Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Credit Suisse 2010 Energy Summit
40 slides from Occidental Petroleum's conference presentation, Feb 4, 2010
Slide 1: Credit Suisse 2010 Energy Summit
February 4, 2010 Stephen I. Chazen President and Chief Financial Officer Credit Suisse 2010 Energy Summit
Slide 2: Full Year 2009 Results – Summary
2 Full Year 2009 Results – Summary ($ in millions, except EPS data) 2009 2008 1 • Core Results $3,083 $7,348 • Core EPS (diluted) $3.78 $8.94 • Net Income $2,915 $6,857 • Reported EPS (diluted) $3.58 $8.34 • Oil and Gas sales volumes (mboe/day) 714 675 • +5.8% year-over-year • Capital Spending $3,58
Slide 3: Corporate Strategy/Philosophy
3 Corporate Strategy/Philosophy • Focus on core areas – long-term production growth of 5 - 8% CAGR • US - Permian Basin, California, and Midcontinent Gas • Middle East/North Africa • Latin America • Maintain strong balance sheet – Maintain “A” credit rating – Maintain investment discipline – Create
Slide 4: What Are Our Goals & Current Objectives?
4 What Are Our Goals & Current Objectives? • Allocate and deploy capital with a focus on achieving strong financial returns. • Pursue only those opportunities which meet our standards for ROCE and complement our existing assets. – Return Targets* • Domestic – 15+% • International – 20+% • Focus on f
Slide 5: Worldwide Oil & Gas Operations
5 Worldwide Oil & Gas Operations Piceance Iraq Hugoton Libya California Bahrain Qatar Permian Basin UAE Oman Yemen Colombia Argentina
Slide 6: Worldwide Production Outlook
6 Worldwide Production Outlook 1000 Thousand BOE/Day 900 770 800 CAGR 714 = 7.9% 700 675 750 633 601 600 519 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010E US ME/NA Latin America Variance Note: Note: This This schedule schedule reflects reflects what what production production volumes volumes
Slide 7: Business Risk Factors
7 Business Risk Factors Level of Risk Acceptable to Occidental Risk Factor Low Middle High Exploratory 9 Commodity 9 Political 9 Engineering 9 Reinvestment 9 Financial 9
Slide 8: 2009 Reserve Replacement
8 2009 Reserve Replacement • We estimate that we replaced approximately 206% of our oil and gas production in 2009. • 2009 year-end proved reserves were 3.23 billion BOE, an increase of 8%. • Oxy had a three-year reserve replacement ratio of 160%. • Our finding and development costs in 2009 were $7.
Slide 9: Reserve Replacement
9 Reserve Replacement Million BOE Worldwide Organic Reserve Production Growth Acquisitions Total Replace % (million boe) 2009 323 160 483 206 235 2008 126 210 336 153 220 2007 182 60 242 116 208 2006 180 326 506 243 208 2005 241 139 380 212 179 3-Year Average 210 143 353 160 221 5-Year Average 210 1
Slide 10: Capital Spending Program
10 Capital Spending Program • We currently anticipate total year 2010 capex to be about $4.3 billion compared to $3.6 billion spent in 2009. – Our capital program will continue to focus on ensuring that our returns remain well above our cost of capital. – The increase in capital vs. 2009 will be all
Slide 11: Pipeline of Future Growth Projects
11 Pipeline of Future Growth Projects • California – Oxy is the largest acreage holder in the state, and is continuing to pursue recent exploration successes. • Permian Basin – opportunity to deploy additional sources of CO2 to improve recovery and boost oil production. • Midcontinent Gas – most of
Slide 12: US Oil & Gas Operations
12 US Oil & Gas Operations Utah Piceance Basin Elk Hills Sheep Mountain Hugoton & California Bakersfield Bravo Dome Properties Los Angeles Long Beach Oxy Permian Houston 2009 net production 2009 reserves • 377 mboe/day • 2.07 billion boe • 58% of worldwide total • 64% of worldwide total
Slide 13: US Oil & Gas Operations
13 US Oil & Gas Operations 600 Thousand BOE/Day Key Operations/Assets: US Oil and Gas Production – California/Elk Hills Field 500 – Permian Basin 400 361 377 – Midcontinent Gas 359 354 331 1 300 2009 Financial Data 200 Pre-tax Income $2.2 Billion After-tax Cash $1.6 Billion 100 Capital $1.2 Billion
Slide 14: Permian Basin Operations
14 Permian Basin Operations • Large resource inventory — Oxy Colorado Kansas holds 2.2 mm net acres Sheep Sheep Mountain Mountain Hugoton Hugoton • 2009 production of 185 mboe/day • 1.1 billion boe of net proved Bravo Bravo Dome Dome reserves (34% of Oxy total) To To Cushing, Cushing, OK OK • Low de
