Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Investor Presentation (January 2019)
46 slides from Occidental Petroleum's investor presentation, January 2019
Slide 1: Investor Presentation
Investor Presentation Occidental Petroleum Corporation January 2019
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements This presentation contains forward-looking statements based on management’s current expectations relating to Occidental’s operations, liquidity, cash flows, results of operations and business prospects. Words such as “estimate,” “project,” “predict,”
Slide 3: Occidental Petroleum
Occidental Petroleum • Highlights and Cash Flow Priorities • Financial Summary and Guidance • Permian Update • International Update • Closing Remarks 3
Slide 4: Value Based Cash Flow Growth
Value Based Cash Flow Growth Production increase: 14% YoY ROCE: 13% Cash Opex + DDA ($/Boe): -4% YoY CROCE: 26% Dividends $2.4 B Repurchases $0.9 B Total $3.3 B Net Debt to Cap: 23% Credit Rating: A/A3/A Stable 1Trailing 12 months for the period ending 9/30/2018; $61.08 WTI ROCE, CROCE and Net Debt
Slide 5: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights $2.6 B cash flow from operations before working capital exceeded capital expenditures and dividends by $700 MM Highest quarterly EPS since 2014 Portfolio Optimization $1.5 B returned to shareholders Returning Capital to Shareholders Focused on Returns Strong Cash
Slide 6: Integrated Portfolio with High Value Investment Options
Integrated Portfolio with High Value Investment Options Oil & Gas Chemical Midstream & Marketing Focused in world class Leading manufacturer of Integrated infrastructure and basins with a history of basic chemicals and marketing provides access to maximizing recovery significant cash generator globa
Slide 7: Cash Flow Priorities & 2019 Capital Scenarios
Cash Flow Priorities & 2019 Capital Scenarios Cash Flow Breakeven at Low Oil Prices Estimated Cash Flows ($)1 • $40 WTI – maintain dividend and production • $50 WTI – maintain dividend and CFFO grow long-term production 5 - 8+% $60+ WTI $2 B+ Share Repurchase CFFO Program $50 WTI • ~$1.3 B repurchas
Slide 8: Annual Cash Flow
Premium Integrated Assets Drive Long Term $9.0 - 9.5 B Cash Flow Growth $8.5 B CFFO at • 5 - 8+% production $67.50 WTI growth • $5.0 - $5.3 B Capital Annual Cash Flow • Returns driven $60 WTI capital allocation $7.6 B • Share repurchases Adjusted for increase cash flow $60 WTI per share 2018E 2022E
Slide 9: Oxy Consistently Returns Capital to Shareholders
Oxy Consistently Returns Capital to Shareholders Increasing cash Sustaining the flow for dividend Consistent Dividend & Opportunistic Share Repurchases at Higher Commodity Prices Dividend growth 5,000 Dividend Sustainable at $40 WTI 120.00 4,500 16 Consecutive Years of Dividend Growth - 12% CAGR
Slide 10: Occidental Petroleum
Occidental Petroleum • Highlights and Cash Flow Priorities • Financial Summary and Guidance • Permian Update • International Update • Closing Remarks 10
Slide 11: 3Q18 Results
3Q18 Results Reported diluted EPS $2.44 Core diluted EPS $1.77 Core diluted EPS 3Q18 CFFO before working capital & other $2.6 B 3Q18 3Q17 YoY 3Q18 capital expenditures $1.3 B $1.77 $0.18 883% Dividend payments $0.6 B CFFO before working capital & other Share repurchases $0.9 B 3Q18 3Q17 YoY Cash bal
Slide 12: 2018 Guidance
2018 Guidance Oil & Gas Segment Exploration Expense • FY 2018E Production • ~$70 MM in 4Q18E > Total production of 655 – 659 Mboed • ~$135 MM in FY 2018E > Permian Resources production of 211 – 213 Mboed DD&A – FY 2018E > International production of 286 – 287 Mboed • Oil & Gas: ~$13.50 / boe • 4Q18E
Slide 13: Occidental Petroleum
Occidental Petroleum • Highlights and Cash Flow Priorities • Financial Summary and Guidance • Permian Update • International Update • Closing Remarks 13
Slide 14: 2018 YTD Permian Highlights
2018 YTD Permian Highlights Permian Resources Total Year Production + 10 Mboed from Initial Guidance Increased the Value of Advanced Technologies and Enhanced Our Portfolio our Assets Operations Permian Resources Permian Resources Operational Efficiency • Completed 25,000 net acre trades YTD • Oxy r
Slide 15: Increasing Shareholder Value in Permian Resources
Increasing Shareholder Value in Permian Resources Returns Focused Investment Approach Permian Resources Production Results in High Margin Growth (Mboed) 30% - 35% CAGR 26 of top 50 wells in the Basin Best Wells over the last year1 Max Price Oil takeaway capacity with 211 - 213 exposure to world mark
Slide 16: Occidental Petroleum
