EXHIBIT 99.4
Occidental Petroleum Corporation
Second Quarter 2012 Earnings Conference Call
July 26, 2012
Second Quarter 2012 Earnings Conference Call
July 26, 2012
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• Net Income - $1.3 Billion in 2Q12 vs. $1.8 Billion in 2Q11
and $1.6 Billion in 1Q12.
and $1.6 Billion in 1Q12.
– EPS $1.64 (diluted) vs. $2.23 (diluted) in 2Q11 and $1.92
(diluted) in 1Q12.
(diluted) in 1Q12.
• All of the drop in 2Q12 earnings compared to 1Q12 was
attributable to the decline in commodity prices.
attributable to the decline in commodity prices.
• Worldwide oil and domestic gas and NGL prices were
significantly lower during the quarter.
significantly lower during the quarter.
Second Quarter 2012 Earnings - Highlights
Second Quarter 2012 Earnings - Highlights
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Second Quarter 2012 Earnings - Oil & Gas
Segment Variance Analysis - 2Q12 vs. 1Q12
Segment Variance Analysis - 2Q12 vs. 1Q12
Second Quarter 2012 Earnings - Oil & Gas
Segment Variance Analysis - 2Q12 vs. 1Q12
Segment Variance Analysis - 2Q12 vs. 1Q12
• Core Results for 2Q12 of $2.0 B vs. $2.5 B in 1Q12
– All of the drop in 2Q12 earnings compared to 1Q12 was attributable to the decline in
commodity prices. Worldwide oil and domestic gas and NGL prices were significantly lower
during the quarter.
commodity prices. Worldwide oil and domestic gas and NGL prices were significantly lower
during the quarter.
($ in millions)
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Second Quarter 2012 Earnings - Oil & Gas
Segment Variance Analysis - 2Q12 vs. 2Q11
Segment Variance Analysis - 2Q12 vs. 2Q11
Second Quarter 2012 Earnings - Oil & Gas
Segment Variance Analysis - 2Q12 vs. 2Q11
Segment Variance Analysis - 2Q12 vs. 2Q11
• Core Results for 2Q12 of $2.0 B vs. $2.6 B in 2Q11
($ in millions)
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2Q12 2Q11
Oil and Gas Production Volumes (mboe/d) 766 715
– The highest volume in the Company's history for the second
consecutive quarter, +7% year-over-year.
consecutive quarter, +7% year-over-year.
• Our total domestic production was 462 mboe/d, the
seventh consecutive domestic quarterly volume record
for the company.
seventh consecutive domestic quarterly volume record
for the company.
• Our total domestic production was 9% higher than 2Q11.
• Latin America volumes were 33 mboe/d.
– Colombia’s production of 31 mb/d improved 7 mb/d from 1Q12 due to
significantly lower levels of insurgent activity during 2Q12.
significantly lower levels of insurgent activity during 2Q12.
Second Quarter 2012 Earnings - Oil & Gas Production
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• In the Middle East region, volumes were 271 mboe/d:
– In Oman, 2Q12 production was 72 mboe/d, 2 mboe/d lower
than 1Q12 volumes.
than 1Q12 volumes.
– In Qatar, 2Q12 production was 74 mb/d, 2 mb/d higher than
1Q12 volumes.
1Q12 volumes.
– For Dolphin and Bahrain combined, daily production increased
7 mboe/d from 1Q12, which included planned plant shutdowns
in Dolphin.
7 mboe/d from 1Q12, which included planned plant shutdowns
in Dolphin.
– The rest of the Middle East/North Africa production decreased
by 10 mboe/d.
by 10 mboe/d.
– Oil prices and production sharing and similar contract factors
did not significantly impact this quarter’s production volumes
compared to the previous quarter or 2Q11.
did not significantly impact this quarter’s production volumes
compared to the previous quarter or 2Q11.
– Our 2Q12 sales volumes were 759 mboe/d, slightly lower than
our production volumes, due to the timing of liftings in the
Middle East/North Africa.
our production volumes, due to the timing of liftings in the
Middle East/North Africa.
