Occidental Petroleum Corporation · NYSE:OXY
Occidental Petroleum — Q3 2014 Earnings Presentation
32 slides from Occidental Petroleum's earnings presentation, Oct 23, 2014
Slide 1: Third Quarter 2014 Earnings Conference Call
Occidental Petroleum Corporation p Third Quarter 2014 Earnings Conference Call October 23, 2014
Slide 2: Third Quarter 2014 Earnings – Highlights
Third Quarter 2014 Earnings – Highlights Results • Domestic D ti oil il production d ti (Bbl/d) 282 000 282,000 8% year / year growth • Total company production (boe/d) 755,000 • Core earnings* $1.2 billion • Core diluted EPS* $1.58 • YTD CFFO before WC $8.6 billion • Cash balance @ 9/30/2014 $2 9 b
Slide 3: Oil & Gas Segment Pre-Tax Earnings
Third Quarter 2014 Earnings – Oil & Gas Segment Pre-Tax Earnings PRE-TAX 3Q14 vs. 2Q14 ($ in millions) $2,118 ($259) $70 ($37) $1,902 $10 Core Results • 3Q14 $1.9 B • 2Q14 $2.1 B • 3Q13 $2.4 B 2Q14 Sales Price Sales Volumes Higher Operating All Others 3Q14 Costs 3
Slide 4: Oil and Gas Total Company Production
Third Quarter 2014 Earnings – Oil and Gas Total Company Production Total company oil and gas production volume, averaged 755,000 BOE per day, an increase of 19,000 BOE in daily production from the second quarter. Company-wide Oil & Gas Production (mboe/d) 10 (2) 755 9 2 736 2Q14 Permian Other Domest
Slide 5: Oil and Gas Domestic Production
Third Quarter 2014 Earnings – Oil and Gas Domestic Production Met our domestic oil production growth guidance with a year over year increase of 20,000 BOE per day or about 8 percent, led by our Permian and California assets. Domestic Oil & Gas Production (mboe/d) 5 475 6 464 458 3Q13 2Q14 Oil Natura
Slide 6: Oil and Gas Domestic Production
Third Quarter 2014 Earnings – Oil and Gas Domestic Production Domestic Oil & Gas Production Excluding California (mboe/d) 4 315 3 308 305 3Q13 2Q14 Oil Natural Gas & 3Q14 NGLs Note: Excludes California and Hugoton production 6
Slide 7: Oil & Gas Realized Prices
Third Quarter 2014 Earnings – Oil & Gas Realized Prices Realized Prices Benchmark Prices Worldwide Worldwide Domestic Nat. Oil (($/bbl)) NGLs (($/bbl)) Gas (($/mmbtu)) WTI Brent NYMEX 3Q14 $94.68 $40.26 $3.91 $97.17 $103.39 $4.17 WTI % 97% 41% 94%* Brent % 92% 39% 2Q14 $100.38 $42.82 $4.28 $102.99 $
Slide 8: Oil & Gas Production Costs
Third Quarter 2014 Earnings – Oil & Gas Production Costs Production Costs ($/boe) FY13 1Q14 2Q14 3Q14 YTD14 $13.76 $14.33 $14.68 $14.89 $14.64 DD&A ($/boe) FY13 1Q14 2Q14 3Q14 YTD14 $17.10 $16.86 $17.25 $17.45 $17.19 Taxes other than Income ($/boe) FY13 1Q14 2Q14 3Q14 YTD14 $2.57 $2.94 $2.83 $2.64 $
Slide 9: Chemical Segment Core Earnings
Third Quarter 2014 Earnings – Chemical Segment Core Earnings PRE-TAX 3Q14 vs. 2Q14 Guidance ($ in millions) 4Q14 expected t be to b ~$115 $115 mm. $9 ($6) (($1)) $5 $133 $140 Core Results • 3Q14 $140 mm • 2Q14 $133 mm • 3Q13 $181 mm 2Q14 Sales Price Sales Volume / Operations / All Others 3Q14 Mix Ma
Slide 10: Midstream, Marketing & Other Segment Earnings
Third Quarter 2014 Earnings – Midstream, Marketing & Other Segment Earnings PRE-TAX 3Q14 vs. 2Q14 ($ in millions) $219 ($115) $10 $125 $11 Core Results • 3Q14 $ $125 mm • 2Q14 $219 mm • 3Q13 $212 mm 2Q14 Trading Power Generation All Others 3Q14 10
Slide 11: YTD 2014 Cash Flow
Third Quarter 2014 Earnings – YTD 2014 Cash Flow • The first nine months of 2014 included tax payments of $570 million related to the gain on the sale of the PAGP units and our Hugoton assets $12,000 ($400) YTD 2014 3Q14 ($6,600) ($ in millions) Debt / Capital 16% Return on Equity* q y 12% CFFO Retu
