June 2017 Investor Presentation Occidental Petroleum Corporation As of June 19, 2017
Richard A. Jackson Vice President - Investor Relations 713-215-7235 richard_jacksonoxy.com Anthony J. Cottone Senior Director - Investor Relations 212-603-8188 anthony_cottoneoxy.com
Table of Contents Transactions Announced June 19, 2017 Company Overview and Value Proposition Driving Value in the Permian Journey to Digital Transformation Appendix 4
Opportunistic Transactions Create Long-term Value Consistent with our pathway to breakeven at 50 WTI*, Oxy has executed multiple transactions in the Permian to accelerate our plan. Oxy has agreed to a number of purchase and sale…
Overview of Non-Strategic Permian Resources Net Transactions Transactions Terms Permian Resources Acreage Permian EOR Acreage Combined net proceeds of 0.6 Bn Properties Description Divested of non-strategic acreage in Andrews, Martin…
Overview of Enhanced Oil Recovery Acquisition in the Permian Transactions Terms Permian Resources Acreage Permian EOR Acreage Purchase price of 0.6 Bn CO2 Source Fields and Pipelines Properties Description Bravo Dome Unit WI from 77%…
Upside Potential from Operatorship of Seminole-San Andres Value Improvement Through Scale and Operating Costs (/Boe) 30 Operational Synergies 25 High Opex Range Seminole-San Oxy EOR unit of Seminole-San Andres unit becomes Oxys…
Transactions Effectively a Swap with Net Benefits to Oxy Transactions on a net basis*: Remaining 2017 2019 Production (Boed) 3,500 7,000 Operating Cash Flow ( MM) 35 80 Free Cash Flow ( MM) 25 55 Lowers our sustaining capital and…
Table of Contents Transactions Announced June 19, 2017 Company Overview and Value Proposition Driving Value in the Permian Journey to Digital Transformation Appendix 10
Oxys Unique Consistent Dividend Growth Value Growing dividend with strong yield Proposition Value protection in down cycle Upside in rising oil Promotes capital allocation discipline price environment and downside Moderate Value-Based…
Current Dividend Yield vs. Competitors 6.0% Dividend yield should revert close to historical levels as we 5.2% execute plan to a lower cash flow breakeven 5.0% 5.0% 4.1% 4.0% 3.8% 3.0% 2002 2016 Average Oxy Dividend Yield 2.2%…
Cash Flow Priorities 1. Base/Maintenance Capital Favor Dividends 2. Dividends Dividends promote 3. Growth Capital capital allocation Subject to Returns and discipline 4. Acquisitions Market Conditions 5. Share Repurchases 14
Value Growth - Annual ROCE for Oxy vs. Average of Competitors 30% 20% 10% 00% (10%) (20%) (30%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 OXY ROCE Competitors ROCE* *Competitors ROCE represents a simple average of APA,…
Value Growth 2016 ROCE* 10% Focus on value driven growth - Top quartile returns 0% Positioned to return to double digit (10%) returns (20%) (30%) HES DVN CXO APC MRO APA EOG COP PXD OXY CVX XOM *Calculated based on public…
Value Growth - Multi-year Returns Focused Portfolio Optimization Set to generate both returns to shareholders and value-based growth Divested assets that did not generate competitive Investing in assets with higher cash margin and…
Value Growth - Production Growth Since 2013 Ongoing Total Company Production CAGR 10%* 700 600 575 Permian 528 Resources 500 428 440 25% CAGR 400 Mboed 300 200 100 0 2013 2014 2015 2016 Ongoing Company Excluding…
Strong Balance Sheet Oxy Credit Ratings Vs. Peers Company S&P S&P Moodys Moodys New Issue Ratings Outlook Ratings Outlook Indications (10-year) XOM AA+ Negative Aaa Negative 2.95% CVX AA- Negative Aa2 Stable 3.05% OXY A Stable A3…
Successful Consistent Dividend Growth Value Oxy dividend CAGR more than doubled S&P CAGR since 2002 Proposition Highest yield vs. US peers Historical dividend yield of 2.85% Oxy has delivered Moderate Value-Based Growth positive results…
Unique Investment Proposition Large Integrated Majors Independent E&Ps Company Market Cap (Bn) Company Market Cap (Bn) Oxy XOM 346 COP 56 Uniquely RDS 226 EOG 53 Positioned CVX 198 APC 29 TOT 118 PXD 29 BP 93 DVN 19 ENI 52 APA 18…
Occidental Petroleum Value Proposition Quality Assets Differentiated Value Based Approach 24
Focused Oil and Gas Core Areas Businesses with 66% Oil 13% NGL 21% Gas Scale United States Oil & Gas Leading position in the Permian Basin High-return, low decline, Permian Resources is a growth driver long life, moderate growth,…
Longest Legacy International Operations: Colombia and Oman Colombia: Discovered giant Cano Limon field in the early 1980s. Several contracts that currently range from 6 years up to the economic life of field. Long term contracts…
Additional Core Middle East Assets ISND and ISSD: Offshore development in Qatar. ISND contract for 25 years initiated in 1994. ISSD contract expires in 2022. Dolphin: Premier transborder pipeline delivering gas from Qatar to Abu…