Second Quarter 2012 Earnings - Oil & Gas Production
Second Quarter 2012 Earnings - Oil & Gas Production
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• 2Q12 realized prices were lower for our products
compared to 1Q12.
compared to 1Q12.
– Our worldwide crude oil realized price was $99.34 per barrel, a decrease
of about 8%;
of about 8%;
– worldwide NGLs were $42.06 per barrel, a decrease of about 20%, and;
– domestic natural gas prices were $2.09 per MCF, a decline of 26%.
• 2Q12 realized prices were also lower than 2Q11 prices for
all our products.
all our products.
– On a year-over-year basis, price decreases were 4% for worldwide
crude oil;
crude oil;
– 27% for worldwide NGLs, and;
– 51% percent for domestic natural gas.
Second Quarter 2012 Earnings - Oil & Gas
Segment - Realized Prices
Segment - Realized Prices
Second Quarter 2012 Earnings - Oil & Gas
Segment - Realized Prices
Segment - Realized Prices
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• Realized oil prices for the quarter represented 106%
of the average WTI and 91% of the average Brent price.
of the average WTI and 91% of the average Brent price.
• Realized NGL prices were 45% of WTI and realized
domestic gas prices were 92% of the average NYMEX
price.
domestic gas prices were 92% of the average NYMEX
price.
• Price changes at current global prices affect our
quarterly earnings before income taxes by $38 mm
for a $1.00 per barrel change in oil prices and $8 mm for
a $1.00 per barrel change in NGL prices.
quarterly earnings before income taxes by $38 mm
for a $1.00 per barrel change in oil prices and $8 mm for
a $1.00 per barrel change in NGL prices.
• A swing of 50 cents per million BTUs in domestic gas
prices affects quarterly pre-tax earnings by about $35 mm.
prices affects quarterly pre-tax earnings by about $35 mm.
– These price change sensitivities include the impact of production-sharing
contract volume changes on income.
contract volume changes on income.
Second Quarter 2012 Earnings - Oil & Gas
Segment - Realized Prices
Segment - Realized Prices
Second Quarter 2012 Earnings - Oil & Gas
Segment - Realized Prices
Segment - Realized Prices
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Second Quarter 2012 Earnings - Oil & Gas Segment
2Q12 2Q11
Reported Segment Earnings ($mm) $2,043 $2,624
WTI Oil Price ($/bbl) $93.49 $102.56
Brent Oil Price ($/bbl) $108.90 $117.36
NYMEX Gas Price ($/mcf) $2.28 $4.23
Oxy’s Realized Prices
Worldwide Oil ($/bbl) $99.34 $103.12
- 4% year-over-year
Worldwide NGLs ($/bbl) $42.06 $57.67
- 27% year-over-year
US Natural Gas ($/mcf) $2.09 $4.27
- 51% year-over-year
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• Oil and gas cash production costs were $14.50 a
boe for the first six months of 2012, compared with
last year's twelve-month costs of $12.84 a boe.
boe for the first six months of 2012, compared with
last year's twelve-month costs of $12.84 a boe.
– The cost increase reflects higher well maintenance activity, in part
reflecting our higher well count, higher workover activity and higher
support and injection costs.
reflecting our higher well count, higher workover activity and higher
support and injection costs.
• Taxes other than on income, which are directly related
to product prices, were $2.46 per boe for the first six
months of 2012, similar to last year’s comparable period.
to product prices, were $2.46 per boe for the first six
months of 2012, similar to last year’s comparable period.
• 2Q12 exploration expense was $96 million.
Second Quarter 2012 Earnings - Oil & Gas
Segment - Production Costs and Taxes
Segment - Production Costs and Taxes
Second Quarter 2012 Earnings - Oil & Gas
Segment - Production Costs and Taxes
Segment - Production Costs and Taxes
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Second Quarter 2012 Earnings - Chemical
Segment Variance Analysis - 2Q12 vs. 1Q12
Segment Variance Analysis - 2Q12 vs. 1Q12
Second Quarter 2012 Earnings - Chemical
Segment Variance Analysis - 2Q12 vs. 1Q12
Segment Variance Analysis - 2Q12 vs. 1Q12
• Core Results for 2Q12 were $194 mm vs. $184 mm in 1Q12.
