Oxy Permian Tour Driving Value in the Permian March 10, 2017
2016 Performance Production Program F&D Cost* Exceeded Expectations 300 269 14 12 250 12 222 Overall Permian CAGR 10% 200 10 9 mboe/d 8 Base management 150 /boe 6 Well productivity improvement 100 4 50 2 Improved F&D…
Permian Basin Key Takeaways 2.5 million net acres in the Permian Basin 650,000 net acres within the Delaware and Midland basins Increased unconventional horizontal drilling locations by 37% to 11,650 Average lateral length up 20%…
Net Operated 2016 Net Oxy Permian Business Overview Acres Wells* Production Oxy Permian Resources Unconventional Areas 1.4 5,150 124 Enhanced Oil Recovery Areas 1.1 19,310 145 Oxy Permian Total 2.5MM 24,460 269 Largest operated…
The Permian Drives Oxys Value Proposition Permian Resources Permian EOR Improving top tier margins with recent operational Permian EOR provides stable, free cash flow with and technical breakthroughs. minimal base decline. 11,650…
Full Cycle Value Shaping Competitive Advantage Unmatched acreage + infrastructure Enhanced Recovery Resources Dynamic Development EOR Reservoir Management Field Development Planning + Execution Subsurface excellence People,…
Permian Resources Acreage and Inventory Update Problems Solved Problem Solving Now 8
Net Business Area Acreage Permian Acres* Resources Resources Unconventional Areas Enhanced Oil Recovery Areas 1.4 1.1 Oxy Permian Total 2.5MM Significant acreage & growth potential in all development areas Resources Basin…
Diversified Portfolio Provides High-Return and Significant Flexibility Asset Portfolio Role Upside Potential Southeast New High return, low capital intensity Acreage improvement for longer Mexico for near-term growth and cash laterals…
Increased Total Horizontal Drilling Locations 37% Improved Permian Resources Horizontal Locations within 300,000 of 650,000 net acres in Basin Development Areas Inventory from 4Q2015 11,650 11,650 Added 1,250 locations 12,000 BE < 50…
New Mexico Acreage is Being De-Risked by the Industry 1 5 GOBBLER 5 B2PM STATE COM 1H BLUE JAY FEDERAL 1-H MEWBOURNE CONCHO BONE SPRING BONE SPRING Lateral Length: 3,986 1 Lateral Length: 4,158 30-day IP: 2,336 BOE/d (80% Oil) 4…
Permian Resources 2017 Focused Development New Mexico NW Shelf Greater Sand Dunes 2,000+ Locations Contiguous Midland Basin Acreage NM Delaware Basin Multi-bench TX Delaware Basin Central Basin Capable Platform Infrastructure…
Outstanding Results in Greater Sand Dunes Area Multi-Bench Development Recent Well Results Barilla GreaterDraw Type Log Sand Dunes Target Formation Lateral Peak 24 Hr Peak 30 Day Oil Well Name Length (ft) (BOEPD) (BOEPD) (%)…
Improving Results in Greater Barilla Draw Area Multi-Bench Development Recent Well Results Barilla GreaterDraw BarillaType DrawLog Drilled 228 Wells Across 8 Benches Target Formation Lateral Peak 24 Hr Peak 30 Day Oil Well Name…
Growth Potential of 30+% from Focused Development Areas Multi-Year Permian Resources Growth Potential 300 18 15 14 16 Top-tier well performance 250 14 Production (mboed) 30% CAGR Deep inventory for range of activity 200…
Permian Resources Acreage and Inventory Update Problems Solved Problem Solving Now 17
Problems Solved in the Permian Resources Development Costs Per BOE Permian Adding It All Up Subsurface Characterization Stimulation Cost structure dramatically driven Design Development lower since 2014 Planning Infrastructure…
Subsurface Characterization Landing + Stimulation + Spacing Optimization Adds Value 2nd Bone Spring Net Sand Thickness and Middle Carbonate Outline Middle Carb. Outline A A Problem: Subsurface uncertainties & unknowns to predict…
Subsurface Characterization Customized Stimulation Design and Adds Value Landing Selection Problem: Subsurface discontinuity A 2nd Bone Landing and Frac Optimization A differentiates stimulation impacts Oil left behind Frac…
