Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — UBS Global Oil and Gas Conference 2016
28 slides from Occidental Petroleum's conference presentation, May 25, 2016
Slide 1: Occidental Petroleum Corporation - UBS Global Oil and Gas Conference 2016
OCCIDENTAL PETROLEUM CORPORATION Vicki A. Hollub President & CEO UBS Global Oil and Gas Conference 2016 May 25, 2016 Vicki A. Hollub
Slide 2: Why own Oxy?
Why own Oxy? Large Integrated Majors Independent E&Ps Company Market Cap ($B) Company Market Cap ($B) XOM $372 COP $54 RDS $197 Oxy EOG $45 CVX $188 Uniquely PXD $27 TOT $120 Positioned APC $25 BP $98 APA $22 ENI $55 DVN $18 Characteristics Characteristics • Low or no growth • Generally higher growt
Slide 3: Keys to Success
Keys to Success Balance Sheet Strength Diverse Portfolio • Ended 1Q16 with $3.2 Billion • Long life cash flow assets cash • Significant growth potential • Debt of $7.6 Billion (24% • 5% – 8 % long-term debt to capitalization ratio) • Flexibility to ramp activity up or down depending on market condit
Slide 4: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Share Repurchase 5. Acquisitions 4
Slide 5: History Of Returning Cash To Shareholders
History Of Returning Cash To Shareholders ($ in Billions) Share Period ending 2015 Cash Dividends Repurchases Combined 3 – years $6.0 $4.0 $10.1 5 – years $9.6 $4.9 $14.5 10 – years $14.2 $9.1 $23.3 – Additionally, over the 10 years ending 2015: • We reinvested $54 billion of capital in the business
Slide 6: Oxy Runs A Focused Business
Oxy Runs A Focused Business Oil and Gas Focus Areas United States • Leading position OxyChem in the Permian Basin. High FCF, moderate • Permian Resources growth business. is a growth driver. Oxy Midstream • Al Hosn Project, Integrated pipeline and MENA Oman and Qatar. marketing business to • Additio
Slide 7: Total Spend Per Barrel
Total Spend Per Barrel Capital Spending + G&A + All Operating Costs Total Spend per Barrel = Global Oil & Gas Sales Volumes • Internal performance metric to focus on operational efficiency, especially in consideration of the sharp decline in commodity prices. ~$40.00 • Portion of senior management’s
Slide 8: Improved Cost Structure
Improved Cost Structure Ongoing Domestic Production Costs Overhead (SG&A) ($/boe) ($ millions) $1,503 $13.58 $12.28 $1,270 $11.86 ~$1,150 2015 4Q15 1Q16 2014 2015 2016 Target 8
Slide 9: 2016 Capital Outlook
2016 Capital Outlook 2016 Capital Budget ($ in bln) • Carefully reduce activity levels without harming the $5.6 strong progress on growth prospects • Fund only those $2.8 - $3.0 opportunities that exceed hurdle rates of return • 2016 plan approximates expected cash from operations at around current
Slide 10: Committed Project Capital Declining
Committed Project Capital Declining Committed Project Capital • Multiple long-term ($ in millions) investments to drive cash $1,300 flow and earnings growth – Al Hosn – Ethylene cracker JV $800 – Ingleside terminal – Gas processing $500 • Capital spending will continue to decline and cash flows and
Slide 11: Permian Basin Is The Core Domestic Asset
Permian Basin Is The Core Domestic Asset EOR Business • 2015 Production - 145 MBOEPD • 1 million net acres • 1.9 Billion BOE remaining in reserves and resources Resources (Unconventional) • 2015 Production – 110 BMOEPD • 1.5 million net acres • 8,500 identified well locations Midstream • 12 processi
Slide 12: Oxy is the Largest Permian Basin Producer
Oxy is the Largest Permian Basin Producer 10% 50% 75% 350 NET MBOEPD OPERATED PRODUCTION Cumulative Gas Liquids Average % of total 300 3.1 million BOEPD 250 200 150 100 50 - Source: Wood Mackenzie, 9/23/15, Company Net Working Interest Production Rates 12
Slide 13: 2016 Permian Strategy
2016 Permian Strategy Given the current oil price environment, we will focus on investment to achieve four core goals: Accelerate geoscience, characterization and modeling programs to enhance recovery, productivity and field economic returns Minimize base decline and set up major growth programs
Slide 14: Permian Resources Summary
Permian Resources Summary • 1.5 million net acre position 2016 Focus Areas • Shorter cycle – faster growth • Significant improvements in capital execution efficiency and reduction in operating expenses • Will run 2-4 drilling rigs in development areas – Maintain momentum with efficiency improvements
Slide 15: Permian Resources – Drilling Inventory
