Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q3 2015 Earnings Presentation
33 slides from Occidental Petroleum's earnings presentation, Oct 28, 2015
Slide 1: Third Quarter 2015 Earnings Conference Call
OCCIDENTAL PETROLEUM CORPORATION Third Quarter 2015 Earnings Conference Call October 28, 2015
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: Third Quarter 2015 Earnings Highlights
Third Quarter 2015 Earnings Highlights 3Q15 production increased 16% to 689,000 BOED from last year’s 595,000 BOED 39,000 BOED year over year growth in Permian Resources 50,000 BOED year over year growth from Al Hosn which reached full capacity Capital and operating costs continued to declin
Slide 4: Production Growth
Third Quarter 2015 Earnings Production Growth • Oil production growth driven Total Oil Production by: (MBOD) – Focused development 433 436 program in Permian 426 Resources – Al Hosn 401 382 – Resilient base 369 372 production 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2014 2014 2014 2014 2015 2015 2015 4
Slide 5: 2015 Objectives – Adjust to Lower Product Prices
Third Quarter 2015 Earnings 2015 Objectives – Adjust to Lower Product Prices CASH FLOW GROWTH Permian Resources production growth Al Hosn start-up Improvement in price realizations COST SAVINGS Operating Cash Flow to cover dividend outlays and growth Drilling costs in Wolfcamp A in capital p
Slide 6: Portfolio Review – Williston Basin Sale Agreement
Third Quarter 2015 Earnings Portfolio Review – Williston Basin Sale Agreement • Reached an agreement to divest Williston basin assets; expected to close in 4th Quarter – Due to curtailed spending and nature of unconventional assets, production declined ~25% quarter over quarter, when annualized. – P
Slide 7: Portfolio Review – Non-Core Middle East
Third Quarter 2015 Earnings Portfolio Review – Non-Core Middle East • Continue to pursue strategies to substantially reduce our activities and exposure to our non-core operations in Bahrain, Iraq, Libya and Yemen • As a result of these actions and the significant decline in oil and gas futures price
Slide 8: 2015 Capital Program Evolution
Third Quarter 2015 Earnings 2015 Capital Program Evolution 2015 Capital Budget and Domestic Drilling Rigs • Capital spending declined by ~$300 100% Capital million from 2Q15. Budget Domestic • As we capture price savings from Drilling Rigs suppliers and improve efficiencies, we 75% are able to do mo
Slide 9: Committed Project Capital Declining
Third Quarter 2015 Earnings Committed Project Capital Declining Committed Project Capital • Multiple long-term investments to ($ in millions) drive cash flow and earnings $1,300 growth – Al Hosn – Ethylene cracker JV $800 – Ingleside terminal – Gas processing $500 • Capital spending will continue to
Slide 10: Permian Resources Production Growth
Third Quarter 2015 Earnings Permian Resources Production Growth • Total production grew 51% year- Oil NGL Gas over-year to 116 MBOED. – Oil production grew 72% 116 ~118 year-over-year to 74 MBOD. 109 • Total production is expected to 98 grow at a ~30% annual growth rate through 2015. 75 64 – Oil pro
Slide 11: Permian Resources - Activity Summary
Third Quarter 2015 Earnings Permian Resources - Activity Summary • Expect 4Q activity to be similar to 3Q levels with lower rig count 140 120 100 80 Total Well Count 60 40 44 Hz 36 Hz 56 Hz 47 Hz 61 Hz 67 Hz 20 42 Hz 53 Hz 47 Hz 49 Hz 45 Hz 47 Hz 0 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15E Drilled 75 85 86 47
Slide 12: Manufacturing Mode: Drilling / Completions
Third Quarter Earnings 2015 – Permian Resources Manufacturing Mode: Drilling / Completions Move to Manufacturing Mode Significantly Reduced Well Cost WELL COST DRILL DAYS Delaware Wolfcamp A 4,500‘ HZ Delaware Wolfcamp A 4,500’ HZ $12.0 $10.9 50 45 43 $10.0 40 37 GROSS WELL COST $MM $8.0 $5.6 35 $6.
