Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Barclays Capital 2009 CEO Energy/Power Conference
37 slides from Occidental Petroleum's conference presentation, Sep 9, 2009
Slide 1: Barclays Capital 2009 CEO Energy/Power Conference
September 9, 2009 Stephen I. Chazen President and Chief Financial Officer Barclays Capital 2009 CEO Energy/Power Conference
Slide 2: Corporate Strategy/Philosophy
2 Corporate Strategy/Philosophy • Focus on core areas – long-term production growth of 5 - 8% CAGR • US - Permian Basin, California, and Mid-continent/Rockies • Middle East/North Africa • Latin America • Maintain strong balance sheet – Maintain “A” credit rating – Maintain investment discipline – Cr
Slide 3: What Are Our Goals & Current Objectives?
3 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 4: Worldwide Oil & Gas Operations
4 Worldwide Oil & Gas Operations Joslyn Piceance Hugoton Libya Bahrain California Qatar UAE Permian Basin Oman Yemen Colombia Bolivia Argentina
Slide 5: Capital Spending Program
5 Capital Spending Program • Oxy’s total 2009 capital program is expected to be approximately $3.6 billion. – About 80% of the capital will be in Oil and Gas and the remainder in Midstream and Chemical. – We will continue to fully fund much of our Middle East operations and successful exploration pr
Slide 6: Building a Pipeline of Future Growth Projects
6 Building a 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. • Piceance Basin –
Slide 7: Large Inventory of Deferrable Opportunities
7 Large Inventory of Deferrable Opportunities • We spent about $4.7 billion in capital during 2008, and another $4.7 billion for acquisitions; • We have accumulated a sizeable inventory of projects which can be delayed until the industry cost structure is more in line with product prices; • As an il
Slide 8: Worldwide Production Outlook
8 Worldwide Production Outlook Thousand BOE/Day 800 700 660 601 CAGR 570 = 8.3% 600 545 620 500 466 400 300 200 100 0 2005 2006 2007 2008 2009E US ME/NA Latin America Variance Note: Note: Importantly Importantly this forecast is based only on existing projects and does not contemplate any new projec
Slide 9: US Oil & Gas Operations
9 US Oil & Gas Operations Utah Piceance Basin Elk Hills Sheep Mountain Hugoton & California Bakersfield Bravo Dome Properties Los Angeles Long Beach Oxy Permian Houston 2008 net production* 2008 reserves* • 361 mboe/day • 2.07 billion boe • 60% of worldwide total • 70% of worldwide total ** See See
Slide 10: US Oil & Gas Operations
10 US Oil & Gas Operations Thousand BOE/Day 600 Key Operations/Assets: US Oil and Gas Production – California/Elk Hills Field 500 – Permian Basin 400 361 383 – Mid-Continent/Rockies 359 354 331 357 300 2008 Financial Data 200 Pre-tax Income $5.8 Billion After-tax Cash $3.3 Billion 100 Capital $1.9 B
Slide 11: Permian Basin Operations
11 Permian Basin Operations Colorado Kansas • Large resource inventory — Oxy holds 2.4 mm net acres Sheep Sheep Mountain Mountain Hugoton Hugoton • 2008 production of 198 mboe/day Bravo Bravo Dome Dome • 1.1 billion boe of net proved reserves (37% of Oxy total) To To Cushing, Cushing, OK OK • Low de
Slide 12: Permian – Century CO2 Plant Project
12 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 13: Middle East/North Africa Oil & Gas
13 Middle East/North Africa Oil & Gas 2008 net production* • 164 mboe/day • 27% of worldwide total Libya Bahrain Qatar UAE Oman 2008 reserves* Yemen • 650 million boe • 22% of worldwide total ** See See attached attached for for GAAP GAAP reconciliation. reconciliation.
Slide 14: Middle East/North Africa Oil & Gas
14 Middle East/North Africa Oil & Gas Thousand BOE/Day 300 Key Operations/Assets: – Dolphin Project Middle East/North Africa – Qatar ISND 240 Oil and Gas Production 194 – Oman/Mukhaizna 180 164 185 – Bahrain 119 135 2008 Financial Data 120 103 Pre-tax Income $4.5 Billion After-tax Cash $1.6 Billion
Slide 15: Oman – Mukhaizna Project
15 Oman – Mukhaizna Project • Continuing large scale steam flood EOR project – drilled 370+ wells Arabian Gulf thru 2008 Fujairah Gulf of Oman Al Ain Sohar • Gross production at year-end 2008 was 6x higher vs. Sept. 2005 UAE Mukhaizna Blocks 9 & 27 9 • Expect to drill approximately 215 27 new wells
Slide 16: Oman – Gas Project
16 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 17: Bahrain Field Development Project
17 Bahrain Field Development Project • Oxy and Mubadala have signed a Arabian Development and Production Sharing Gulf Agreement (DPSA) with the NOGA of Kingdom of Bahrain for the further development of Bahrain the Bahrain Field. Bahrain Field • The Joint OpCo. will serve as operator under the DPSA,
Slide 18: California – Kern County Discovery
18 California – Kern County Discovery Sacramento • In July, Oxy announced a Valley significant conventional discovery Sacramento in Kern County, CA. • We believe there are 150 mm to San 250 mm gross boe of reserves Francisco within the small producing area San Joaquin delineated by 6 wells. Valley S
Slide 19: California – Kern County Discovery
