Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Sanford C. Bernstein & Co., Inc. 22nd Annual Strategic Decisions Conference 2006
32 slides from Occidental Petroleum's conference presentation, Jun 2, 2006
Slide 1: Sanford C. Bernstein 22nd Annual Strategic Decisions Conference 2006
June 2, 2006 Dr. Ray R. Irani Chairman, President & Chief Executive Officer Sanford C. Bernstein Co., Inc. 22 nd Annual Strategic Decisions Conference 2006
Slide 2: Core Area Growth Projects
Large pipeline of growth projects U.S. California & Permian Latin America Argentina Colombia Middle East & North Africa Libya Oman Qatar United Arab Emirates Yemen 2 Core Area Growth Projects
Slide 3: Ecuador
Oxy filed arbitration claim against the Government of Ecuador for illegally seizing assets Claim filed with International Centre for Settlement of Investment disputes under the U.S.-Ecuador Bilateral Investment Treaty Oxy requests the arbitration panel block third party takeover of assets until clai
Slide 4: Ecuador: Impact of expropriation
Impact of expropriation Net production averaged 44,000 barrels/day in 1 st quarter 2006 7% of worldwide production of 636,000 BOE/day Year-end 2005 proved reserves of 96 million barrels 3% of proforma worldwide reserves, including Vintage properties Net PP&E @ 3/31/06 of about $400 million 2% of wor
Slide 5: Ecuador: Managing Risk
Since 1999 Oxy’s cash flow from the Block 15 operations significantly exceeded its investment (net of the Encana farmout) Managing Risk 5 Ecuador
Slide 6: Production Growth Profile
Grow oil & gas production Minimum volume growth of 5 percent More likely growth of 7 – 10 percent Maintain top quartile financial returns 6 Production Growth Profile
Slide 7: Oil & Gas ROCE
WTI ($/Barrel) Domestic Returns (%) International Returns (%) 2005 56.56 26 40 2004 41.40 20 37 2003 31.03 16 30 2002 26.08 10 35 2001 25.97 17 23 * Net income divided by average capital employed. 7 Oil & Gas ROCE *
Slide 8: Return Targets
New Projects & Acquisitions Domestic …………………... 15+% International ………………. 20+% * Assumes moderate product prices 8 Return Targets*
Slide 9: Argentina
2005 production – 37,000 BOE/Day 2006 annualized production – 41,000 BOE/Day Inventory of 700 drilling locations 2006: 145 wells Ramp up in future years Increase production to 70,000 BOE/Day by 2011 9 Argentina
Slide 10: UAE / Qatar – Dolphin Project
Phase I $4 billion gross capital Oxy’s share 24.5% First gas @ year-end 2006 Production ramp-up in 2007 Estimated year-end exit rate of 55,000 BOE/Day 10 UAE / Qatar – Dolphin Project
Slide 11: Oman – Overview
Mukhaizna Overview Discovered in 1975 2+ billion barrels of heavy oil Previous peak production - 15,000 barrels/day Transfer of operatorship to Oxy & partners 3-4 years of technical work & negotiation 11 Oman – Overview
Slide 12: Oman – Mukhaizna Project
Project Overview Gross Capital – $3.5 Billion 1800+ wells Central processing facility Water treatment plant Steam generation facilities Pipelines 2006 Work Program $450 – $500 MM (Gross) Drill 65 – 85 wells Initial steam injection 12 Oman – Mukhaizna Project
Slide 13: Oman – Additional Growth Potential
13 Oman – Additional Growth Potential
Slide 14: Oxy Libya Holdings
14 Oxy Libya Holdings
Slide 15: Oxy 2006 Exploration Program
15 Oxy 2006 Exploration Program
Slide 16: Scope of Oxy Libya Projects
16 Scope of Oxy Libya Projects
Slide 17: Worldwide Production Outlook