Slide 15: Permian – Century CO2 Plant Project
15 Permian – Century CO2 Plant Project McCamey Hub • Oxy to invest $850 mm NGL in CO2 plant and pipeline Pipelines Oil facilities. Pipelines • CO2 to be used in Oxy’s G as Permian EOR projects. Pi CO2 pe Pipelines lin es County Pikes Mitchell • New CO2 resources Peak expected to expand Gray Ranch Ox
Slide 16: Middle East/North Africa Oil & Gas
16 Middle East/North Africa Oil & Gas 2009 net production • 254 mboe/day • 35% of worldwide total Libya Bahrain Qatar UAE Oman 2009 reserves Yemen • 924 million boe • 29% of worldwide total
Slide 17: Middle East/North Africa Oil & Gas
17 Middle East/North Africa Oil & Gas Thousand BOE/Day Key Operations/Assets: 300 Middle East/North Africa – Dolphin Project Oil and Gas Production 254 238 – Qatar ISND 240 – Oman/Mukhaizna 198 175 – Bahrain 180 157 1 2009 Financial Data 120 Pre-tax Income $2.5 Billion After-tax Cash $1.2 Billion 60
Slide 18: Oman – Mukhaizna Project
18 Oman – Mukhaizna Project • Continuing large scale steam flood EOR project – drilled 665+ wells Arabian Gulf thru 2009 Fujairah Gulf of Oman • Gross production at year-end 2009 Al Ain Sohar was more than 10x higher vs. Sept. UAE 2005 Mukhaizna Blocks 9 & 27 9 27 • Expect to drill approximately 320
Slide 19: Oman – Gas Project
19 Oman – Gas Project • PSA signed on 11/24/08 Arabian Gulf Fujairah – Newly formed contract area – Gulf of Oman “Habiba” - Block 62 Al Ain Sohar – 20-year agreement covers 2,269 UAE Block 62 km2 9 Existing 27 Muscat – Development of four gas fields Operations – Exploration potential Saudi Arabia •
Slide 20: Bahrain Field Development Project
20 Bahrain Field Development Project • Oxy, Mubadala, and NOGA announced the creation of a new joint operating Arabian Gulf company, Tatweer Petroleum, which will Kingdom serve as operator for the Bahrain Field. of Bahrain • The company will operate under a Bahrain Field Development and Production S
Slide 21: Iraq – Zubair Field
21 Iraq – Zubair Field Kirkuk Reserves 17B Bai Hassan Syria Reserves 5B Iran Mansuriya Akkas Reserves 1.6TCF Reserves 2.5TCF Iraq Missan Reserves 2.2B West Qurna 1 ExxonMobil/Shell Reserves 6B Zubair Rumaila Eni/Oxy/Kogas BP/CNPC Reserves 4.2B+ Saudi Arabia Reserves 21B Kuwait
Slide 22: Iraq – Zubair Field
22 Iraq – Zubair Field • Oxy is part of an Eni-led consortium that has been awarded the license for development of the giant Zubair oil field in Iraq. • Iraq holds the world’s second-largest reserves of oil with about 115 billion barrels estimated – second only to Saudi Arabia. • We are now one of t
Slide 23: California – Kern County Discovery
23 California – Kern County Discovery KERN COUNTY DISCOVERY AREA 4Q09 3Q09 2Q09 1Q09 Gross Production* – Natural Gas (mmcf/d) 145 105 74 28 – Liquids (mb/d) 7.5 8.5 5 3 – Total mboe/d 31.7 26.0 17.3 7.7 Number of producing wells* 15 10 6 4 • We believe there are 150 mm to 250 mm gross boe of reserve
Slide 24: California – Kern County Discovery
24 California – Kern County Discovery Sacramento Valley • Cumulative gross production Sacramento since the start of production through 12/31/09 has been 19.4 bcf of gas and 1.5 mm barrels of San Francisco liquids; San Joaquin Valley • We expect to drill 8 wells in the Sa first half of 2010 focusing
Slide 25: California Exploration
25 California Exploration • Excluding the Kern County discovery: – Over the course of a couple of years, we have drilled 39 exploration wells seeking non-traditional hydrocarbon bearing zones in California. – Of these wells, 12 are commercial and 10 are currently being evaluated; – Oxy holds 1.3 mm
Slide 26: Other Value Enhancing Initiatives
26 Other Value Enhancing Initiatives • Chemicals Operations – consistent free cash generator • Midstream Assets – Marketing and Pipelines – adds value and is complimentary to Oil & Gas operations • Dividend Growth – consistent track record of dividend increases
Slide 27: Chemicals Operations
27 Chemicals Operations ($ millions) Period ending 12/31/09* 3-Year* 5-Year* Average Average 2009 Pre-tax Earnings $583 $688 $389 1 Free Cash Flow $657 $758 $480 Capital Spending $230 $221 $205 11 See See attached attached for for GAAP GAAP reconciliation. reconciliation.
