EXHIBIT 99.4
Occidental Petroleum Corporation
Fourth Quarter 2013 Earnings Conference Call
January 30, 2014
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Fourth Quarter 2013 Earnings - 2013 Highlights
Ø Grew our domestic oil production last year by 11 mb/d
over 2012 to 266 mb/d.
over 2012 to 266 mb/d.
Ø Exceeded our capital efficiency goals by reducing drilling
costs by ~24% from the 2012 level.
costs by ~24% from the 2012 level.
Ø Reduced our domestic operating costs by 17%.
Ø Added ~470 MMBOE of reserves achieving an overall
replacement ratio of 169%.
replacement ratio of 169%.
Ø Total costs incurred associated with reserve adds were ~$7.7 billion
resulting in an apparent F&D <$17 / boe.
resulting in an apparent F&D <$17 / boe.
Ø Increased ROCE from 10.3% in 2012 to 12.2% in 2013.
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Fourth Quarter 2013 Earnings -
2013 Development Program Review
2013 Development Program Review
• Improved capital efficiency by 24% over
2012 in the US, saving $900 mm of capital.
2012 in the US, saving $900 mm of capital.
– Permian - 50% of improvement
– California - 25% of improvement
– Other Domestic Assets - 25% of improvement
• Successfully completed drilling program
and by drilling approximately what we had
planned.
and by drilling approximately what we had
planned.
• Reduced domestic operating costs by
17% or $470 mm compared to 2012.
17% or $470 mm compared to 2012.
– Permian - 48% of improvement
– California - 46% of improvement
– Other Domestic Assets - 6% of improvement
• Grew domestic oil production by 11 mb/d.
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Domestic Oil Production
255
266
Domestic Operating Costs
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Fourth Quarter 2013 Earnings - Oil & Gas Reserves
• Very successful year in growing the Company’s reserve base, by
adding substantially more reserves than we produced, over 90%
of which was added through our organic development program.
adding substantially more reserves than we produced, over 90%
of which was added through our organic development program.
• Based on a preliminary estimate of year-end 2013 reserve levels:
− Ended 2013 with ~3.5 B barrels of reserves, an all-time high for Oxy.
− Total reserve replacement ratio from all categories before dispositions
was ~168%, or ~470 MMBOE of new reserves, compared with ~278 MMBOE
of 2013 production.
was ~168%, or ~470 MMBOE of new reserves, compared with ~278 MMBOE
of 2013 production.
− In the U.S., reserve replacement ratio was ~190%.
− Replacement ratios of the California and Permian non-CO2 properties were
similar to the overall company ratio.
similar to the overall company ratio.
− Reserve replacement ratio for liquids from all categories was 195% for the
total company and 228% domestically; reflects our emphasis on oil drilling.
total company and 228% domestically; reflects our emphasis on oil drilling.
• Total costs incurred related to the total reserve additions for
the year, on a preliminary basis, were ~$7.7 billion.
the year, on a preliminary basis, were ~$7.7 billion.
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Fourth Quarter 2013 Earnings - Oil & Gas Reserves
(in millions of BOE)
2013 Overall Reserve
Replacement Ratio of
~169%
Replacement Ratio of
~169%
* Preliminary
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Fourth Quarter 2013 Earnings - Oil & Gas Reserves
• Built a large portfolio of growth oriented assets in the U.S.
• In 2013, we spent a much larger portion of our investment
dollars on the development of this portfolio.
dollars on the development of this portfolio.
• Our organic reserve replacement for 2013 reflects the
positive results of the development program:
positive results of the development program:
− Our 2013 development program, excluding acquisitions, replaced
~169% of our domestic production with ~291 MMBOE of reserve adds.
~169% of our domestic production with ~291 MMBOE of reserve adds.
− In addition, we transferred ~115 MMBOE of proved undeveloped
reserves to the proved developed category domestically as a result
of the 2013 development program.
reserves to the proved developed category domestically as a result
of the 2013 development program.
− 2013 acquisitions were at a multi-year low of $550 mm providing
reserve additions of 32 MMBOE.
reserve additions of 32 MMBOE.