Customized Technical 2nd Bone Spring Optimization Results Excellence Adds Value 2nd Bone Spring Improvements 300 150% 6 month cumulative production improvement from 250 3Q 2016 old design 150% Improved productivity Cumulative…
Customized Technical Technology Staircase - Setting The Bar Higher Excellence Adds Value Other custom solutions: Drilling wellbore design Facilities Play- Flowback process Single Leading Wells Location Artificial lift +10K…
Development Planning Development Units Greater Sand Dunes Adds Value Problem: Potential destruction of future value as a result of unknowns Multi-bench potential 4 3 Frac barriers 3 4 Productivity drivers External timing…
Oxy Drilling Dynamics Step Changing Performance Adds Value Identify Understand Engineer Implement Problem: Inefficient use of rig energy resulting in slow and Real Time Monitoring from Anywhere higher cost drilling Downhole tool…
Integrated Planning Adds Rig Release to Well Online Value 140 Problem: Delay in production and 120 cash flows due to complex operations 100 and planning Days 80 Multiple unaligned schedules 60 Solutions: Implemented…
Surveillance and Base Management Adds Value 2016 Permian Resources Base Optimization Oxy operates 24,460 wells in the Permian Basin 10.0 Cumulative Net MBOEPD Company operated production of 235 Mboepd 8.0 Net (EOR and…
Problems Solved in the Permian Resources Development Costs Per BOE Permian Adding It All Up Subsurface Characterization Stimulation Cost structure dramatically driven Design Development lower since 2014 Planning Infrastructure…
Permian Resources Acreage and Inventory Update Problems Solved Problem Solving Now 28
Lower Breakeven Cost Through Innovative Problem Solving 12,000 11,650 11,650 Innovation expected Midland Basin 2016 to offset cost inflation 10,000 Added and move more 3,150 Texas Delaware locations to lower 8,000 SS…
SL2 Solving Permian Problems Now Single Location Sequenced Laterals - SL2 Single vertical well bore producing from multiple zones Reduce section development cost Initial studies and development began mid-2015 with pilot currently…
Appendix
Key Messages 32
Key Message and Strategy Overriding Goal is to Maximize Total Shareholder Return We believe this can be achieved through a combination of: Consistent, annual dividend growth Value growth through oil and gas development that meets the…
Cash Flow 1. Base/Maintenance Capital Priorities Favor Dividends 2. Dividends 3. Growth Capital Subject to Returns and 4. Acquisitions Market Conditions 5. Share Repurchases 34
2016 Highlights Low-cost Production Growth Exceeds Target 7% 189% 9.65 Production Growth Total Company Total Company All- Capital Program Under FY 2016 Reserve Replacement Sources F&D 3 billion Target Ratio Strong Balance Sheet and…
Oil and Gas Core Areas Focused Businesses OxyChem United States High FCF, moderate Leading position in the Permian growth business Permian Resources is a growth driver Midstream Integrated infrastructure and marketing Middle East…
Growing the Greater Barilla Draw Area Q4 Acquisition Highlights Increased working interest from 26% to 63% Increased acreage position to 100,000 net acres & 5,000+ horizontal locations Capability to deploy 3 rigs in 2017 and 5+…
Operating Highlights 38
Production Total Company Production* Permian Resources Production Growth (MBOED) (MBOED) Exceeded Guidance 7% Growth Y/Y 13% Growth Y/Y 124 602 565 110 2015 2016 2015 2016 * Ongoing operations; excludes Piceance, Iraq and…
2016 Accomplishments - Total Spend per BOE Achieved Target Capital Spending* + G&A + All Operating Costs Total Spend per BOE = Global Oil & Gas Sales Volumes Internal performance metric to focus on 62.00 operational efficiency,…
2016 Reserve Additions Through Reservoir Performance Total 505 MMBOE Reserve Additions prior to price revisions Company 91 2,406 Reserve 346 Replacement 2,200 (231) 2016 77% Proved Developed 189% All In 74% Liquids 150%…
