
California “Shales” - “Under the Radar” Unconventional Play • Oil and gas companies in California, in particular Oxy, have been producing from unconventional plays for a number of years • California “shales” compare very favorably with some of the higher profile plays in other states • Since acquiri
Slide 126: San Joaquin Basin: Breaking the Paradigm
San Joaquin Basin: Breaking the Paradigm • Unlock the potential: – Tight Sands (w/shows) – Oxy’s “Shale” Successes – Carbonates (lower Monterey / Santos?) – Encouraging results – Kern County discovery • Historical view of California reservoirs: – Permeable Sands – Shales (biosiliceous rocks - diatom
Slide 127: Petroleum Resource Generation by Zone
Petroleum Resource Generation by Zone After : Brown (2001)
Slide 128: Thermal Regime - Source Rock Kitchens
Thermal Regime - Source Rock Kitchens
Slide 129: Thermal Regime - San Joaquin Basin
Thermal Regime - San Joaquin Basin
Slide 130: Thermal Regime - Los Angeles and Ventura Basins
Thermal Regime - Los Angeles and Ventura Basins
Slide 131: Thermal Regime - Silica Phases
Thermal Regime - Silica Phases 60º 70º 80º 90º 50º 40º 30º 20º 10º Opal A Opal CT Quartz Biogenic Silica in wt % Detritus in wt % Siliceous Mudstone Porcelanite Chert Silica Phase Diagram Modified after Behl & Garrison, 1994 Antelope Shale Facies
Slide 132: Agenda
Agenda • California “Shale” Background • Oxy’s “Shale” Program • California “Shale” Technical Attributes • California “Shale” Analogs • Summary
Slide 133: Occidental Shale Production
Occidental “Shale” Production • “ Shale” drilling program really started in 1998 at Elk Hills • Currently, over 1/4th of Oxy’s production in California comes from “shales” – Have successfully tested concept in eight more fields • Undertaking 4 year development program – Appraising 20+ BBOE in place
Slide 134: Occidental Acreage - Southern California
Occidental Acreage - Southern California • Oxy has over 1.3 MM net acres in California • Largest acreage position in the state • Oxy “shale” production spans multiple basins
Slide 135: Occidental Shale Production
Occidental “Shale” Production
Slide 136: Sample of Shale Producing Fields
Sample of “Shale” Producing Fields
Slide 137: Drivers for Success - California Shales
Drivers for Success - California “Shales” • Stimulation recipe innovation – Large acid treatments key to unlocking potential in some areas • Interval production testing – Distinguish between oil-producing, wet and other zones – Determine hydrocarbon properties and quality • Reservoir characterizatio
Slide 138: Representative Shale Type Curves
Representative “Shale” Type Curves
Slide 139: [=ar Gas
100 [=ar 90 Gas 900 80 800 70 700 - @ 600 2 @ 50 500 = = a 6 oa 40 400 30 300 20 200 40 100 & 0 1.3.5 7 G 1113 15 17 19 21 23 25 27 2931 33 35 37 39.41 43 45 47 49 51 $3 55 57 50 Months —~ Se ~~
Slide 140: Horizontal Shale Type Curve
Horizontal “Shale” Type Curve
Slide 141: Agenda
Agenda • California “Shale” Background • Oxy’s “Shale” Program • California “Shale” Technical Attributes • California “Shale” Analogs • Summary
Slide 142: Comparison of Major California Shales
Comparison of Major California “Shales”
Slide 143: CA Shales - Critical Technical Aspects
CA “Shales” - Critical Technical Aspects • Organic Rich “Shales” – Good TOC – Thermal Maturity – Source and Reservoir Rock • Gross Thickness – Active Margin Basins • Unique Depositional Environment – Deep vs. Shallow water – Diatom & Foram Rich
Slide 144: Agenda
Agenda • California “Shale” Background • Oxy’s “Shale” Program • California “Shale” Technical Attributes • California “Shale” Analogs • Summary
Slide 145: California Shale Analogs
California “Shale” Analogs • California oil “shales” compare very favorably to developed unconventional oil plays • Bakken and Eagle Ford are best analogs – Large amounts of hydrocarbons generated and in place – Reservoir parameters are similar – Predominantly oil/liquids plays – Significant learnin
Slide 146: Play Comparison: Depth, Thickness, Porosity, Permeability, TOC
Play Depth Thickness Porosity Permeability Toc (ft) (ft) (%) (mD) (%) CA “Shales” 3,500'- | 500°-3,500" 5-30% <0.0001 -2 01-12% 16,000" Bakken 7,000'- 20'— 100" 312% 0.05-0.5 22-18% 11,000" Eagle Ford 8,000"- 75'-300' 3-15% <0,0001 - 003, 0.6-7% 14,000" —— a (
Slide 147: Agenda
Agenda • California “Shale” Background • Oxy’s “Shale” Program • California “Shale” Technical Attributes • California “Shale” Analogs • Summary
Slide 148: Summary