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Fourth Quarter 2013 Earnings -
U.S. Oil & Gas Reserves
U.S. Oil & Gas Reserves
(in millions of BOE)
2013 U.S. Reserve
Replacement Ratio of
~190%
Replacement Ratio of
~190%
* Preliminary
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Fourth Quarter 2013 Earnings - Oil & Gas Reserves
• At year end 2013, ~73% of total proved reserves were liquids,
increasing from 72% in 2012.
increasing from 72% in 2012.
– Of the total reserves, ~70% were proved developed reserves, compared
to 73% in 2012.
to 73% in 2012.
− Increase in the share of proved undeveloped reserves compared to
2012 was the result of reserves added for the Al Hosn Gas Project.
2012 was the result of reserves added for the Al Hosn Gas Project.
− We expect to move these reserves to the proved developed category
at the end of this year once initial production starts in 4Q14.
at the end of this year once initial production starts in 4Q14.
• Through success of our drilling program and capital efficiency
initiatives, we lowered our F&D costs over recent years.
initiatives, we lowered our F&D costs over recent years.
• As a result, we expect our DD&A expense to be ~$17.40 per
barrel in 2014, only a small increase from $17.10 in 2013.
barrel in 2014, only a small increase from $17.10 in 2013.
− Consistent with our expectations that the DD&A rate of growth should
flatten out as recent investments come online and F&D costs come down.
flatten out as recent investments come online and F&D costs come down.
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Fourth Quarter 2013 Earnings - Oil & Gas Reserves
• Success of our organic reserve additions and the efficiencies
we have achieved in our operations demonstrates the
significant progress we have made in turning the Company
into a competitive domestic producer.
we have achieved in our operations demonstrates the
significant progress we have made in turning the Company
into a competitive domestic producer.
• One of our long-term goals domestically has been to achieve
a 50% pretax margin after F&D and cash operating costs to
generate solid returns.
a 50% pretax margin after F&D and cash operating costs to
generate solid returns.
• We believe we are achieving that now and expect to continue
to do so going forward.
to do so going forward.
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Fourth Quarter 2013 Earnings - ROCE
• Our focus in 2013 was to enhance
shareholder value through our results.
shareholder value through our results.
• Heavily focused on growing domestic
oil production, improving our capital
efficiency and F&D costs and lowering
our operating costs.
oil production, improving our capital
efficiency and F&D costs and lowering
our operating costs.
• We met or exceeded all of these goals
and as a result, we increased our ROCE
to 12.2%, a significant improvement
from the 10.3% level in 2012.
and as a result, we increased our ROCE
to 12.2%, a significant improvement
from the 10.3% level in 2012.
• Expect to see further improvement in
our returns in coming years as a result of
recent investments.
our returns in coming years as a result of
recent investments.
• Our 2014 program is designed to
continue and improve upon last
year’s strong performance.
continue and improve upon last
year’s strong performance.
Return on Capital Employed *
* See GAAP Reconciliation
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Fourth Quarter Earnings -
Capital Spending 2013 Actual & 2014 Estimate
Capital Spending 2013 Actual & 2014 Estimate
• 2014 capital program expected to be ~$10.2 billion*
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$8.8
$10.2
• Increase in capital includes ~$400 mm
allocated to each of our CA and Permian
operations largely for additional drilling
to accelerate their development plans
and production growth.
allocated to each of our CA and Permian
operations largely for additional drilling
to accelerate their development plans
and production growth.
• An additional $100 mm will be spent in
these and other U.S. assets for facilities
projects that were deferred from 2013.
these and other U.S. assets for facilities
projects that were deferred from 2013.
• The domestic oil and gas program will
focus on growing oil production and the
entire increase in capital will go to oil
projects.
focus on growing oil production and the
entire increase in capital will go to oil
projects.
• Continue to fund growth opportunities in
key international assets, mainly in Oman
and Qatar ($300 mm of additional capital),
and will complete the Al Hosn Gas Project.
key international assets, mainly in Oman
and Qatar ($300 mm of additional capital),
and will complete the Al Hosn Gas Project.
• Exploration capital will increase ~$100 mm.
*Does not reflect any of the effects of our Strategic Review initiatives.
Capital Investment ($ bln)
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Fourth Quarter Earnings -
Capital Spending 2013 Actual & 2014 Estimate
Capital Spending 2013 Actual & 2014 Estimate
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*Does not reflect any of the effects of our Strategic Review initiatives.