19 California – Kern County Discovery KERN COUNTY DISCOVERY AREA 2Q09 1Q09 Gross Production* – Natural Gas (mmcf/d) 74 28 – Liquids (mb/d) 5 3 – Total mboe/d 17.3 7.7 Number of producing wells* 6 4 Conventional Primary Production 9 9 • Approximately two-thirds of the discovery is believed to be natu
Slide 20: California – Kern County Discovery
20 California – Kern County Discovery Sacramento • We expect to drill an additional 17 Valley wells during 2009; Sacramento • The wells in this area cost about $3.5 to $4.0 mm to drill and San Francisco complete and have payout periods of less than six months; San Joaquin Valley • The combined F&D,
Slide 21: California – Kern County Discovery
21 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 22: California – Kern County Discovery
22 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
Slide 23: California – Kern County Discovery
23 California – Kern County Discovery Finding & Development Costs per Barrel F&D Costs Actual as a % of 6:1* Prices** WTI Oil Price 2008 $23.77 $31.49 24% 3-Year Average $18.05 $20.65 23% (2006-2008) 5-Year Average $14.97 $16.61 22% (2004-2008) Kern County Discovery (based on 1H09 prices) 10% +/- *
Slide 24: California Exploration
24 California Exploration • Excluding the Kern County discovery: – Over the course of little over a year, we have drilled 34 exploration wells seeking non- traditional hydrocarbon bearing zones in California. – Of these wells, 9 are commercial and 16 are currently being evaluated; – We expect to dri
Slide 25: Other Value Enhancing Initiatives
25 Other Value Enhancing Initiatives • Chemicals Operations – consistent free cash generator • Midstream Assets – Marketing and Pipelines – adds value and is complimentary to Oil & Gas operations • Dividend Growth – consistent track record of dividend increases
Slide 26: Midstream, Marketing and Other
26 Midstream, Marketing and Other The assets are comprised of the following businesses: Marketing; Gas processing plants; Pipelines; Power generation, and; CO2 source fields and facilities. ($ in millions) Midstream Data 1H09 2008 2007 Core Results $77 $520 $367 Net Book Value $3,240 $2,930 $1,935 C
Slide 27: Business Risk Factors
27 Business Risk Factors Level of Risk Acceptable to Occidental Risk Factor Low Middle High Exploratory 9 Commodity 9 Political 9 Engineering 9 Reinvestment 9 Financial 9
Slide 28: Six Months 2009 Results – Summary
28 Six Months 2009 Results – Summary ($ in millions, except EPS data) 1H2009 1H2008 • Core Results $1,096 $4,119 • Core EPS (diluted) $1.34 $4.97 • Net Income $1,050 $4,143 • Reported EPS (diluted) $1.29 $5.00 • Oil and Gas sales volumes (mboe/day) 651 598 • +8.9% year-over-year • Capital Spending $
Slide 29: First Half 2009 – Cash Flow
29 First Half 2009 – Cash Flow $4,000 $1,900 ($ in millions) Cash Flow From Operations $2,200 $500 $740 $20 $1,800 $520 Beginning Cash $1,800 12/31/08 Available Capex Acquisitions Dividends Debt Other Ending Cash Cash & Signing Issuance Balance Bonuses 6/30/09
Slide 30: Creating Shareholder Value – Dividends
30 Creating Shareholder Value – Dividends Establishing a track record of consistent dividend increases • Annual dividend rate was increased to $1.32 per share from $1.28 on 4/30/09 $1.21 Annual Dividend Payout per share $0.94 5.9% 1 = A GR $0.80 C 2008 2007 $0.645 2006 $0.55 $0.50 $0.52 2005 2002 20
Slide 31: Future Growth Areas to Watch
31 Future Growth Areas to Watch • Bahrain – • Oman/Mukhaizna – • Middle East – • California – • Permian Basin – • Argentina –
Slide 32: Occidental Petroleum Corporation
32 Occidental Petroleum Corporation Statements in this presentation that contain words such as "will," "expect" or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause results
Slide 33: Appendix
33 Appendix
Slide 34: Full Year 2008 Results – Summary
34 Full Year 2008 Results – Summary ($ in millions, except EPS data) 2008 2007 1 • Core Results $7,348 $4,405 • Core EPS (diluted) $8.95 $5.25 • +70% year-over-year • Net Income $6,857 $5,400 • Reported EPS (diluted) $8.35 $6.44 • Oil and Gas sales volumes (mboe/day) 601 570 • +5.4% year-over-year •
Slide 35: Full Year 2008 Cash Flow
35 Full Year 2008 Cash Flow $12,700 $4,700 ($ in millions) Cash Flow From Operations $4,700 $10,700 $950 $940 $1,500 $10 $1,800 Beginning Cash $2,000 Available Capex Acquisitions Debt Dividends Share Other Ending Cash Cash Repurchase Balance 12/31/08
Slide 36: Gross Cash Flow Uses
36 Gross Cash Flow Uses Percentage of Total 2004 2005 2006 2007 2008 Capital 40 34 41 40 39 Acquisitions 5 31 26 16 40 Share Repurchase — — 21 14 13 Debt Reduction & Cash 44 27 3 21 — Dividends 11 8 9 9 8 100 100 100 100 100
Slide 37: Reserves Replacement
37 Reserves Replacement Million BOE Worldwide Organic Reserve Production Growth Acquisitions Total Replace % (million boe) 2008 126* 210 336 152 221 2007 182 60 242 116 209 2006 187 326 513 257 200 2005 231 139 370 216 171 2004 201 40 241 145 166 3-Year Average 165 199 364 173 210 5-Year Average 185
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