Occidental Petroleum • Highlights and Cash Flow Priorities • Financial Summary and Guidance • Permian Update • International Update • Closing Remarks 16
Slide 17: International Highlights
International Highlights • On track to generate $1.4 B of free cash flow in 2018 • Improved Drilling efficiencies - 17% faster and 30% cheaper since 2014 • Exploration success leading to growth in short cycle inventory • World class HES performance • Al Hosn Gas Plant debottlenecking increases capac
Slide 18: Opportunities for Growth - Oman
Opportunities for Growth - Oman New Blocks: 51 and 65 in Oman North and Block 72 in Central Oman • Increases Oman acreage from 2.3 to 6 MM gross acres • Doubles potential well inventory UAE to ~10,000 locations Saudi Arabia Sultanate • Contiguous acreage will leverage of Oman existing infrastructure
Slide 19: Oman Value Creation
Oman Value Creation Increased from 5 productive horizons to ~17 producing and appraisal horizons ARUMA NATIH A Oxy Subsurface Characterization NATIH A NATIH B UNC • Leveraged 2,600 square miles of recently NATIH C NATIH C acquired 3D seismic NATIH D NATIH D NATIH E SHUAIBA > Enhanced regional unders
Slide 20: Occidental Petroleum
Occidental Petroleum • Highlights and Cash Flow Priorities • Financial Summary and Guidance • Permian Update • International Update • Closing Remarks 20
Slide 21: Oxy's Sustainable Value Proposition
Oxy’s Sustainable Value Proposition Integrated Business Model Returns Focused Growth Industry Leading Base Decline Rate in Permian Resources is Driving High- Oil and Gas and Sustainable Cash Return Growth with the Best Wells in the Generation from Midstream and Permian Basin Chemical CROCE Growth wi
Slide 22: Appendix
QELS GSD A (OA a Seen $20 us
Slide 23: Appendix Contents
Appendix Contents • Financial Information • Social Responsibility, Environment and Governance • Permian Updates • Chemical Updates 23
Slide 24: Cash Flow Sensitivities in 4Q18
Cash Flow Sensitivities in 4Q18 Oil & Gas • Annualized cash flow changes ~$120 MM per ~$1.00 / bbl change in oil prices > ~$90 MM per ~$1.00 / bbl change in Midland prices > ~$30 MM per ~$1.00 / bbl change in Brent prices • Annualized cash flow changes ~$35 MM per ~$0.50 / Mmbtu change in natural ga
Slide 25: All Segments Outperforming Cash Flow Expectations
All Segments Outperforming Cash Flow Expectations Midstream & Marketing Chemical Oil & Gas – Permian EOR Market and operational improvements: Market improvements: Market and operational improvements: • Mid to Gulf Coast Differentials • Improved Caustic Soda pricing • Production increased 3% • Higher
Slide 26: YTD 2018 Cash Flow and Cash Balance Reconciliation
YTD 2018 Cash Flow and Cash Balance Reconciliation $B $2.7 ($2.7) $6.2 ($3.6) ($1.3) $3.0 $1.7 Beginning Cash CFFO Before Asset Sales Dividends & Share Capital Expenditures Other Ending Cash Balance 1/1/18 Working Capital Repurchases Balance 09/30/18 26
Slide 27: Short-cycle Investments Provide Flexibility and Less Risk
Short-cycle Investments Provide Flexibility and Less Risk Capital Flexibility Capability to reduce capital from $5.0 B 2018 growth plan to sustaining capital level in six months Commodity Risk Payback for 2018 Development Capital at $50 WTI 20% 25% 55% <2 Years 2-3 Years >3 Years 27
Slide 28: Appendix Contents
Appendix Contents • Financial Information • Social Responsibility, Environment and Governance • Permian Updates • Chemical Updates 28
Slide 29: Leadership in Carbon Reduction
Leadership in Carbon Reduction • Oil and Gas Climate Initiative (OGCI) Oxy Direct Emissions Reduction Plan > Advancing technology and projects for a lower carbon future and Target Communicated in 2019 • American Petroleum Institute Environmental Partnership Direct Emissions Intensity > Aimed at redu
Slide 30: Occidental Joins Oil and Gas Climate Initiative (OGCI)
Occidental Joins Oil and Gas Climate Initiative (OGCI) Collaborating with Industry Leaders to Lower the Carbon Footprint of Energy and Industrials • Occidental joined group in September 2018 • 13 members of OGCI represent 30% of the global oil and gas production • Collective reduction targets > Meth
Slide 31: Occidental Low Carbon Ventures
Occidental Low Carbon Ventures Leveraging our unique Systematic direct emission reductions from operations position and leadership in Adapt equipment to lower energy use per the CO2 market to provide a produced volume Low-carbon sustainable energy future Direct emissions emission reduction electrici
Slide 32: Appendix Contents
Appendix Contents • Financial Information • Social Responsibility, Environment and Governance • Permian Updates • Chemical Updates 32
