Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — 2010 UBS Global Oil & Gas Conference
41 slides from Occidental Petroleum's conference presentation, May 25, 2010
Slide 1: Occidental Petroleum Corporation
Occidental Petroleum Corporation 2010 UBS Global Oil & Gas Conference May 25, 2010 Stephen I. Chazen President and Chief Financial Officer 1
Slide 2: E&P Business Drivers
E&P Business Drivers • Volume Growth • Capital Expenditures • Acquisitions • Return Targets 2
Slide 3: Volume Growth Drivers
Volume Growth Drivers • Base 5 – 8% Growth – CO2 in Permian – Current California risked prospects – Rockies gas – Bahrain – Oman – Iraq • Upside from Existing Holdings – New California conventional and unconventional prospects – Permian exploration – Rockies gas – Argentina • Additional opportunitie
Slide 4: International Producing Areas
International Producing Areas Libya Iraq Qatar Bahrain UAE Oman Yemen Colombia Bolivia Argentina Focus Areas 4
Slide 5: International Oil & Gas Production Outlook
International Oil & Gas Production Outlook Thousand BOE/Day (Assumes $75 WTI Price) 486 7.5% Total 500 476 CAGR 452 6.0% Base 420 CAGR 400 365 338 300 453 453 434 200 414 365 338 100 0 2009 2010 2011 2012 2013 2014 Base Iraq (incl. in Base totals) Variance 5
Slide 6: Major Potential Drivers of Production and Profitability — International Oil & Gas
Major Potential Drivers of Production and Profitability — International Oil & Gas • Bahrain – Base case shows steady but not aggressive progress – Possible better oil results by 2014 • Oman – Base shows only modest growth of Oman gas markets – Likely better growth by 2014 • Libya – Little progress a
Slide 7: Major Potential Drivers of Production and Profitability — International Oil & Gas
Major Potential Drivers of Production and Profitability — International Oil & Gas • Argentina – Modest base case shown – Potential is very high • Iraq – Field is capable of outperforming our estimates 7
Slide 8: International Oil & Gas Summary – 5 years
International Oil & Gas Summary – 5 years Grow: • Oman gross production from 190 to 240 Mboepd • Bahrain gross oil production from 30 to 75 Mbopd • Bahrain gross gas production from 1.1 to 1.6 Bcfd • Argentina gross production from 50 to 85 Mboepd • Iraq gross production from 182 to 880 Mbopd Contin
Slide 9: US Oil & Gas Production Outlook
US Oil & Gas Production Outlook Thousand BOE/Day 700 632 10.9% Total CAGR 600 557 494 6.4% Base 500 417 CAGR 391 400 376 300 482 512 452 200 391 411 376 100 0 2009 2010 2011 2012 2013 2014 Base Variance California Exploration California Shales 9
Slide 10: Major Potential Drivers of Production and Profitability — US Oil & Gas
Major Potential Drivers of Production and Profitability — US Oil & Gas • Permian CO2 – 3 billion net barrels in resource from Oxy operated only – Possibly more CO2 available over the 5-year period – Probable better response by 2013-14 • Rockies Gas – 3.8 TCFE potential – Base uses $6.00 gas in 2014
Slide 11: Major Potential Drivers of Production and Profitability — US Oil & Gas
Major Potential Drivers of Production and Profitability — US Oil & Gas • California Conventional – 50 prospect inventory and growing – Low F&D – Considerable success so far – Only two or three moderate exploration successes built into production wedge • California Unconventional – 870,000 potential
Slide 12: Permian Growth Opportunities
Permian Growth Opportunities Permian Basin • Primary Development (1,000+ locations) – Plan a 6-7 rig program – Dora Roberts Wolfberry Houston – Continued southeast New Mexico exploitation – Deeper added plays Bravo Dome CO2 Source Oklahoma • CO2 Growth Texas – Existing flood expansions New Mexico (i
Slide 13: Permian EOR Opportunities
Permian EOR Opportunities • Permian properties 7.8 BBO Net Remaining initially had 11.9 BBO net in place 3P Reserves • 4.1 BBO have been produced, 0.8 BBO • leaving 7.8 BBO net EOR Likely remaining 1.4 BBO 4.6 BBO 1.0 BBO Residual EOR Potential 13
Slide 14: Permian Reserves and CO2 Requirements
