Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q4 2010 Earnings Presentation
23 slides from Occidental Petroleum's earnings presentation, Jan 26, 2011
Slide 1: Fourth Quarter 2010 Earnings Conference Call
Occidental Petroleum Corporation Fourth Quarter 2010 Earnings Conference Call January 26, 2011
Slide 2: Fourth Quarter 2010 Earnings – Highlights
Fourth Quarter 2010 Earnings – Highlights • Core Results - $1.3 Billion vs. $1.1 Billion in 4Q09 – Core EPS $1.58 (diluted) vs. $1.35 in 4Q09. • Net Income - $1.2 Billion vs. $938 Million in 4Q09 – EPS $1.49 (diluted) vs. $1.15 in 4Q09. 2
Slide 3: Fourth Quarter 2010 Earnings – Highlights
Fourth Quarter 2010 Earnings – Highlights • Argentina has been classified as a discontinued operation; therefore, its results have been excluded from continuing operations, net of tax, for all periods. • Argentina has not been profitable for the last four years. • 4Q10 also included after-tax non-co
Slide 4: Oil & Gas Segment Variance Analysis – 4Q10 vs. 4Q09
Fourth Quarter 2010 Earnings – Oil & Gas Segment Variance Analysis – 4Q10 vs. 4Q09 • Core Results for 4Q10 of $1.941 B vs. $1.869 B in 4Q09 – Realized crude oil prices increased 11½ percent in 2010 but domestic natural gas prices declined 5½ percent from the fourth quarter of 2009. ($ in millions) $
Slide 5: Oil & Gas Segment – Production Volumes
Fourth Quarter 2010 Earnings – Oil & Gas Segment 4Q10 4Q09 Oil and Gas Production Volumes (mboe/d) 753 717 – Year-over-year increase of 5%. • 4Q10 production of 753 mboe/d was slightly higher than 3Q10 of 751 mboe/d. • 4Q10 volumes, compared to 3Q10, were negatively impacted by 10 mboe/d from the ef
Slide 6: Oil & Gas Segment – Sales Volumes
Fourth Quarter 2010 Earnings – Oil & Gas Segment 4Q10 4Q09 Oil and Gas Sales Volumes (mboe/d) 751 722 • Sales volumes differ from production volumes above due mainly to a 4Q10 lifting in Argentina, which slipped from 3Q10, partially offset by Iraq production, which will be sold in 2011 and a lifting
Slide 7: Oil & Gas Segment – Earnings and Prices
Fourth Quarter 2010 Earnings – Oil & Gas Segment 4Q10 4Q09 Reported Segment Earnings ($ mm) $1,666 $1,869 WTI Oil Price ($/bbl) $85.17 $76.19 NYMEX Gas Price ($/mcf) $3.85 $4.29 Oxy’s Realized Prices Worldwide Oil ($/bbl) $79.96 $71.74 US Natural Gas ($/mcf) $4.13 $4.37 7
Slide 8: Chemical Segment Variance Analysis – 4Q10 vs. 4Q09
Fourth Quarter 2010 Earnings – Chemical Segment Variance Analysis – 4Q10 vs. 4Q09 • Core Results for 4Q10 of $111 mm vs. $33 mm in 4Q09 – Chemical segment earnings for 4Q10 were $111 million and in line with our earlier guidance. ($ in millions) $17 $40 $133 $32 $111 $33 4Q09 Sales Price Sales Volum
Slide 9: Midstream Segment Variance Analysis – 4Q10 vs. 4Q09
Fourth Quarter 2010 Earnings – Midstream Segment Variance Analysis – 4Q10 vs. 4Q09 • Core Results for 4Q10 of $202 mm vs. $81 mm in 4Q09 – Midstream segment earnings for 4Q10 increased compared to $163 mm in 3Q10 and $81 mm in 4Q09. The increase in earnings was mainly due to higher trading and marke
Slide 10: Full Year 2010 Results & Capital Spending
Fourth Quarter 2010 Earnings – Full Year 2010 Results & Capital Spending FY2010 FY2009 • Net Income ($mm) $4,530 $2,915 • EPS (diluted) $5.56 $3.58 • Core Income ($mm) $4,664 $3,192 • EPS (diluted) $5.72 $3.92 • Income for the twelve months of 2010 included $134 million of charges, net of tax and 20
Slide 11: Oil & Gas Segment – Cash Production Costs and Taxes
