Third Quarter 2017 Earnings Conference Call Occidental Petroleum Corporation November 2, 2017
Occidental Petroleum Pathway to Breakeven Progress Financial Summary and Guidance Permian Resources Update Closing Remarks 3
Impact of Hurricane Harvey for 3Q17 Pre-Tax Income Loss 70 MM Chemicals 60 MM Midstream 10 MM Permian Resources production loss of 1 Mboed Hurricane Harvey impacts are expected to effect only 3Q17 4
Occidental Petroleum Pathway to Breakeven and 3Q17 Highlights Permian Resources Achieves Record Well Results Across Multiple Development Areas and Benches Value-based Operations and Portfolio Management Development Approach…
Pathway to Cash Flow Breakeven at Low Oil Prices Cash Flow Breakeven at 50: 6.0 Dividend + 5% 8% Production Growth 5.7 5.7 Growth 5.0 Cash Flow Neutral at 40: Capital Operating Cash Flow ( Bn) 1.0 Dividend with Flat Production…
Achieving Goals to Cash Flow Neutrality at 40 Annualized Cash Flow From Operations Improvements ( Bn) Achieved since 1Q17 Breakeven Plan Harvey impacted Chemicals cash flow by 160 MM 0.8 annualized and Midstream cash flow by 30 MM…
Ample Liquidity to Fulfill Cash Flows Through End of 2018 at 40 WTI Plan Even at 40 WTI 6.0 2018 Cash flow outspend through the Remaining 2017 completion of our plan is covered by 5.0 available liquidity, including: 4.0 Current cash…
Occidental Petroleum Pathway to Breakeven Progress Financial Summary and Guidance Permian Resources Update Closing Remarks 9
3Q 2017 Results Results Total reported production (boed) 600,000 Total Permian Resources production (boed) 139,000 Reported diluted EPS 0.25 Core diluted EPS* 0.18 3Q17 CFFO before working capital & other 1.1 Bn 3Q17 capital…
YTD 2017 Cash Flow and Cash Balance Reconciliation ( in Bn) 3.2 (0.3) (2.5) (1.8) 2.2 1.3 (1.1) 0.8 1.8 Beginning Cash CFFO Before Change in Capital Dividends Asset Sales Acquisitions/ Tax Refund Ending Cash Balance Working…
4Q17 and FY 2017 Guidance Summary Oil & Gas Segment DD&A FY 2017E Oil & Gas: 15 / boe FY 2017E Production Chemicals and Midstream: 685 MM Total production of 597,000 599,000 boed Permian Resources production of 141,000 144,000 boed…
Occidental Petroleum Pathway to Breakeven Progress Financial Summary and Guidance Permian Resources Update Closing Remarks 13
3Q17 Record Well Sustainable, Step Change in Well Results De-risks Breakeven Plan Results in Greater Sand Dunes 3Q17 Wells Peak 30D Production Rates1 Oil (Bod) NGL (Boed) Gas (Boed) 2nd Bone Spring Performance 250 Last 7 wells brought…
Recent Rig Additions Record Well Results Provide Near-term Visibility to Begin Contributing to Achieving 80 Mboed Production Increase Milestone Production Growth Permian Resources Horizontal Wells Online Greater Sand Dunes rig count…
Occidental Petroleum Pathway to Breakeven Progress Financial Summary and Guidance Permian Resources Update Closing Remarks 16
Appendix
Appendix Contents Permian Updates Midstream and Chemicals Updates Social Responsibility, Environment, and Governance Journey to Digital Transformation Company Overview and Value Proposition 18
Permian Resources Wells Continue to Improve New Mexico Bone Spring Texas Delaware Wolfcamp 250 150 200 Cumulative Production Cumulative Production 100 6 Month BOE 150 6 Month BOE 100 50 50 0 0 2015 1H 16 2H…
Permian Resources Results and Guidance Resources production grew 1% from Q2 17 156-170 to 139 Mboed after divestment and Harvey Divested assets: -3 Mboed 3Q impact Hurricane Harvey: -1 Mboepd 3Q impact 139 141-144 143*…
Achieving Plan Through Value-based Approach Current trajectory of 30% CAGR 2017 - 2019 Multi-Year Permian Resources Growth Significant increase in 4Q17 300 20 wells online 18 250 11 operated rigs, 6-7 in Greater 16 Sand Dunes by…
Operating Capability Continued Margin Improvement Through Opex Reduction Reduces Costs Permian Resources Opex/BOE Water-handling improvement 12.93 reducing surface costs 12 11.17 Continued lift optimization reducing downhole…
Greater Sand Dunes Value-Based Development Increases Returns Play-leading Well Performance Well Performance Improvements Average 2nd Bone Spring, 3rd Bone Spring and Wolfcamp X/Y 250 Continued play-leading results 3Q17 7 wells 1H17…