Largest Operator in the Permian 400 Liquids Gas 350 PERMIAN BASIN NET MBOEPD Advantages Through Scale OPERATED PRODUCTION* 300 250 10,000 mi2 3D seismic 200 130,000 mi2 2D seismic 150 10,000 gross OBO wells 250 OBO wells…
Permian Net Resources Business Area Acreage Acres* Resources Unconventional Areas 1.4 Enhanced Oil Recovery Areas 1.1 Significant acreage Oxy Permian Total 2.5MM & growth potential in all development Net areas Resources Basin…
Improved Permian Resources Horizontal Increased Total Horizontal Drilling Locations 37% Inventory from 4Q2015 Locations within 300,000 of 650,000 net acres in Basin Development Areas Added 1,250 12,000 11,650 11,650 locations BE <…
Permian EOR Proven Leader in Maximizing Recovery Across the Permian Significant inventory in 10-year plan Permian EOR Net Resource Potential MMBOE Geographically diverse 2,000 100 active CO2 + water floods High- covering multiple…
Midstream: Improving Cash Flows and Market Access Businesses 2017 Impact Gas Plants: Natural gas and CO2 gathering, Free cash flow expected to improve 150 - compression and processing systems to 200+ MM due to better marketing…
Occidental Petroleum Value Proposition Quality Assets Differentiated Value Based Approach 34
Our Pathway to Cashflow Breakeven: Dividend + Growth Executing a plan to fund a growing dividend and 5% 8% growth at 50 WTI. Pathway: Milestones: Grow high margin production with low 80 Mboed of production growth capital intensity…
Oxy Pathway to Cash Flow Breakeven at 50 WTI 6.0 5.6 5.6 Operating Cash Flow ( Bn) 5.0 4.7 Sustaining 4.4 4.2 and 4.0 Growth Pathway Drivers: Capital 3.3 3.0 Permian Resources high-margin growth to 50/bbl accelerate value…
Asset Quality and Capital Flexibility Provides Optionality to Cover Dividend Upon plan execution, Oxy can fund dividend and sustain production from operating cash flows. WTI Oil Price: Annual cash flow sensitivities (Bn) 40 50 60…
Differentiated Creating shareholder value over the long-term Value-Based Approach Culture of innovative technology and process Subsurface characterization More Oil Integrated development planning Oxy Drilling Dynamics Less Cost…
SL2 Technology Is Key To Further Cost Reduction SL2 Potentially Lowers Secondary Bench BE by 5: Lowers well cost by 0.5 - 1.0MM Reduces operating costs by over 50% Sequencing increases facilities utilization One artificial lift…
Logistic & Maintenance Hub Value Chain Partnerships Lower Costs Underway Secures supply availability Service company yard OCTG Laydown Yard 500 750k savings per well Maintenance Stimulation & Cement 20 railcar spots…
Occidental Value Proposition: Weve done what we said we would do and will repeat that success Petroleum Quality Assets: Recent portfolio upgrade Value Proposition provides highest quality assets in the industry and they are designed…
Table of Contents Transactions Announced June 19, 2017 Company Overview and Value Proposition Driving Value in the Permian Journey to Digital Transformation Appendix 42
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 Mboed 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…
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…
Maximize Value of Portfolio - Low Capital Intensity Drives Value Multi-Year Permian Resources All-In Capital Intensity 2015 / 2016 54 MM 300 STX Sale Re-invested 11 13 rigs 15 20 < 30MM 2017 33 MM 250 at exit Annual Wedge…
Greater Sand Dunes Value Based Development Increases Returns Currently three play leading Three high-return development benches benches under development 300 Current* 3rd Bone Spring Cumulative Mboe 4,500 250 Modular development…
Greater Barilla Draw Value Based Development Increases Returns Red Bull South Active and Wolfcamp B Improvement = frac optimization to drive results Improving 150 2 rigs currently operating 125 100 Cumulative Mboe Oxy WC B…
Midland Basin - Merchant Value Based Development Increases Returns Wolfcamp B Improvement = two high return development benches Currently two play leading benches under development 175 Cumulative Oil - Mbo 150 All WC A Wells…
Outstanding Results in Greater Sand Dunes Area Multi-Bench Development Recent Well Results Barilla DrawDunes Greater Sand Type Log Target Formation Lateral Peak 24 Hr Peak 30 Day Well Name Oil (%) Length (ft) (boed) (boed) Brushy…
Improving Results in Greater Barilla Draw Area Multi-Bench Development Recent Well Results Barilla DrawDraw Greater Barilla Type Log 228 Wells Across 8 Benches Drilled Target Formation Lateral Peak 24 Hr Peak 30 Day Oil Well Name…
2015+ NonOperated Activity Permian Resources Non-Operated New Mexico NW Shelf Assets Midland Basin NM Delaware Significant OBO Basin Central Basin position delivers Greater Sand Dunes Platform 13% of domestic TX Delaware…