– The sequential quarterly improvement was due to improved polyvinyl chloride (PVC)
and vinyl chloride monomer (VCM) margins driven primarily by lower ethylene costs.
and vinyl chloride monomer (VCM) margins driven primarily by lower ethylene costs.
($ in millions)
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Second Quarter 2012 Earnings - Chemical
Segment Variance Analysis - 2Q12 vs. 2Q11
Segment Variance Analysis - 2Q12 vs. 2Q11
Second Quarter 2012 Earnings - Chemical
Segment Variance Analysis - 2Q12 vs. 2Q11
Segment Variance Analysis - 2Q12 vs. 2Q11
• Core Results for 2Q12 were $194 mm vs. $253 mm in 2Q11.
– The year-over-year decrease was the result of lower domestic and export caustic volumes,
lower VCM export demand, and lower PVC and VCM export prices, partially offset by lower
natural gas and ethylene costs.
lower VCM export demand, and lower PVC and VCM export prices, partially offset by lower
natural gas and ethylene costs.
*Lower energy and feedstock costs
($ in millions)
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Second Quarter 2012 Earnings - Midstream
Segment Variance Analysis - 2Q12 vs. 1Q12
Segment Variance Analysis - 2Q12 vs. 1Q12
Second Quarter 2012 Earnings - Midstream
Segment Variance Analysis - 2Q12 vs. 1Q12
Segment Variance Analysis - 2Q12 vs. 1Q12
($ in millions)
• Core Results for 2Q12 were $77 mm vs. $131 mm in 1Q12.
– The decline in earnings was mostly in the marketing and trading businesses and to a lesser
degree in the gas plants, reflecting lower NGL prices, partially offset by improvements in the
pipeline businesses.
degree in the gas plants, reflecting lower NGL prices, partially offset by improvements in the
pipeline businesses.
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Second Quarter 2012 Earnings - Midstream
Segment Variance Analysis - 2Q12 vs. 2Q11
Segment Variance Analysis - 2Q12 vs. 2Q11
Second Quarter 2012 Earnings - Midstream
Segment Variance Analysis - 2Q12 vs. 2Q11
Segment Variance Analysis - 2Q12 vs. 2Q11
• Core Results for 2Q12 were $77 mm vs. $187 mm in 2Q11.
($ in millions)
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• The worldwide effective tax rate was 40% for 2Q12.
• Our 2Q12 U.S. and foreign tax rates are included in
the “Investor Relations Supplemental Schedules.”
the “Investor Relations Supplemental Schedules.”
Second Quarter 2012 Earnings - Taxes
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Second Quarter 2012 Earnings -
2012 YTD Cash Flow
2012 YTD Cash Flow
Second Quarter 2012 Earnings -
2012 YTD Cash Flow
2012 YTD Cash Flow
– Cash flow from operations for the first six months of 2012 was $6 billion. We used $5.1 billion of the
company’s total cash flow to fund capital expenditures and $1 billion for acquisitions. Financial
activities, which included dividends paid, stock buybacks and a $1.75 billion borrowing during the
quarter, provided a net $800 million of cash flow.
company’s total cash flow to fund capital expenditures and $1 billion for acquisitions. Financial
activities, which included dividends paid, stock buybacks and a $1.75 billion borrowing during the
quarter, provided a net $800 million of cash flow.
($ in millions)
Cash Flow
From
Operations
$6,000
From
Operations
$6,000
Beginning
Cash
$3,800
12/31/11
Cash
$3,800
12/31/11
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Second Quarter 2012 Earnings -
Capital Expenditures & Acquisitions
Capital Expenditures & Acquisitions
Second Quarter 2012 Earnings -
Capital Expenditures & Acquisitions
Capital Expenditures & Acquisitions
• Capital expenditures for the first six months of 2012 were
$5.1 billion, of which $2.7 billion was spent in 2Q12.
$5.1 billion, of which $2.7 billion was spent in 2Q12.
• Year-to-date capital expenditures by segment were 82%
in oil and gas, 15% in midstream and the remainder in
chemicals.
in oil and gas, 15% in midstream and the remainder in
chemicals.
• The Al Hosn Shah gas project made up about 11% of the
total capital spending for the first six months of 2012.
total capital spending for the first six months of 2012.