Slide 12: California Resources
Third Quarter 2014 Earnings – California Resources • We received cash proceeds of approximately $5 billion from the bond offering completed by California Resources. – IRS rules mandate that use of these proceeds be restricted to share repurchases, dividend payments or debt retirement. • We will be r
Slide 13: US Oil & Gas Pro Forma Data
Third Quarter 2014 Earnings – US Oil & Gas Pro Forma Data Production (Mboe/d) 3Q14 2Q14 1Q14 4Q13 3Q13 2Q13 1Q13 Permian Resources 77 72 67 64 62 64 68 Permian EOR 148 144 145 143 150 146 149 Midcontinent and Other 90 92 90 88 93 88 91 Ongoing Operations 315 308 302 295 305 298 308 Hugoton - 6 18 18
Slide 14: 4Q14 & FY 2014 Guidance Summary
Third Quarter 2014 Earnings – 4Q14 & FY 2014 Guidance Summary Oil & Gas Segment * • Domestic 4Q 2014 Production* Pre-tax Income Price Sensitivity (excludes Impact − Oil: continued Permian production growth. growth California) (Quarter) − NGLs: modest decline Oil +/- $1/bbl = +/- $29 mm – Natural gas
Slide 15: Permian
Third Quarter 2014 Earnings – Permian Permian Resources • 24% production growth (year / year) in 3Q14 • 80,000+ boe/d exit rate in 2014E • 100,000+ boe/d exit rate in 2015E Production Permian EOR Permian Resources 216 226 207 211 212 198 120+ 48 57 64 67 72 77 (mboe//d) 150 150 147 144 144 148 2011
Slide 16: California Resources Spin-Off Update
Third Quarter 2014 Earnings – California Resources Spin-Off Update • Board of Directors authorized California Major Resources spin-off Producing – Distribution expected to occur on November 30 Basins – Record date is November 17 • Oxy shareholders will receive 0.4 shares of CRC for each share of Oxy
Slide 17: Strategic Initiative Update
Third Quarter 2014 Earnings – Strategic Initiative Update Strategic Initiatives • In the Williston and Piceance basins, given the current product price environment we plan to operate these assets with less capital p in order to generate g free cash and Hugoton g Sale shift our investment toward our
Slide 18: Use of Proceeds
Third Quarter 2014 Earnings – Use of Proceeds • Expect to generate a large amount of cash proceeds from the strategic initiatives • The bulk of these proceeds will be used for to share repurchases, we also hope to reinvest i t in i the th business b i through th h attractive tt ti bolt-on b lt prope
Slide 19: Capital Outlook
Third Quarter 2014 Earnings – Capital Outlook • Significant amount of long-term investment, including capital for the BridgeTex pipeline and the Capital Breakdown Excluding Al Hosn Gas project, is nearing completion. California • Expect our overall capital program to decline in 2015 given the absenc
Slide 20: Production Outlook
Third Quarter 2014 Earnings – Production Outlook • Expect Permian Resources to deliver production growth of at least 20% in 2015, primarily from oil. − Expect the Resources business to exit 2014 at over 80,000 BOE per day and to exit 2015 at over 100,000 BOE per day. • Total domestic production shou
Slide 21: Outlook
Third Quarter 2014 Earnings – Outlook • We expect our cash balance to exceed our total debt at year end. • Oxy is built to thrive in this environment with our core properties in the Permian EOR business and production sharing contracts in the Middle East which provide relatively stable cash flow. •
Slide 22: Permian Resources Summary
