Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q2 2023 Earnings Presentation
40 slides from Occidental Petroleum's earnings presentation, Aug 3, 2023
Slide 1: Second Quarter Earnings Conference Call
08.03.23 Second 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 Differentiated Portfolio Second Quarter Highlights Value Creation Financials
Slide 4: Differentiated Portfolio
DIFFERENTIATED PORTFOLIO 4 Oxy’s premier diversified assets and distinguished operational capabilities create a runway for sustainable shareholder value accretion OIL & GAS OXYCHEM • Diversified portfolio with deep, improving inventory • Sector earnings leader with resilient free cash flow • Operati
Slide 5: Outline
5 OUTLINE Differentiated Portfolio Second Quarter Highlights Value Creation Financials
Slide 6: Oil & Gas Update Highlights
HIGHLIGHTS 6 OIL & GAS UPDATE New Mexico seven-well Wolfcamp development (Top Spot) delivered an average 30-day IP of ~4,600 boed per well TX Delaware three-well Wolfcamp development (Chicane) delivered an average 30-day IP of ~4,270 boed per well Rockies drilling 32% faster (ft/d) than 1Q23,
Slide 7: Outline
7 OUTLINE Differentiated Portfolio Second Quarter Highlights Value Creation Financials
Slide 8: Top-Tier Well Performance: Delaware Continues to Improve
TOP-TIER WELL PERFORMANCE DELAWARE CONTINUES TO IMPROVE 8 BASIN WELL 450 PRODUCTIVITY 400 Superior-quality 350 inventory combined with subsurface expertise Cumulative Mboe 300 drives continuous improvement and value 250 200 1 Year Cumulative Improvement 150 2015 to 2022: +205% 100 2018 to 2022: +25%
Slide 9: Well Design Driving Major DJ Basin Productivity Gains
WELL DESIGN DRIVING MAJOR DJ BASIN WELL PRODUCTIVITY GAINS 9 PRODUCTIVITY 200 180 2023 Wedge Wells Data-driven well design • Achieved new 30-day operated IP record on Gaddis 36-4HZ and operational expertise 160 ~1,900 bod / ~2,800 boed drive continuous 140 Cumulative Mboe improvement and value 120 1
Slide 10: Technical and Operational Excellence
TECHNICAL AND OPERATIONAL EXCELLENCE 10 CREATING VALUE THROUGH OPERATING INGENUITY WORLD-CLASS RESERVOIR INNOVATIVE WELL DESIGNS AND CHARACTERIZATION AND DATA APPLICATION TECHNOLOGY-DRIVEN EXECUTION • Oxy-developed proprietary workflows and • Long laterals, complex trajectories, and models combined
Slide 11: Outline
11 OUTLINE Differentiated Portfolio Second Quarter Highlights Value Creation Financials
Slide 12: Second Quarter 2023 Performance
FINANCIALS 12 SECOND QUARTER 2023 PERFORMANCE $1.0 B OIL & GAS OXYCHEM Free Cash Flow 1,218 Mboed; Pre-Tax Income Generation Full Year Guidance of $436 MM Increased 15 Mboed $425 MM $522 MM INVESTMENT Shares Preferred Equity GRADE Repurchased Redemption Triggered Fitch Rating Upgrade NOTE: FREE CASH
Slide 13: Second Quarter 2023 Results
FINANCIALS 13 SECOND QUARTER 2023 RESULTS Reported Production versus Mboed Reported Guidance Midpoint Reconciliation ROCKIES Adjusted diluted EPS1 $0.68 Strong base and new well performance, +28 higher OBO volumes, nonrecurring royalty Reported diluted EPS1 $0.63 receipt PERMIAN CFFO before working
Slide 14: Third Quarter and Full-Year 2023 Guidance
FINANCIALS 14 THIRD QUARTER AND FULL-YEAR 2023 GUIDANCE OIL & GAS 3Q23 FY 2023 MIDSTREAM2 3Q23 FY 2023 Total Company Production (Mboed) 1,166 - 1,206 1,185 - 1,235 Pre-tax Income $(170) - $(70) MM $(325) - $(175) MM Permian Production (Mboed) 568 - 588 571 - 589 Midland - MEH Spread $ / bbl. $0.15 -
Slide 15: Preferred Equity Redemption
FINANCIALS 15 PREFERRED EQUITY REDEMPTION 1Q23 $0.95 Year-To-Date >$4/Share Shareholder Distributions 2Q23 4Q22 and Preferred Equity Redemption1 $0.68 $0.81 $4.081 3Q22 $1,286 MM excess distributions to common shareholders2 Distribution added to rolling 12-month calculation 3Q23 through Total from 0
Slide 16: Appendix
16 Appendix
Slide 17: Appendix: Financial Information, Oil & Gas Update, Asset Overview, LCV Overview
17 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Overview
Slide 18: Shareholder Return Framework
SHAREHOLDER RETURN FRAMEWORK 18 Sustainable & • Increased quarterly dividend to $0.18 per share in 2023 Growing Dividend • Dividend sustainable at $40 WTI • $3 B of share repurchases completed in 2022 Share v • Refreshed $3 B share repurchase authorization; ~40% complete Repurchases • Supports capit
Slide 19: Cash Flow Sensitivities
FINANCIAL INFORMATION 19 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 20: 2023 Capital Plan
CAPITAL BUDGET – FEB 2023 Capital $ B 2022 Actuals 2023 Plan 20 2023 CAPITAL PLAN Oil & Gas $3.8 $4.3 - 4.7 Chemicals $0.3 $0.6 Sustaining Capital1 Midstream & Corporate $0.3 $0.3 ~$300 MM change from 2022: Subtotal $4.4 $5.2 - $5.6 • Sustaining capital increased to ~$3.5 B for Net-Zero Pathway2 $0.
