Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Bank of America Merrill Lynch 2011 Global Energy Conference
44 slides from Occidental Petroleum's conference presentation, Nov 15, 2011
Slide 1: Occidental Petroleum Corporation
Occidental Petroleum Corporation Bank of America Merrill Lynch 2011 Global Energy Conference Stephen I. Chazen President and Chief Executive Officer November 15, 2011 November 15, 2011
Slide 2: First Nine Months 2011 Results - Summary
First Nine Months 2011 Results - Summary 9 Mos 2011 9 Mos 2010 • Core Results $5,187 $3,377 • Core EPS (diluted) $6.37 $4.14 • Net Income $5,137 $3,318 • Reported EPS (diluted) $6.31 $4.07 • Oil and Gas production volumes (mboe/d) +3.6% 728 703 • Capital Spending $4,969 $2,580 • Cash Flow from Opera
Slide 3: What Is Our Philosophy & Strategy?
What Is Our Philosophy & Strategy? Overriding Goal is to Maximize Total Shareholder Return • We believe this can be achieved through a combination of: • Growing our oil and gas production by 5 to 8% per year on average over the long term; • Allocating and deploying capital with a focus on achieving
Slide 4: Return on Assets
Return on Assets Net Income Return on Assets U.S. 16% International 35% Total E&P 21% Cash Flow* Return on Assets U.S. 24% International 53% Total E&P 31% * Net Income + DD&A 5 Year Average 5 Year Average See attached for GAAP reconciliation (2006 - 2010)
Slide 5: 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 2010 $20.25 $24.18 30% 3-Year Average $16.38 $20.25 25% (2008 - 2010) 5-Year Average $16.66 $19.52 26
Slide 6: Dividend Growth
Dividend Growth • Our ability to pay dividends is indicated by our free cash flow generation. • Free cash flow after interest, taxes and capital spending, but before dividends, acquisitions and debt activity for the first nine months of 2011 was $3.7 billion. • Oxy’s annual dividend rate is currentl
Slide 7: Dividend Growth
Dividend Growth Annual dividend increased 21% to $1.84 per share, effective with the 4/15/11 payment
Slide 8: Worldwide Oil & Gas Producing Areas
Worldwide Oil & Gas Producing Areas Colombia Libya Oman UAE Yemen Bolivia Qatar Iraq Bahrain Focus Areas United States Permian Basin California Colombia Libya Oman UAE Yemen Bolivia Qatar Iraq Bahrain United States Permian Basin California
Slide 9: Geographic Value of Oxy's Oil & Gas Reserves
Geographic Value of Oxy’s Oil & Gas Reserves (Percentage of Oxy total company value) Note: excludes Argentina as the sale of this asset closed in February 2011; * as a percentage of total US value.
Slide 10: Realized Prices & Differentials
Realized Prices & Differentials • About 60% of Oxy’s oil production tracks world oil prices and 40% is indexed to WTI. For example: – In California our realized price was 114% of WTI and 91% of Brent in 3Q11. – In Oman our average price was 117% of WTI and 93% of Brent. • Differentials improved in 3
Slide 11: Capital Spending - 2011 Outlook
Capital Spending - 2011 Outlook • We expect capital spending for the total year 2011 to be about $7.0 billion, compared to the total 2010 capital of $3.9 billion. • Year to-date capital expenditures by segment were 83% in Oil and Gas, 14% in Midstream and the remainder in Chemicals. • Oxy's share of
Slide 12: Capital Spending - 2011E vs. 2010 Actual
Capital Spending - 2011E vs. 2010 Actual (excluding Argentina) • Last year we provided a 2010 - 14 capital budget of $27.5 billion, with average spending of $5.5 billion per year • Excluding capital for Shah project, estimated capital for 2010 - 11 of $10.4 billion is in the range of that guidance E
Slide 13: Domestic Oil & Gas Production - 3Q11
Domestic Oil & Gas Production - 3Q11 • The impact of our capital program and increase in drilling activity has started to have a visible impact on our domestic oil and gas production volumes. • Compared to 2Q11, our domestic production increased by about 6 mboe/d per month, compared to our guidance
Slide 14: US Oil & Gas Capital and Production
US Oil & Gas Capital and Production $310 $704 $884 $640 $403
Slide 15: Oxy's US Operated Rig Activity
Oxy’s US Operated Rig Activity
Slide 16: Oil & Gas Production - 4Q11 Outlook
