Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Howard Weil 39th Annual Energy Conference (March 2011)
33 slides from Occidental Petroleum's conference presentation, Mar 29, 2011
Slide 1: Occidental Petroleum Corporation – Howard Weil 39th Annual Energy Conference
Occidental Petroleum Corporation Howard Weil 39th Annual Energy Conference Stephen I. Chazen President and Chief Operating Officer March 29, 2011
Slide 2: Full Year 2010 Results – Summary
Full Year 2010 Results – Summary ($ in millions, except EPS data) FY2010 FY2009 • Core Results $4,664 $3,192 • Core EPS (diluted) $5.72 $3.92 • Net Income $4,530 $2,915 • Reported EPS (diluted) $5.56 $3.58 • Oil and Gas production volumes 706 671 (mboe/d) & excl. Argentina; +5.2% • Capital Spending
Slide 3: What Is Our Philosophy & Strategy?
What Is Our Philosophy & Strategy? Overriding Goal is to Maximize Total Shareholder Return • We believe this can be achieved through a combination of: • Growing our oil and gas production by 5 to 8% per year on average over the long term; • Allocating and deploying capital with a focus on achieving
Slide 4: Business Risk Factors
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 4
Slide 5: Adjusted 1Q11 Oil & Gas Production/Sales Guidance
Adjusted 1Q11 Oil & Gas Production/Sales Guidance (thousand boe/d) Oil & Gas Oil & Gas Production Sales Previous 1Q11 Guidance 740 - 750 725 Libya & Yemen; and slower capital spending in Iraq (15) (1) Impact of weather in Permian and Midcontinent (7) (7) Oil price impact (7) (7) Note: Previous guida
Slide 6: Oil Reserves Concentrated in the U.S.
Oil Reserves Concentrated in the U.S. (Percentage of Oxy’s worldwide proved oil reserves) Iraq Qatar Libya Bahrain United States MENA Oman 73% 23% Yemen California 24% Libya/Yemen/Bahrain Libya/Yemen/Bahrain Permian 4% 4% Basin 45% Note: excludes Argentina as the sale of this asset closed in Februar
Slide 7: Standard Measure of Discounted Future Net Cash Flows (SEC PV-10)
Standard Measure of Discounted Future Net Cash Flows (SEC PV-10) (Percentage of Oxy total company value) Iraq Qatar Libya Bahrain United States 68% MENA Oman 28% Yemen California 34% Libya/Yemen/Bahrain Libya/Yemen/Bahrain Permian 4% 4% Basin 59% Note: excludes Argentina as the sale of this asset cl
Slide 8: Worldwide Oil & Gas Producing Areas
Worldwide Oil & Gas Producing Areas United States Libya Iraq California Qatar Permian Basin Bahrain UAE Oman Yemen Colombia Bolivia Focus Areas 8
Slide 9: Capital Spending – 2011 Outlook
Capital Spending – 2011 Outlook • We expect capital spending for the total year 2011 to be about $6.1 billion compared to the total 2010 capital of $3.9 billion. • Both amounts exclude Argentina and the Shah Field Development Project. • Oxy's share of the Shah Field development capital will total ab
Slide 10: Capital Spending – 2011E vs. 2010 Actual
Capital Spending – 2011E vs. 2010 Actual Chemicals & Chemicals & Midstream California Midstream California 20% 21% 15% 20% Exploration 7% Exploration 5% Permian Permian 13% 14% MENA MENA 27% 30% Midcontinent Midcontinent 6% Latam 7% New 4% Latam Acquisitions 3% 8% 2010 Capital - $3.9 Billion 2011E C
Slide 11: Oil & Gas Volume Growth Drivers
Oil & Gas Volume Growth Drivers • Base 5 – 8% Growth – CO2 in Permian – Current California risked prospects – Recent domestic properties acquisitions (Williston Basin, South TX gas) – Oman – Iraq • Upside from Existing Holdings – New California conventional and unconventional prospects – Permian exp
Slide 12: Summary of Recent Transactions
Summary of Recent Transactions (announced 12/10/10) • Divestment of Oxy’s Argentine oil and gas operations to Sinopec for after-tax proceeds of approximately $2.6 billion • Oxy purchased oil and gas properties in South Texas and North Dakota for about $3.2 billion • Oxy increased its interest in Gen
Slide 13: Impact of Transactions
Impact of Transactions • These new acquisitions and the sale of Argentina will: – be immediately accretive to our earnings, ROCE and cash flow after capital; – provide greater certainty in achieving both our short-term and long-term average annual production growth outlook of 5 to 8%; – increase the
Slide 14: Oxy – Shell South Texas Assets Transaction
Oxy – Shell South Texas Assets Transaction Houston • 100k gross, 92.8k net acres TEXAS • Production ~200 mmcfe/d of Galveston gas equivalent • 360+ Bcfe proven developed Lyda Lyda reserves Rosita 12 – ~840 Bcfe of identified add’l La La Copita Copita// resource potential North Corpus Christi North R
Slide 15: Oxy – North Dakota Assets Transaction
Oxy – North Dakota Assets Transaction • Purchased ~174,000 contiguous net acres in ND within the southern extents of the Bakken and Three Forks Formations. • Operated working interests avg. 63% with avg. NRI of ~83%. • Net risked reserve potential in excess of 250 mmboe from the Middle Bakken and Up
Slide 16: Oxy North Dakota – Williston Basin
Oxy North Dakota – Williston Basin MONTANA NORTH DAKOTA MT ND Burke Sheridan Bottineau Divide South Coteau SD Williams Nesson Renville Anticline Roosevelt Mountrail McHenry Richland Parshall- Sanish Ward Fields Elm Coulee Field McLean McKenzie Sheridan Dunn Mercer Dawson Billings Oxy Acquisition Are