• Our acquisitions for the first six months of 2012 were
$1 billion, mostly consisting of bolt-on acquisitions in
the Williston basin, South Texas and the Permian.
$1 billion, mostly consisting of bolt-on acquisitions in
the Williston basin, South Texas and the Permian.
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Second Quarter 2012 Earnings -
Shares Outstanding & Debt/Capital
Shares Outstanding & Debt/Capital
Shares Outstanding (mm) 2H12 6/30/12
Weighted Average Basic 810.4
Weighted Average Diluted 811.2
Basic Shares Outstanding 809.4
Diluted Shares Outstanding 810.0
6/30/12 12/31/11
Debt/Capital 16% 13%
• At the end of 2Q12, we issued $1.75 billion of senior notes at a
weighted average interest rate of 2.4%, which brought the
Company’s average effective borrowing rate down to 3.0%.
weighted average interest rate of 2.4%, which brought the
Company’s average effective borrowing rate down to 3.0%.
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Second Quarter 2012 Earnings -
Key Performance Metrics
Key Performance Metrics
Second Quarter 2012 Earnings -
Key Performance Metrics
Key Performance Metrics
• Occidental’s 2Q12 production set an all-time record for the
Company for the second consecutive quarter and
the domestic oil and gas segment produced record
volumes for the seventh consecutive quarter.
Company for the second consecutive quarter and
the domestic oil and gas segment produced record
volumes for the seventh consecutive quarter.
• 2Q12 domestic production of 462 mboe/d, consisting
of 322 mb/d of liquids and 840 mmcf/d of gas, was an
increase of 7 mboe/d compared to 1Q12.
of 322 mb/d of liquids and 840 mmcf/d of gas, was an
increase of 7 mboe/d compared to 1Q12.
• About 86% of the domestic production growth over 1Q12
was in liquids, which grew from 316 mb/d to 322 mb/d.
was in liquids, which grew from 316 mb/d to 322 mb/d.
• Compared to 2Q11, our domestic production grew by 9%,
or 38 mboe/d, of which 25 mb/d was liquids production
growth and 79 mmcf/d was gas.
or 38 mboe/d, of which 25 mb/d was liquids production
growth and 79 mmcf/d was gas.
• Our annualized return on equity for the first six months of
2012 was 15% and return on capital employed was 13%.
2012 was 15% and return on capital employed was 13%.
Note: See attached GAAP reconciliation.
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• We are raising our estimate of the total year capital
program to $9.2 billion, from our previously announced
level of $8.3 billion.
program to $9.2 billion, from our previously announced
level of $8.3 billion.
• Of the increase, about $600 million is for the Al Hosn
Shah gas project, with the remainder of the increase
going to the rest of the Oil and Gas segment, primarily to
non-operated properties where our forecasting ability is
limited.
Shah gas project, with the remainder of the increase
going to the rest of the Oil and Gas segment, primarily to
non-operated properties where our forecasting ability is
limited.
• We expect our capital spend rate to slow down modestly
from the current levels during the back half of the year
and stabilize in 4Q12.
from the current levels during the back half of the year
and stabilize in 4Q12.
Second Quarter 2012 Earnings - Capital Program
Second Quarter 2012 Earnings - Capital Program
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Second Quarter 2012 Earnings -
2012 Updated Capital Expenditure Program
2012 Updated Capital Expenditure Program
Second Quarter 2012 Earnings -
2012 Updated Capital Expenditure Program
2012 Updated Capital Expenditure Program
($ in millions)
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Second Quarter 2012 Earnings -
2012 vs. 2011 Capital Program
2012 vs. 2011 Capital Program
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($ in millions)
(a) Excludes the $500 million development costs, incurred by the project prior to the effective date of our participation, which was paid at the date of the
signing of the Al Hosn Shah Field Development Project.
signing of the Al Hosn Shah Field Development Project.
