Occidental Petroleum Corporation · NYSE:OXY

Occidental Petroleum — Q1 2016 Earnings Presentation

35 slides from Occidental Petroleum's earnings presentation, May 5, 2016

  1. Slide 1: First Quarter 2016 Earnings Conference Call

    OCCIDENTAL PETROLEUM CORPORATION First Quarter 2016 Earnings Conference Call May 5, 2016

  2. 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

  3. Slide 3: Key Messages

    First Quarter 2016 Key Messages • Full-cycle cost leadership  Cost structure continues to improve • Optimal capital allocation  On track for ~$3 billion 2016 capital budget • Superior balance sheet  Extended debt maturities, $3.2 billion of cash • Operational excellence  Increased production gui

  4. Slide 4: Core Production Growth

    First Quarter 2016 Core Production Growth Total Oil Production* Total Company Production* (MBOD) (MBOED) 590 397 371 531 1Q2015 1Q2016 1Q2015 1Q2016 * Ongoing operations; excludes Williston, Piceance, Iraq, Bahrain, Yemen production volumes 4

  5. Slide 5: Improved Cost Structure

    First Quarter 2016 Improved Cost Structure Production Costs* Overhead (SG&A) ($/boe) ($ in millions) • Expect continued $1,270 improvement in cost $13.36 structure $1,088 – Strategic Initiatives – Lower workovers $10.28 – Lower downhole maintenance – Lower energy costs 1Q15 1Q16 2015 1Q16 Annualized

  6. Slide 6: 2016 Production Outlook Increased

    First Quarter 2016 2016 Production Outlook Increased • Increased FY 2016 production guidance from 570 - 585 to 585 - 600 MBOED • Expect total production from core assets to grow 4% - 6% over 2015 levels – The increase in guidance is due to better than expected well performance in the Permian and bas

  7. Slide 7: Capital Program

    First Quarter 2016 Earnings Capital Program 2016 Capital Budget ($ in millions) • On track to meet ~$3 billion capital budget $687 • Shifting capital to longer duration Permian projects in Permian EOR to modify Resources and expand CO2 processing facilities Remaining • Permian Resources development

  8. Slide 8: Core Results

    First Quarter 2016 Core Results Results • Total oil production (Bbl/d) 397,000 7% year / year growth* • Total ongoing production (BOED) 590,000 • Core results** ($426) million • Core diluted EPS** ($0.56) • 1Q16 CFFO before Working Capital & Other $822 million • 1Q16 Capital Expenditures $687 millio

  9. Slide 9: Oil and Gas Total Company Production - Reported

    First Quarter 2016 Oil and Gas Total Company Production - Reported • In 1Q 2016, total company oil and gas production volumes averaged 657,000 BOED, a decrease of 23,000 BOE in daily production from 4Q 2015 due to planned maintenance, natural gas declines and sale of Piceance basin assets Company-wi

  10. Slide 10: Oil and Gas Total Company Production – Ongoing Operations

    First Quarter 2016 Oil and Gas Total Company Production – Ongoing Operations • In 1Q 2016, total company oil and gas production volumes averaged 590,000 BOED, a decrease of 7,000 BOE in daily production from 4Q 2015. Company-wide Oil & Gas Core Production* (MBOED) 12 (3) (16) 597 590 4Q15 Permian Ot

  11. Slide 11: Oil and Gas Domestic Production

    First Quarter 2016 Oil and Gas Domestic Production • Domestic oil production grew 7,000 Bbls/D in 1Q 2016 with Permian Resources up 8,000 Bbls/D. Domestic Oil & Gas Production* (MBOED) (1) 3 307 7 298 290 1Q15 4Q15 Oil NGLs Natural Gas 1Q16 *Core production excludes Williston and Piceance production

  12. Slide 12: Oil & Gas Realized Prices

    First Quarter 2016 Oil & Gas Realized Prices Realized Prices Benchmark Prices Worldwide Worldwide Domestic Nat. Oil ($/bbl) NGLs ($/bbl) Gas ($/mmbtu) WTI Brent NYMEX 1Q16 $29.42 $10.86 $1.50 $33.45 $35.08 $2.07 WTI % 88% 32% 73%* Brent % 84% 31% 4Q15 $38.68 $14.02 $1.75 $42.18 $44.71 $2.44 WTI % 92