Slide 28: Midstream, Marketing and Other
28 Midstream, Marketing and Other The assets are comprised of the following businesses: Marketing; Gas processing plants; Pipelines; Power generation, and; CO2 source fields and facilities. ($ in millions) Midstream Data 2009 2008 2007 Pre-tax earnings $235 $520 $367 Net Book Value $3,840 $2,930 $1,
Slide 29: Full Year 2009 Cash Flow
29 Full Year 2009 Cash Flow $7,600 $3,600 ($ in millions) Cash Flow From Operations $5,800 $1,750 $1,065 $40 $5 $1,230 Beginning Debt Cash Issuance $1,800 $740 12/31/08 Debt Reduction $700 Available Capex Acquisitions Dividends Net Debt Other Ending Cash Cash & Foreign Issuance Balance Bonuses 12/31
Slide 30: Uses of Capital – (In Order of Priority)
30 Uses of Capital – (In Order of Priority) ($ in millions) 2009 1. Base/Maintenance Capital – $2,550 2. Dividends – $1,065 3. Growth Capital – $1,030 4. Acquisitions – $1,750 5. Share Repurchase – $ -
Slide 31: Creating Shareholder Value – Dividends
31 Creating Shareholder Value – Dividends An established track record of consistent dividend increases Annual Dividend Payout per share $1.31 $1.21 4.8% 1 = AGR C $0.94 $0.80 $0.645 $0.52 $0.55 $0.50 2002 2003 2004 2005 2006 2007 2008 2009
Slide 32: Creating Shareholder Value
32 Creating Shareholder Value Oxy’s Shareholder Equity versus Equity Market Value • Building a History of Generating Shareholder Value Change In Equity Market Value Market Value per $ of Equity Retained ($ in millions) Change In Shareholders’ Equity $17,443 1 – Year 9.5 $1,834 $25,037 3 – Year 2.6 $
Slide 33: Future Growth Areas to Watch
33 Future Growth Areas to Watch • Bahrain – • Oman/Mukhaizna – • Middle East – • California – • Permian Basin – • Midcontinent Gas –
Slide 34: Occidental Petroleum Corporation
34 Occidental Petroleum Corporation 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 actual
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Slide 36: Appendix
36 Appendix
Slide 37: Gross Cash Flow Uses
37 Gross Cash Flow Uses Percentage of Total 2004 2005 2006 2007 2008 2009 Capital 40 34 41 40 39 54 Acquisitions 5 31 26 16 40 27 Share Repurchase — — 21 14 13 — Debt Reduction & Cash 44 27 3 21 — 3 Dividends 11 8 9 9 8 16 100 100 100 100 100 100
Slide 38: California – Kern County Discovery
38 California – Kern County Discovery Conventional vs. Non-conventional – What does this mean? • Oxy’s discovery is Conventional, which means it is non-shale, is analogous to a deep water discovery, and bears no relationship at all to so called resource plays. • This is a classic oil and gas field w
Slide 39: California – Kern County Discovery
39 California – Kern County Discovery Conventional vs. Non-conventional – What does this mean? • In a Non-conventional play drilling efficiencies and cost burden determines the outcome. In a Conventional discovery the value is created by the discovery process. • In a Non-conventional field, reserves
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