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Fourth Quarter 2013 Earnings -
2014 Production Outlook
2014 Production Outlook
• We expect our 2014 total company
production volumes to grow to
780 - 790 mboe/d vs. 763 mboe/d in
2013, with a 4Q14 exit rate of over
800 mboe/d, excluding the planned
Al Hosn production.
production volumes to grow to
780 - 790 mboe/d vs. 763 mboe/d in
2013, with a 4Q14 exit rate of over
800 mboe/d, excluding the planned
Al Hosn production.
• This increase will come almost entirely
from domestic oil production while we
expect to see a continued modest drop
in our domestic gas volumes.
from domestic oil production while we
expect to see a continued modest drop
in our domestic gas volumes.
• Domestic oil production is expected
to grow from 266 mb/d in 2013 to
280 - 295 mb/d in 2014, or ~9%.
to grow from 266 mb/d in 2013 to
280 - 295 mb/d in 2014, or ~9%.
• This growth will come fairly evenly
from our CA and Permian operations.
from our CA and Permian operations.
• Internationally, excluding Al Hosn,
we expect production to grow slightly.
we expect production to grow slightly.
763
780 - 790
Domestic Oil*
266
280 - 295
Total Company*
*Does not reflect any of the effects of our Strategic Review initiatives.
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Fourth Quarter 2013 Earnings -
2014 Production Outlook
2014 Production Outlook
• While the elements of the 2014 program as discussed
assume no changes to the Company structure or its mix
of assets, we do expect the Company to look significantly
different by the end of the year.
assume no changes to the Company structure or its mix
of assets, we do expect the Company to look significantly
different by the end of the year.
• The strategic review we are undertaking will result in
significant changes to the Company’s asset mix.
significant changes to the Company’s asset mix.
• Our capital program, production expectations and other
elements of the 2014 program will be adjusted as related
transactions are concluded.
elements of the 2014 program will be adjusted as related
transactions are concluded.
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Fourth Quarter 2013 Earnings -
Long-term Growth Investments
Long-term Growth Investments
• Some of the longer lead time investments we have been
making over the past couple of years will start contributing
to our results this year.
making over the past couple of years will start contributing
to our results this year.
Specifically:
Ø The Al Hosn Gas Project is expected to start its initial
production in 4Q’14 and start contributing to our cash flow.
production in 4Q’14 and start contributing to our cash flow.
Ø We expect the BridgeTex pipeline to come online around
3Q’14 and start contributing to our Midstream earnings
and cash flow.
3Q’14 and start contributing to our Midstream earnings
and cash flow.
Ø The New Johnsonville chlor-alkali plant is expected to come
online early in the year and will make a positive contribution
to the operations of our chemical business.
online early in the year and will make a positive contribution
to the operations of our chemical business.
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Fourth Quarter 2013 Earnings - Strategic Review
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• With respect to the initiatives outlined in the first phase
of the Company’s strategic review announced last year:
of the Company’s strategic review announced last year:
− We completed the sale of a portion of the Company’s investment in
the General Partner of the Plains All-American Pipeline in October
resulting in pre-tax proceeds of $1.4 billion. After this sale, we continue
to hold a ~25% interest, which at current market prices would be valued
at ~$3.7 billion.
the General Partner of the Plains All-American Pipeline in October
resulting in pre-tax proceeds of $1.4 billion. After this sale, we continue
to hold a ~25% interest, which at current market prices would be valued
at ~$3.7 billion.
− We have made steady progress on discussions with key partners in the
countries we operate in the MENA region for the sale of a minority interest
in our operations there. Due to the scale and complexities of a potential
transaction, we expect these discussions to continue through 1H’14.
countries we operate in the MENA region for the sale of a minority interest
in our operations there. Due to the scale and complexities of a potential
transaction, we expect these discussions to continue through 1H’14.
− We have also made good progress in our pursuit of strategic alternatives
for select Midcontinent assets. We expect to provide further information
on any transactions as they conclude around the end of 2Q’14 and will
announce material developments as they occur.
for select Midcontinent assets. We expect to provide further information
on any transactions as they conclude around the end of 2Q’14 and will
announce material developments as they occur.
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Fourth Quarter 2013 Earnings - Capitalization
• In 4Q’13, we used the Plains proceeds to retire $625 mm of
debt, reducing our debt load by ~9%, and to purchase almost
10 mm shares of the Company’s stock with a cash outlay of
$880 mm.
debt, reducing our debt load by ~9%, and to purchase almost
10 mm shares of the Company’s stock with a cash outlay of
$880 mm.