Slide 13: Delaware Basin Recent Performance
Third Quarter 2015 Earnings Delaware Basin Recent Performance Well Performance: Texas Delaware – Wolfcamp A Boepd / Peak 24 Hour 30 Day 1000’ LEIGH STATE 40 1,790 383 #11H 82% Oil 1,528 327 1,711 366 BETTY LOU 1013H 82% Oil 1,310 280 1,270 279 2015 Avg. 946 208 OXY Focus Acreage • Peck State 258 6H
Slide 14: Manufacturing Mode: Drilling / Completions
Third Quarter 2015 Earnings – 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 35 GROSS WELL COST $MM $8.0 31 $
Slide 15: East Midland Basin Recent Performance
Third Quarter 2015 Earnings East Midland Basin Recent Performance Well Performance: Wolfcamp A Boepd / 1000’ Peak 24 Hour 30 Day ADAMS 1,698 178 4201WA 1,495 90% Oil 157 YOUNG A 1,611 260 2124WA 89% Oil 1,237 200 1,165 140 2015 Avg. 938 113 OXY Operated Acreage • May 1102 WA online 2Q 2015 has four
Slide 16: Permian Resources Cash Operating Expense Reduction
Third Quarter 2015 Earnings – Permian Resources Cash Operating Expense Reduction Permian Resources Opex / Boe $15.00 $13.20 • Focus on reducing field $13.03 operating costs during 2015 $11.39 $10.87 − Downhole expense ($/boe) $10.00 reduced 33% from 4Q 2014 − Company-operated cash operating expenses
Slide 17: Permian EOR
Third Quarter 2015 Earnings 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 is expected to generate free cash flow this year in the current oil price environment. • Sou
Slide 18: Update on Hobbs: CO2 Flood and Expansion Areas
Third Quarter 2015 Earnings Update on Hobbs: CO2 Flood and Expansion Areas North Hobbs: South Hobbs: • Phase 1 added 35 MMBOE (Injection started • Started CO2 injection into Phase 1 in September in 2003) (ahead of schedule) • Phase 2A Project will develop 13.7 MMBOE at • Phase 1 & 2 will develop 28
Slide 19: Permian Summary
Third Quarter 2015 Earnings Permian Summary • Continue to execute focused EOR Resources development strategy in Permian Resources ~262 254 260 − Expect to drill ~50 horizontal 243 wells in 4Q15 222 211 − Expect to exit 2015 with production of at least 120 64 75 98 109 116 ~118 MBOED • EOR business i
Slide 20: Highlights
Third Quarter 2015 Earnings Highlights Results • Domestic oil production (Bbl/d) 204,000 12% year / year growth* • Total company production (BOED) 689,000 • Core earnings** $24 million • Core diluted EPS** $0.03 • 3Q15 CFFO before Working Capital $1.2 billion • 3Q15 Capital Expenditures $1.2 billion
Slide 21: Non-Core Items
Third Quarter 2015 Earnings Non-Core Items • Oxy follows the Successful Efforts method of accounting where we review our proved oil and gas properties for indications of impairment whenever events or circumstances indicate that the carrying value of the oil and gas properties may not be adequately r
Slide 22: Oil & Gas Segment Pre-Tax Core Earnings
Third Quarter 2015 Earnings Oil & Gas Segment Pre-Tax Core Earnings PRE-TAX 3Q15 vs. 2Q15 Core Results ($ in millions) • 3Q15 $162 mm • 2Q15 $324 mm • 3Q14 $1.6 B 324 (261) 68 162 45 (14) 2Q15 Sales Price Sales Volumes Lower Operating All Others 3Q15 Expenses 22
Slide 23: Oil and Gas Total Company Production
