Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Barclays 2017 CEO Energy-Power Conference
27 slides from Occidental Petroleum's conference presentation, Sep 6, 2017
Slide 1: Barclays 2017 CEO Energy-Power Conference
Barclays 2017 CEO Energy-Power Conference Occidental Petroleum Corporation September 6, 2017 Vicki Hollub Chief Executive Officer
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements 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. Actual results may differ from anticipated
Slide 3: Occidental Petroleum
Occidental Petroleum • Value Proposition • Portfolio Optimization • Path to Cash Flow Neutrality and Breakeven • Sustainability With High Quality Assets • Model 3
Slide 4: Oxy's Unique Value Proposition
Oxy’s Unique 2016 ROCE* Consistent Dividend Growth Value • Growing dividend with strong yield Proposition • Value protection in down cycle Upside in rising oil • Promotes capital allocation discipline price environment and downside Moderate Value-Based Growth protection during • 5 – 8% average produ
Slide 5: Cash Flow Priorities Favor Dividends
Cash Flow Priorities 1. Base/Maintenance Capital Favor Dividends 2. Dividends Dividends promote 3. Growth Capital capital allocation Subject to Returns and discipline 4. Acquisitions Market Conditions 5. Share Repurchases 5
Slide 6: Delivering Consistent Annual Dividend Growth
Delivering Consistent Annual Dividend Growth 2002 – 2016: Oxy dividend CAGR 13% vs S&P CAGR 7% ($/share) $28.00 Annual Dividends Paid $26.44 $24.00 Cumulative Dividends Paid $23.38 $20.36 $20.00 $17.39 $16.00 $14.51 $11.95 $12.00 $9.79 $7.95 $8.00 $6.48 $5.17 $3.96 $4.00 $2.22 $3.02 $2.56 $2.88 $2.9
Slide 7: Value Growth - Production Growth Since 2011
Value Growth - Production Growth Since 2011 Ongoing Total Company Production CAGR 6%* 700 600 575 Permian 528 Resources 500 438 435 428 440 16% CAGR 400 Mboed 300 200 100 0 2011 2012 2013 2014 2015 2016 Ongoing Company Excluding Permian Resources Permian Resources *Pro forma for ongoing operations (
Slide 8: Value Growth - Annual ROCE for Oxy vs. Average of Competitors
Value Growth - Annual ROCE for Oxy vs. Average of Competitors 30% 2008 – 2013 20% Oxy Average ROCE 15% 10% 00% (10%) (20%) (30%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 OXY ROCE Competitors ROCE* *Competitors ROCE represents a simple average of APA, APC, COP, CVX, DVN, EOG, HES, MRO and XOM 8
Slide 9: Multi-year Returns Focused Portfolio Optimization
Value Growth - Multi-year Returns Focused Portfolio Optimization Set to generate both returns to shareholders and value-based growth Divested assets that did not generate Investing in assets with higher cash competitive corporate returns or free margin and lower capital intensity cash flow Growth ta
Slide 10: Pathway to Cash Flow Breakeven at Low Oil Prices
Pathway to Cash Flow Breakeven at Low Oil Prices Cash Flow Breakeven at $50: 6.0 Dividend + 5% – 8% Production Growth $5.7 $5.7 Growth Operating Cash Flow ($ Bn) 5.0 Cash Flow Neutral at $40: Capital $1.0 Dividend with Flat Production $4.3 $4.5 $4.5 $120 MM per $1 4.0 $3.7 Seminole-San Andres Change
Slide 11: Achieving Goals to Cash Flow Neutrality at $40
Achieving Goals to Cash Flow Neutrality at $40 Annualized Cash Flow From Operations Improvements ($ Bn) Achieved since 1Q17 Breakeven Plan Ethylene cracker achieved full quarter of operating 0.8 income with first cash $0.7 distribution expected in 3Q17 0.6 Marketing differential improved substantial
Slide 12: Ample Liquidity to Fulfill Plan Even at $40 WTI
Ample Liquidity to Cash Flows Through End of 2018 at $40 WTI 2018 Fulfill Plan Even at 6.0 Remaining 2017 $40 WTI 5.0 Cash flow outspend through the 4.0 completion of our plan is covered $Bn by available liquidity, including: 3.0 Capital Program • Current cash balance: $2.2 Bn Dividend Available 2.0
Slide 13: Significantly Reduced Development Cost
Value Growth – Significantly Reduced Development Cost 2016 F&D (Organic) $/Boe 20 19.27 17.19 15 13.37 11.73 11.41 $/Boe 10 9.59 6.86 6.51 6.45 5 0 1 2 3 4 5 6 7 8 OXY Competitor Peers* *Competitor Peers include APC, CVX, CXO, DVN, EOG, HES, MRO, PXD. Excludes APA, COP, XOM due to negative F&D. 13
Slide 14: Value Growth: 2016 ROCE
Value Growth 2016 ROCE* 10% Focus on value driven growth - Top quartile returns 0% Positioned to return to double digit (10%) returns (20%) (30%) HES DVN CXO APC MRO APA EOG COP PXD OXY CVX XOM *Calculated based on public information and on a consistent basis Companies listed alphabetically : APA, A