Third Quarter 2014 Earnings – Permian Resources Summary Growing production and increasing operational efficiency Active Rigs Total Production (boe/d) 77 000 77,000 4Q14 26 4 Oil Production (bbls/d) 43,000 vs. 2Q-2014 8% Increase 3Q14 19 5 vs. 3Q-2013 26% Increase Well Cost 2Q14 17 7 vs. 2013 8% Redu
Slide 23: Permian Resources Core Areas
Third Quarter 2014 Earnings – Permian Resources Core Areas Midland Basin Delaware Basin Delaware Basin Bench Gross Wells Bench Gross Wells B Bone Spring S i 1 500 1,500 Spraberry 450 Wolfcamp A 800 Wolfcamp A 250 Midland Basin Wolfcamp B 650 Wolfcamp B 350 Wolfcamp C 700 Wolfcamp C 550 Other 600 Wol
Slide 24: Permian Resources Delaware
Third Quarter 2014 Earnings – Permian Resources Delaware Benches Active Rigs Geologic Delaware Basin Age Bell Canyon 4Q14 15 2 Cherry Canyon Delaware Basin Brushy Canyon Avalon 3Q14 11 1 1st Bone Spring 2nd Bone Spring Permian 2Q14 10 2 3rd Bone Spring Marathon Thrust Belt Val Verde Basin A Horizont
Slide 25: Permian Resources Delaware Well Performance
Third Quarter 2014 Earnings – Permian Resources Delaware Well Performance Texas Delaware – Wolfcamp A/B BOEPD / 1000’ 1,600 292 Ryman 14 #5H 249 1,365 1,355 311 Q3 Avg 1 067 1,067 245 Barilla Draw 1,175 303 Q2 YTD Avg 215 834 ‐ 1,000 2,000 Peak 24 Hr 30 Day Completed zipper frac on Anna Katherine
Slide 26: Permian Resources Midland Basin
Third Quarter 2014 Earnings – Permian Resources Midland Basin Benches Active Rigs Geologic Age Midland Basin Midland Y t Yates Basin 4Q14 Grayburg 11 2 San Andres Clear Fork Upper Spraberry 3Q14 8 4 Permian Middle Spraberry Lower Spraberry A 2Q14 7 5 Wolfcamp B Val Verde Basin Marathon Thrust Belt C
Slide 27: Permian Resources Midland Basin Well Performance
Third Quarter 2014 Earnings – Permian Resources Midland Basin Well Performance St. Andrews Spraberry, Wolfcamp A / B BOEPD / 1000’ Mabee 128 Ranch 934 SCR 3526H 125 Guitar 913 1,437 170 DR 4027H 79 671 South Curtis Ranch (SCR) 731 129 Q3 Avg 95 Powell 541 Ranch 752 122 Q2 YTD Avg 81 Merchant 500 Dor
Slide 28: Permian Resources Guidance
Third Quarter 2014 Earnings – Permian Resources Guidance • Strong 2014 performance Production (Mboe/d) • Rapidly translating the knowledge 120+ gained in our appraisal efforts to value • Positioned required resources to execute accelerated development in 77 72 2015 64 67 57 • Maintain flexibility to
Slide 29: OXY Permian Gathering / Takeaway
Third Quarter 2014 Earnings – OXY Permian Gathering g / Takeaway y Cushing Centurion Central/ SENM/ Midland Basins DE Basins Basin Slaughter Colorado City y Seaway Sea ay WTG Midland- BridgeTex (50%) South LongHorn Houston Cactus 2Q15 Owned 3rd Party Corpus Christi B id T Started BridgeTex St t d Up
Slide 30: Takeaway Capacity Impact on Prices
Third Quarter 2014 Earnings – Takeaway Capacity Impact on Prices Midland WTI to LLS Differential ($/Bbl) 2009 2010 2011 2012 2013 2014 $10 $5 2011-14 YTD Avg. -(~$16)/Bbl 2014 YTD Avg. - (~$12)/Bbl $0 ($5) ($10) ($15) BridgeTex ($20) Longhorn Start-up ($25) Expansion Longhorn (300MBPD) Sun (50MBPD)
Slide 31: Permian Infrastructure Value Drivers
Third Quarter 2014 Earnings – Permian Infrastructure Value Drivers $20 $18 $16 $14 $12 ~ $0-10+/Bbl $/Bbl $10 $8 $6 $4 ~$1-3/Bbl $2 ~ $1-3/Bbl $0 T Tariff T iff iff Revenue Tariff Revenue R R Shi Shipper Shi Shipper P Producer/Shipper P dd /Shi Producer/Shipper /Shi (Advantaged Pipeline Tariff) (Hig
Slide 32: Conference Call Q&A
Third Quarter 2014 Earnings Conference Call Q&A