Permian Resources – Drilling Inventory Continuing to lower economic hurdle points through reservoir characterization and optimization, improved productivity, reduced well costs, and faster time to market 100% • Total of ~8,500 locations Drilling Inventory Based on Q4 Costs in horizontal inventory Be
Slide 16: Permian Resources Production
Permian Resources Production • Total production grew 31% year-over-year to 128 Oil NGL Gas MBOED. 128 – Oil production grew 35% 118 year-over-year to 84 110 MBOD. • We have leveraged and 75 extended our industry 64 leading practices from our EOR business to drive 84 improvements in base 71 76 manage
Slide 17: Southeast New Mexico Recent Performance
Southeast New Mexico Recent Performance Completion optimization efforts have significantly increased value • Increased proppant to 1,500 lbs/ft − Testing up to 2,000 lbs/ft New Design – 4 Wells 78% Oil • Evaluating cluster spacing and fluid design • Monitoring cumulative production results of recent
Slide 18: Permian Resources – Manufacturing Mode
Permian Resources – Manufacturing Mode Delaware Wolfcamp A 4,500’ HZ East Midland Wolfcamp A 7,500’ HZ $10.9 Drilling $9.2 Drilling Completions Completions WELL COST $MM WELL COST $MM $5.6 $6.1 $6.3 $5.5 $5.3 $5.4 $3.4 $3.8 $2.7 $3.4 $5.3 $3.7 $2.9 $2.7 $2.3 $1.9 2014 Current Best 2014 Current Best
Slide 19: Permian Resources Continued Opex Reduction
Permian Resources Continued Opex Reduction Permian Resources Opex/BOE • Continued focus on $15.00 reducing field operating $13.02 costs during 2016 $11.41 $10.87 − Downhole expense $9.74 $/boe reduced 36% from $10.00 $8.72 Q1 2015 − Company operated operating expense $5.00 down ~37% ($/boe) from Q1
Slide 20: Permian EOR Strategy
Permian EOR Strategy CO2 Supply & Processing • 1.0 million net acres • Shift more capital to longer-cycle EOR to take advantage of lower cost of materials and services • Inventory includes projects that have F&D costs of $3-$12/BOE • Incremental production will come on line in 6-18 months after the
Slide 21: World Leader in CO2 Enhanced Oil Recovery
World Leader in CO2 Enhanced Oil Recovery U.S. CO2 EOR Projects Size of bubble = CO2 EOR Production Volume 3,500 Number of Injection Wells 3,000 Occidental 2,500 2,000 • Inject 1.9 billion cubic feet a day 1,500 Kinder Morgan • Operate 31 CO2 EOR projects Apache 1,000 Chevron Exxon 500 Denbury Hess
Slide 22: Permian EOR Cost Structure
Permian EOR Cost Structure Permian EOR can operate at cash costs as low as $22 per BOE 2015 Permian EOR Cost Structure 2015 Permian EOR Cost Structure $55 WTI, $3.00 NYMEX $35 WTI, $2.00 NYMEX $35 $35 $30 $2.7 $30 $25 $4.0 $25 $4.7 $1.8 $20 $ / BOE $20 $ / BOE $3.2 $4.7 $15 $15 $2.2 $4.0 $10 $10 $14
Slide 23: Residual Oil Zone Development
Residual Oil Zone Development • The ROZ development is a vertical expansion of the CO2 flooded interval. • Utilize work-over rigs to drill the extra depth into additional CO2 floodable sections of the reservoir. • The ROZ underlies most of our major EOR properties with current projects in South Hobb
Slide 24: Middle East Summary
Middle East Summary Middle East Footprint • Reduced footprint in the Middle East. Qatar • Strategy is to grow businesses in UAE the core countries of UAE, Oman and Qatar. Oman Focus Areas • Oxy has stopped investment in Libya, Yemen, and Iraq and has agreed to exit Bahrain. Al Hosn Project • The Al
Slide 25: Chemicals – Ethylene Cracker Update
Chemicals – Ethylene Cracker Update Average annual Chemicals EBIT of MexiChem Ethylene Cracker JV almost $600 Million over last three years with earnings and cash flow growth expected from the start-up of the Ingleside Ethylene Cracker. • Currently have spent ~80% of total project capital of ~$725 m
Slide 26: Summary – Key to Success / Strengths
Summary – Key to Success / Strengths • A key to long term success is to take advantage of this downturn to improve our future: – Major cost structure changes • Data Analytics – Further advances in improved recovery • Technology (new or different) – Investment in people • Technical excellence – Portf
Slide 27: Cautionary Statement
Cautionary Statement 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. Words such as "estimate," "project," "predict," "will," "would," "shoul
Slide 28: Occidental Petroleum Corporation
D> Oxy Ww’ Occidental Petroleum Corporation
Occidental Petroleum — UBS Global Oil and Gas Conference 2016 on 6ix