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Second Quarter 2012 Earnings -
Capital Program - Al Hosn
Capital Program - Al Hosn
Second Quarter 2012 Earnings -
Capital Program - Al Hosn
Capital Program - Al Hosn
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Second Quarter 2012 Earnings -
Capital Program - Domestic Operations
Capital Program - Domestic Operations
Second Quarter 2012 Earnings -
Capital Program - Domestic Operations
Capital Program - Domestic Operations
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Second Quarter 2012 Earnings -
Capital Program - Domestic Operations
Capital Program - Domestic Operations
Second Quarter 2012 Earnings -
Capital Program - Domestic Operations
Capital Program - Domestic Operations
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• As we look ahead to production expectations in 2H12:
– Over the past year, we have generally achieved our 6 to 8 mboe/d
quarter-over-quarter domestic production increase.
quarter-over-quarter domestic production increase.
– We expect that we will achieve the high end of this range of
increase through the rest of the year, which should give us an
entry rate into the new year of at least 480 mboe/d.
increase through the rest of the year, which should give us an
entry rate into the new year of at least 480 mboe/d.
– The increase will be spread among all of the domestic operations.
• Internationally, at current prices we expect production
to increase modestly for the rest of the year, depending
on spending levels in Iraq.
to increase modestly for the rest of the year, depending
on spending levels in Iraq.
– This includes the effect of a drop in production at Dolphin to
about 40 mboe/d starting in 3Q12, resulting from the full cost
recovery of the pre-startup capital over the first five years since
production commenced in July 2007.
about 40 mboe/d starting in 3Q12, resulting from the full cost
recovery of the pre-startup capital over the first five years since
production commenced in July 2007.
– We expect international sales volumes in 3Q12 to be similar to
the 2Q12 level.
the 2Q12 level.
Second Quarter 2012 Earnings -
Oil and Gas - 2H12 Outlook
Oil and Gas - 2H12 Outlook
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• A $5.00 change in global oil prices would impact our
daily volumes by about 3 mboe/d. The financial impact
of this volume change is incorporated into the product
price sensitivities we have provided.
daily volumes by about 3 mboe/d. The financial impact
of this volume change is incorporated into the product
price sensitivities we have provided.
• We expect exploration expense to be about $85 million
for seismic and drilling for our exploration programs in
3Q12.
for seismic and drilling for our exploration programs in
3Q12.
Second Quarter 2012 Earnings -
Oil and Gas - 2H12 Outlook
Oil and Gas - 2H12 Outlook
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• The chemical segment 3Q12 earnings are estimated to
be about $175 million.
be about $175 million.
– Weakness in export demand, conditions in Europe and China,
slowdown in U.S. demand and rising US natural gas costs will
keep pressure on margins.
slowdown in U.S. demand and rising US natural gas costs will
keep pressure on margins.
• We expect our combined worldwide tax rate in 3Q12 to
increase to about 42%.
increase to about 42%.
Second Quarter 2012 Earnings -
3Q12 Outlook - Chemicals & Taxes
3Q12 Outlook - Chemicals & Taxes
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Second Quarter 2012 Earnings - Summary
Second Quarter 2012 Earnings - Summary
• To summarize: We closed the quarter with a second consecutive
all-time record total Company production and the seventh
consecutive record domestic oil and gas production.
all-time record total Company production and the seventh
consecutive record domestic oil and gas production.
– We increased our total domestic production by 7 mboe/d over 1Q12
and by 38 mboe/d from 2Q11.
and by 38 mboe/d from 2Q11.
– Domestically, where we are the largest onshore liquids producer in
the lower 48 states, our production increased by 9% from 2Q11.
the lower 48 states, our production increased by 9% from 2Q11.
– Our total production increased by 7% in 2Q12 on a year-over-year basis;
• We are raising our estimate of the total year capital program to
$9.2 billion, from our previously announced level of $8.3 billion.
$9.2 billion, from our previously announced level of $8.3 billion.
– Of the increase, about $600 million is for the Al Hosn Shah gas project
with the remainder of the increase going to the rest of the oil and gas
segment;
with the remainder of the increase going to the rest of the oil and gas
segment;
• The business generated cash flow from operations of $6 billion in
the first six months of 2012.
the first six months of 2012.
– We spent about $5.1 billion of our cash flow on our capital program.
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Second Quarter 2012 Earnings - Q&A
Second Quarter 2012 Earnings - Q&A
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