Oil & Gas Production - 4Q11 Outlook • We expect 4Q11 oil and gas production to be as follows: – Domestic volumes are expected to increase by about 3 to 4 mboe/d per month from the 3Q11 average level of 436 mboe/d. – This should result in average 4Q11 production of about 442 to 444 mboe/d. – This wou
Slide 17: Oil & Gas Volume Growth Drivers
Oil & Gas Volume Growth Drivers • Base 5 - 8% Compounded Average Annual Growth – CO 2 in Permian – Current California risked prospects – Recent domestic properties acquisitions (Williston Basin, South TX gas) – Oman – Iraq • Upside from Existing Holdings – New California conventional and unconventio
Slide 18: California Overview
California Overview California Overview Los Angeles Los Angeles Bakersfield Bakersfield Oxy Acreage • Largest acreage holder in CA with ~1.6 mm acres, majority of which are net mineral interests. • ~768 mm BOE of proved reserves at year end 2010, of which 73% are oil. • 2010 production of 139 mboe/d
Slide 19: California - 2011 Program Summary
California - 2011 Program Summary THUMS (Long Beach) Oxy Properties Ventura Basin Los Angeles Elk Hills Buena Vista San Joaquin Basin • 2011 Capital program ~$1.6 billion, up ~80% vs. 2010. • Plan to drill 500+ new development wells. • Shifted our drilling to oil wells which we expect to result in h
Slide 20: California Conventional Exploration
California Conventional Exploration • World Class Province – 35+ Billion BOE discovered – 5 of top 12 U.S. oil fields • Significant Remaining Potential – Large undiscovered resources – Multiple play and trap types • Underexplored • Oxy – Major producer – Largest acreage holder – Successful explorer
Slide 21: California Field Sizes
California Field Sizes Field Size (MMBOE) <0.1 0.1 1 Billion 10 Billion Discovery Play Oxy Play Type and Prospect Exposure Sources: California Division of Oil, Gas & Geothermal Resources Occidental Estimates
Slide 22: California Unconventional "Shale" Program
California Unconventional “Shale” Program • Multi-year inventory of drill sites in CA, many of which are both outside of Elk Hills proper & the Kern County Discovery Area • Expect to drill 154 shale wells outside Elk Hills proper, and 195 total shale wells including Elk Hills in 2011 • 30-day initia
Slide 23: California "Shale" Summary and Play Comparison
Play Depth (ft) Thickness (ft) Porosity (%) Permeability (mD) TOC (%) CA “Shales” 3,500’ - 16,000’ 500’ - 3,500’ 5 - 30% <0.0001 - 2 0.1 - 12% Bakken 7,000’ - 11,000’ 20’ - 100’ 3 - 12% 0.05 - 0.5 2 - 18% Eagle Ford 8,000’ - 14,000’ 75’ - 300’ 3 - 15% <0.0001 - .003 0.6 - 7% California “Shale” Summa
Slide 24: California Update
California Update • We expect to drill and complete a total of 42 shale wells during 4Q11. • We expect to run a 30 rig program in the state during 4Q11. • Our conventional drilling program is progressing somewhat better than planned. • With respect to the recent personnel turnover at the DOGGR, our
Slide 25: Permian Basin Overview
Permian Basin Overview • Approximately 1.2 billion BOE of proved reserves at year end 2010 • 2010 production of 197,000 boe/d • Largest oil producer in Permian (~16% share of total) • Largest operator in Permian (of 1,500+ operators) • ~66% of Oxy’s Permian oil production is from CO 2 related EOR pr
Slide 26: Permian - 2011 Program Summary
Permian - 2011 Program Summary • 2011 Capital program ~$1 billion • Plan to drill 300+ wells this year • Expect to run ~24 rig drilling program by year-end 2011 • Drilling program is front-end loaded to exploit quick production first • 160+ workover/maintenance rigs operating, and 50% more than a ye
Slide 27: Permian EOR Opportunities
4.6 BBO 0.8 BBO 1.4 BBO 1.0 BBO Permian EOR Opportunities • 4.1 BBO have been produced, • leaving 7.8 BBO net remaining 3P Reserves EOR Likely EOR Potential Residual 7.8 BBO Net Remaining
Slide 28: Permian, Midcontinent & Other Update
Permian, Midcontinent & Other Update • In the Permian operations: – Our CO 2 flood production is progressing according to plan. – We expect our rig count to be about 24 in 4Q11. – Our non-CO 2 operations have stepped up their development program but will not show significant production growth until
