Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Merrill Lynch Global Energy Conference 2006
31 slides from Occidental Petroleum's conference presentation, Nov 1, 2006
Slide 1: Merrill Lynch Global Energy Conference 2006
November 2006 Stephen I. Chazen Senior Executive Vice President and Chief Financial Officer Merrill Lynch Global Energy Conference 2006
Slide 2: Nine Months Results
YTD2006 YTD2005 Core Income ($ mm) $3,514 $2,616 Core EPS (diluted) $4.07 $3.20 ROE 19% 34% ROCE* 17% 27% Oil and Gas Earnings ($ mm) $5,740 $4,172 Oil and Gas production (mboe/day) 596 519 + 53 mboe/day from Vintage + 18 mboe/day from Libya WTI Oil Price ($/bbl) $68.24 $55.40 Oxy’s Worldwide Realiz
Slide 3: Cash Flow 2006 Year-To-Date
$7,200 $1,000 $2,400 $2,000 $1,300 $610 $460 $30 $1,400 Available Cash 12/31/05 Asset Sale Proceeds Acquisitions Capex Share Repurchase Reduction Dividends Other Ending Cash Balance 9/30/06 Other Other ($ in millions) Debt Cash Flow 2006 Year-To-Date Beginning Cash $2,400 Flow From Cash Operations $
Slide 4: Occidental Petroleum - Profile
Oil & gas production growth Large pipeline of projects High quality assets with good returns Volume growth of 5-8 percent per year Disciplined capital program Maintain top quartile financial returns Maintain “A” credit rating Occidental Petroleum - Profile
Slide 5: Corporate Strategy
Focus on core areas US - California & Permian Basin Middle East-North Africa Latin America Maintain strong balance sheet Maintain investment discipline Create value Acquire assets with upside potential Capture EOR projects with large volumes of oil in place Maximize free cash flow from chemicals Con
Slide 6: Competitive Advantages
Economies of scale Infrastructure Operating experience Large technical data base Strong regional relations Competitive Advantages
Slide 7: Worldwide Oil & Gas Operations
Long Beach Permian Basin Horn Mountain Hugoton Elk Hills Colombia Libya Russia Pakistan Oman U.A.E . Yemen Qatar Argentina Bolivia Worldwide Oil & Gas Operations . . .
Slide 8: Oil & Gas ROCE
2005 2004 2003 2002 2001 International Returns (%) 56.56 41.40 31.03 26.08 25.97 WTI ($/Barrel) 36 33 29 37 24 Domestic Returns (%) 26 20 16 10 17 * Net income from continuing operations divided by average capital employed. (see Appendix for GAAP reconciliation) Oil & Gas ROCE*
Slide 9: Reserves Replacement
2005 2004 2003 2002 2001 243 217 250 172 224 139 36 107 68 4 382 253 357 240 228 64 86 70 72 98 Organic Growth Acquisitions Total Organic (% Total) Million BOE 191 190 191 183 168 Worldwide Production (million boe) (see Appendix for GAAP reconciliation) Reserves Replacement 3-Year Average 5-Year Ave
Slide 10: Oxy – Permian Basin
Large resource base Low decline rate & long-lived properties YTD Production (boepd) 2006: 200,000 2005: 184,000 Drilling rate: ~330 wells/yr. CO 2 projects on track Significant cash generation Natural area for consolidation Lubbock Amarillo Bravo Dome Texas New Mexico Oklahoma Salt Creek Sharon Ridg
Slide 11: Oxy – California Oil & Gas Operations
California Production (boepd) 2006E: 127,000 2005: 116,000 Elk Hills Drilling rate: ~280 wells/yr. Shallow oil zone Shale development EOR Opportunities Nitrogen flood CO 2 pilots Plains Operations October 1 Oxy – California Oil & Gas Operations
Slide 12: U.S. – Plains Properties Acquisition
Transaction closed on 9-29-06 Principal Properties California (San Joaquin Basin) West Texas (Permian Basin) Purchase price of $859 million Reserves & Production Estimated Proved Reserves 56 million BOE Current Production 8,900 BOE/Day 50-50 split between oil & gas Light oil makes up 85% of oil rese
Slide 13: Argentina – Growth
2005 production – 37 mboed 2006* production – 41 mboed Inventory of 700 drilling locations 2006: 145 wells 2007: 200+ wells Identified 28 waterflood projects Additional technology driven opportunities Consolidation opportunities Mature areas ripe for consolidation 2 Exploration Blocks Increase produ
