Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — J.P. Morgan Investor Conference 2017
30 slides from Occidental Petroleum's conference presentation, Jun 27, 2017
Slide 1: J.P. Morgan Investor Conference
J.P. Morgan Investor Conference Occidental Petroleum Corporation June 27, 2017 Vicki Hollub Chief Executive Officer
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
Slide 3: Occidental Petroleum
Occidental Petroleum • Value Proposition • Portfolio Optimization • Path to Cash Flow Neutrality and Breakeven • Sustainability With High Quality Assets • Model 3
Slide 4: Oxy's Unique Value Proposition
Oxy’s Unique 2016 ROCE* Consistent Dividend Growth Value • Growing dividend with strong yield Proposition • Value protection in down cycle Upside in rising oil • Promotes capital allocation discipline price environment and downside Moderate Value-Based Growth protection during • 5 – 8% average produ
Slide 5: Cash Flow Priorities Favor Dividends
Cash Flow Priorities 1. Base/Maintenance Capital Favor Dividends 2. Dividends Dividends promote 3. Growth Capital capital allocation Subject to Returns and discipline 4. Acquisitions Market Conditions 5. Share Repurchases 5
Slide 6: Delivering Consistent Annual Dividend Growth
Delivering Consistent Annual Dividend Growth 2002 – 2016: Oxy dividend CAGR 13.7% vs S&P CAGR 7% ($/share) $28.00 Annual Dividends Paid $26.42 $24.00 Cumulative Dividends Paid $23.38 $20.36 $20.00 $17.39 $16.00 $14.51 $11.95 $12.00 $9.79 $7.95 $8.00 $6.48 $5.16 $3.96 $4.00 $2.22 $3.02 $2.56 $2.88 $2
Slide 7: Value Growth - Production Growth Since 2011
Value Growth - Production Growth Since 2011 Ongoing Total Company Production CAGR 6%* 700 600 575 Permian 528 Resources 500 438 435 428 440 16% CAGR 400 Mboed 300 200 100 0 2011 2012 2013 2014 2015 2016 Ongoing Company Excluding Permian Resources Permian Resources *Pro forma for ongoing operations (
Slide 8: Value Growth - Annual ROCE for Oxy vs. Average of Competitors
Value Growth - Annual ROCE for Oxy vs. Average of Competitors 30% 2008 – 2013 20% Average ROCE 15% 10% 00% (10%) (20%) (30%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 OXY ROCE Competitors ROCE* *Competitors ROCE represents a simple average of APA, APC, COP, CVX, DVN, EOG, HES, MRO and XOM 8
Slide 9: Multi-year Returns Focused Portfolio Optimization
Value Growth - Multi-year Returns Focused Portfolio Optimization Set to generate both returns to shareholders and value-based growth Divested assets that did not generate Investing in assets with higher cash competitive corporate returns or free margin and lower capital intensity cash flow Growth ta
Slide 10: Our Pathway to Cash Flow Breakeven at $50 WTI
Our Pathway to Cash Flow Breakeven at $50 WTI 6.0 $5.6 $5.6 Growth Capital Operating Cash Flow ($ Bn) 5.0 $4.7 $4.4 $1.0 $4.2 4.0 Pathway Drivers: Sustaining Capital 3.0 • Permian Resources high-margin growth to $2.3 $50/bbl accelerate value proposition of consistent dividend plus moderate productio
Slide 11: Asset Quality and Capital Flexibility Provides Optionality to Cover Dividend
Asset Quality and Capital Flexibility Provides Optionality to Cover Dividend Upon plan execution, Oxy can fund dividend and sustain production from operating cash flows. WTI Oil Price: Annual cash flow sensitivities (Bn) $40 $50 $60 Dividend ex- Dividend + Dividend + Cash Flow Priorities: Growth Gro
Slide 12: Oxy Pathway to Cash Flow Breakeven at $40 WTI
Oxy Pathway to Cash Flow Breakeven at $40 WTI 5.0 $4.4 $4.4 Operating Cash Flow ($ Bn) 4.0 $3.7 $3.4 $3.2 Sustaining 3.0 Pathway Drivers: Capital $2.1 • Permian Resources high-margin growth to 2.0 $40/bbl accelerate value proposition of consistent dividend plus moderate production growth • Enables o
Slide 13: Opportunistic Transactions Create Long-term Value
Opportunistic Transactions Create Long-term Value Consistent with our pathway to breakeven at $50 WTI*, Oxy has executed multiple transactions in the Permian to accelerate our plan. > Oxy has agreed to a number of purchase and sale transactions in Permian Resources to generate combined proceeds of $
Slide 14: Overview of Non-Strategic Permian Resources Net Transactions
Overview of Non-Strategic Permian Resources Net Transactions •Transactions Terms Permian Resources Acreage Permian EOR Acreage > Combined net proceeds of ~$0.6 Bn •Properties Description > Divested of non-strategic acreage in Andrews, Martin and Pecos Counties and added incremental acreage to Midlan
Slide 15: Overview of Enhanced Oil Recovery Acquisition in the Permian
Overview of Enhanced Oil Recovery Acquisition in the Permian •Transactions Terms Permian Resources Acreage Permian EOR Acreage > Purchase price of $0.6 Bn CO2 Source Fields and Pipelines •Properties Description • Bravo Dome Unit WI from 77% to 87% • West Bravo Dome WI from 0% to Seminole-San Andres
Slide 16: Upside Potential from Operatorship of Seminole-San Andres
