Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Barclays Capital 2010 CEO Energy/Power Conference
35 slides from Occidental Petroleum's conference presentation, Sep 15, 2010
Slide 1: Occidental Petroleum Corporation
Occidental Petroleum Corporation Barclays Capital 2010 CEO Energy/Power Conference Stephen I. Chazen President and Chief Operating Officer September 15, 2010
Slide 2: First Six Months 2010 Results – Summary
First Six Months 2010 Results – Summary ($ in millions, except EPS data) 1H 2010 1H 2009 • Core Results $2,140 $1,096 • Core EPS (diluted) $2.63 $1.34 • Net Income $2,127 $1,050 • Reported EPS (diluted) $2.61 $1.29 • Oil and Gas sales volumes 737 716 (mboe/day) • Capital Spending $1,700 $1,900 • Cas
Slide 3: What Are Our Goals & Objectives?
What Are Our Goals & Objectives? • Allocate and deploy capital with a focus on achieving strong financial returns. • Pursue only those opportunities which meet our standards for ROCE and complement our existing assets. – Return Targets* • Domestic – 15+% • International – 20+% • Focus on further del
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: Oil & Gas Business Drivers
Oil & Gas Business Drivers • Volume Growth • Capital Expenditures • Acquisitions • Return Targets 5
Slide 6: Oil & Gas Volume Growth Drivers
Oil & Gas 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 op
Slide 7: 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 7
Slide 8: International Oil & Gas Producing Areas
International Oil & Gas Producing Areas Libya Iraq Qatar Bahrain UAE Oman Yemen Colombia Bolivia Argentina Focus Areas 8
Slide 9: 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 9
Slide 10: 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 11: 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 11
Slide 12: 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 13: 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 14: 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 14
Slide 15: 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 15
Slide 16: 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 16
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 – 90 MMCFPD skid mounted facility has been brought online, and will be filled • Planning to drill an additional 23 wells in 2H10 (oil focused) • Extension opport
Slide 18: Elk Hills Gas Plant Expansions
Elk Hills Gas Plant Expansions Gas Plant Capacity MMCFD Current 420 (at capacity) Early 3Q 2010 Skid Plant 90 (will be at capacity) 1Q 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 recover
Slide 19: 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 20: Exploration Going Forward
Exploration Going Forward Major Producing 2011 - 14 Annual Program Basins # Wells* Discovery Play 7 - 10 High Potential 5 - 10 Sacramento Bread & Butter 5-6 San Francisco Emerging 3-4 14 - 20 Wells Total per year 20 - 30 Bakersfield 3D Seismic — 200 - 400 km2 per year - San Joaquin – Infill and Expa
Slide 21: California Field Sizes
California Field Sizes Discovery Play High Potential ution Bread & Butter tri b Dis Size F ield <0.1 0.1 1 10 100 1 Billion 10 Billion Field Size (MMBOE) Oxy Play Type and Prospect Exposure Sources: California Division of Oil, Gas & Geothermal Resources Occidental Estimates 21
Slide 22: California Conventional Exploration – Summary
California Conventional Exploration – Summary • 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 MMBO
Slide 23: 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 24: 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 25: Side by Side “Shale” Play Comparison
Side by Side “Shale” 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
Slide 26: 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 27: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase 27
Slide 28: First Half 2010 Cash Flow
First Half 2010 Cash Flow - Free Cash Flow for 1H10 after capex and dividends but before acquisition activity and debt retirements was about $2.1 billion. $5,500 $1,700 ($ in millions) $760 $540 Cash Flow $300 $100 From $2,300 Operations $4,300 Beginning Cash $1,200 12/31/09 Available Capex Acquisit
Slide 29: 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 30: 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 Cap
Slide 31: 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 31
Slide 32: 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 average
Slide 33: Oxy — Investment Attributes
Oxy — 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
Slide 34: 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 35: Occidental Petroleum Corporation
Occidental Petroleum Corporation
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