EXHIBIT 99.4
Third Quarter 2008
Earnings Conference Call
October 28, 2008
1
Third Quarter 2008 Earnings –
Cash Flow YTD 2008
($ in millions)
$10,100
Cash
Flow From
Operations
$8,100
Beginning
Cash
$2,000
12/31/07
Available
Cash
$3,200
Capex
$3,300
Acquisitions
$680
Dividends
$1,500
Share
Repurchase
$30
Other
$1,450
Ending Cash
Balance
9/30/08
2
Third Quarter 2008 Earnings – Cash Flow
*See attached for GAAP reconciliation.
3
Third Quarter 2008 Earnings – Balance Sheet
Total Company Debt
$1.8 billion at September 30, 2008, and unchanged from December
31, 2007;
Debt to total capitalization rate is 6%;
Upcoming debt maturities
$714 million due in 2009;
$239 million due in 2010;
$368 million due in 2012.
Cash and liquidity
$1.45 billion of cash on hand at September 30, 2008;
Recent $1 billion five-year notes offering could be used to cover
debt maturities and we will pay $1.25 billion for the recent PXP
transaction;
Available unused lines of committed bank credit of $1.5 billion;
Pro forma debt to total capitalization (for recent debt issue) is 9%,
or $0.98 per BOE of proved reserves.
4
Third Quarter 2008 Earnings – Highlights
Net Income - $2.3 B vs. $1.3 B in 3Q-07
EPS $2.78 (diluted) vs. $1.58 in 3Q-07
+76% year-over-year
Core Results - $2.3 B vs. $1.2 B in 3Q-07
Core EPS $2.78 (diluted) vs. $1.45 in 3Q-07 (with WTI at $75)
+92% year-over-year
5
Third Quarter 2008 Earnings - Oil & Gas
Segment Variance Analysis - 3Q08 vs. 3Q07
Core Results for 3Q08 of $3.618 Billion vs. $1.914 Billion in 3Q07
+89% year-over-year
($ in millions)
$1,914
3Q 07
$1,769
Sales Price
$165
Sales
Volume/Mix
$6
Exploration
Expense
$236
*All Others
$3,618
3Q 08
*All Others include: DD&A rate increase and higher operating expenses.
6
Third Quarter 2008 Earnings –
Oil & Gas Segment
3Q08
3Q07
Reported Segment Earnings ($ mm)
$3,618
$1,955
Oxy’s Realized Prices
Worldwide Oil ($/bbl)
$104.15
$67.81
US Natural Gas ($/mcf)
$9.35
$5.90
WTI Oil Price ($/bbl)
$117.98
$75.38
NYMEX Gas Price ($/mcf)
$10.72
$6.69
7
Third Quarter 2008 Earnings –
Oil & Gas Segment
3Q08
3Q07
Oil and Gas Production (mboe/d)
588
570
+3.2% year-over-year
Improvement largely due to:
the Dolphin Project (+31 mboe/d);
Partially offset by:
Lower volumes attributable to Hurricane Ike (-5 mboe/d), and;
Lower volumes from Libya operations due to the new contract (-13
mboe/d).
Exploration expense was $61 mm in 3Q08, below our guidance
of $90 to $110 million.
Oil and Gas production costs were $14.80 per boe through nine
months of 2008 vs. $12.33 per boe for full-year 2007.
Approximately 38% of the increase is related to increased energy costs
reflecting higher production taxes and ad valorem taxes. Higher costs
were also a function of increased workovers and field operating costs.
8
Third Quarter 2008 Earnings – Chemical
Segment Variance Analysis – 3Q08 vs. 3Q07
Core Results for 3Q08 of $219 Million vs. $212 Million in 3Q07
Results higher primarily due to higher caustic soda prices and, better than
our guidance of $135 to $150 million.
($ in millions)
$212
3Q 07
$309
Sales Price
$86
Sales
Volume/Mix
$224
*Operations/
Manufacturing
$8
All Others
$219
3Q 08
*Higher energy and feedstock costs
9
Third Quarter 2008 Earnings - Midstream
Segment Variance Analysis - 3Q08 vs. 3Q07
Core Results for 3Q08 of $66 Million vs. $86 Million in 3Q07
Earnings decline due to lower crude oil marketing margins, partially offset
by higher Dolphin pipeline income, higher NGL margins, and improved
margins for power generation.
($ in millions)
$86
3Q 07
$77
*Marketing
$33
Pipeline -
Dolphin start-up
$24
All Others
$66
3Q 08
*Includes negative mark to market adjustments in crude oil marketing.
10
Third Quarter 2008 Earnings –
Nine Months Results
YTD2008
YTD2007
Net Income ($ mm)
$6,414
$3,948
Record income, +62% year-over-year.
Nine months net income for 2007 included $1 billion benefit, net of tax for the
items noted on the schedule reconciling net income to core results.
EPS (diluted)
$7.79
$4.69
Oil and Gas Production (mboe/day)
594
563
+5.5% year-over-year
Capital spending was $1.2 billion in 3Q08 and $3.2 billion YTD
2008.
We expect total 2008 capital spending to be approximately $4.5 to $4.7 billion.
Our preliminary estimate is that 2009 capital spending will be no greater than
this year’s.
11
Third Quarter 2008 Earnings –
Shares Outstanding and Financial Returns
Spent $1.5 billion this year to repurchase 19.4 million
shares through 9/30/08.
Shares Outstanding (mm)
YTD08
9/30/08
Weighted Average Basic
820.1
Weighted Average Diluted
823.8
Basic Shares Outstanding
810.1
Diluted Shares Outstanding
813.8
Annualized ROE of 34%, and ROCE* of 32%.
*See attached for GAAP reconciliation.