Greater Barilla Draw Value-Based Development Increases Returns Operating Excellence & Strong Results 2017 Barilla Draw proper Wolfcamp A Optimized Landing Point Results 350 Lyda 16H 10,150 Oxy record wells in Texas Delaware in 2 300…
Midland Basin - Merchant Value-Based Development Increases Returns Mature Field with High Margins Multi-bench program and operating efficiency create play-leading opex Operating…
Outstanding Results in Greater Sand Dunes Area MultiBench Development Recent Well Results Target Barilla Draw Type Log Greater Sand Dunes Lateral Length Peak 24 Hr Peak 30 Day Formation Well Name Oil (%) (ft) (boed) (boed) Brushy…
Improving Results in Greater Barilla Draw Area MultiBench Development Recent Well Results Target Lateral Length Peak 24 Hr Peak 30 Day Formation Well Name Oil (%) Barilla GreaterDraw BarillaType DrawLog (ft) (boed) (boed) Avalon…
Logistic & Maintenance Hub Value Chain Partnerships Lower Costs Underway Secures supply availability Service company yard OCTG Laydown Yard 500 750k savings per well Maintenance 20 railcar spots Stimulation & Cement Dedicated truck…
Reached
Added 20 Rig Years of Activity…
Permian Resources Capital Intensity Improves through 2019 All-In Capital Intensity 2017 to 2019 Value-based Development Annual Capex MM / Annual Wedge Mboed* reduces capital intensity 54MM Facilities, infrastructure and other**…
Permian Resources Business Area Acreage Net Acres* Resources Unconventional Areas 1.4 Significant acreage & growth Enhanced Oil Recovery Areas 1.1 potential in all development Oxy Permian Total 2.5MM areas Net Resources Basin…
Largest Operator in the Permian 400 Liquids Gas PERMIAN BASIN NET MBOEPD OPERATED 350 Advantages Through Scale 300 10,000 mi2 3D seismic 250 130,000 mi2 2D seismic PRODUCTION* 200 24,500 gross operated wells 10,000 gross…
Oxys Competitive Advantage in Permian Unconventional Development System Value Based Subsurface Vision Well 3D Modular Development Portfolio Decisions Manufacturing Characterization Development Scenarios Blueprint Organization…
Subsurface Landing + Stimulation + Spacing Optimization Characterization 2nd Bone Spring Net Sand Thickness and Middle Carbonate Outline Adds Value Middle Carb. Outline A A Extensive subsurface characterization & expertise Seismic…
Production drivers Challenging the Vision Well Adds Value Discover recipe for play-leading wells Surveillance Data analytics Apply data analytics to identify production drivers Subsurface Completion Design Choke and lift…
Modular Development Adds Value Maximize value through optimizing pace and sequencing Identify Uncertainties: Land core-up completed Variability of production results Learnings from other development Rate of improvement 4 units…
Differentiated Scale and Position Permian EOR Over 2 Bboe Net Resource Potential 1 Bboe…
Unmatched Infrastructure Position Field 20,000 wells 1,200+ surface facilities 30,000 miles of pipelines 230+ pumps for water reinjection Plants 13 gas processing plants 9 recompression facilities 920k hp compression 1,600 miles…
Permian EOR Keys to Success: Long-term Life Cycle Technical EOR Expertise High-quality Reservoirs Infrastructure and CO2 Supply Contiguous Scale Gas Processing Strategic Position Automation and Controls 1 Bboe < 6/boe F&D…
Benefits of EOR Proven History of Maximizing Recovery Business Unit in Oxys Portfolio Reservoir Development Stages Recovery of Oil in Place* Long-term cash 70% generator Waterflood 60% Low capital intensity CO2 growth…
Permian EOR Value-based, Full Cycle Approach Maintenance Annual Beam Unit Reliability 20,000 maintenance activities per 99.6% 99.7% 99.8% 99.8% 99.9% Less than 20 month supported by: of 7,000+ Right-sized programs Beam Units…
Appendix Contents Permian Updates Midstream and Chemicals Updates Social Responsibility, Environmental, and Governance Journey to Digital Transformation Company Overview and Value Proposition 44
Midstream and Annualized Midstream Cash Flow From Operations ( MM) Marketing Cash 700 Actual Forecast Flow Improvement 190 30 660 (140) 50 MM of upside not Drivers 600 currently included in breakeven plan (90) 500 100 500 Al Hosn…