Slide 21: Diluted Share Count Example
FINANCIAL INFORMATION 21 DILUTED SHARE COUNT EXAMPLE Basic Shares Outstanding + Incremental Diluted Shares = Total Diluted Outstanding Shares Incremental diluted shares include June 2020 warrants, Berkshire Hathaway warrants, and performance awards Treasury method assumes proceeds from exercised
Slide 22: Appendix: Financial Information, Oil & Gas Update, Asset Overview, LCV Overview
22 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Overview
Slide 23: Domestic Onshore Assets
OIL & GAS UPDATE 23 DOMESTIC ONSHORE ASSETS PERMIAN 2023 ACTIVITY ROCKIES 2023 ACTIVITY $2.3 B - $2.6 B ~24 Gross ~11 Net 380 - 410 $0.7 - $0.8 B ~3 Gross ~2 Net 90 – 105 Capex Rigs Rigs Wells Online Capex Rigs Rigs Wells Online 100% OBO OBO 100% OBO EOR Base Maint Powder Powder Base Maint EOR EOR P
Slide 24: DJ Basin – Well Design Changes Driving Capital Efficiency
DJ BASIN – WELL DESIGN CHANGES DRIVING CAPITAL EFFICIENCY 24 Subsurface Design Execution Performance Previous 18 WPS Driving Innovation and Efficiency Development Optimization Niobrara • Oxy’s ingenuity in well design and execution • Smaller surface impacts and accelerated time-to-market Benches ena
Slide 25: Leading Delaware Basin Well Performance
OIL & GAS UPDATE 25 LEADING DELAWARE BASIN WELL PERFORMANCE AVERAGE 6-MONTH CUMULATIVE OIL BY OPERATOR1 AVERAGE 12-MONTH CUMULATIVE OIL BY OPERATOR2 Oxy is 31% above the 6-month basin average Oxy is 21% above the 12-month basin average 180 250 Average 12-month cum. oil, Mbbl Average 6-month cum. oil
Slide 26: Domestic Inventory & Innovation
DOMESTIC Domestic Onshore Operated Inventory Total Gross Operated Locations 8,000 26 INVENTORY & 6,885 INNOVATION 6,000 5,592 4,000 3,812 Depth of low-breakeven inventory demonstrates quality 2,000 1,321 and quantity of Oxy’s domestic unconventional portfolio - Breakeven <$30 Breakeven <$40 Breakeve
Slide 27: Al Hosn Gas – Project Execution and Operational Excellence
Al Hosn Gas – Project Execution and Operational Excellence 27 • 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 • 2022: Full plant 1
Slide 28: Appendix: Financial Information, Oil & Gas Update, Asset Overview, LCV Overview
28 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Overview
Slide 29: Oxy's Combined Integrated Portfolio
OXY’S COMBINED INTEGRATED PORTFOLIO 29 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 34 1,218 Mboed Ro
Slide 30: OxyChem Market Leading Position
OXYCHEM 2,500 Pre-Tax Earnings (EBIT)1 30 MARKET LEADING POSITION 2,000 • 23 owned facilities worldwide 1,500 $ MM • Integrated assets capture benefits of favorable market conditions 1,000 • Top-tier global producer in every product 500 produced 0 ◦ Largest merchant caustic soda seller in 2010 2011
Slide 31: Midstream & Marketing Guidance Reconciliation
