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Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp

Occidental Petroleum Corp · Feb 23, 2016 · 34 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 1
    OCCIDENTAL PETROLEUM CORPORATION Vicki A. Hollub President & Chief Operating Officer Credit Suisse Energy Summit February 23, 2016
  2. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 2
    Why own Oxy Large Integrated Majors Independent E&Ps Company Market Cap (B) Company Market Cap (B) XOM 328 COP 41 CVX 156 Oxy EOG 37 RDS 142 Uniquely APC 21 TOT 100 Positioned PXD 20 BP 94 APA 15 ENI 51 MRO 6 Characteristics…
  3. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 3
    Why own Oxy Balance sheet Portfolio of Assets Ended 2015 with 4.4 Billion Long life cash flow assets cash Significant growth potential Debt of 8.3 Billion (25% Flexibility to ramp activity debt to capitalization ratio) up or down…
  4. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 4
    Key Messages & Strategy Overriding Goal is to Maximize Total Shareholder Return We believe this can be achieved through a combination of: Oil and gas production growth of 5% to 8% per year over the long-term; Executing on our capital…
  5. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 5
    Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Share Repurchase 5. Acquisitions 6
  6. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 6
    Execution Of Our Strategic Initiatives Closed the sale of Williston Basin properties Williston Sale 16 MBOED FY15 Progressed our efforts to exit from non-core operations in Middle East 0.6 bn pre-tax proceeds Reached understanding…
  7. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 7
    Oxy Runs A Focused Business Oil and Gas Focus Areas United States Leading position OxyChem in the Permian Basin High FCF, moderate Permian Resources growth business. is a growth driver Oxy Midstream MENA Al Hosn Project,…
  8. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 8
    Permian Basin Is The Core Domestic Asset Largest oil producer and operator in Permian Basin. Significant investments in infrastructure to support the upstream provide low operating costs, advantaged realized prices and competitive…
  9. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 9
    Oxy is the Largest Permian Basin Producer Cumulative Total Operated Production, Thousand BOEPD % of total 2.3 million BOEPD Source: IHS Energy Feb and Mar 2014, 6 MCF/BOE excluding estimated CO2 production. 10
  10. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 10
    2016 Permian Strategy Given the current oil price environment, we will focus on investment to achieve four core goals: Accelerate geoscience, characterization and modeling programs to enhance recovery, productivity and field economic…
  11. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 11
    Permian Resources Drilling Inventory Continuing to lower economic hurdle points through reservoir characterization and optimization, improved productivity, reduced well costs, and faster time to market 100% Total of 8,500 locations in…
  12. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 12
    Permian Resources Production Growth Oil NGL Gas Total production grew 40% year- over-year to 118 MBOED. Oil production grew 49% year-over-year to 76 MBOD. 116 118 123 110 109 Oil production is expected 98 to continue to grow at…
  13. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 13
    Permian Resources Cost Reduction Permian Resources Operating Costs / BOE 15.00 13.20 13.03 Focus on reducing field 11.39 10.87 operating costs during 2015 10.00 9.73 Downhole expense (/boe) reduced 34% from 4Q14 Company operated…
  14. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 14
    Permian Resources Manufacturing Mode Move to Manufacturing Mode Significantly Reduced Well Cost WELL COST DRILL DAYS Delaware Wolfcamp A 4,500 HZ Delaware Wolfcamp A 4,500 HZ 50 12.0 10.9 43 45 10.0 40 37 35 GROSS WELL COST…
  15. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 15
    Permian Resources Manufacturing Mode 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 GROSS WELL COST…
  16. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 16
    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…
  17. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 17
    World Leader in CO2 Enhanced Oil Recovery U.S. CO2 EOR Projects Size of bubble = CO2 EOR Production Volume 3,500 Number of Injection Wells 3,000 Occidental 2,500 2,000 Inject 1.9 billion cubic feet a day 1,500 Kinder…
  18. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 18