12
Third Quarter 2008 Earnings – 4Q08 Outlook
We expect oil and gas production to be in the range of 610 to
625 mboe/d in 4Q08, at approximately current oil prices.
Production increases are expected from:
Middle East and North Africa, reflecting lower prices on our PSCs;
Our domestic operations, and;
Argentina
Commodity Price Sensitivity – Earnings
A $40 per barrel decrease in oil prices from 3Q08 would reduce 4Q08
pre-tax Oil and Gas earnings by about $1.5 billion.
Further changes of $5 per barrel in oil prices will impact Oil and Gas
quarterly pre-tax earnings by about $190 million.
A $3.00 per mm BTUs decline in domestic gas prices from 3Q08 would
decrease Oil and Gas quarterly pre-tax earnings by $140 million.
We expect 4Q08 exploration expense to be about $150 million.
13
Third Quarter 2008 Earnings - 4Q08 Outlook
We expect 4Q08 Chemical earnings to be about $150 million.
High caustic soda prices are expected to continue through the period;
Partially offset by weakness in the construction and housing markets
impacting domestic demand;
Despite difficult economic conditions, a seasonally weak fourth quarter
and concerns over export opportunities over the balance of the year,
we believe this approximate earnings amount is likely.
We expect our combined worldwide tax rate to be about 44%
in 4Q08.
The expected sequential increase in the rate is due to proportionally
higher foreign source income and higher anticipated currently non-
deductible foreign exploration.
14
15
Occidental Petroleum Corporation
Return on Capital Employed (% )
($ Millions)
|
|
|
|
| Nine |
|
|
|
| ||
|
|
|
|
| Months |
| Annualized | ||||
Reconciliation to Generally Accepted Accounting Principles (GAAP) |
| 2007 | 2008 |
| 2008 | ||||||
GAAP measure - earnings applicable to common shareholders |
|
| 5,400 |
|
| 6,414 |
|
|
|
|
|
Interest expense |
|
| 199 |
|
| 10 |
|
|
|
|
|
Tax effect of interest expense |
|
| (70 | ) |
| (4 | ) |
|
|
|
|
Earnings before tax-effected interest expense |
|
| 5,529 |
|
| 6,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP stockholders' equity |
|
| 22,823 |
|
| 26,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEBT |
|
|
|
|
|
|
|
|
|
|
|
GAAP debt |
|
|
|
|
|
|
|
|
|
|
|
Debt, including current maturities |
|
| 1,788 |
|
| 1,771 |
|
|
|
|
|
Non-GAAP debt |
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligation |
|
| 25 |
|
| 25 |
|
|
|
|
|
Subsidiary preferred stock |
|
| - |
|
| - |
|
|
|
|
|
Total debt |
|
| 1,813 |
|
| 1,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital employed |
|
| 24,636 |
|
| 28,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Capital Employed (%) |
|
| 23.6 |
|
| 24.1 |
|
|
| 32.1 |
|
Occidental Petroleum Corporation
Cash Flow Available For Capital and Other Uses
Reconciliation to Generally Accepted Accounting Principles (GAAP)
($ Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9 Months | ||
|
| 2004 | 2005 | 2006 | 2007 |
| 2008 | ||||||||||
Occidental Petroleum Consolidated Statement of Cash Flows | |||||||||||||||||
Cash flow from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flow from continuing operations |
|
| 3,282 |
|
| 4,740 |
|
| 5,931 |
|
| 6,660 |
|
|
| 8,103 |
|
Operating cash flow from discontinued operations |
|
| 596 |
|
| 597 |
|
| 422 |
|
| 138 |
|
|
| 33 |
|
Cash flow from operating activities |
|
| 3,878 |
|
| 5,337 |
|
| 6,353 |
|
| 6,798 |
|
|
| 8,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing cash flow from continuing operations |
|
| (2,287 | ) |
| (3,033 | ) |
| (4,360 | ) |
| (3,117 | ) |
|
| (6,570 | ) |
Investing cash flow from discontinued operations |
|
| (141 | ) |
| (128 | ) |
| (23 | ) |
| (11 | ) |
|
| - |
|
Cash flow from investing activities |
|
| (2,428 | ) |
| (3,161 | ) |
| (4,383 | ) |
| (3,128 | ) |
|
| (6,570 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
| (821 | ) |
| (1,187 | ) |
| (2,819 | ) |
| (3,045 | ) |
|
| (2,078 | ) |
Change in cash |
|
| 629 |
|
| 989 |
|
| (849 | ) |
| 625 |
|
|
| (512 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Available for Capital and Other Uses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow From Continuing Operations |
|
| 3,282 |
|
| 4,740 |
|
| 5,931 |
|
| 6,660 |
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
| (424 | ) |
| (483 | ) |
| (646 | ) |
| (765 | ) |
|
|
|
|
Adjusted Cash Flow |
|
| 2,858 |
|
| 4,257 |
|
| 5,285 |
|
| 5,895 |
|
|
|
|
|
Adjust dividends and interest to 2008 annualized rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (net of tax) included above |
|
| 155 |
|
| 131 |
|
| 85 |
|
| 129 |
|
|
|
|
|
Dividends paid included above |
|
| 424 |
|
| 483 |
|
| 646 |
|
| 765 |
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 annualized interest (net of tax) |
|
| (8 | ) |
| (8 | ) |
| (8 | ) |
| (8 | ) |
|
|
|
|
2008 annualized dividends |
|
| (904 | ) |
| (904 | ) |
| (904 | ) |
| (904 | ) |
|
|
|
|
Cash Flow Available for Capital and Other Uses |
|
| 2,525 |
|
| 3,959 |
|
| 5,104 |
|
| 5,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|