Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q2 2012 Earnings Presentation
30 slides from Occidental Petroleum's earnings presentation, Jul 26, 2012
Slide 1: Second Quarter 2012 Earnings Conference Call
Occidental Petroleum Corporation p Second Quarter 2012 Earnings Conference Call July 26, 2012
Slide 2: Second Quarter 2012 Earnings – Highlights
Second Quarter 2012 Earnings – Highlights • Net Income - $1.3 Billion in 2Q12 vs. $1.8 Billion in 2Q11 and $1.6 $1 6 Billion in 1Q12. 1Q12 – EPS $1.64 (diluted) vs. $2.23 (diluted) in 2Q11 and $1.92 ((diluted)) in 1Q12. • All of the drop in 2Q12 earnings compared to 1Q12 was attributable to the decl
Slide 3: Oil & Gas Segment Variance Analysis – 2Q12 vs. 1Q12
Second Quarter 2012 Earnings – Oil & Gas Segment Variance Analysis – 2Q12 vs. 1Q12 • Core Results for 2Q12 of $2.0 B vs. $2.5 B in 1Q12 – All of the drop in 2Q12 earnings compared to 1Q12 was attributable to the decline in commodity prices. Worldwide oil and domestic gas and NGL prices were signific
Slide 4: Oil & Gas Segment Variance Analysis – 2Q12 vs. 2Q11
Second Quarter 2012 Earnings – Oil & Gas Segment Variance Analysis – 2Q12 vs. 2Q11 • Core Results for 2Q12 of $2.0 B vs. $2.6 B in 2Q11 ($ in millions) $2,624 $389 $237 $205 $185 $34 $5 $2,043 2Q11 Sales Price Sales Volume Higher Higher DD&A Higher Expl. All Others 2Q12 Operating Rate Exp. Costs 4
Slide 5: Oil & Gas Production
Second Quarter 2012 Earnings – Oil & Gas Production 2Q12 2Q11 Oil and Gas Production Volumes (mboe/d) 766 715 – Th The highest hi h volume l in i the h Company's C ' history hi for f the h second d consecutive quarter, +7% year-over-year. • Our total domestic production was 462 mboe/d mboe/d, the se
Slide 6: Oil & Gas Production
Second Quarter 2012 Earnings – Oil & Gas Production • In the Middle East region, volumes were 271 mboe/d: – In Oman, 2Q12 production was 72 mboe/d, 2 mboe/d lower than 1Q12 volumes volumes. – In Qatar, 2Q12 production was 74 mb/d, 2 mb/d higher than 1Q12 volumes. – For Dolphin and Bahrain combined,
Slide 7: Oil & Gas Segment – Realized Prices
Second Quarter 2012 Earnings – Oil & Gas Segment – Realized Prices • 2Q12 realized prices were lower for our products compared p to 1Q12. Q – Our worldwide crude oil realized price was $99.34 per barrel, a decrease of about 8%; – worldwide NGLs were $42.06 per barrel, a decrease of about 20%, and; –
Slide 8: Oil & Gas Segment – Realized Prices
Second Quarter 2012 Earnings – Oil & Gas Segment – Realized Prices • Realized oil prices for the quarter represented 106% of the average WTI and 91% of the average Brent price. • Realized NGL prices were 45% of WTI and realized domestic gas prices were 92% of the average NYMEX price. price • Price c
Slide 9: Oil & Gas Segment
Second Quarter 2012 Earnings – Oil & Gas Segment 2Q12 2Q11 Reported Segment Earnings ($mm) $2,043 $2,624 WTI Oil Price ($/bbl) $93.49 $102.56 Brent Oil Price ($/bbl) $108.90 $117.36 NYMEX Gas Price ($/mcf) $2.28 $4.23 Oxy’s y Realized Prices Worldwide Oil ($/bbl) $99.34 $103.12 - 4% year-over-year W
Slide 10: Oil & Gas Segment – Production Costs and Taxes
Second Quarter 2012 Earnings – Oil & Gas Segment – Production Costs and Taxes • Oil and gas cash production costs were $14.50 a boe for the first six months of 2012 2012, compared with last year's twelve-month costs of $12.84 a boe. – The cost increase reflects higher well maintenance activity, in p
Slide 11: Chemical Segment Variance Analysis – 2Q12 vs. 1Q12
Second Quarter 2012 Earnings – Chemical Segment Variance Analysis – 2Q12 vs. 1Q12 • Core Results for 2Q12 were $194 mm vs. $184 mm in 1Q12. – The sequential quarterly improvement was due to improved polyvinyl chloride (PVC) and vinyl chloride monomer (VCM) margins driven primarily by lower ethylene
Slide 12: Chemical Segment Variance Analysis – 2Q12 vs. 2Q11
Second Quarter 2012 Earnings – Chemical Segment Variance Analysis – 2Q12 vs. 2Q11 • Core Results for 2Q12 were $194 mm vs. $253 mm in 2Q11. – The year-over-year decrease was the result of lower domestic and export caustic volumes, lower VCM export demand, and lower PVC and VCM export prices, partial
Slide 13: Midstream Segment Variance Analysis – 2Q12 vs. 1Q12
Second Quarter 2012 Earnings – Midstream Segment Variance Analysis – 2Q12 vs. 1Q12 • Core Results for 2Q12 were $77 mm vs. $131 mm in 1Q12. – The decline in earnings was mostly in the marketing and trading businesses and to a lesser degree in the gas plants, reflecting lower NGL prices, partially of
Slide 14: Midstream Segment Variance Analysis – 2Q12 vs. 2Q11
Second Quarter 2012 Earnings – Midstream Segment Variance Analysis – 2Q12 vs. 2Q11 • Core Results for 2Q12 were $77 mm vs. $187 mm in 2Q11. (($ in millions)) $28 $23 $187 $106 $9 $77 2Q11 Pi li Pipelines G Processing Gas P i Marketing M k ti andd All Others Oth 2Q12 Trading 14
Slide 15: Taxes