Summary • ~870,000 acres are within most prospective “shale” plays • Oxy’s average NRI ~95% • Multiple potentially productive “shale” zones in each well • Oxy’s acreage encompasses favorable thermal regime • Identified 15 areas to appraise over the next 4 years (5-10% of total acreage) – Initially t
Slide 149: Occidental Petroleum Corporation
Occidental Petroleum Corporation Stephen I. Chazen President and Chief Financial Officer May 19, 2010
Slide 150: Agenda
Agenda • Midstream & Chemicals • Production Forecast • Capital Forecast • Acquisition Strategy • Asset Return Results • Cash Flow Priorities • Investment Attributes
Slide 151: Midstream Overview
Midstream Overview • 3-Year Average EBIT was $374 Million • 2009 EBIT was $235 Million • $3.8 Billion net PP&E and investments • Significant and growing fee income Midstream 3-Year Average EBIT
Slide 152: Midstream Lines of Business
Midstream Lines of Business Gas Processing • Located near our domestic producing operations • Processes both Oxy and third-party gas • Spread between natural gas and NGL prices drives business Marketing & Trading • Maximizes value of company’s production – Spread in pricing between various grades of
Slide 153: Midstream Lines of Business
Midstream Lines of Business Pipelines • Oxy owns 2,760 miles of oil pipeline in Permian Basin and Oklahoma • 22% ownership of Plains All American Pipeline, G.P. • 24.5% ownership of Dolphin Pipeline • Fee-based business Power Generation • Oxy power and steam generation facilities at our Louisiana an
Slide 154: Midstream 5-Year Outlook
Midstream 5-Year Outlook EBIT Growth to $1 Billion Annually by 2014 • Increased pipeline fees • Addition of Phibro • Increased gas and CO 2 plant capacity • Bolt-on acquisitions likely
Slide 155: Chemicals Overview
Chemicals Overview • 5-Year Average EBIT was $688 Million • $ 389 Million EBIT in 2009 • $ 2.6 Billion Net PP&E • Focus on Chlorovinyls • Major Factor in its Industry • Earnings are Volatile See attached for GAAP reconciliation
Slide 156: Major Market End Uses for OxyChem Products
Major Market End Uses for OxyChem Products * Other Products Accounted for 12% of Sales & 16% of Earnings in 2009 Chlorovinyls • Building Materials / Automotive Products • Pulp & Paper / Aluminum Production • Water Treatment / Disinfection • Medical Products • Fertilizers / Ag Feed Other Products * •
Slide 157: Chemical Companies Comparison
Chemical Companies Comparison See attached for GAAP reconciliation
Slide 158: Chemicals 5-Year Outlook
Chemicals 5-Year Outlook • Expect average annual EBIT of $700 Million over next five years • Opportunity for small bolt-on acquisitions
Slide 159: E&P Business Drivers
E&P Business Drivers • Volume Growth • Capital Expenditures • Acquisitions • Return Targets
Slide 160: Volume Growth Drivers
Volume Growth Drivers • Base 5 - 8% Growth – CO 2 in Permian – Current California risked prospects – Rockies gas – Bahrain – Oman – Iraq • Upside from Existing Holdings – New California conventional and unconventional prospects – Permian exploration – Rockies gas – Argentina • Additional opportuniti
Slide 161: Major Potential Drivers of Production and Profitability
Major Potential Drivers of Production and Profitability • California Non-conventional – 870,000 potential acres with virtually no royalties – EUR of 400 - 700 MBOE per well – Modest F&D – Modest success built into production wedge • California Conventional – 50 prospect inventory and growing – Low F
Slide 162: Major Potential Drivers of Production and Profitability
Major Potential Drivers of Production and Profitability • Rockies Gas – 3.8 TCFE potential – Base uses $6.00 gas in 2014 – Upside case is $7.00 gas in 2014 • Permian CO 2 – 3 billion net barrels in resource from Oxy operated only – Possibly more CO 2 available over the 5-year period – Probable bette
Slide 163: U.S. Production Outlook
U.S. Production Outlook Thousand BOE/Day 6.4% Base CAGR 10.9% Total CAGR
Slide 164: Major Potential Drivers of Production and Profitability
Major Potential Drivers of Production and Profitability • Bahrain – Base case shows steady but not aggressive progress – Possible better oil results by 2014 • Oman – Base shows only modest growth of Oman gas markets – Likely better growth by 2014 • Libya – Little progress assumed – Possible need by
Slide 165: Major Potential Drivers of Production and Profitability
Major Potential Drivers of Production and Profitability • Argentina – Modest base case shown – Potential is very high • Iraq – Field is capable of outperforming our estimates