Shares Outstanding (mm) FY2013 12/31/13
Weighted Average Basic 804.1
Weighted Average Diluted 804.6
Shares Outstanding 796.0
Capitalization ($mm) 12/31/12 12/31/13
Long-Term Debt $ 7,623 $ 6,939
Equity $ 40,048 $ 43,372
Total Debt to Total Capitalization 16% 14%
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Fourth Quarter 2013 Earnings - Summary
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• At the Board’s February meeting we will review the Company’s
dividend policy, status of the strategic alternatives and share
repurchase authority.
dividend policy, status of the strategic alternatives and share
repurchase authority.
• Many of the steps we have taken in 2013, our success in
improving our efficiency and the actions that our Board
has authorized, lay the groundwork for strong results in
2014 and beyond.
improving our efficiency and the actions that our Board
has authorized, lay the groundwork for strong results in
2014 and beyond.
• The operational improvements we expect to achieve in 2014,
coupled with the strategic actions we expect to execute this
year should place the Company in a position to improve its
returns while continuing to grow and increase its dividends
to maximize shareholder value.
coupled with the strategic actions we expect to execute this
year should place the Company in a position to improve its
returns while continuing to grow and increase its dividends
to maximize shareholder value.
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Fourth Quarter 2013 Earnings -
Permian Basin & California Oil & Gas Operations
Permian Basin & California Oil & Gas Operations
2014 Operational Objectives
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Ø Continue the development of anchor projects, enabling the
allocation of significant portions of capital to projects with
solid returns, low execution risk and long-term growth.
allocation of significant portions of capital to projects with
solid returns, low execution risk and long-term growth.
Ø Further reduce drilling and completion costs to improve
F&D costs and project economics.
F&D costs and project economics.
Ø Continue to optimize operating costs, without affecting
production, to improve current earnings and free cash flow.
production, to improve current earnings and free cash flow.
Ø Build on successful exploration efforts in core areas.
Ø Evaluate data and test new concepts in pilot areas,
which will set up anchor projects of the future.
which will set up anchor projects of the future.
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Fourth Quarter 2013 Earnings - Permian Basin
Permian Basin Capital
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• Two business units named as:
− “Permian EOR”: CO2 and
waterfloods.
waterfloods.
− “Permian Resources”: growth
oriented “unconventional”.
oriented “unconventional”.
• The entire $450 mm increase
will be spent on our Permian
Resources assets, representing
~70% of total capital in the basin.
will be spent on our Permian
Resources assets, representing
~70% of total capital in the basin.
$1,722
$2,190
$1,530
$660
$615
$1,107
($ in mm)
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Fourth Quarter 2013 Earnings - Permian Basin
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$19.35
$16.13
• We expect the Permian EOR business
to offset its decline in 2014 and grow
1.4%.
to offset its decline in 2014 and grow
1.4%.
• The Permian Resources business is
expected to grow oil production faster
by 20% - 25% and total production by
13% - 16%.
expected to grow oil production faster
by 20% - 25% and total production by
13% - 16%.
• On a combined basis, should translate to:
− 6%+ oil production growth.
− 5% total production growth.
− ~$1.8 billion cash flow after capital.
• Improved capital efficiency by 25%
and reduced operating expenses by
$3.22 / boe.
and reduced operating expenses by
$3.22 / boe.
211
~222
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Fourth Quarter 2013 Earnings - Permian Resources
Development Wells
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• Drilled 49 horizontal wells with
47 completed and producing.
47 completed and producing.
• Improvements in well costs,
our own results and those of
neighboring operators have
given us the confidence to
dramatically shift our program
to more horizontal drilling in
2014.
our own results and those of
neighboring operators have
given us the confidence to
dramatically shift our program
to more horizontal drilling in
2014.
• 2014 Goal: Continue the
evaluation of the potential
across our full acreage position.
evaluation of the potential
across our full acreage position.
• 2014 Goal: Pilot various
development strategies, including
optimal lateral length, frac design
and well spacing both laterally
and vertically.
development strategies, including
optimal lateral length, frac design
and well spacing both laterally
and vertically.
Avg. Rig Count 16 21
335
~345
Shift to Horizontal Drilling
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Fourth Quarter 2013 Earnings - Permian Resources
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• Believe we have one of the most promising and
under-exploited unconventional portfolio in the basin.
under-exploited unconventional portfolio in the basin.
