Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q1 2022 Earnings Presentation
49 slides from Occidental Petroleum's earnings presentation, May 11, 2022
Slide 1: First Quarter Earnings Conference Call
05.11.22 First Quarter Earnings Conference Call
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS 2 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 (“Oc
Slide 3: Outline
3 OUTLINE First Quarter Highlights Financials Closing Remarks
Slide 4: Delivering Cash Flow Priorities
DELIVERING CASH FLOW PRIORITIES 4 Deleverage De-risk Continuing Return of Capital Complete In Progress • Maintain production • Near-term: repay $5 B of debt • Quarterly common and reduce net debt to $20 B dividend of $0.13 per • Substantial cost share structure improvement • Medium-term: reduce gros
Slide 5: First Quarter 2022 Performance Highlights
HIGHLIGHTS 5 FIRST QUARTER 2022 PERFORMANCE $3.3 B $3.3 B $2.121 Free Cash Flow Debt Adjusted Generation Retired EPS OIL & GAS OXYCHEM LCV Strong Operational Highest Earnings in Agreements for Net Zero Performance with Over 30 Years Oil, Carbon Removal 1.08 MMboed Credits, and CCUS Hub development N
Slide 6: First Quarter Oil & Gas Operational Excellence
HIGHLIGHTS 6 FIRST QUARTER OIL & GAS OPERATIONAL EXCELLENCE Drilled Oxy’s longest DJ Basin lateral at over 15,000’ and longest Oman lateral at over 12,000’ Averaged ~8 drill days per well for six XXL laterals (>14,000’) on recent DJ Basin pad Completed Oxy’s first 15,000’ development in Midlan
Slide 7: Outline
7 OUTLINE First Quarter Highlights Financials Closing Remarks
Slide 8: First Quarter 2022 Results
FINANCIALS 8 FIRST QUARTER 2022 RESULTS Reported Production versus Guidance Reported Mboed Midpoint Reconciliation Adjusted diluted EPS1 $2.12 ROCKIES Stronger than expected new well +4 Reported diluted EPS1 $4.65 performance and NGL recoveries CFFO before working capital $4.2 B PERMIAN Faster time
Slide 9: Second Quarter and Full-Year 2022 Guidance
FINANCIALS 9 SECOND QUARTER AND FULL-YEAR 2022 GUIDANCE OIL & GAS OXYCHEM CORPORATE – FY 2022 2Q22 Production 2Q22 pre-tax income: ~$775 MM •Domestic tax rate: 22% • Total Company: 1,130 - 1,160 Mboed FY 2022 pre-tax income: $2.1 - $2.4 B •International tax rate: 45% • Permian: 488 - 498 Mboed •Over
Slide 10: Outline
10 OUTLINE First Quarter Highlights Financials Closing Remarks
Slide 11: Zero in on Value
11 ZERO IN ON VALUE COMPLEMENTARY SHAREHOLDER STRENGTHENING PATHWAY TO BUSINESSES RETURNS FINANCIAL PROFILE NET ZERO • Oil & Gas • Sustainable Common Dividend • Prioritizing Debt Reduction • Direct Air Capture • OxyChem • Share Repurchase Program • Investment Grade Ambition • Carbon Sequestration •
Slide 12: Appendix
12 Appendix
Slide 13: Appendix contents
13 APPENDIX Financial Information Oil & Gas Update Asset Overview Environment, Social & Governance
Slide 14: Priorities Continued
14 Maintain Production Base CONTINUED 2022 Preserve asset base integrity FOCUS and longevity CASH FLOW Debt Reduction PRIORITIES Lower expenses and enhance balance sheet flexibility Excess cash flow continues to be Sustainable & Growing Dividend CURRENT allocated to balance Through-the-cycle sustain
Slide 15: Shareholder Return Framework
SHAREHOLDER RETURN FRAMEWORK 15 Continued Prioritize retirement of additional $5 B of debt 1 Debt Reduction • Near-term: repay $5 B of debt and reduce net debt to $20 B • Medium-term: reduce gross debt to high-teens with objective of regaining investment grade credit ratings Increased Dividend of $0