Subsurface Characterization Landing + Stimulation + Spacing Optimization Adds Value 2nd Bone Spring Net Sand Thickness and Middle Carbonate Outline Middle Carb. Problem: Subsurface uncertainties & Outline A A 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…
Development Planning Adds Value Development Units Greater Sand Dunes Problem: Potential destruction of future value as a result of unknowns Multi-bench potential 4 Frac barriers 3 3 Productivity drivers 4 External timing…
Oxy Drilling Dynamics Step Changing Performance Adds Value Identify Understand Engineer Implement Problem: Inefficient use of rig energy resulting in slow and higher cost drilling Real Time Monitoring from Anywhere Downhole tool…
Integrated Planning Adds Rig Release to Well Online Value 140 Problem: Delay in production and 120 cash flows due to complex operations and planning 100 Days Multiple unaligned schedules 80 Solutions: Implemented Integrated…
Surveillance and Base Management Adds Value 2016 Permian Resources Base Optimization Oxy operates 24,460 wells in the Permian 10.0 Basin Cumulative Net MBOEPD 8.0 Company operated production of 235 Mboepd 6.0 Net (EOR and…
2016 Accomplishments in EOR Business 2017 Capital Outlook Opex Reduction Capital Efficiency 25 CO2 Floods / Expansions 17% Reduction 2014-2016 12% Reduction Y/Y 600 - 195MM 20 500 /BOE 15 400 TZ / ROZ Projects 300 -…
Table of Contents Transactions Announced June 19, 2017 Company Overview and Value Proposition Driving Value in the Permian Journey to Digital Transformation Appendix 61
Our Journey to Digital Transformation Production Optimization Consolidated ERP Systems Institutionalized Processes Integration of operational, technical and Tools and financial data Single reporting repository Global Supply Chain…
Capturing and Executing Innovative Ideas Oxys Innovation Process Current Innovation Pipeline Statistics and Results A flexible system that flows, changes form in real time, and seeks the most natural path to its destination. 10…
Data Science Going Beyond Interesting Data Collection & Profiling Insight & Recommendations Computational Methods Key Levers University Partnerships Optimization Data & Analytics Domain Expertise O&G Industry Oxy & Industry…
Driving Value Bit Algorithm the Bit Predicts bit location using physics +machine Projection Distance learning Bit + Target Calculates dogleg severity, build/turn rate, motor yield 325K avg. per rig savings Vendor performance…
Driving Value the Observation Well Injection Well Vent Well Reservoir Target=100MM Field decisions that Steam/Water/CO2 optimize daily total field production Leverage field data and new data sources Temp, Press Injection…
Driving Value Lift System Diagnostic/Optimization the Well Leverages artificial intelligence and pattern recognition Increase run life Proprietary deviated well algorithms based on Earlier detection of failures mechanical…
Driving Value Field Development Multivariate Modelling Augments, validates and Predictive, interactive multivariate statistical model that predicts quickens existing practices geologic sweet spot areas and compares completion practices…
The Possibilities Are Endless Retention & Risk Management Field Development Identifying Organization Issues Where to Drill Risk Management Capital Optimization Lease Management Analytics Production HES Workforce Management…
Table of Contents Transactions Announced June 19, 2017 Company Overview and Value Proposition Driving Value in the Permian Journey to Digital Transformation Appendix 70
2Q17 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 595,000 615,000 boed Permian Resources production of 140,000 150,000 boed Midstream…
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 prices…
Permian Resources Results and Guidance Total production grew 5% from Q4 16 to 129 Mboed Oil production up 7% from Q4 16 to 78 Mbod Oil NGL Gas 140 - 150 135 - 140 Increased activity in 1Q 2017 129 124 Exited Q1 with 7 rigs 110…
Our Pathway to Cash Flow Breakeven at 50 WTI Chemicals Drivers 6.0 5.6 5.6 Operating Cash Flow ( Bn) 5.0 4.7 Sustaining 4.4 4.2 +0.20 and 4.0 Growth Chemicals Drivers: Capital 3.3 3.0 Full-year benefit of current basic…
Our Pathway to Cash Flow Breakeven at 50 Oil Midstream Drivers 6.0 5.6 5.6 Operating Cash Flow ( Bn) 5.0 4.7 Sustaining 4.4 +0.3 4.2 and 4.0 Growth Midstream & Marketing Drivers: Capital 3.3 3.0 Improved Midland to Gulf Coast…
Our Pathway to Cash Flow Breakeven at 50 Oil Oil & Gas Drivers 6.0 5.6 5.6 +0.9 Operating Cash Flow ( Bn) 5.0 4.7 Sustaining 4.4 4.2 and 4.0 Growth Oil & Gas Drivers: Capital 3.3 3.0 Over 2,500 locations with NPV10…
Reducing Domestic Opex Through High Margin Growth Barrels Asset Area Opex Ranges Domestic Production Mix Permian Resources 2 - 4 Growth Opex / boe Growth Legacy Flat EOR Permian Resources 5 - 20 Legacy Opex / boe 2017 2018+…
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…
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