• In 2013, added 200K net prospective acres to our
unconventional portfolio, and now have ~1.9 mm
prospective acres.
unconventional portfolio, and now have ~1.9 mm
prospective acres.
• Exposure to all unconventional plays, which is
unique and will give us flexibility to develop our
most attractive opportunities first, and mitigate risks.
unique and will give us flexibility to develop our
most attractive opportunities first, and mitigate risks.
• Identified ~4,500 drilling locations representing
1.2+ billion net barrels of resource potential.
1.2+ billion net barrels of resource potential.
• Believe we have made conservative assumptions
regarding prospective acres, well spacing and
expected ultimate recoveries and expect these
numbers will grow as we learn more.
regarding prospective acres, well spacing and
expected ultimate recoveries and expect these
numbers will grow as we learn more.
Acreage in Select Permian Plays
(Thousands of Acres)
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Fourth Quarter 2013 Earnings - Permian Resources
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• We see the largest near-term growth in the
Midland Basin, which represents ~ 2/3 of
our currently assessed resource potential.
Midland Basin, which represents ~ 2/3 of
our currently assessed resource potential.
• Our Delaware Basin prospective acreage is
significantly larger, and the potential there
should continue to grow.
significantly larger, and the potential there
should continue to grow.
• We believe our measured approach to our
unconventional portfolio has worked to our
advantage.
unconventional portfolio has worked to our
advantage.
• Our Permian Resources production comes
from ~9,500 gross wells, of which 54% are
operated by other producers. On a net basis,
we have 4,400 wells of which only 15% are
non-operated.
from ~9,500 gross wells, of which 54% are
operated by other producers. On a net basis,
we have 4,400 wells of which only 15% are
non-operated.
• This has given us the opportunity to observe
the results achieved by other operators in
the Basin, learn from those results and
optimize our approach to maximize the
opportunity set on our acreage.
the results achieved by other operators in
the Basin, learn from those results and
optimize our approach to maximize the
opportunity set on our acreage.
Permian Basin Plays
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Fourth Quarter 2013 Earnings - Permian Resources
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• The success of our capital and
operating cost efficiency efforts
in 2013, has also enabled us to
significantly improve our cost
structure which has increased
our opportunity set.
operating cost efficiency efforts
in 2013, has also enabled us to
significantly improve our cost
structure which has increased
our opportunity set.
• For example, a typical well in the
Collie area that had IRR of 24%
before our capital and operating
cost reductions, now yields IRR of
48% using the same product prices.
Collie area that had IRR of 24%
before our capital and operating
cost reductions, now yields IRR of
48% using the same product prices.
• We achieved similar success in all
of our most active areas across the
business unit.
of our most active areas across the
business unit.
Resource | ||
Collie | ||
Yeso | ||
Cost Reductions Expand Opportunity Set
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Fourth Quarter 2013 Earnings- Permian Resources
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Unconventional Acreage Strategy
1. Exploration to establish the presence
of a commercial resource.
of a commercial resource.
2. Testing and data gathering to optimize
well and completion design.
well and completion design.
3. Pilot programs to assess variability
of well performance to design full field
development plans.
of well performance to design full field
development plans.
4. Transition to manufacturing mode
for full field development.
for full field development.
• Prudent strategy to develop our acreage,
maximizing cash flow and returns.
maximizing cash flow and returns.
• We are now prepared to accelerate
our activities in the Permian Resources
business where the opportunity in front
of us is one of the biggest in the basin.
our activities in the Permian Resources
business where the opportunity in front
of us is one of the biggest in the basin.
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Fourth Quarter 2013 Earnings - Permian Resources
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Midland Basin
2014E Capital | $790 mm |
Average Rigs | 8 |
2014 Wells | 174 |
Horizontal Wells | 74 |
• Drilled 16 horizontal wells to date.
• Largest opportunity is in the Wolfcamp
Shale where we have tested Wolfcamp A and
B benches and, plan to test the remaining
benches.
Shale where we have tested Wolfcamp A and
B benches and, plan to test the remaining
benches.
• South Curtis Ranch - average 30 day IP rate
of horizontal wells have met expectations at
~800 boe/d.
of horizontal wells have met expectations at
~800 boe/d.