Slide 166: International Production Outlook
International Production Outlook Thousand BOE/Day (Assumes $75 WTI Price) 6.0% Base CAGR 7.5% Total CAGR
Slide 167: Worldwide Production Outlook
Worldwide Production Outlook Thousand BOE/Day (Assumes $75 WTI Price) 1,033 1,118 6.2% Base CAGR 9.4% Total CAGR
Slide 168: Capital
Capital 2010 - 2014 Capital - $27.5 Billion International share will remain at 45% of Capital Program
Slide 169: Acquisition Strategy
Acquisition Strategy • Company’s core business is acquiring assets that can provide future growth through improved recovery – Foreign contracts – Domestic add-ons – Small incremental additions to production in short term • Generate returns of at least 15% in the U.S. and 20% internationally • Overal
Slide 170: Sources of Acquisitions
Sources of Acquisitions • Permian – 1,500+ Operators; 75,000+ Royalty owners • California – Large acreage holders • Other U.S. – Small investments in emerging plays • Foreign – Additional foreign contracts
Slide 171: Reserves Replacement
Reserves Replacement 2005 128 139 104 371 220% 169 2006 137 325 51 513 259% 198 2007 254 60 (72) 242 116% 208 2008 247 210 (121) 336 153% 220 2009 173 160 150 483 206% 235 3-Year Avg. 225 143 (14) 354 160% 221 5-Year Avg. 188 179 22 389 189% 206 Improved Reserve Worldwide Recovery Acquisitions Other
Slide 172: Acquisitions
Acquisitions 2005 $ 1,807 139 128 2006 $ 4,463 325 137 2007 $ 1,103 60 254 2008 $ 3,202 210 247 2009 $ 703 160 173 Investment in Reserves Immediately Improved Acquisitions Added from Acquisition Recovery ($ Million) (MMBOE) (MMBOE) See attached for GAAP reconciliation
Slide 173: Return on Assets
Return on Assets Net Income Return on Assets U.S. 19% International 24% Total E&P 21% Cash Flow* Return on Assets U.S. 27% International 41% Total E&P 31% * Net Income + DD&A 5 Year Average 5 Year Average See attached for GAAP reconciliation
Slide 174: Finding & Development Costs per Barrel
Finding & Development Costs per Barrel F&D Costs Actual as a % of 6:1 * Prices ** WTI Price * Oil / Gas Energy Content (Industry convention) ** Gas converted to BOE @ WTI Oil Price / NYMEX Gas Price See attached for GAAP reconciliation 2009 $ 7.90 $ 9.64 16% 3-Year Average $15.04 $18.40 24% (2007 -
Slide 175: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase
Slide 176: Capital Spending Program
Capital Spending Program Growth Capital $ 1.8 $ 11.2 Base Capital 2.5 15.0 Total Oil & Gas and Midstream Capital $ 4.3 $ 26.2 ($ in Billions) 2010-2014 Oil & Gas and Midstream Capital 2010 Cumulative • Base Oil & Gas capital historically running at $2.5 billion • As production increases, the base ca
Slide 177: $1.70 $1.50 $1.30 $1.10 $0.90 $0.70 $0.50 $0.52 $0.55 $0.50 $0.30 Prior Mar-03 Mar-04
$1.70 $1.50 $1.30 $1.10 $0.90 $0.70 $0.50 $0.52 $0.55 $0.50 $0.30 Prior Mar-03 Mar-04 Mar-05 Dec-05 Sep-06 Sep-07 Jun-08 Jun-09 Jun-10 —— Se ~~
Slide 178: Conservative Accounting
Conservative Accounting Proved Unproved Properties Developed plus Goodwill / Reserves / Total Net Capitalized Costs Company Proved Reserves plus Goodwill OXY 77.3% 6.7% A 54.4% 10.0% B 59.2% 21.6% C 69.1% 8.2% D 70.5% 39.3% E 70.3% 40.5% F 61.4% 13.6% G 70.7% 21.9% H 70.1% 22.6% I 67.3% 3.4% J 56.6%
Slide 179: Capital Program Effectiveness
Capital Program Effectiveness Five years Ten Years Company ended 12/31/09 ended 12/31/09 OXY $2.67 $2.57 A $2.28 $2.53 B $1.67 $1.31 C $1.38 $1.63 D $1.38 $1.29 E $1.06 $1.13 F $0.75 $1.28 G $0.60 $0.83 H $0.25 $0.66 I ($0.60) $0.87 J ($1.15) ($0.24 ) * Impairments greater than 5% of Shareholders’ E
Slide 180: Investment Attributes
Investment Attributes • 5 - 8% base annual production growth • Opportunity for additional volume growth • Annual increases in dividends • Significant financial flexibility for opportunities in distressed periods • Conservative financial statements • Returns on invested capital significantly in exces
Slide 181: Forward-Looking Statements
Forward-Looking Statements Statements in this release that contain words such as “will,” “expect” or “estimate,” or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause actual results to dif
Slide 182: Companies Included in Equity Market Comparison
Companies Included in Equity Market Comparison Anadarko Apache BP Chevron ConocoPhillips Devon EOG ExxonMobil Hess Marathon Occidental Petroleum Corporation Chemicals EBIT Reconciliation to Generally Accepted Accounting Principles (GAAP) ($ Millions) 5-Year Average Segment income Add: significant it