Slide 16: 2022 Capital Plan
FINANCIALS 16 2022 CAPITAL PLAN Capital $ B 2021 Actuals Sustaining1 2022 Plan Oil & Gas $2.4 $2.8 $3.2 - $3.4 Chemicals $0.3 $0.3 $0.3 Midstream & Corporate $0.1 $0.1 $0.2 Net-Zero Pathway2 $0.1 $0.0 $0.2 - $0.4 Total Oxy Capital $2.9 $3.2 $3.9 - $4.3 Sustaining Capital1 2022 Capital ~$300 MM chang
Slide 17: 2022 Capital Plan
FINANCIAL INFORMATION 17 2022 CAPITAL PLAN $4.5 $4.3 B $4.0 $3.9 B $3.5 $3.2 B $3.0 $2.9 B $2.5 $2.0 $1.5 $1.0 $0.5 $- 2021 GoM & EOR Fewer Efficiency & Exploration Sustaining Inflation Multi-Year Net-Zero 2022 Capital 2022 Activity Rockies Deflation & Multi-Year @ $40 Projects & Pathway Low-End Ran
Slide 18: 2022 Capital Plan
FINANCIAL INFORMATION 18 2022 CAPITAL PLAN $3.9 B - $4.3 B CAPITAL PROGRAM BY ASSET CAPITAL PROGRAM BY TYPE Facilities 20% $0.2 Exploration & Corporate $0.3 - $0.5 D,C&E 58% Oil & Gas Base Maintenance 7% Midstream & Marketing $0.3 (includes LCV) Exploration 4% $0.5 OxyChem OBO & Other 11% $0.5 GoM C
Slide 19: Balance Sheet Improvement Drives Shareholder Value
FINANCIAL INFORMATION 19 BALANCE SHEET IMPROVEMENT DRIVES SHAREHOLDER VALUE $90 Enterprise Value ($ B) PRIORITIZING DEBT REDUCTION $80 Market capitalization becomes a 38% larger percentage of Enterprise $70 Value as debt is reduced 18% 20% 17% $60 7% 13% Equity benefits from rising $50 16% 20% 2
Slide 20: Cash Flow Sensitivities
FINANCIAL INFORMATION 20 CASH FLOW SENSITIVITIES OIL & GAS MIDSTREAM & MARKETING Annualized cash flow changes ~$225 MM per $1.00 / Annualized cash flow changes ~$65 MM per $0.25 / bbl bbl change in oil prices change in Midland to MEH spread ◦ ~$205 MM per $1.00 / bbl change in WTI price ◦ ~35-da
Slide 21: Appendix contents
21 APPENDIX Financial Information Oil & Gas Update Asset Overview Environment, Social & Governance
Slide 22: Domestic Onshore Assets
OIL & GAS UPDATE 22 DOMESTIC ONSHORE ASSETS PERMIAN 2022 ACTIVITY ROCKIES 2022 ACTIVITY $1.7 B - $1.9 B ~16 Gross ~10 Net 305 - 335 $0.4 B ~2 Gross ~1 Net 75 - 85 Capex Rigs Rigs Wells Online Capex Rigs Rigs Wells Online 100% EOR 100% OBO OBO EOR OBO Powder OBO Base Maint River Basin BaseFacilities
Slide 23: Leading Delaware Basin Well Performance
OIL & GAS UPDATE 23 LEADING DELAWARE BASIN WELL PERFORMANCE AVERAGE 6-MONTH CUMULATIVE OIL BY OPERATOR1 AVERAGE 12-MONTH CUMULATIVE OIL BY OPERATOR2 Oxy is 34% above the 6-month basin Oxy is 33% above the 12-month basin 160 average while using ~7% less proppant 250 average while using ~7% less propp
Slide 24: Domestic Inventory and Well Costs
7,000 Domestic Onshore Operated Inventory 24 DOMESTIC Total Gross Operated Locations 6,079 6,000 INVENTORY 5,000 4,399 AND WELL 4,000 COSTS 3,000 2,000 1,599 1,000 Depth of low-breakeven - inventory demonstrates Breakeven <$30 Breakeven <$40 Breakeven <$50 quality and quantity of Permian Resources R
Slide 25: International & Gulf of Mexico Milestones
INTERNATIONAL & GULF OF 25 MEXICO MILESTONES 2022 2023 2024 • Horn Mountain West, Lucius, Holstein, and Blind Faith (OBO) • HMW, Caesar-Tonga, Lucius, Holstein • HMW, Caesar-Tonga, Lucius, • Exploration • CTSSE (CT subsea expansion) Holstein GOM • Holstein 4D seismic • Exploration • SS pumping onlin
Slide 26: Al Hosn Gas – Project Execution and Operational Excellence
Al Hosn Gas – Project Execution and Operational Excellence 26 • World-class, state-of-the-art sour-gas project • Plant capacity increased twice between 2016 and 2018 with minimal capital investment • 2021: Expansion project commenced; Saipem awarded EPC, long lead items procured and delivered to sit