• Started full field development mode with
remaining inventory of 200+ horizontal
locations.
remaining inventory of 200+ horizontal
locations.
• Substantial Cline resource potential with
450+ locations.
450+ locations.
• Plan to test horizontal Spraberry in 1Q14.
Texas
Oxy acreage in blue
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Fourth Quarter 2013 Earnings - Permian Resources
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Texas Delaware Basin
2014E Capital | $370 mm |
Average Rigs | 5 |
2014 Wells | 91 |
Horizontal Wells | 48 |
• Horizontal activity focused on
Wolfcamp where we believe the A,
B and C benches will prove to be
the most prospective.
Wolfcamp where we believe the A,
B and C benches will prove to be
the most prospective.
• Drilled or participated in 3 horizontal
Wolfcamp wells in 2013 and will
increase that to 45 wells in 2014.
Wolfcamp wells in 2013 and will
increase that to 45 wells in 2014.
• Activity centered in Reeves County.
• Collie program plans to drill 43
vertical wells targeting Bell and
Cherry Canyon formations.
vertical wells targeting Bell and
Cherry Canyon formations.
Texas
New Mexico
Oxy acreage in blue
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Fourth Quarter 2013 Earnings - Permian Resources
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New Mexico Permian
2014E Capital | $370 mm |
Average Rigs | 4 |
2014 Wells | 97 |
Horizontal Wells | 50 |
• Bone Spring formation in New Mexico
is the second largest opportunity in our
portfolio behind the Wolfcamp Shale.
is the second largest opportunity in our
portfolio behind the Wolfcamp Shale.
• In 2013, we drilled 16 horizontal wells
testing the 1st, 2nd and 3rd Bone Spring
sand intervals.
testing the 1st, 2nd and 3rd Bone Spring
sand intervals.
• Our results were very encouraging, and
we expect to increase the program to
drill 30 horizontal wells in 2014.
we expect to increase the program to
drill 30 horizontal wells in 2014.
Oxy acreage in blue
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Fourth Quarter 2013 Earnings - Permian EOR
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Permian EOR
• Business unit is a combination of
water and CO2 floods.
water and CO2 floods.
• $660 mm capital in 2014.
• Symbiotic to manage these assets
together as they have similar development
characteristics and ongoing monitoring
and maintenance requirements.
together as they have similar development
characteristics and ongoing monitoring
and maintenance requirements.
• The last couple of years we have actually
spent more capital on waterfloods as
we mature the next CO2 developments.
spent more capital on waterfloods as
we mature the next CO2 developments.
• Efficiency leader in the basin in applying
CO2 flood technology.
CO2 flood technology.
• In 2014, 25% of the $660 mm will be
spent on waterflood development and
the remainder on CO2 floods.
spent on waterflood development and
the remainder on CO2 floods.
• 1.4 billion net barrels of reserves and
potential resources remaining to be
developed.
potential resources remaining to be
developed.
CO2 Pipelines
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Fourth Quarter 2013 Earnings - Permian Basin
Exploration
31
• Over the last several years the focus of our Permian
exploration program has been to identify unconventional
opportunities, which are then transitioned to full field
development through our evaluation process.
exploration program has been to identify unconventional
opportunities, which are then transitioned to full field
development through our evaluation process.
• Our approach has been very successful giving us a large
opportunity set that we are now working to fully develop.
opportunity set that we are now working to fully develop.
• We continue to see the addition of new plays in the basin
and see years of exploration drilling opportunities ahead
in our 2 million prospective acre position.
and see years of exploration drilling opportunities ahead
in our 2 million prospective acre position.
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Fourth Quarter 2013 Earnings - Permian Summary
32
Permian Basin Overall Strategy for Success
1. Maximize field resource potential
• Targeted use of horizontal & vertical drilling, optimizing
development and completion plans, infrastructure investment
to pre-plan for life of field success, successful exploration.
development and completion plans, infrastructure investment
to pre-plan for life of field success, successful exploration.
2. Control costs to maximize returns
• Leading technologies and execution efficiencies.
3. Maximize price realizations
• Investing in additional take-away capacity, including
completion of the BridgeTex pipeline and build out of our
gathering systems, giving our crude a strategic advantage
to reach either the Houston Ship Channel or Corpus Christi
markets.
completion of the BridgeTex pipeline and build out of our
gathering systems, giving our crude a strategic advantage
to reach either the Houston Ship Channel or Corpus Christi
markets.