MIDSTREAM & MARKETING 31 GUIDANCE RECONCILIATION PHYSICAL MIDSTREAM BUSINESS • 2Q23 income exceeded guidance due to lower 2Q23 Guide 2Q23 Actuals 3Q23 Guide gas processing costs and gains on $200 investments. 3Q23 guidance lower due to Quarterly Pre-Tax Income ($ MM) lower margin expectations $150 $
Slide 32: Narrowing Waha-Houston Ship Channel Spread
MIDSTREAM AND MARKETING 32 NARROWING WAHA-HOUSTON SHIP CHANNEL SPREAD Narrowing natural gas spreads and moderating market Waha and HSC Spread volatility lessen Oxy’s gas marketing income potential 1.0 Permian to Gulf Coast gas spread has contracted as basin supply/demand balance has stabilized d
Slide 33: One of the Largest U.S. Acreage Holders
ONE OF THE LARGEST U.S. ACREAGE HOLDERS 33 9.5 MM Net Total U.S. Acres ROCKIES 1.1 MM ACRES PERMIAN 2.8 MM ACRES POWDER RIVER UNCONVENTIONAL 0.3 MM POWDER RIVER 1.4 MM DJ BASIN CONVENTIONAL 0.8 MM 1.4 MM Excludes acreage outside of active DJ BASIN operating areas OTHER ONSHORE GULF OF MEXICO TOTAL A
Slide 34: U.S. Onshore Overview
U.S. ONSHORE OVERVIEW 34 2Q23 NET PRODUCTION ROCKIES Oil NGLs Gas Total 1.1 MM ACRES (Mbod) (Mbbld) (MMcfd) (Mboed) Permian 333 141 646 582 Rockies & Other Dmstc. 76 100 586 273 Total 409 241 1,232 855 OPTIMIZED ADVANCED DEPLOY STRATEGIC PERMIAN D EV ELOPMENT SUBSURFACE + POWERFUL + INFRASTRUCTURE S
Slide 35: Gulf of Mexico Overview
GULF OF MEXICO OVERVIEW 35 ALABAMA GULF OF MEXICO MISSISSIPPI TOTAL ACREAGE 1.0 MM TEXAS LOUISIANA 2Q23 NET PRODUCTION MARLIN Oil (Mbod) 112 HORN MOUNTAIN NGLs (Mbbld) 10 HOLSTEIN NANSEN CONSTITUTION Gas (MMcfd) 78 CAESAR/TONGA BOOMVANG MARCO POLO Total (Mboed) 135 GUNNISON HEIDELBERG LUCIUS NOTE: A
Slide 36: International Overview
INTERNATIONAL OVERVIEW 36 U.A.E. 2Q23 NET PRODUCTION 2.5 MM ACRES Oil NGLs Gas Total (Mbod) (Mbbld) (MMcfd) (Mboed) Algeria & Other Intl. 28 3 15 34 Al Hosn 15 25 289 88 Dolphin 6 8 152 39 Oman 58 - 53 67 ALGERIA OMAN Total 107 36 509 228 0.5 MM ACRES 6.0 MM ACRES MENA NOTE: AS OF 06/30/2023; ACREAG
Slide 37: Appendix: Financial Information, Oil & Gas Update, Asset Overview, LCV Overview
37 APPENDIX Financial Information Oil & Gas Update Asset Overview LCV Overview
Slide 38: Roadmap to Commercial Developments
CCUS TECHNOLOGY AND MARKET ADVANCEMENT 38 ROADMAP TO COMMERCIAL DEVELOPMENTS VOLUNTARY & COMPLIANCE POLICY 2021 – 2024 2025 – 2030 DE-RISK & INNOVATE MANUFACTURING MODE CURRENT DIRECT AIR MAR 2022 CAPTURE & REVENUE SEQUESTRATION $250 – 450/t $400 – 630/t $400 – 630/t IRA 45Q Enhancements DAC to EOR:
Slide 39: Progress Toward DAC - Stratos
DIRECT AIR CAPTURE 39 PROGRESS TOWARD DAC 1 - STRATOS LICENSE TO BUILD Exclusive DAC and AIR TO FUELS™ license for U.S. deployment. OLCV has a worldwide agreement with Carbon Engineering as the execution partner for all DAC and AIR TO FUELS™ deployments INNOVATION CENTRE Carbon Engineering Innovatio
Slide 40: Oxy Zero In
VB OXY ZERO IN”