Second Quarter 2012 Earnings – Taxes • The worldwide effective tax rate was 40% for 2Q12. • Our 2Q12 U.S. and foreign g tax rates are included in the “Investor Relations Supplemental Schedules.” 15
Slide 16: 2012 YTD Cash Flow
Second Quarter 2012 Earnings – 2012 YTD Cash Flow – Cash flow from operations for the first six months of 2012 was $6 billion. We used $5.1 billion of the company’s total cash flow to fund capital expenditures and $1 billion for acquisitions. Financial activities, which included dividends paid, stoc
Slide 17: Capital Expenditures & Acquisitions
Second Quarter 2012 Earnings – Capital Expenditures & Acquisitions • Capital expenditures for the first six months of 2012 were $5.1 billion, of which $2.7 billion was spent in 2Q12. • Year-to-date capital expenditures by segment were 82% in oil and g gas, 15% in midstream and the remainder in chemi
Slide 18: Shares Outstanding & Debt/Capital
Second Quarter 2012 Earnings – Shares Outstanding & Debt/Capital Shares Outstanding (mm) 2H12 6/30/12 Weighted Average Basic 810.4 810 4 Weighted Average Diluted 811.2 Basic Shares Outstanding 809.4 Diluted Shares Outstanding 810.0 6/30/12 12/31/11 Debt/Capital 16% 13% • At the end of 2Q12, we issue
Slide 19: Key Performance Metrics
Second Quarter 2012 Earnings – Key Performance Metrics • Occidental’s 2Q12 production set an all-time record for the Company for the second consecutive quarter and the domestic oil and gas segment produced record volumes for the seventh consecutive quarter. • 2Q12 domestic production of 462 mboe/d,
Slide 20: Capital Program
Second Quarter 2012 Earnings – Capital Program • We are raising our estimate of the total year capital program to $9.2 billion, from our previously announced level of $8.3 billion. • Of the increase, increase about $600 million is for the Al Hosn Shah gas project, with the remainder of the increase
Slide 21: 2012 Updated Capital Expenditure Program
Second Quarter 2012 Earnings – 2012 Updated Capital Expenditure Program $200 $100 $9,200 $600 $8 300 $8,300 ($ in millions) Initial Capital p Al Hosn Domestic Outside All Others Current Capital p Program Operated Program 21
Slide 22: 2012 vs. 2011 Capital Program
Second Quarter 2012 Earnings – 2012 vs. 2011 Capital Program $5,500 2012 2011 $4,343 ($ in millions) $1,764 $1,500 $1,200 $1,000 $950 $ $461 (a) Domestic Al Hosn Rest of International Chemical / All Other (a) Excludes the $500 million development costs, incurred by the project prior to the effective
Slide 23: Capital Program – Al Hosn
Second Quarter 2012 Earnings – Capital Program – Al Hosn • The Al Hosn Shah gas project is approximately 49% complete p and is progressing p g g as planned. p • This project made up about 11% of our total capital program for the first six months of 2012. • With spending continuing at current levels,
Slide 24: Capital Program – Domestic Operations
Second Quarter 2012 Earnings – Capital Program – Domestic Operations • In our domestic operations, we expect the total average rig count at current levels of about 75 to go down to an average of 70 by y the end of the y year. • However, the mix of the rigs will shift among different regions related
Slide 25: Capital Program – Domestic Operations
Second Quarter 2012 Earnings – Capital Program – Domestic Operations • In California, we are continuing to see improvement with respect to permitting issues relative to last year year. – We have received approved field rules and new permits for both injection wells and drilling locations. – The regu
Slide 26: Oil and Gas – 2H12 Outlook
Second Quarter 2012 Earnings – Oil and Gas – 2H12 Outlook • As we look ahead to production expectations in 2H12: – Over the past year, we have generally achieved our 6 to 8 mboe/d quarter-over-quarter domestic production increase increase. – We expect that we will achieve the high end of this range
Slide 27: Oil and Gas – 2H12 Outlook
Second Quarter 2012 Earnings – Oil and Gas – 2H12 Outlook • A $5.00 change in global oil prices would impact our d il volumes daily l by b about b t 3 mboe/d. b /d TheTh financial fi i l impact i t of this volume change is incorporated into the product price sensitivities we have provided. • We expe
Slide 28: 3Q12 Outlook – Chemicals & Taxes
Second Quarter 2012 Earnings – 3Q12 Outlook – Chemicals & Taxes • The chemical segment 3Q12 earnings are estimated to b about be b t $175 million. illi – Weakness in export demand, conditions in Europe and China, slowdown in U.S. demand and rising US natural gas costs will keep pressure on margins.
Slide 29: Summary
Second Quarter 2012 Earnings – Summary • To summarize: We closed the quarter with a second consecutive all-time record total Company production and the seventh consecutive record domestic oil and gas production. – We increased our total domestic production by 7 mboe/d over 1Q12 and by 38 mboe/d from
Slide 30: Q&A
Second Quarter 2012 Earnings – Q&A 30