Does not depend on exploration success Does not include future acquisitions Does not include new EOR/development projects Does not include swap/sale of mature non- operated properties Range reflects timing differences 17 Worldwide Production Outlook
Slide 18: Additional Growth Opportunities
Base Production ……………… New EOR/development projects Middle East/North Africa …. Latin America…………….... Exploration ……………………. Domestic acquisitions ……….. Mature non-operated ………… Total …………………………… 665 - 750 50 - 75 20 - 30 20 - 40 35 - 50 (20 - 30) 770 - 915 (Thousand BOE/Day) Excludes Ecuador. 5.3%-
Slide 19: Competitive Advantages
Economies of scale Infrastructure Operating experience Large technical data base Strong regional relations 19 Competitive Advantages
Slide 20: Top 10 Texas Oil Producers
2005 Gross Operated Production (Thousand Barrels/Day) 174.5 OXY 56.7 CVX 56.5 KMI 30.7 APA 29.6 XOM 23.6 PXD 22.5 HES 21.9 XTO 20.4 APC 15.5 COP 20 Top 10 Texas Oil Producers
Slide 21: Financial Policy
Continue to increase the dividend regularly Reduce outstanding shares to a pre-Vintage acquisition level of about 400 million shares Keep debt levels low & maintain “A” credit ratings 21 Financial Policy
Slide 22: Conclusion - Focus on Key Metrics
Focus on key performance metrics that drive top quartile financial returns Continue to improve quality of assets Grow reserves at a rate exceeding production Keep finding & development costs low Optimize profit/BOE Optimize free cash flow/BOE Maintain financial discipline Maintain “A” credit rating
Slide 23: Slide 23
Slide 24: Forward-looking statements
Statements in this presentation 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 results to differ materially include, but a
Slide 25: Appendix
25 Appendix
Slide 26: Worldwide Oil & Gas Operations
Long Beach Permian Basin Horn Mountain Hugoton Elk Hills Colombia Libya Russia Pakistan Oman U.A.E. Yemen Qatar Argentina 26 Worldwide Oil & Gas Operations . . .
Slide 27: Return on Equity
Percentage 22 2001 17 2002 21 2003 28 2004 41 2005 28 5-Year Average See Appendix for GAAP reconciliation. 27 Return on Equity
Slide 28: Return on Capital Employed
Percentage 2001 2002 2003 2004 5 Year Average 13 11 15 20 33 2005 19 See Appendix for GAAP reconciliation. 28 Return on Capital Employed
Slide 29: Reserves Replacement
244 263 368 268 382 173 188 200 207 194 Worldwide Reserve Additions (Million BOE) Worldwide Production (Million BOE) 2001 2002 2003 2004 2005 2005 excludes Ecuador. See Appendix for GAAP reconciliation. 29 Reserves Replacement 3-Year Average 5-Year Average
Slide 30: Finding & Development Costs
1,171 1,223 1,584 1,785 4,283 244 263 368 268 382 Costs Incurred ($ Millions) Reserve Additions (Million BOE) 2001 2002 2003 2004 2005 2005 excludes Ecuador. See Appendix for GAAP reconciliation. 30 Finding & Development Costs 2,551 2,009 3-Year Average 5-Year Average
Slide 31: Finding & Development Costs
2005 2004 2003 2002 2001 2,103 1,631 1,216 1,031 1,089 2,180 154 368 192 82 4,283 1,785 1,584 1,223 1,171 49 91 77 84 93 Organic Growth Acquisitions Total Organic (% Total) Costs Incurred ($ Million) 382 268 368 263 244 Total Reserve Additions (Million BOE) 2005 excludes Ecuador. 31 Finding & Develo
Slide 32: Chemical Companies Comparisons
OxyChem – 16.7 OxyChem – 22.2 8.0 11.6 2.9 14.0 7.6 7.2 8.2 13.9 11.8 13.0 13.4 11.2 EBIT Percent of Sales EBITDA 12.0 8.1 11.9 10.6 9.9 20.7 19.4 19.4 15.7 15.5 17.3 18.4 Excludes special items. 32 Chemical Companies Comparisons WORLDWIDE PRODUCTION Reconciliation to Generally Accepted Accounting P