Slide 14: Argentina – San Jorge Basin
Comodoro Rivadavia Argentina Caleta Olivia Koluel Kayke Oxy Blocks Oil Gas Pipelines Proved Undeveloped Argentina – San Jorge Basin
Slide 15: UAE / Qatar – Dolphin Project
$4 billion gross capital Oxy’s share 24.5% Project status Export pipeline complete Platforms, wells & receiving facilities on or ahead of schedule Gas processing plant may or may not be fully operational at year-end Substantial production ramp up in 2007 Phase I UAE / Qatar – Dolphin Project
Slide 16: 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 50 - 55 wells Initial steam injection Oman – Mukhaizna Project
Slide 17: Libya Update
2006 YTD Production – 21 mboed Expect to spud 1st exploration well in 4Q Seismic completed – Blocks 106, 124, 163, offshore 12 -16 exploration wells planned in 2006/07 Libya Update 2006 Drilling Program Current Seismic Activity Completed Seismic Program NC143 NC145 NC150 NC74 NC144 NC29
Slide 18: UAE Natural Gas Development Projects
Multi-Tcf Potential Fields Bab Field Shah Field Expect to present proposals by YE 2006 First Gas target 2010 Arabian Gulf Abu Dhabi UAE Natural Gas Development Projects Qatar Saudi Arabia UAE Oman Maqta Taweelah Dubai Fujairah Al Ain 200 Km Bab Field Shah Field
Slide 19: Oil & Gas Capital (2006-2010)
Growth Capital Exploration Argentina Dolphin Mukhaizna Total Growth Capital Base Capital Total Oil & Gas 300 100 255 175 830 1,970 2,800 300 150 90 210 750 1,850 2,600 300 100 160 175 735 1,680 2,415 300 75 315 50 740 1,395 2,135 300 75 210 50 635 1,515 2,150 2006 2007 2008 2009 2010 $ million Oil &
Slide 20: 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 Worldwide Production Outlook
Slide 21: Worldwide Production Outlook
Thousand Barrels/Day 615 680 715 722 750 2005 2006 2007 2008 2009 2010 Assumes $50 WTI Price Worldwide Production Outlook
Slide 22: Oil Price Sensitivity
$40 $60 WTI Price ($/Barrel) PSC Production Impact (Barrels/Day) + 10,000 - 8,000 Oil Price Sensitivity
Slide 23: Additional Growth Opportunities
Base Production (2010)…….… 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) 5.3%-8.5% 9.3%-14.8
Slide 24: Creating Shareholder Value
New projects must meet expectations for good returns Return Targets* Domestic – 15+% International – 20+% Compare new projects & asset acquisitions with share repurchases Make decisions based on creating long-term value for shareholders *Assumes Moderate Product Prices Creating Shareholder Value
Slide 25: Gross Cash Flow Uses
43 19 — 26 12 100 2003 43 5 — 42 10 100 2004 Capital Acquisitions Share Repurchase Debt Reduction & Cash Dividends 2005 Percentage of Total 42 20 — 30 8 100 YTD2006 39 34 26 (8) 9 100 Gross Cash Flow Uses
Slide 26: Share Repurchase Program
Spent $1.3 Billion to Repurchase 26.7 mm shares YTD 2006 at an average price of $48.22 a share Repurchased 6.6 mm shares in 3Q06 at an average price of $47.98 a share – 67% purchased during month of September 14.4 mm shares remaining under current repurchase authorization Reduce outstanding post-spl
Slide 27: 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 28: Statements in this presentation that contain words such as "will," "expect" or "estimate," or
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 29: Slide 29
Slide 30: Appendix
Appendix
Slide 31: Chemical Companies Comparisons
OxyChem - 16.7 OxyChem – 22.2 2.9 8.1 8.0 11.9 11.6 15.7 15.1 18.4 7.6 10.6 7.2 9.9 11.2 15.5 7.3 11.1 13.7 18.4 13.0 19.4 13.4 19.4 11.8 20.7 EBIT Percent of Sales EBITDA Excludes special items. (see Appendix for GAAP reconciliation) Chemical Companies Comparisons Occidental Petroleum Corporation C
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