Slide 29: Oxy - North Dakota Assets
Oxy - North Dakota Assets • Acquired ~174,000 contiguous net acres within the southern extents of the ND Bakken and Three Forks Formations. • Operated working interests avg. 63% with avg. NRI of ~83%. • Net risked reserve potential in excess of 250 mmboe from the Middle Bakken and Upper Three Forks
Slide 30: Oxy North Dakota - Williston Basin
Oxy North Dakota - Williston Basin NORTH DAKOTA South Coteau Nesson Anticline Elm Coulee Field Parshall- Sanish Fields Russian Creek Burke Ward McLean Mercer Stark Oliver Williams Divide Roosevelt McKenzie Mountrail Dunn Billings Renville Richland Morton MT ND Dawson Golden Valley Other Notable Area
Slide 31: Oxy - Qatar Oil & Gas Fields
Oxy - 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 Mb
Slide 32: Oxy - Qatar Gross Oil Production
Oxy - Qatar Gross Oil Production
Slide 33: Oxy - 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 Oxy - Dolphin Project • Oxy share 24.5% • Delivering 2.2 Bcfd to UAE and 200 MMcfd to Oman markets • 2010 Gross production 537 mboepd, Net production 63
Slide 34: Oxy Oman History
Oxy Oman History • Oxy commenced operation of the Safah field in 1984 • Approximately 600 wells drilled and 30+ fields discovered in Blocks 9 and 27 • Signed 30-year PSC for the Mukhaizna field in 2005 • Block 62 acquired in 2008, and pursuing exploration and development opportunities • 2010 Gross p
Slide 35: Oxy Oman Gross Production Growth
Oxy Oman Gross Production Growth
Slide 36: Oxy Oman - Mukhaizna Project
Oxy Oman - Mukhaizna Project • World Class Steam flood project • 2 B bo ROIP • Discovered in 1975 in South Central Oman • Cold production commenced 1992 • Oxy assumed operation September 1, 2005 at 8,500 b/d • Steam flood commenced May 2007, and had drilled 1,020+ new wells through 2010 • Current Gr
Slide 37: Abu Dhabi - Al Hosn Gas Project (Shah Field)
Abu Dhabi - Al Hosn Gas Project (Shah Field) • Shah Gas Field one of the largest in the Middle East • Oxy holds a 40% participating interest under a 30-year contract • The project involves development of high-sulfur content reservoirs within the Shah field, located onshore ~180 km so. west of AD • P
Slide 38: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase
Slide 39: Summary - YTD 2011 Cash Flow
Summary - YTD 2011 Cash Flow See attached GAAP reconciliation. – Free cash flow from continuing operations after capex and dividends, but before acquisition and debt activity, was about $2.6 billion.
Slide 40: Acquisition Strategy
Acquisition Strategy • Company’s core business is acquiring assets that can provide future growth through improved recovery. – Foreign contracts – Domestic add-ons – Small incremental additions to production in short term • Generate returns of at least 15% in the US and 20% overseas. • Overall avera
Slide 41: Oxy - Investment Attributes
Oxy - Investment Attributes • 5 - 8% base annual production growth • Opportunity for additional volume growth • Returns on invested capital significantly in excess of Company’s cost of capital • Annual increases in dividends • Significant financial flexibility for opportunities in distressed periods
Slide 42: Creating Shareholder Value
Creating Shareholder Value Oxy’s Shareholder Equity versus Equity Market Value 1 - Year 3 - Year 5 - Year 10 - Year Change in Equity Market Value ($ in millions) A History of Generating Shareholder Value Market Value per $ of Equity Retained Change in Shareholder Equity Financial Data for period end
Slide 43: Cautionary Statement
Cautionary Statement Portions of this presentation contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are
Slide 44: Reconciliation to Generally Accepted Accounting Principles (GAAP)
Occidental Petroleum Corporation Occidental Petroleum Corporation Reconciliation to Generally Accepted Accounting Principles (GAAP) For the Nine Months Ended September 30, (Stated in millions, except per share amounts) Diluted Diluted EPS EPS Reported Income $ 5,137 $ 6.31 $ 3,318 $ 4.07 Add: signif
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