  13. Slide 13: YTD 2016 Cash Flow

    First Quarter 2016 YTD 2016 Cash Flow 1Q 2016 ($ in millions) $820 ($680) 1Q16 ($690) Debt / Capital 24% ($570) ($700) $600 $4,400 $3,180 Beginning Cash CFFO Before Change in Capital Dividends Debt Retirement Asset Sale Ending Cash Balance Working Capital Working Capital Expenditures Proceeds, Balan

  14. Slide 14: Debt Maturity Schedule

    First Quarter 2016 Debt Maturity Schedule • New issuances extended the dollar-weighted average maturity of debt by over 5 years. Rating Outlook S&P A Stable Fitch A Stable $ million Retired / Called maturities Moody’s A3 Stable 1,450 1,500 New Issuances 1,250 1,000 500 0 2016 2017 2018 2019 2020 202

  15. Slide 15: Recent Issuances of Ten-Year Bonds

    First Quarter 2016 Recent Issuances of Ten-Year Bonds • Oxy issued $2.75 billion of senior notes in April 2016, including a 10-year tranche ($1.15 billion) with a coupon of 3.40%. 5.85% 5.55% 4.95% 4.45% 4.15% 3.33% 3.40% 3.04% T +362 T +362 T +225 T +312 T +200 T +130 T +97 T +155 Comp Comp OXY Com

  16. Slide 16: Capital Program

    First Quarter 2016 Earnings Capital Program • On track to meet ~$3 billion 2016 2016 Capital Budget budget. ($ in millions) $687 • Total company capital expenditures for the 1Q16 were $687 million, and we expect our quarterly expenditures Permian to ramp down through the year Resources following a m

  17. Slide 17: Total Spend per BOE

    First Quarter 2016 Total Spend per BOE Capital Spending + G&A + All Operating Costs Total Spend per BOE = 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

  18. Slide 18: FY 2016 Production Outlook – Core Assets

    First Quarter 2016 FY 2016 Production Outlook – Core Assets • FY 2016 Total Production Outlook – Core Assets (Excludes Iraq, Bahrain, Yemen, Williston & Piceance) – Total volumes of 585,000 – 600,000 BOED • 2Q16 Total Production Outlook – Core Assets (Excludes Iraq, Bahrain, Yemen, Williston & Picea

  19. Slide 19: 1Q16 & FY 2016 Guidance Summary

    First Quarter 2016 1Q16 & FY 2016 Guidance Summary Oil & Gas Segment DD&A – FY 2016E • FY 2016E Total Production – Core Assets • Oil & Gas: ~$15.00 / BOE – 585,000 – 600,000 BOED • Chemicals and Midstream: $670 mm • 2Q16E Production – Core Assets Exploration Expense – Total production of 600,000 – 6

  20. Slide 20: Permian Resources Production

    First Quarter 2016 Earnings Permian Resources Production • Total production grew 31% year- over-year to 128 MBOED. Oil NGL Gas 128 – Oil production grew 35% 118 110 year-over-year to 84 MBOD. 75 • We have leveraged and 64 extended our industry leading practices from our EOR business to drive improve

  21. Slide 21: TX Delaware Basin Recent Performance

    First Quarter Earnings 2016 – TX Delaware Basin Recent Performance Optimization Efforts: Wolfcamp A • Continue to test more aggressive completions − Tighter cluster spacing − Higher clusters per stage − Increased proppant concentration • Initial results positive, continuing to evaluate and test new

  22. Slide 22: Permian Resources Manufacturing Mode: Drilling / Completions

    First Quarter Earnings 2016 – Permian Resources Manufacturing Mode: Drilling / Completions Move to Manufacturing Mode Significantly Reduced Well Cost WELL COST DRILL DAYS Delaware Wolfcamp A 4,500‘ Delaware Wolfcamp A 4,500’ HZ HZ $12.0 50 $10.9 45 43 $10.0 40 GROSS WELL COST $MM $8.0 $5.6 $7.7 35 3