Upside Potential from Operatorship of Seminole-San Andres •Value Improvement Through Scale and Operating Costs ($/Boe) $30 Operational Synergies $25 High Opex Range Seminole-San Oxy EOR unit of > Seminole-San Andres unit becomes Oxy’s largest Andres unit analogous scale and $20 operated CO2 flood in
Slide 17: Transactions Effectively a Swap with Net Benefits to Oxy
Transactions Effectively a Swap with Net Benefits to Oxy Transactions on a net basis*: Remaining 2017 2019 Production (Boed) 3,500 7,000 Operating Cash Flow ($ MM) 35 80 Free Cash Flow ($ MM) 25 55 > Lowers our sustaining capital and overall production decline rate > Additional benefits anticipated
Slide 18: Value Growth – Significantly Reduced Development Cost
Value Growth – Significantly Reduced Development Cost 2016 F&D (Organic) $/Boe 20 19.27 17.19 15 13.37 11.73 11.41 $/Boe 10 9.59 6.86 6.51 6.45 5 0 1 2 3 4 5 6 7 8 OXY Competitor Peers* *Competitor Peers include APC, CVX, CXO, DVN, EOG, HES, MRO, PXD. Excludes APA, COP, XOM due to negative F&D. 18
Slide 19: Value Growth 2016 ROCE
Value Growth 2016 ROCE* 10% Focus on value driven growth - Top quartile returns 0% Positioned to return to double digit (10%) returns (20%) (30%) HES DVN CXO APC MRO APA EOG COP PXD OXY CVX XOM *Calculated based on public information and on a consistent basis Companies listed alphabetically : APA, A
Slide 20: Focused Businesses
Focused Oil and Gas Core Areas Businesses OxyChem High free cash United States flow, moderate • Leading position in the Permian growth business • Permian Resources is a growth driver Midstream Integrated infrastructure Middle East and marketing • Focus areas – Oman, Qatar, and UAE business to • Oppo
Slide 21: Permian Resources
Permian Resources Business Area Acreage Net Acres • Resources – Unconventional Areas 1.4 Significant acreage • Enhanced Oil Recovery Areas 1.1 & growth potential Oxy Permian Total 2.5 MM in all development areas Net Resources Basin Development Areas Acres* ~650,000 net acres • NM Delaware Basin 290,
Slide 22: Increased Total Horizontal Drilling Locations ~37%
Improved Permian Increased Total Horizontal Drilling Locations ~37% Resources Horizontal Inventory from 4Q2015 Locations within 300,000 of 650,000 net acres in Basin Development Areas • Added 1,250 locations 12,000 ~11,650 ~11,650 BE < $50 Midland Basin 2016 • Added 3,150 total 10,000 Added location
Slide 23: Permian EOR Proven Leader in Maximizing Recovery Across the Permian
Permian EOR Proven Leader in Maximizing Recovery Across the Permian Significant inventory in Permian EOR 10-year plan Net Resource Potential 2,000 Geographically diverse High- 100 active CO2 + water gradable Inventory 1,500 floods covering multiple MMBOE horizons Midland Basin 1,000 2 BBOE of identi
Slide 24: Longest Legacy International Operations: Colombia and Oman
Longest Legacy International Operations: Colombia and Oman Colombia: Discovered giant Cano Limon field in the early 1980’s. Several contracts that currently range from 6 years up to the economic life of field. Long term contracts with upside potential Oman: Assisted with the discovery and started Om
Slide 25: Additional Core Middle East Assets
Additional Core Middle East Assets ISND and ISSD: Offshore development in Qatar. ISND contract for 25 years initiated in 1994. ISSD contract expires in 2022. Dolphin: Premier transborder pipeline delivering gas from Qatar to Abu Dhabi and Oman. Agreement was initiated in 2007 for a 25 year term. Al
Slide 26: Current Dividend Yield vs. Competitors
Current Dividend Yield vs. Competitors 6.0% Dividend yield should revert close to historical levels as we 5.2% execute plan to a lower cash flow breakeven 5.0% 5.0% 4.1% 4.0% 3.8% 3.0% 2002 – 2016 Average Oxy Dividend Yield 2.2% 2.3% 2.0% 2.1% 2.1% 2.0% 1.5% 1.0% 0.7% 0.7% 0.4% 0.0% 0.0% PXD APC DVN
Slide 27: Strong Balance Sheet - Oxy Credit Ratings Vs. Peers
Strong Balance Sheet - Oxy Credit Ratings Vs. Peers Company S&P S&P Moody’s Moody’s New Issue Ratings Outlook Ratings Outlook Indications (10-year) XOM AA+ Negative Aaa Negative 2.95% CVX AA- Negative Aa2 Stable 3.05% OXY A Stable A3 Stable 3.25% EOG BBB+ Stable Baa1 Stable 3.35% COP A- Stable Baa2
Slide 28: Unique Investment Proposition
Unique Investment Proposition Large Integrated Majors Independent E&Ps Company Market Cap ($Bn) Company Market Cap ($Bn) Oxy XOM $344 COP $55 Uniquely RDS $237 EOG $50 Positioned CVX $197 PXD $26 TOT $120 APC $25 BP $117 APA $18 ENI $54 DVN $16 Characteristics Characteristics • Low or no growth • Ge
Slide 29: Successful Value Proposition
Successful Consistent 2016 ROCE* Dividend Growth Value • Oxy dividend CAGR doubled S&P CAGR since 2002 Proposition • Highest yield vs. US peers • Historical dividend yield of 2.85% Oxy has delivered Moderate Value-Based Growth positive results on • Averaged better than 5% production growth each comp
Slide 30: Q&A
Q&A
Occidental Petroleum — J.P. Morgan Investor Conference 2017 on 6ix