Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Credit Suisse 2013 Energy Summit
46 slides from Occidental Petroleum's conference presentation, Feb 6, 2013
Slide 1: Occidental Petroleum Corporation – Credit Suisse 2013 Energy Summit
Occidental Petroleum Corporation Credit Suisse 2013 Energy Summit Stephen I. Chazen President and Chief Executive Officer February 6, 2013
Slide 2: Investor relations contacts
Christopher G. Stavros Vice President and Treasurer 212-603-8184 | [email protected] Christopher M. Degner Senior Director - Investor Relations 212-603-8185 | [email protected] Anthony J. Cottone Manager - Investor Relations 212-603-8188 | [email protected]
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Slide 4: Full Year 2012 Results – Summary
Full Year 2012 Results – Summary ($ in millions, except EPS data) FY 2012 FY 2011 • Core Income from continuing operations $5,750 $6,828 • Core EPS (diluted) from continuing operations $7.09 $8.39 • Reported Net Income $4,598 $6,771 • Reported EPS (diluted) $5.67 $8.32 • Worldwide oil and gas produc
Slide 5: 2012 Oil & Gas Production Growth
2012 Oil & Gas Production Growth • Oxy's total daily production reached a record 779 mboe/d in 4Q12 and 766 mboe/d for the full year 2012, resulting in a 5% increase for last year. Total Company Total Domestic Total Domestic Oil 800 500 275 766 465 255 750 733 Thousand boe per day 450 250 Thousand b
Slide 6: 2012 U.S. Oil & Gas Production Growth
2012 U.S. Oil & Gas Production Growth • Total U.S. production in 4Q12 was 475 mboe/d, up 6 mboe/d from 3Q12 our 9th consecutive quarterly domestic volume record. Year-over-year, production grew by 6%, or 26 mboe/d, of which 25 mb/d was oil, as we continued to execute on our oil production growth str
Slide 7: Capital Efficiency & Operating Cost Reduction Program
Capital Efficiency & Operating Cost Reduction Program • We have an aggressive plan to improve our operational efficiencies over all cost categories, including capital – with a view toward achieving an appreciable reduction in our operating expenses and drilling costs to at least 2011 levels in order
Slide 8: Capital Efficiency & Operating Cost Reduction Program – Production costs
Capital Efficiency & Operating Cost Reduction Program • We expect our production costs per barrel to be under $14 in 2013, which is significantly lower than the 2012 average costs. • Many of the steps already taken during 4Q12, which are only partially reflected in the quarter's average costs, along
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Slide 10: Capital Efficiency & Operating Cost Reduction Program
Capital Efficiency & Operating Cost Reduction Program • Improvements were realized across most business units, most notably in the Permian and Elk Hills. • The reductions resulted from efficiencies achieved across most cost categories including savings in surface operations, reductions in the use of
Slide 11: 2012 Oil & Gas Reserves
2012 Oil & Gas Reserves • Preliminary estimates of our year-end 2012 reserve levels: • We produced ~280 mmboe in 2012. • Our total company reserve replacement ratio from all categories, including revisions, was about 143%, or ~400 mm boe. − Depressed domestic gas prices and changes in our plans for
Slide 12: 2012 Oil & Gas Reserves
2012 Oil & Gas Reserves • Our 2012 development program, excluding acquisitions and revisions, replaced ~175% of our production with ~490 mmboe of reserve additions. • Our 2012 program, including acquisitions but excluding revisions of prior year estimates, replaced 209% of our production. − We belie
Slide 13: What Is Our Philosophy & Strategy?