Slide 27: Appendix contents
27 APPENDIX Financial Information Oil & Gas Update Asset Overview Environment, Social & Governance
Slide 28: Oxy's Combined Integrated Portfolio
OXY’S COMBINED INTEGRATED PORTFOLIO 28 Oil & Gas OxyChem Oxy Midstream Focused in world class Leading manufacturer of basic Integrated infrastructure and basins with a history of chemicals and significant cash marketing provide access to global maximizing recovery generator markets 36 1.08 MMboed Ro
Slide 29: One of the Largest U.S. Acreage Holders
ONE OF THE LARGEST U.S. ACREAGE HOLDERS 29 9.5 MM Net Total U.S. Acres Rockies Permian 1.2 MM Acres 2.9 MM Acres Powder River Basin – 0.4 MM Permian Unconventional – 1.5 MM DJ Basin – 0.8 MM Excludes acreage outside of active Permian Conventional – 1.4 MM operating areas Other Onshore Gulf of Mexico
Slide 30: U.S. Onshore Overview
U.S. ONSHORE OVERVIEW 30 Rockies Permian 1.2 MM Acres 2.9 MM Acres 1Q22 Net Production Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Permian 280 108 504 472 Rockies & Other Dmstc. 89 92 632 286 Total 369 200 1,136 758 NOTE: AS OF 03/31/2022; ACREAGE AMOUNTS REPRESENT NET ACRES
Slide 31: Gulf of Mexico Overview
GULF OF MEXICO OVERVIEW 31 Gulf of Mexico 0.7 MM Acres MARLIN 1Q22 Net Production HORN MOUNTAIN Oil (Mbod) 114 NANSEN HOLSTEIN NGLs (Mbbld) 10 CONSTITUTION BOOMVANG MARCO POLO CAESAR/TONGA Gas (MMcfd) 83 GUNNISON HEIDELBERG Total (Mboed) 138 LUCIUS NOTE: AS OF 03/31/2022; ACREAGE AMOUNTS REPRESENT N
Slide 32: International Overview
INTERNATIONAL OVERVIEW 32 U.A.E. 2.5 MM Acres 1Q22 Net Production Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Algeria & Other Intl. 33 1 10 36 Al Hosn 8 14 139 45 Dolphin 5 7 130 34 Oman 57 - 69 68 Total 103 22 348 183 Algeria Oman 0.5 MM Acres 6.0 MM Acres NOTE: AS OF 03/31/2022; ACREAGE AMOU
Slide 33: OxyChem Market Leading Position
OXYCHEM 2,400 Pre-Tax Earnings (EBIT)1 33 MARKET LEADING POSITION 2,000 • 23 owned facilities worldwide 1,600 $ MM • Integrated assets capture benefits 1,200 of favorable market conditions 800 • Top tier global producer in every product 400 produced 0 ◦ Largest merchant caustic soda seller in 2010 2
Slide 34: Midstream & Marketing Guidance Reconciliation
MIDSTREAM & MARKETING 34 GUIDANCE RECONCILIATION PHYSICAL MIDSTREAM BUSINESS • 1Q22 income above guidance primarily driven 1Q22 Guide 1Q22 Actuals 2Q22 Guide by improved sulfur and NGL prices. 2Q22 $150 guidance higher than 1Q22 due to completions Quarterly Pre-Tax Income ($ MM) of Al Hosn and Dolph
Slide 35: Appendix contents
35 APPENDIX Financial Information Oil & Gas Update Asset Overview Environment, Social & Governance
Slide 36: Pathway to Net Zero
PATHWAY TO NET ZERO 36 Oxy has set the following goals, among others, to achieve net zero across our total emissions inventory in accordance with the Paris Agreement1: 2024 2032 2040 2050 BEYOND Reduce total operational Facilitate geologic storage Achieve net-zero Achieve net zero for our Capture an
Slide 37: Short-Term GHG Goals (2021-25)
ADVANCING NET ZERO 37 SHORT-TERM GHG GOALS (2021-25) GHG SCOPE TARGET DATE TYPE METRIC Scope 1+2 2021 Annual Milestones in Emission Reduction Efforts established annually by the Board of Directors Scope 3 2021 Annual Milestones in Low Carbon Ventures Projects established annually by the Board of Dir
Slide 38: Medium- and Long-Term GHG Goals