Fourth Quarter 2010 Earnings – Oil & Gas Segment – Cash Production Costs and Taxes • Oil and gas cash production costs, which exclude production and property taxes, were $10.19 per boe for 2010, excluding Argentina. – Full-year 2009 costs were $8.95 a boe, on the same basis. – The year-over-year inc
Slide 12: Full Year 2010 Cash Flow
Fourth Quarter 2010 Earnings – Full Year 2010 Cash Flow – Free cash flow from continuing operations after capex and dividends but before acquisition activity and debt retirements was about $4.3 billion. $2,600 $3,900 ($ in millions) $10,300 $4,925 Operating Cash Flow from Continuing Operations $9,10
Slide 13: Shares Outstanding, Debt and Returns
Fourth Quarter 2010 Earnings – Shares Outstanding, Debt and Returns Shares Outstanding (mm) 2010 12/31/10 Weighted Average Basic 812.5 Weighted Average Diluted 813.8 Basic Shares Outstanding 812.5 Diluted Shares Outstanding 813.9 2010 Debt/Capital 14% ROE 14.7% ROCE 13.2% 13
Slide 14: Acquisitions & Reserve Replacement
Fourth Quarter 2010 Earnings – Acquisitions & Reserve Replacement • Our acquisition costs in 4Q10 were $3.1 billion, which included the previously announced purchases and oil and gas bolt-on properties, mainly in the Permian. – We expect to close the purchase of several additional properties and the
Slide 15: Oil and Gas Production – 1Q11 Outlook
Fourth Quarter 2010 Earnings – Oil and Gas Production – 1Q11 Outlook • Our 1Q11 production will be impacted by the following factors: – We will no longer report Argentina production; – The timing of the completion of the new acquisitions; • While the acquisition of the oil and gas properties in Nort
Slide 16: Oil and Gas Production – 1Q11 Outlook
Fourth Quarter 2010 Earnings – Oil and Gas Production – 1Q11 Outlook – Production for 1Q11 is expected to grow 4% to 5% on a sequential basis. (assumes $85 WTI) (thousand boe/d) 49 750 714 8 5 39 740 4Q10 without Elk Hills Dolphin Partial Impact from 1Q11 Outlook Argentina Maintenance Maintenance re
Slide 17: Oil and Gas Production – 1Q11 Outlook
Fourth Quarter 2010 Earnings – Oil and Gas Production – 1Q11 Outlook • We expect 1Q11 oil and gas production volumes to be between 740 and 750 mboe/d at 4Q10 average oil prices of $85 WTI. • We expect sales volumes to be around 725 mboe/d. – A $5 increase in WTI would reduce our daily volumes by abo
Slide 18: 1Q11 Outlook
Fourth Quarter 2010 Earnings – 1Q11 Outlook • Commodity Price Sensitivity – Earnings – At current market prices, a $1.00 per barrel change in oil prices impacts oil and gas quarterly earnings before income taxes by about $41 mm; – The average 4Q10 WTI oil price was $85.17 per barrel; – A swing of $0
Slide 19: 1Q11 Outlook
Fourth Quarter 2010 Earnings – 1Q11 Outlook • The Chemical segment is expected to provide earnings for 1Q11 of about $125 million. – We expect margins and volumes to continue to improve as the economy strengthens. • We expect our combined worldwide tax rate in 1Q11 to be about 40 percent. 19
Slide 20: Capital Spending and DD&A – Full Year 2011 Outlook
Fourth Quarter 2010 Earnings – Capital Spending and DD&A – Full Year 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. – Occidental's
Slide 21: Capital Spending – 2010 Actual & 2011 Outlook
Fourth Quarter 2010 Earnings – Capital Spending – 2010 Actual & 2011 Outlook 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%
Slide 22: California Update
Fourth Quarter 2010 Earnings – California Update • We have about 520 geologically viable (so-called de-risked) shale drilling locations in California excluding traditional Elk Hills. – Of these locations, about 250 are both outside of Elk Hills proper and the Kern County Discovery Area. • During 201
Slide 23: 23
23