What Is Our Philosophy & Strategy? Overriding Goal is to Maximize Total Shareholder Return • We believe this can be achieved through a combination of: • Growing our oil and gas production by 5% to 8% per year on average over the long term; • Allocating and deploying capital with a focus on achieving
Slide 14: Oxy Is Primarily a Domestic Oil Producer
Oxy Is Primarily a Domestic Oil Producer Oil & Gas Production Full Year 2012 (Million barrels of oil equivalent) 79 110 28% 171 170 39% 30 61% 61% 11% Oil NGLs Gas U.S. International 14
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Slide 16: Cash Flow Priorities
Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Acquisitions 5. Share Repurchase 16
Slide 17: Consistent Dividend Growth
Consistent Dividend Growth • Our ability to pay dividends is indicated by our free cash flow generation. • We have increased our dividends at a compounded annual rate of 15.8% over the last 10 consecutive years through 11 dividend increases. • We expect to announce a further dividend increase after
Slide 18: Consistent Dividend Growth
Consistent Dividend Growth ($/share) $11.95 $12.00 $9.79 $10.00 $7.95 $8.00 $6.48 $6.00 $5.16 $3.96 $4.00 $3.02 $2.22 $2.16 $1.57 $1.47 $1.84 $2.00 $1.02 $1.21 $1.31 $0.80 $0.94 $0.55 $0.65 $0.50$0.50 $0.52 $0.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Annual Dividends Paid Cumulative
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Slide 20: Worldwide Oil & Gas Producing Areas
Worldwide Oil & Gas Producing Areas United States Libya Iraq California Qatar Permian Bahrain UAE Basin Oman Yemen Colombia Bolivia Focus Areas 20
Slide 21: Capital Spending 2012 Actual & 2013 Estimate
Capital Spending 2012 Actual & 2013 Estimate • Capital spending is expected to decline by ~6% in 2013 to $9.6 billion from the $10.2 billion we spent in 2012. Exploration Exploration Al Hosn Al Hosn & Other & Other Gas Gas 10% 10% 11% 12% Rest of Rest of Middle East Middle East 18% 20% US Oil & US O
Slide 22: 2013 Capital Outlook
2013 Capital Outlook • Our overall capital spending is expected to decline by ~6% in 2013 to $9.6 billion from the $10.2 billion we spent in 2012. • The reduction in capital will come entirely from the oil and gas business where the 4Q12 spend rate was already close to the level planned for all of 2
Slide 23: 2013 Capital Outlook – Future Growth Projects
2013 Capital Outlook – Future Growth Projects • We are currently in an investing phase • Capital for future growth projects: in many of our businesses where a higher than normal portion of our − The Al Hosn Gas Project. capital is spent on longer-term projects. − Construction has begun on the • In 2
Slide 24: 2013 Capital Outlook – Domestic Oil & Gas
2013 Capital Outlook – Domestic Oil & Gas • In domestic oil and gas, development capital will be about 64 46% of our total capital program. – We expect our average operated rig 60 Oxy Operated Domestic Average Rig Counts 55 count in the United States to be about 55 rigs during 2013 compared to 64 ri
Slide 25: 2013 Capital Outlook – Domestic Oil & Gas
2013 Capital Outlook – Domestic Oil & Gas • Permian capital should remain flat. • We expect to reduce CA capital ~$500 million from 2012, which represents Exploration & Other, 9% ongoing well cost reductions and efficiencies, a modest shift toward US California, more conventional drilling Midstream,
Slide 26: 2013 Capital Outlook – Domestic Oil & Gas
2013 Capital Outlook – Domestic Oil & Gas • In the Midcontinent, we expect to reduce spending ~$400 million from 2012. • We have reduced our activity in higher Exploration cost unconventional oil plays, specifically & Other, 9% in the Williston and in lower return gas properties, mainly in the Midco
Slide 27: 2013 Capital Outlook – International & Exploration
2013 Capital Outlook – International & Exploration • Our total Al Hosn gas project capital will decline modestly from the 2012 levels, and will make up about 11% of our total capital program for the year. • While Iraq’s spending levels continue to be difficult to predict reliably, capital in the res
Slide 28: 2013 Capital Outlook – Chemical & Midstream
2013 Capital Outlook – Chemical & Midstream • The U.S. Midstream capital will increase by about $400 million due to the BridgeTex pipeline project. • Chemical segment capital will be about $425 million, which includes the construction of a new 182,500 ton per year membrane chlor-alkali plant in New
Slide 29: Oil & Gas Production Volume Growth Drivers