32
Fourth Quarter 2013 Earnings - Permian Summary
Significant Position with Key Competitive Advantages
33
Ø More than 2.5 billion BOE in reserves and potential resources
with 15+ years of development and growth opportunities.
with 15+ years of development and growth opportunities.
Ø Flexibility to shift capital among projects and between the two
business units as needed.
business units as needed.
Ø Large and diverse portfolio creates a variety of growth options.
Ø Significant infrastructure ownership of storage, gas processing,
gathering lines and pipelines.
gathering lines and pipelines.
Ø Takeaway capacity to both Gulf Coast and Cushing secured through
ownership of Centurion and BridgeTex pipelines provides unique
market access for crude oil.
ownership of Centurion and BridgeTex pipelines provides unique
market access for crude oil.
33
Fourth Quarter 2013 Earnings - Permian Summary
Growth Outlook
34
Ø Significant cash flow from Permian EOR to fuel growth.
Ø Plan to double drilling rigs over next 3 years to accelerate
development of the Permian Resources unit growth opportunities.
development of the Permian Resources unit growth opportunities.
Ø Expect to grow Permian Resources production from 64 Mboe/d
in 2013 to 120+ Mboe/d in 2016.
in 2013 to 120+ Mboe/d in 2016.
Ø Combined with the EOR growth opportunities, we expect to grow
our overall Permian Basin production by a 10% compound annual
growth rate through 2016.
our overall Permian Basin production by a 10% compound annual
growth rate through 2016.
34
Fourth Quarter 2013 Earnings - Permian Summary
Growth Outlook
35
Ø Significant cash flow from Permian EOR to
fuel growth.
fuel growth.
Ø Plan to double drilling rigs over next 3 years
to accelerate growth in Permian Resources.
to accelerate growth in Permian Resources.
211
Production
150
198
57
48
35
Fourth Quarter 2013 Earnings -
California Overview
California Overview
36
• 2013 main goals were to:
− deliver a predictable outcome.
− advance low-risk projects that
contribute to long-term growth .
contribute to long-term growth .
− reduce the cost structure.
− lower the base decline.
− create a more balanced portfolio.
− test exploration and development
concepts.
concepts.
• We achieved every one of these
objectives.
objectives.
36
Fourth Quarter 2013 Earnings - California
37
• 2013 Production of 154 mboe/d and free cash flow of ~$1.3 billion
after capital.
after capital.
• Progressed development of steam floods in Kern Front and Lost Hills,
and started the redevelopment of Huntington Beach Field.
and started the redevelopment of Huntington Beach Field.
• Improved our capital efficiency by 20% and reduced operating costs
by ~20%.
by ~20%.
37
Fourth Quarter 2013 Earnings -
California Capital Program
California Capital Program
• Focus on low-decline projects.
• 2014 Goals
• Expect this program to deliver
~11% oil production growth,
4% total production growth and
$1.0 billion of free cash flow after
capital at current prices.
~11% oil production growth,
4% total production growth and
$1.0 billion of free cash flow after
capital at current prices.
38
California 2014 Capital - $1.9 bn
• We believe the rate of growth will
further accelerate in 2015+ as
steam and water flood projects
reach full production, base decline
is lowered due to less natural gas
drilling and higher investment in
lower decline oil projects.
further accelerate in 2015+ as
steam and water flood projects
reach full production, base decline
is lowered due to less natural gas
drilling and higher investment in
lower decline oil projects.
38
Fourth Quarter 2013 Earnings -
California Operations - Water Floods
California Operations - Water Floods
39
Wilmington Field
• Drilled 135 wells and will
increase 7% to 145 wells in
2014.
increase 7% to 145 wells in
2014.
• Horizontal program was
particularly strong, and
horizontal wells will represent
a greater % of wells in 2014.
particularly strong, and
horizontal wells will represent
a greater % of wells in 2014.
Huntington Beach
• Successfully brought online
our two new fit-for-purpose
drilling rigs and drilled and
completed our first two wells
in the project.
our two new fit-for-purpose
drilling rigs and drilled and
completed our first two wells
in the project.
• In 2014, we plan to drill 30
wells and will ultimately drill
at least 128 wells.
wells and will ultimately drill
at least 128 wells.