  23. Slide 23: Southeast New Mexico Recent Performance

    First Quarter Earnings 2016 – Southeast New Mexico Recent Performance Well Performance: New Mexico 2nd Bone Spring • Cedar Canyon 27 Fed Com 7H three month cumulative production of 135 Mboe – 81% oil • Cedar Canyon 28 Fed Com 7H three month cumulative production of 129 Mboe – 82% oil Boepd / 1000’ 3

  24. Slide 24: Southeast New Mexico Recent Performance

    First Quarter Earnings 2016 – 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 cumulativ

  25. Slide 25: East Midland Basin Recent Performance

    First Quarter Earnings 2016 – East Midland Basin Recent Performance Well Performance: East Midland - Wolfcamp A • Adams 4231WA six month cumulative production of 220 Mboe – 91% oil  We believe it’s the most productive well drilled in Howard County in recent history • May 1102WA six month cumulative

  26. Slide 26: Permian Resources Manufacturing Mode: Drilling / Completions

    First Quarter Earnings 2016 – Permian Resources Manufacturing Mode: Drilling / Completions Move to Manufacturing Mode Significantly Reduced Well Cost WELL COST DRILL DAYS East Midland East Midland Wolfcamp A 7,500' Hz Wolfcamp A 7,500’ Hz $12.0 50 46 45 $10.0 $9.2 40 GROSS WELL COST $MM 35 $8.0 $7.1

  27. Slide 27: Permian Resources Base Management and Surveillance

    First Quarter Earnings 2016 – Permian Resources Base Management and Surveillance Focus on maximizing production from existing wells • Extensive base surveillance and monitoring − Re-deployed engineers from Houston to field offices − Maximizing knowledge of the reservoirs from current producers to en

  28. Slide 28: Permian Resources Continued Opex Reduction

    First Quarter Earnings 2016 – Permian Resources Continued Opex Reduction Permian Resources Opex/BOE • Continued focus on reducing $15.00 field operating costs during $13.02 2016 $11.41 $10.87 − Downhole expense $/boe $10.00 $9.74 reduced 36% from Q1 2015 $8.72 − Company operated operating expense do

  29. Slide 29: Permian EOR

    First Quarter 2016 Permian EOR CO2 Supply & Processing • Stable and low-decline base production at an advantaged cost • Permian EOR business remains profitable in the current downturn • EOR business expected to generate free cash flow this year in the current oil price environment • South Hobbs: − S

  30. Slide 30: World Leader in Enhanced Oil Recovery

    First Quarter 2016 World Leader in Enhanced Oil Recovery U.S. CO2 EOR Projects 3,500 Size of bubble = CO2 EOR 3,000 Production Volume Number of Injection Wells Oxy 2,500 2,000 All of Oxy’s CO2 operations 1,500 Kinder Morgan are in the Permian Basin Apache 1,000 Chevron Exxon 500 Denbury Hess Anadark

  31. Slide 31: Permian EOR Cash Operating Expense

    First Quarter 2016 Permian EOR Cash Operating Expense ($/BOE) $25.00 • Improvement in well $20.82 maintenance job productivity $20.03 $20.00 sustained into Q1 $18.16 $18.36 $16.46 $16.49 $15.00 • Surface costs negatively $/BOE impacted by severe weather $10.00 in January $5.00 • Lowered injectant co

  32. Slide 32: South Hobbs: CO2 Flood and Expansion Areas

    First Quarter 2016 South Hobbs: CO2 Flood and Expansion Areas Main Oil Column CO2 Flood: Residual Oil Zone (“ROZ”) Potential: • Started CO2 injection into Phase 1 in September • Four pattern initial development to begin in 2016 2015 (ahead of schedule) • Full ROZ expansion ~50 patterns; 80 MMBOE • P

  33. Slide 33: Residual Oil Zone Development

    First Quarter 2016 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 pro

  34. Slide 34: 2016 Permian Strategy

    First Quarter 2016 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 ma

  35. Slide 35: First Quarter 2016 Earnings Conference Call Q&A

    FIRST QUARTER 2016 EARNINGS CONFERENCE CALL Q&A

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