    Permian EOR Cost Structure Permian EOR can operate at cash costs as low as 22 per BOE 2015 Permian EOR Cost Structure 2015 Permian EOR Cost Structure 55 WTI, 3.00 NYMEX 35 WTI, 2.00 NYMEX 35 35 30 2.7 30 25 4.0 25 4.7 1.8…
  19. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 19
    Permian EOR Cash Costs Cash Operating Expense (/BOE) 25.00 Cash Operating Expense reduced 20.82 20.03 by 4.36 / BOE in 4Q14 to 4Q15 20.00 18.16 18.36 16.46 Savings were driven by 15.00 productivity gains and supplier cost…
  20. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 20
    Denver EOR Unit: Battery 5 Development Waterflood Primary CO2 Battery 5 Redevelopment Project: Develops both Main Oil Column & Residual Oil Zone Requires deepening 150 wells Develops 21 MMBOE net at a 4.80 per BOE 21
  21. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 21
    Hobbs: CO2 Flood and Expansion Areas North Hobbs: South Hobbs: Phase 1 added 35 MMBOE (Injection started Started CO2 injection into Phase 1 in in 2003) September (ahead of schedule) Phase 2A Project will develop 13.7 MMBOE Phase 1 & 2…
  22. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 22
    Permian EOR ROZ Projects development cost South Hobbs ranges from 3 - 7 per BOE Residual Oil Zone (ROZ) Potential: Four pattern to begin in 2016. Full ROZ expansion: 50 patterns; 80 MMBOE Stranded Oil in the Residual Oil Zone…
  23. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 23
    Permian EOR is a Large, Highly Economic Resource Unrisked, gross resource potential of up to 1.9 billion barrels 2015 EOR CAPEX = 500MM Unrisked, Gross Reserves and Complete and begin CO2 injection at Resources South Hobbs Start…
  24. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 24
    Permian Summary EOR Resources 2016 activity focused on core locations with minimal infrastructure investments 260 261 266 255 254 Analyze appraisal data to support 243 future development and initiate 222 seed projects for long…
  25. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 25
    2016 Capital Outlook 2016 Capital Budget Carefully reduce activity levels without ( in bln) harming the strong progress on growth prospects 5.6 Fund only those opportunities that exceed hurdle rates of return 2016 plan approximates…
  26. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 26
    Committed Project Capital Declining Committed Project Capital Multiple long-term investments to ( in millions) drive cash flow and earnings growth 1,300 Al Hosn Ethylene cracker JV 800 Ingleside terminal Gas processing 500…
  27. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 27
    2016 Capital Breakdown Oil & Gas 2016 Capital Budget 2.8 - 3.0 billion Chemicals 18% Permian Resources 21% Midstream 16% Permian EOR 17% Exploration & Other 4% International 24% 28
  28. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 28
    Oxy Production Growth Total Oil Production* Total Company Production* (MBOD) (MBOED) 416 652 362 571 2014 2015 2014 2015 * Ongoing operations; excludes Williston & Hugoton production volumes 29
  29. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 29
    2016 Production Outlook Expect total production from core assets to grow 2% - 4% over 2015 levels Core assets exclude Bahrain, Libya, Iraq, Yemen, Williston and Piceance Basins Full year contribution from Al Hosn and start-up of…
  30. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 30
    Improved Cost Structure Production Costs Overhead (SG&A) (/boe) ( millions) Expect continued improvement in cost structure 13.50 1,503 Strategic Initiatives 1,270 11.57 Lower workovers Lower downhole maintenance Lower energy…
  31. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 31
    2016E Sources & Uses of Cash S&P Rating affirmed at 2016 Illustrative Sources & Uses of Cash single A with stable outlook Ecuador Payments 1.2 bn & Asset Sales Financial flexibility to invest through the cycle and return 4Q15 cash to…
  32. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 32
    Cash Flow Priorities 1. Base/Maintenance Capital 2. Dividends 3. Growth Capital 4. Share Repurchase 5. Acquisitions 33
  33. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 33
    History Of Returning Cash To Shareholders ( in Billions) Share Period ending 2015 Cash Dividends Repurchases Combined 3 years 6.0 4.3 10.4 5 years 9.6 4.4 14.6 10 years 14.0 9.2 23.3 Additionally, over the 10 years ending…
  34. Credit Suisse 21st Annual Energy Summit – Occidental Petroleum Corp – slide 34
    Summary Key to Success / Strengths A key to long term success is to take advantage of this downturn to improve our future: Major cost structure changes Data Analytics Further advances in improved recovery Technology (new or…

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