Slide 17: Permian Basin Overview
Permian Basin Overview • Approximately 1.2 billion BOE of proved reserves at year end 2010 • 2010 production of 197,000 boe/d • Largest oil producer in Permian (~16% share of total) • Largest operator in Permian (of 1,500+ operators) • ~66% of Oxy’s Permian oil production is from CO2 related EOR pro
Slide 18: Permian – 2011 Program Summary
Permian – 2011 Program Summary • 2011 Capital program ~$850 mm • Plan to drill 300+ wells this year • Average 13-rig program in 2011 • Drilling program is front-end loaded to exploit quick production first • 130+ workover/maintenance rigs operating, two-thirds more than a year ago • Extensive Wolfbe
Slide 19: Typical Permian CO2 Project Cost Structure
Typical Permian CO2 Project Cost Structure $80 $70 $13.00 $60 $4.30 $9.80 $50 $ / BOE $5.70 $40 $75.00 $3.80 $30 $20 $38.40 $10 $- lty t e l x n t ita os os u Ta gi a en ap C ar C oy n ev ng M C g tio R tin R ed h fti uc as ra Li tiz d C pe ro or et O /P m N & A H 2 O O C * $75 / Bbl Marker Price 19
Slide 20: California Overview
California Overview • Largest acreage holder in CA with 1.6 mm acres, majority of which are net mineral interests. • ~768 mm BOE of proved reserves at year end 2010, of which 73% are oil. Sacramento • 2010 production of 139 mboe/d. San Francisco • 78% interest in the Elk Hills Field — the largest pr
Slide 21: California – 2011 Program Summary
California – 2011 Program Summary San Joaquin Basin • 2011 Capital program ~$1.3 billion, up ~50% vs. 2010. • Plan to drill 500+ new Elk Hills development wells. Bakersfield • Shifting our drilling to oil wells Buena Vista which we expect to result in higher oil production in 2011. • Drill about 28
Slide 22: California Unconventional “Shale” Program
California Unconventional “Shale” Program Rose • We have ~520 geologically viable (so-called de-risked) North Shafter shale drilling locations in CA excluding traditional Elk Hills. Monument Junction • Of these, ~250 are both outside Bakersfield of Elk Hills proper and the Kern Elk Hills Buena Vista
Slide 23: California “Shale” Summary and Play Comparison
California “Shale” Summary and Play Comparison • ~870,000 acres are within most prospective “shale” plays • Oxy’s average NRI ~95% • Identified 15 areas to appraise (5 - 10% of total acreage) – Initially target 1 to 2 areas including Kern County discovery – Average IP 400 - 800 boepd; Production ran
Slide 24: Summary of Full Year 2010 Cash Flow
Summary of Full Year 2010 Cash Flow – Free cash flow from continuing operations after capex and dividends but before acquisition activity and debt retirements was ~$4.3 billion. $2,600 $3,900 ($ in millions) $10,300 $4,925 Operating Cash Flow from Continuing Operations $9,100 (excluding Argentina) $
Slide 25: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase 25
Slide 26: Finding & Development Costs per Barrel
Finding & Development Costs per Barrel F&D Costs Actual as a % of 6:1 * Prices ** WTI Price 2010 $20.25 $24.18 30% 3-Year Average $16.38 $20.25 25% (2008 – 2010) 5-Year Average $16.66 $19.52 26% (2006 – 2010) 10-Year Average $12.22 $13.48 24% (2001 – 2010) * Oil / Gas Energy Content (Industry conven
Slide 27: Return on Assets
Return on Assets (2006 – 2010) Net Income Return on Assets 5 Year Average U.S. 16% International 35% Total E&P 21% Cash Flow* Return on Assets 5 Year Average U.S. 24% International 53% Total E&P 31% * Net Income + DD&A See attached for GAAP reconciliation 27
Slide 28: Dividend Growth
Dividend Growth Annual dividend to increase to $1.84 per share or 21% effective with the 4/15/11 payment $2.00 $1.84 $1.80 $1.60 $1.52 R C AG $1.28 $1.32 $1.40 14% $1.20 $1.00 $1.00 $0.88 $0.72 $0.80 $0.55 $0.62 $0.60 $0.50 $0.52 $0.40 $0.20 $0.00 Prior Mar-03 Mar-04 Mar-05 Dec-05 Sep-06 Sep-07 Jun-
Slide 29: Acquisition Strategy
Acquisition Strategy • Company’s core business is acquiring assets that can provide future growth through improved recovery. – Foreign contracts – Domestic add-ons – Small incremental additions to production in short term • Generate returns of at least 15% in the US and 20% overseas. • Overall avera
Slide 30: Oxy — Investment Attributes
Oxy — Investment Attributes • 5 - 8% base annual production growth • Opportunity for additional volume growth • Returns on invested capital significantly in excess of Company’s cost of capital • Annual increases in dividends • Significant financial flexibility for opportunities in distressed periods
Slide 31: Creating Shareholder Value
Creating Shareholder Value Oxy’s Shareholder Equity versus Equity Market Value A History of Generating Shareholder Value Change in Equity Market Value Market Value per $ of Equity Retained ($ in millions) Change in Shareholder Equity $13,685 1 – Year 4.1 $3,325 $16,162 3 – Year 1.7 $9,626 $47,614 5
Slide 32: 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. Factors that could cause results to differ materially include, but are
Slide 33: Occidental Petroleum Corporation
Occidental Petroleum Corporation
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