Permian Reserves and CO2 Requirements “The next billion barrels” Net Net CO2 Reserves* Required (MMBOE) (TCF) Developed 570 2.8 Undeveloped 430 2.2 TOTAL 1,000 5.0 * 3P Reserves 14
Slide 15: Typical Permian CO2 Project Cost Structure
Typical Permian CO2 Project Cost Structure $80 $70 $13.00 $60 $4.30 $9.80 $50 $5.70 $40 $75.00 $3.80 $ / BOE $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 15
Slide 16: Mid-Continent Gas – Summary
Mid-Continent Gas – Summary • Primary development – Prudent approach to gas drilling – 3.8 TCFE Resource – 6,000+ drilling locations – Low royalty burden enhances economics – Recent Hugoton acquisition doubles acreage position and adds significant oil location inventory • Production – Expect to grow
Slide 17: California Development – Kern County Discovery
California Development – Kern County Discovery • Currently have 24 wells capable of producing ~45 MBOEPD – Currently gas plant constrained – When 90 MMCFPD skid mounted facility is brought online, it will be filled • Planning to drill an additional 20 wells in 2010 (oil focused) • Extension opportun
Slide 18: Kern County Discovery
Kern County Discovery Discovery Volumes Gross Production (Net MMBOE) 50 Results after 24 Wells: Thousands of BOE (Gross) 40 Produced + Proved 88 Probable 47 30 Possible 40 – 115 End 1Q ‘10 175 – 250 20 2010 Step-Out Plan 100 – 150 10 Total Net Potential 275 – 400 0 Q1 10 Year End 2010 Gross Potentia
Slide 19: Elk Hills Gas Plant Expansions
Elk Hills Gas Plant Expansions Gas Plant Capacity MMCFD Current 420 (at capacity) Late 2Q 2010 Skid Plant 90 (will be at capacity) Q1 2012 Cryo Plant 200 Total 710 • 200 MMCFD plant–largest that could be built in 20-24 months • Awarded contract for the plant, and work has begun • Deeper NGL recovery
Slide 20: California Conventional Exploration
California Conventional Exploration Major Producing Basins • World Class Province – 35+ Billion BOE discovered 2 Billion BOE – 5 of top 12 U.S. oil fields • Significant Remaining Potential Sacramento – Large undiscovered resources San 20 Billion BOE – Multiple play and trap types Francisco • Underex
Slide 21: Oxy Land Position 1998 - 2010
Oxy Land Position 1998 - 2010 • Elk Hills Acquisition in 1998 • Learn, build, explore close-in • Dominant player, expand 1998 Fee Holdings Kern Front Field 1999-2005 Lease/Fee Additions 2005-2010 Lease/Fee Additions Elk Hills Field 1998-2005 Exploration Wells n Ke r r Bakersfield 2005-2010 Explorati
Slide 22: Oxy California Play Focus
Oxy California Play Focus 47 Plays Identified 10 Plays Selected L.A. Focus Sac. Plays Valley San Joaquin Emerging Ventura All Others • Targeting Oil Prone Plays and Areas • Integrate Well, Seismic, Outcrop and Analog Data • Forensic geology – not all information resides on a workstation • Challenge
Slide 23: Exploration Going Forward
Exploration Going Forward Major Producing 2011 - 14 Annual Program Basins # Wells* Discovery Play 7-10 High Potential 5-10 Bread & Butter 5-6 Sacramento San Emerging 3-4 Francisco 14-20 Wells Total per year 20 - 30 Bakersfield 3D Seismic – 200-400 km2 per year - San Joaquin – Infill and Expand 3-5 W
Slide 24: California Conventional Exploration
California Conventional Exploration • Tremendous potential – Attractive risk profile (Oxy 1 in 3 success rate) • Dominant land position • Kern County Discovery – 175 - 250 MMBOE net discovered with significant upside • Discovery Play – 7-10 prospects/year – Each prospect • 100 - 125 MMBOE, average •
Slide 25: Oxy California Unconventional “Shale” Play
Oxy California Unconventional “Shale” Play • “Shale” drilling program really started in 1998 at Elk Hills • Currently, over 1/4th of Oxy’s production in California comes from “shales” – Have successfully tested concept in eight more fields • Undertaking 4 year development program – Appraising 20+ BB
Slide 26: Occidental Acreage – Southern California
Occidental Acreage – Southern California • Oxy has over Rose Rose 1.3 MM net acres North North Shafter Shafter in California Monument Monument Junction Junction • Largest acreage Bakersfield position in the Elk Elk Hills Hills Buena Buena Vista Vista state Rail Rail Road Road Gap Gap • Oxy “shale” O