Near-term Outlook Midland to Magellan East Houston Spread (/bbl) for Midland to Gulf 6.00 Coast Spreads Actual Outlook 5.00 New Pipeline Global refining margins Harvey Capacity expected to remain 4.00 Impact on Spread strong Upper…
A Leader in Crude Exports from the Oxy Share of US Gulf Coast Light Crude Exports Gulf Coast OXY Light Other Exporters Light 1,000 Premier oil terminal on the Gulf Coast 800 Leading Permian Crude Marketer with 600 600,000 bopd Export…
Chemicals Free Cash Flow to Significantly Increase with Lower Capital Spending 4CPe Plant during construction Construction complete and undergoing commissioning 4CPe Plant commercial operation expected in 4Q 2017 Project is…
Market Overview Chemicals Pre-Tax Earnings (EBIT)1 250 Update 200 Millions 150 Major industry consolidation 100 complete 50 Caustic soda supply- 0 4Q17E 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14…
Appendix Contents Permian Updates Midstream and Chemicals Social Responsibility, Environmental, and Governance Journey to Digital Transformation Company Overview and Value Proposition 51
Reporting on Social Responsibility Since 1995 Environment, Social Responsibility and Governance are fundamental to our success and reputation as a Partner of Choice. 52
Stockholder Proposal Stockholder Produce a report assessing portfolio impacts of plausible scenarios that Proposal on address climate change, including the International Energy Agency's 450 Managing Scenario Climate-related Risks…
Our Governance of Climate-related Risks and Opportunities Managing Board of Directors' Environment, Health and Safety Committee provides leadership and oversight across all businesses with regard to climate risk, community resiliency…
Industry-Leading Water 2017 Delaware Basin YTD Completion Water Usage Recycling Program 5% Fresh water only 5% of water used Fresh Water 32% for completions in Delaware Basin Brackish Water Recycled Water Sand Dunes Water Recycling…
C02 EOR Process Makeup CO2 Gas Plant Makeup CO2 Gas & NGL Supplied from Supplied from Pipeline Sales Anthropogenic Sources CO2 Recycled from Gas Plant Produced Gas Producer wellbore CO2 Production Emissions Reducing…
How does CO2 Oil (Red) EOR Work Physics of Miscible CO2 EOR at Pore Scale Water Injection Water injection (blue) recovers oil in large pores; leaving trapped oil (red) in small pores CO2 (yellow) dissolves and displaces trapped…
Appendix Contents Permian Updates Midstream and Chemicals Updates Social Responsibility, Environment, and Governance Journey to Digital Transformation Company Overview and Value Proposition 58
Our Journey to Digital Transformation Production Optimization Consolidated ERP Systems Institutionalized Processes Integration of operational, technical and and Tools financial data Single reporting repository Global Supply Chain…
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 Step Changing Performance the Bit Identify Understand Engineer Implement Problem: Inefficient use of rig Real Time Monitoring from Anywhere energy resulting in slow and higher cost drilling R e-Engineer BHA* Downhole…
Driving Value Bit Algorithm the Bit + Predicts bit location using physics +machine learning Projection Distance the Target Calculates dogleg severity, build/turn rate, motor yield 325K avg. per rig savings Vendor performance…
Driving Value the Reservoir Target=100MM Observation Well Injection Well Vent Well 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 mechanical engineering+applied mathematics Earlier…
Appendix Contents Permian Updates Midstream and Chemicals Updates Social Responsibility, Environment, and Governance Journey to Digital Transformation Company Overview and Value Proposition 65
Value Growth Value Growth - Annual ROCE for Oxy vs. Average of Competitors Consistent top-tier ROCE performance in industry 30% Organizational structure, process and culture have 20% been aligned to deliver returned based growth…
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…
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…
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