Improved Margins in Permian Resources Attracting Investment Permian Resources Cost Structure 16 - 19 / boe Improved productivity and lower well costs in Permian Resources drive improved profitability Pre-tax margins 50% at 50 /…
Lower Well Costs Are Sustainable Through Design and Performance Gains Design and efficiency to secure well costs 2017 Focus Areas Reduction of drilling non productive time through focused development Improving well costs despite…
Permian EOR Proven Leader in Maximizing Recovery Across the Permian Significant inventory in Permian EOR Net Resource Potential 10-year plan MMBOE 2,000 Geographically diverse High-gradable 100 active CO2 + water 1,500 Inventory…
2016 Accomplishments in EOR Business 2017 Capital Opex Reduction Capital Efficiency Outlook 25 17% Reduction 2014-2016 12% Reduction Y/Y 600 20 500 CO2 Floods / Expansions - 195MM /BOE 15 400 300 MM 10 TZ / ROZ…
Access to Multiple Markets Through Midstream Investments Cushing Ample takeaway capacity to reach multiple markets and to drive improved price realizations Blending capabilities allow for optimization MidValley 240 kb/d Colorado…
Infrastructure Adds Value Greater Sand Dunes 2016 Highlights 2017 Highlights Produced Water Re-cycling Oil Pipeline with Facility expansion capability 36,000 bwpd treatment 30+ mi of pipeline Eddy County 90+ Mbopd capacity Frac…
Midstream: Improving Cash Flows and Market Access Business Segments 2017 Impact Gas Plants: Natural gas and CO2 Free cash flow expected to improve 150 - gathering, compression and processing 200+ MM due to better marketing economics…
Chemicals Free Cash Flow to Significantly Increase Ingleside Ethylene Cracker September 2016 Ingleside Ethylene Cracker commercial operation in Q1 2017 All systems turned over for commissioning 50/50 JV with Mexichem in Corpus…
Basic Chemical Market Dynamics Are Shifting Spot Domestic Caustic Soda Price* North American Chlor-Alkali Capacity Share * Low end of price range as reported by IHS 450 400 Rest of 350 Industry Olin 23% 35% 300 250 Westlake 18% 200…
Oman Oman Improved Reservoir Surveillance 140 Oman - Mukhaizna Gross Production (Mbopd) Mukhaizna Infill and shallow drilling 135 programs 130 Record Monthly 125 Production 2016 Total Spend per Barrel 120 79% reduced by 24% 115…
Colombia Colombia Improved subsurface reservoir characterization Focused Workover and Drilling Campaign LCI* New Well Costs reduced by 35% Increased gross 2016 Total Spend per barrel reduced by 25% production by 5 79% Proved…
Al Hosn Gas Al Hosn Gas Optimized plant to deliver more capacity Completed operational trials Increased Minimal capital was required Plant Capacity to 110% 2017 production expected to be 70 MBOED net 53
2017 Outlook 54
2017 Capital Plan Will Deliver 4% to 7% Production Growth Flexible Capital Program Domestic ( in billions) Increased Permian Resources drilling in SE New Mexico and Greater Barilla Draw Short cycle development allows for flexibility…
Free Cash Flow Improvement Improved market conditions, project start-ups and lower capital should increase free cash flow generation in 2017 2017 vs 2016 FCF Improvement International O&G 400 MM Midstream 150 - 200 MM Chemicals…
Cash Flow Improvements Expected in 2017 Improved product prices Annualized cash flow changes 100 million for a 1.00 / barrel change in oil prices Annualized cash flow changes 45 million for a 0.50 / Mmbtu change in natural gas…
1Q17 and FY 2017 Guidance Summary Oil & Gas Segment DD&A FY 2017E Oil & Gas: 15.00 / BOE FY 2017E Total Production Chemicals and Midstream: 685 mm 625,000 645,000 BOED Permian Resources production of 140,000 150,000 BOED Midstream…
Permian Resources Results and Guidance Total production grew 13% year-over-year to 124 MBOED Oil NGL Gas Increased activity in 4Q 2016 140 - 150 16 wells online in 4Q16 vs. 9 in 3Q16 124 127- 132 Added 7 top tier performing wells in…
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