Oil & Gas Production Volume Growth Drivers • Base 5 - 8% Compounded Average Annual Growth – Current California risked prospects – Non-CO2 & CO2 in the Permian – Al Hosn Gas Project – Oman • Upside from Existing Holdings – New California conventional and unconventional prospects – Permian exploration
Slide 30: 2013 Production Outlook
2013 Production Outlook • Domestically, we expect oil production for all of 2013 to grow by about 8% to 10% from the 2012 average. − With lower drilling on gas properties, we expect gas and NGL production to decline somewhat. − Planned plant turnarounds in the Permian CO2 business will cause additio
Slide 31: California Overview
California Overview • Largest acreage holder in CA with ~1.8 mm acres, majority of which are net mineral interests • 2012 production of 148 mboe/d vs. 138 mboe/d in 2011 Sacramento • 78% interest in the Elk Hills Field — the largest producer of gas and San Francisco NGLs in CA • During 2012, Oxy dri
Slide 32: California Update
California Update • Total CA oil production volumes grew 10% in 2012 vs. 2011, and as we continued to execute on our oil production growth strategy. • We have grown our production in CA despite declines seen at the mature Elk Hills field, permitting issues and continued low gas prices. • Overall per
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Slide 34: Permian Basin Overview
Permian Basin Overview • 2012 production of 207 mboe/d, vs. 198 mboe/d in 2011 • Largest oil producer in Permian (~16% net share of total) • Largest operator in Permian (of 1,500+ operators) • ~60% of Oxy’s Permian oil production is from CO2 related EOR projects – Oxy’s most profitable business • Dr
Slide 35: Permian non-CO2 Business
Permian non-Co2 Business Acreage in Select Permian Plays • Oxy’s Permian non-CO2 business (Thousands of Acres) is one of our fastest growing assets; Delaware Basin Gross Oxy Share • Since beginning delineation and Avalon 340 120 development efforts in 2010, we Bone Spring 1 Sand 560 220 have grown p
Slide 36: Map of Select Permian Basin Plays
Map of Select Permian Basin Plays Matador Arch Northwest Shelf Midland Basin Wolfberry Wolfcamp Bone Spring Central Eastern horz. Basin Shelf Avalon Platform Delaware Basin Cline Shale Wolfcamp Diablo horz. Platform Wolfbone Ozona Arch Val Verde Basin 36
Slide 37: Abu Dhabi – Al Hosn Gas Project (Shah Field)
Abu Dhabi – Al Hosn Gas Project (Shah Field) • Shah Gas Field one of the largest in the Middle East; • Oxy holds a 40% participating interest under a 30-year contract; • The project involves development of high-sulfur content reservoirs within the Shah field, onshore ~180 km so. west of Abu Dhabi; •
Slide 38: Abu Dhabi – Al Hosn Gas Project (Shah Field)
Abu Dhabi – Al Hosn Gas Project (Shah Field) • The Project is ~65% complete and progressing as planned; • Spending on the Project was ~12% ($1.2 B) of our total capex for 2012; • Capex for the Project is expected to decline modestly from 2012 levels, and comprise about 11% of our total capex program
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Slide 40: 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 avera
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Slide 42: Summary of 2012 Cash Flow
Summary of 2012 Cash Flow • In 2012, we generated $12.1 billion of cash flow from continuing operations before changes in working capital. Working capital changes reduced our full year cash flow from operations by ~$800 mm to $11.3 billion. ($ in millions) $15,900 $800 $15,100 $10,200 Cash Flow From
Slide 43: Oxy – Investment Attributes
Oxy – Investment Attributes • 5 - 8% base annual production growth over the long term • Opportunity for additional volume growth • Returns on invested capital significantly in excess of the Company’s cost of capital • Consistent, annual increases in dividends • Significant financial flexibility for
Slide 44: 2013 Summary Outlook
2013 Summary Outlook • Assuming similar realized oil and gas prices to 2012 and our expectation of comparable Chemical and Midstream segment earnings, we expect that our 2013 program will: − Generate cash flow from operations of about $12.7 billion; and − Invest about $9.6 billion in capital spendin
Slide 45: Cautionary Statement
Cautionary Statement 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. Factors that could cause results to differ materially include, but are
Slide 46: Appendix
Appendix 46
Occidental Petroleum — Credit Suisse 2013 Energy Summit on 6ix