ADVANCING NET ZERO 38 MEDIUM- AND LONG-TERM GHG GOALS GHG SCOPE TARGET DATE TYPE METRIC MEDIUM-TERM (2026-2035) Scope 1 2030 Absolute Eliminate all routine flaring by 2030 Facilitate 25 million metric tons per year of geologic storage or utilization of captured Absolute Scope 1, 2 + 3 2032 CO2 in ou
Slide 39: Building a Future Net-Zero Economy
DIRECT AIR CAPTURE & AIR TO FUELS™ CO2-TO-PRODUCT ZERO-EMISSION POWER SOLUTIONS MANUFACTURING 39 KOH & PVC FROM OXYCHEM TO DAC POINT-SOURCE CAPTURE LOW-CARBON DIESEL AND JET FUELS MADE FROM ATMOSPHERIC CO2 BUILDING A FUTURE NET-ZERO OIL PRODUCTION DEDICATED CO2 NET-ZERO SEQUESTRATION HUBS ECONOMY Il
Slide 40: Strategic Investment Approach
BUILDING A CCUS PLATFORM ACROSS THE CARBON CAPTURE VALUE CHAIN 40 STRATEGIC INVESTMENT APPROACH Oxy is leveraging its carbon management expertise, experience and infrastructure to accelerate the global development and commercialization of CCUS technologies, scale carbon markets and develop innovativ
Slide 41: Capital Funding Considerations
1POINTFIVE 41 CAPITAL FUNDING CONSIDERATIONS Funding Principles 2021 – 2024 2025 – 2030 Beyond DE-RISK & INNOVATE MANUFACTURING MODE COMMODITY DEVELOPMENT Capital will be allocated based on strong and growing market demand capable of supporting attractive long-term returns • Oxy Capital • Minimize
Slide 42: 1PointFive Overview
DEVELOPMENT AT SCALE 42 1POINTFIVE OVERVIEW A wholly-owned Oxy subsidiary, 1PointFive is a durable, integrated CCUS platform with a mission to curb global temperature rise to 1.5°C by delivering carbon capture, sequestration, utilization and products CO2 CAPTURE & CO2 CO2 REMOVAL PRODUCTS ENABLED PR
Slide 43: OLCV Investment
BUILDING A CCUS PLATFORM ACROSS THE CARBON CAPTURE VALUE CHAIN 43 OLCV TECHNOLOGY, PROJECTS, AND PLATFORMS ZERO-EMISSION CO2 CAPTURE & PIPELINES & CO2 CARBON TRACKING CARBON UTILIZATION & POWER REMOVAL GAS PROCESSING SEQUESTRATION METHODOLOGIES AND PRODUCTS TOOLS OXY EXISTING OXYCHEM PERMIAN CO2 PIP
Slide 44: Direct Air Capture
DIRECT AIR CAPTURE 44 TECHNOLOGY ENGINEERING & CONSTRUCTION DAC FIRST-MOVERS AND EARLY ADOPTERS ARTIST RENDERING
Slide 45: Direct Air Capture Highlights
HIGHLIGHTS DIRECT AIR CAPTURE TEAMED UP WITH CARBON ENGINEERING TO DEPLOY TECHNOLOGY TO REMOVE CO2 FROM THE FIRST FACILITY EXPECTED TO REMOVE UP ATMOSPHERE AT SCALE TO 1 MILLION TONNES OF CO2 ANNUALLY FIRST COMMERCIAL DAC EXPECTED OPERATIONAL IN LATE 2024 FIRST COMMERCIAL DAC FACILITY TO BE BUILT IN
Slide 46: DAC Development Scenarios
DAC DEVELOPMENT SCENARIOS 46 Current support scenario assumes today’s policy, voluntary and compliance markets Net-zero support scenario assumes increase in global policy incentives and demand in voluntary and compliance markets led by net-zero business to achieve global targets for society by 2050
Slide 47: CO2 Storage Hub Development
CO2 STORAGE 47 HUB DEVELOPMENT CURRENT SUPPORT SCENARIO 3 DEDICATED SEQUESTRATION HUBS Project Tundra EXPECTED TO BE ONLINE BY 2025 Multiple land/pore space access agreements executed with expectation of more than 100,000 net acres by the end of 2022 Planning multiple sequestration sites on the
Slide 48: Executive Compensation Program
48 2021 CEO Target Direct Compensation Mix1 – 90% Variable/At Risk EXECUTIVE COMPENSATION PROGRAM POLICIES AND PRACTICES • Pay for performance • Act on shareholder feedback • Emphasize stock ownership • Use relative and absolute performance measures for equity At the 2022 Annual Meeting, shareholder
Slide 49: Oxy Zero In
VB OXY ZERO IN”