Slide 15: Focused Businesses
Focused Oil and Gas Core Areas Businesses OxyChem High free cash United States flow, moderate • Leading position in the Permian growth business • Permian Resources is a growth driver Midstream Integrated infrastructure Middle East and marketing • Focus areas – Oman, Qatar, and UAE business to • Oppo
Slide 16: Permian Resources
Permian Resources Business Area Acreage Net Acres* • Resources – Unconventional Areas 1.4 • Significant acreage & growth • Enhanced Oil Recovery Areas 1.1 potential in all development Oxy Permian Total ~2.5MM areas • ~637,000 net acres within Resources Basin Development Areas Net Acres* the Delaware
Slide 17: Undeveloped Drilling Locations
Reached <$50 Added 400 Hz Locations <$50 Breakeven inventory additions goal since 4Q16 16 years of inventory <$50 breakeven with 10 rigs • + 400 locations YTD • + 3.5 MM feet of total 3,000 horizontal lateral 100 2,855 155 45 • Increased <$50 average Midland 100 Undeveloped Drilling Locations 2,500
Slide 18: Undeveloped Drilling Locations
Added ~20 Rig Years of Activity to <$50 Inventory Permian Resources Inventory 2Q17 14,000 • + 400 locations BE <$50 11,963* 12,000 11,325 11,650 > ~300 in New Mexico Undeveloped Drilling Locations Midland 10,000 Basin > Replaced inventory from Texas divestitures Delaware 8,000 Basin • + 3.0 MM ft of
Slide 19: Permian Resources Capital Intensity Improves through 2019
Permian Resources Capital Intensity Improves through 2019 • 2017 to 2019 – Value-based Development reduces All-In Capital Intensity capital intensity Annual Capex $MM / Annual Wedge Mboed* $54MM > Facilities, infrastructure and other** 23% to <15% of capital budget $42MM > New Mexico wells ~30% to ~
Slide 20: Seminole-San Andres Further Strengthens Leading Position in EOR
Seminole-San Andres Further Strengthens Our Leading Position in EOR • Seminole-San Andres is now our largest operated CO2 3,500 Gas EOR Projects* project in the Permian 3,000 Production Volumes Occidental Injection Wells > San Andres reservoir is world-class 2,500 > Oxy now operates 34 CO2 projects
Slide 21: Permian EOR Proven Leader in Maximizing Recovery
Permian EOR Proven Leader in Maximizing Recovery Across the Permian • Seminole San Andres Unit Permian EOR adds low F&D inventory Net Resource Potential > ~100 MMboe at < $6.00 SSAU 2,000 Acquisition future development cost High-gradable Inventory • Significant opportunity to 1,500 improve and grow
Slide 22: Longest Legacy International Operations: Colombia and Oman
Longest Legacy International Operations: Colombia and Oman Colombia: Discovered giant Cano Limon field in the early 1980’s. Several contracts that currently range from 6 years up to the economic life of field. Long term contracts with upside potential Oman: Assisted with the discovery and started Om
Slide 23: Additional Core Middle East Assets
Additional Core Middle East Assets ISND and ISSD: Offshore development in Qatar. ISND contract for 25 years initiated in 1994. ISSD contract expires in 2022. Dolphin: Premier transborder pipeline delivering gas from Qatar to Abu Dhabi and Oman. Agreement was initiated in 2007 for a 25 year term. Al
Slide 24: Current Dividend Yield vs. Competitors
Current Dividend Yield vs. Competitors 6.0% Dividend yield should revert close to historical levels as we 5.7% execute plan to a lower cash flow breakeven 5.2% 5.0% 4.0% 4.1% 4.0% 3.0% 2002 – 2016 Average Oxy Dividend Yield 2.6% 2.4% 2.5% 2.2% 2.0% 2.0% 1.8% 1.0% 0.8% 0.8% 0.5% 0.1% 0.0% PXD APC DVN
Slide 25: Unique Investment Proposition
Unique Investment Proposition Large Integrated Majors Independent E&Ps Company Market Cap ($Bn) Company Market Cap ($Bn) Oxy XOM $323 COP $53 Uniquely RDS $227 EOG $49 Positioned CVX $202 APC $24 TOT $109 PXD $22 BP $114 DVN $16 ENI $56 APA $15 Characteristics Characteristics • Low or no growth • Ge
Slide 26: Successful Value Proposition
Successful Consistent 2016 ROCE* Dividend Growth Value • Oxy dividend CAGR doubled S&P CAGR since 2002 Proposition • Highest yield vs. US peers • Historical dividend yield of 2.85% Oxy has delivered Moderate Value-Based Growth positive results on • Averaged better than 5% production growth each comp
Slide 27: Q&A
Q&A
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