Slide 33: Core Development Areas Delivering High Results – Greater Sand Dunes
Core Development Areas Delivering High Results – Greater Sand Dunes Cumulative Production (Mboed) Subsurface Characterization is Driving Basin Greater Sand Dunes Bone Spring – 10,000’ wells 400 2017: 8 Wells Leading Results ~9,900’ 300 2018: 41 Wells • Customized development to maximize value 200 ~9
Slide 34: Core Development Areas Delivering High Results – Barilla Draw
Core Development Areas Delivering High Results – Barilla Draw Cumulative Production (Mboed) Scalable Performance Improvements Barilla Draw Wolfcamp A – 10,000’ wells 300 2017: 3 Wells Increasing Asset Value ~10,000’ 2018 Old Design: 200 7 Wells ~10,000’ • New well design and subsurface characterizat
Slide 35: Improving Returns Through Opex Reduction
Improving Returns Through Opex Reduction Permian Scale and Operating Capability Permian Resources Opex/BOE Reduces Costs • Development planning focused on value maximization (life-cycle cost) $12.93 $12 $11.17 • Lower Cost > Water management $8.43 $8.72 > Equipment failure reduction $8.00 $8.43 $8 $
Slide 36: Results in Greater Sand Dunes Area Multi-Bench Development
Results in Greater Sand Dunes Area Multi-Bench Development Recent Well Results Target Formation Lateral Peak 24 Hr Peak 30 Oil Barilla GreaterDraw Type Log Sand Dunes Well Name Length (ft) (boed) Day (boed) (%) Brushy Canyon Federal 23 13H 4,376 899 833 90% Mesa Verde BS Unit 1H 9,799 2,872 2,709 74
Slide 37: Results in Greater Barilla Draw Area Multi-Bench Development
Results in Greater Barilla Draw Area Multi-Bench Development Recent Well Results Target Formation Well N ame Lateral Peak 24 Hr Peak 30 Oil Barilla GreaterDraw BarillaType DrawLog Length (ft) (boed) Day (boed) (% ) Avalon Evaluating st Evaluating 1 BS nd Collie A East N63H 9,725 1,370 1,155 81% 2 BS
Slide 38: Integrated Subsurface Characterization Optimizes Development for Value
Integrated Subsurface Characterization Optimizes Development for Value Pre-Seismic Section Development Plan Optimized Section Development Plan Upper Flow Unit Upper Flow Unit 1H 2H 3H 4H 5H 6H 1H 3H 5H Carbonate Barrier Lower Flow Unit Lower Flow Unit (no wells) 2H 4H 6H Gun Barrel View, 10 M Latera
Slide 39: Permian Resources Delivers Basin Leading Wells
Permian Resources Delivers Basin Leading Wells Oxy has 26 of the top 50 Wells in the Permian Basin Leading Wells with Less Proppant 4,250 10,000 8,000 3,250 Proppant #/ft IP 24 BOPD 6,000 Competitor Average Proppant #/ft 2,250 +25% 4,000 Oxy Average Proppant #/ft 2,000 1,250 September-17 November-17
Slide 40: Aventine – Strategic Relationships that Secure Supply and Lower Costs
Aventine – Strategic Relationships that Secure Supply and Lower Costs • Over 520,000 tons of frac sand 3Q 2016 delivered representing near • Design concept approved complete coverage of NM frac operations 2Q 2017 • Acquired land 2018 Operating Highlights > Represents over 21,000 truck loads • Projec
Slide 41: Undeveloped Drilling Locations
Permian Resources High Value Inventory Permian Resources Inventory 2Q18 12,000 • Increased average length of total 11,207 10,8351 inventory from ~7,600 ft to 10,574 ~7,800 ft Undeveloped Drilling Locations 10,000 Midland Basin • Traded 460 gross locations away for higher interest in longer Texas 8,0
Slide 42: Permian Resources
Permian Resources Net Business Area Acreage Acres1 • Resources – Unconventional Areas 1.4 • Enhanced Oil Recovery Areas 1.1 • Significant growth potential in Oxy Permian Total ~2.5MM all development areas • ~650,000 net acres within Net the Delaware and Midland Resources Basin Development Areas Acre
Slide 43: Permian EOR
Permian EOR Proven Leader in Maximizing Recovery Across the Permian Significant opportunity Permian EOR Net Resource Potential to grow inventory 2,000 > Subsurface characterization > Operating efficiency High-gradable Inventory > Technology 1,500 Midland Basin 1,000 TZ/ROZ1 Water Floods + Other Infi
Slide 44: Appendix Contents
Appendix Contents • Financial Information • Social Responsibility, Environment and Governance • Permian Updates • Chemical Updates 44
Slide 45: Chemical: Market Leading Position
Chemical: Market Leading Position Chemical Segment at a Glance Earnings Highlights • Major global exporter of all core products • Positive cash flow generation throughout cycle • Top tier global producer in every product produced • Integrated assets capture > Largest merchant caustic seller in the w
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