Third Quarter 2015 Earnings Oil and Gas Total Company Production • Total company oil and gas production volumes averaged 689,000 BOED, an increase of 31,000 BOE in daily production from 2Q 2015. Company-wide Oil & Gas Production (MBOED) 6 (7) 47 689 658 (15) 2Q15 Permian Other Domestic Colombia MENA
Slide 24: Oil and Gas Domestic Production
Third Quarter 2015 Earnings Oil and Gas Domestic Production • Exceeded our domestic oil production growth guidance with a year over year increase of 22,000 BOD or about 12% led by our Permian Resources assets. Domestic Oil & Gas Production (MBOED) 3 (3) 333 (1) 332 315 3Q14 2Q15 Oil NGLs Natural Gas
Slide 25: Oil & Gas Realized Prices
Third Quarter 2015 Earnings Oil & Gas Realized Prices Realized Prices Benchmark Prices Worldwide Worldwide Domestic Nat. Oil ($/bbl) NGLs ($/bbl) Gas ($/mmbtu) WTI Brent NYMEX 3Q15 $47.78 $14.68 $2.24 $46.43 $51.17 $2.78 WTI % 103% 32% 81%* Brent % 93% 29% 2Q15 $54.55 $18.06 $2.09 $57.94 $63.50 $2.7
Slide 26: Chemical Segment Core Earnings
Third Quarter 2015 Earnings Chemical Segment Core Earnings 3Q15 vs. 2Q15 PRE-TAX ($ in millions) Guidance 4Q15 expected Core Results to be ~$130 mm. • 3Q15 $174 mm 8 174 • 2Q15 $136 mm 80 • 3Q14 $140 mm 136 (42) (8) 2Q15 Sales Price Sales Volume / Mix Operations / All Others 3Q15 Manufacturing * * L
Slide 27: Midstream & Marketing Segment Core Earnings
Third Quarter 2015 Earnings Midstream & Marketing Segment Core Earnings PRE-TAX 3Q15 vs. 2Q15 Core Results ($ in millions) • 3Q15 $31 mm • 2Q15 $84 mm • 3Q14 $155 mm 23 (91) 84 17 31 (2) 2Q15 Pipelines Marketing Gas Plants All Others 3Q15 27
Slide 28: YTD 2015 Cash Flow
Third Quarter 2015 Earnings YTD 2015 Cash Flow • Expect to receive proceeds from asset sales of ~$650 million in 4Q15 $3,800 ($2,100) 3Q15 YTD 2015 ($ in millions) LT Debt / Capital 19% ($4,400) $7,800 ($1,700) $1,500 $4,300 ($600) Restricted Cash $4,000 Restricted Cash $1,765 Beginning Cash CFFO Be
Slide 29: Capital Program
Third Quarter 2015 Earnings Capital Program • Total company capital expenditures for the 2015 Capital Budget 3Q15 were $1.2 billion and we expect our 4Q15 to be $1.1 to $1.2 billion. $1.7 bn ~$1.5 bn • Oil and Gas spent $3.6 billion YTD, with Permian ~$1.2 bn Permian Resources expenditures Resources
Slide 30: Targeted Overhead Reductions
Third Quarter 2015 Earnings Targeted Overhead Reductions Annual G&A Expense • Expect to continue to reduce ($ in millions) SG&A costs ~$1,800 ~$300 − Costs associated with exiting non-core assets ~$300 − Elimination of contract workers, replaced with own employees ~$1,200 − Voluntary severance progr
Slide 31: 4Q15 Production Outlook
Third Quarter 2015 Earnings 4Q15 Production Outlook • 4Q15 US Production Outlook – Permian Resources of ~118,000 BOED – Total Domestic of 310,000 – 320,000 BOED – Growth in Permian with declines in Midcontinent gas production and adjusted for the sale of Williston assets • 4Q15 International Product
Slide 32: 4Q15 & FY 2015 Guidance Summary
Third Quarter 2015 Earnings 4Q15 & FY 2015 Guidance Summary Oil & Gas Segment Price Sensitivity Pre-tax Income Impact (Quarter) • 2015 total production is expected to be Oil +/- $1/bbl = +/- $30 mm between 660,000 – 670,000 BOED. NGL +/- $1/bbl = +/- $7 mm • Domestic 4Q15 Production U.S. Nat Gas +/-
Slide 33: Third Quarter 2015 Earnings Conference Call Q&A
THIRD QUARTER 2015 EARNINGS CONFERENCE CALL Q&A