Slide 27: Side by Side Play Comparison
Side by Side Play Comparison Play Depth Thickness Porosity Permeability TOC (ft) (ft) (%) (mD) (%) CA “Shales” 3,500’ - 500’ – 3,500’ 5 – 30% <0.0001 - 2 0.1 – 12% 16,000’ Bakken 7,000’ - 20’ – 100’ 3 – 12% 0.05 - 0.5 2 - 18% 11,000’ Eagle Ford 8,000’ - 75’ – 300’ 3 – 15% <0.0001 - .003 0.6 - 7% 14,
Slide 28: Oxy California “Shale” Summary
Oxy California “Shale” Summary • ~870,000 acres are within most prospective “shale” plays • Oxy’s average NRI ~95% • Multiple potentially productive “shale” zones in each well • Oxy’s acreage encompasses favorable thermal regime • Identified 15 areas to appraise over the next 4 years (5-10% of total
Slide 29: Worldwide Oil & Gas Production Outlook
Worldwide Oil & Gas Production Outlook Thousand BOE/Day (Assumes $75 WTI Price) 1200 1,118 9.4% Total 1,033 CAGR 1000 946 837 6.2% Base CAGR 756 800 714 600 400 200 0 2009 2010 2011 2012 2013 2014 Domestic Base International Base Iraq Variance, Exploration & Exploitation 29
Slide 30: Capital Spending Program
Capital Spending Program California, 20% Permian, 13% California, 23% Permian, 10% % tin ent, 4 Chemicals & Con Midstream, 20% M id Mid Continent, 12% Chemicals & Latin America, 11% Midstream, 8% Latin America, 9% Middle East / North Middle East / North Africa, 35% Africa, 35% 2010 Capital - $4.5 Bi
Slide 31: 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 U.S. and 20% internationally • Overal
Slide 32: Finding & Development Costs per Barrel
Finding & Development Costs per Barrel F&D Costs Actual as a % of 6:1 * Prices ** WTI Price 2009 $ 7.90 $ 9.64 16% 3-Year Average $15.04 $18.40 24% (2007 – 2009) 5-Year Average $14.77 $16.84 24% (2005 – 2009) 10-Year Average $ 9.15 $ 9.82 19% (2000 – 2009) * Oil / Gas Energy Content (Industry conven
Slide 33: Return on Assets
Return on Assets Net Income Return on Assets 5 Year Average U.S. 19% International 24% Total E&P 21% Cash Flow* Return on Assets 5 Year Average U.S. 27% International 41% Total E&P 31% * Net Income + DD&A See attached for GAAP reconciliation 33
Slide 34: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase 34
Slide 35: Capital Spending Program
Capital Spending Program • Base Oil & Gas capital historically running at $2.5 billion • As production increases, the base capital will grow ($ in Billions) 2010-2014 Oil & Gas and Midstream Capital 2010 Cumulative Growth Capital $ 1.8 $ 11.2 Base Capital 2.5 15.0 Total Oil & Gas and Midstream Capit
Slide 36: Dividends
Dividends $1.70 $1.52 $1.50 $1.28 $1.32 $1.30 C AGR % 14.4 $1.10 $1.00 $0.88 $0.90 $0.72 $0.70 $0.62 $0.52 $0.55 $0.50 $0.50 $0.30 Prior Mar-03 Mar-04 Mar-05 Dec-05 Sep-06 Sep-07 Jun-08 Jun-09 Jun-10 36
Slide 37: Conservative Accounting
Conservative Accounting Proved Unproved Properties Developed plus Goodwill / Reserves / Total Net Capitalized Costs Company Proved Reserves plus Goodwill OXY 77.3% 6.7% A 54.4% 10.0% B 59.2% 21.6% C 69.1% 8.2% D 70.5% 39.3% E 70.3% 40.5% F 61.4% 13.6% G 70.7% 21.9% H 70.1% 22.6% I 67.3% 3.4% J 56.6%
Slide 38: Capital Program Effectiveness
Capital Program Effectiveness (Equity Market Value Created per $1 Change in Shareholders’ Equity*) Five years Ten Years Company ended 12/31/09 ended 12/31/09 OXY $2.67 $2.57 A $2.28 $2.53 B $1.67 $1.31 C $1.38 $1.63 D $1.38 $1.29 E $1.06 $1.13 F $0.75 $1.28 G $0.60 $0.83 H $0.25 $0.66 I ($0.60) $0.8
Slide 39: Investment Attributes
Investment Attributes • 5 – 8% base annual production growth • Opportunity for additional volume growth • Annual increases in dividends • Significant financial flexibility for opportunities in distressed periods • Conservative financial statements • Returns on invested capital significantly in exces
Slide 40: Cautionary Statement
Cautionary Statement 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 actual results to diff
Slide 41: Occidental Petroleum Corporation
Occidental Petroleum Corporation
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