LA Basin - 2014 Capital of $500 mm
39
Fourth Quarter 2013 Earnings -
California Operations - Steam Floods
California Operations - Steam Floods
Heavy Oil
– Key focus area in 2013 and will
be again in 2014.
be again in 2014.
– We plan to spend $350 mm
to drill about 420 wells in 2014,
compared to 324 wells in 2013,
to continue the multi-year
development of Kern Front and
Lost Hills steam floods and pilot
new projects.
to drill about 420 wells in 2014,
compared to 324 wells in 2013,
to continue the multi-year
development of Kern Front and
Lost Hills steam floods and pilot
new projects.
– Achieved record production in
4Q’13, producing 19 mboe/d,
an increase of 4 mboe/d from
1Q’13.
4Q’13, producing 19 mboe/d,
an increase of 4 mboe/d from
1Q’13.
40
40
Fourth Quarter 2013 Earnings -
California Operations - Elk Hills
California Operations - Elk Hills
• Key objective is to lower the high decline
rate; significant progress toward this goal.
rate; significant progress toward this goal.
• 2014 capital of $600 mm to drill ~325 wells,
an increase of $170 mm over 2013.
an increase of $170 mm over 2013.
• ~55% of capital will be targeting shale
reservoirs where capital efficiency efforts
in 2013 had a significant impact.
reservoirs where capital efficiency efforts
in 2013 had a significant impact.
• Achieved a 23% decline in well costs and
21% decline in operating costs, which
dramatically improved the economics
and increased the opportunity set.
21% decline in operating costs, which
dramatically improved the economics
and increased the opportunity set.
• For example, a typical well that generated
30% IRR prior to our efficiency initiatives
now delivers 50% IRR using the same
product prices.
30% IRR prior to our efficiency initiatives
now delivers 50% IRR using the same
product prices.
• In 2014, we will drill ~130 shale wells at
Elk Hills, an increase from 80 in 2013.
Elk Hills, an increase from 80 in 2013.
• The remaining Elk Hills capital will target
continued development in the shallow oil
zone and Stevens sands.
continued development in the shallow oil
zone and Stevens sands.
41
Elk Hills
41
Fourth Quarter 2013 Earnings -
California Operations - Exploration
California Operations - Exploration
– Solid results for over 5 years.
– The 2014 California program will continue to explore both
unconventional and conventional targets.
unconventional and conventional targets.
– The unconventional program targets several prospects similar
to the 2013 discovery.
to the 2013 discovery.
– The conventional program will target prospects in and around
our existing production in both the San Joaquin Valley and
Ventura County.
our existing production in both the San Joaquin Valley and
Ventura County.
– Extensive proprietary 3D seismic surveys are yielding an exciting
inventory of leads and prospects, which will provide years of
drilling opportunities.
inventory of leads and prospects, which will provide years of
drilling opportunities.
42
42
Production Outlook
154
~160
110
190
44
Fourth Quarter 2013 Earnings -
California Production
California Production
43
• Capital shift to lower decline and lower
risk steam and water flood projects.
risk steam and water flood projects.
• We believe we can grow production
from 154 mboe/d to 190 mboe/d in 2016,
a ~7.5% CAGR.
from 154 mboe/d to 190 mboe/d in 2016,
a ~7.5% CAGR.
• Water & steam floods will contribute 80%
of production growth.
of production growth.
• 90% of growth from projects already online.
• We think this positions California as one
of the lowest risk growth profiles in the
industry.
of the lowest risk growth profiles in the
industry.
• Focus on oil production will expand
margins.
margins.
• Expect to grow oil volumes by 15%+ CAGR
through 2016.
through 2016.
43
134
138
148
154
139
Fourth Quarter 2013 Earnings -
California Production
California Production
44
• Over the long-term, we expect our
California growth prospects to
benefit from changes in our asset
mix.
California growth prospects to
benefit from changes in our asset
mix.
• Elk Hills and Long Beach, while
having the potential for years of
continued production, have lower
growth prospects due to the mature
state of both of those fields.
having the potential for years of
continued production, have lower
growth prospects due to the mature
state of both of those fields.
• Our water and steam floods, as well
as unconventional opportunities,
should continue to give us double
digit growth for years to come.
as unconventional opportunities,
should continue to give us double
digit growth for years to come.
Shift in California Production Mix
44
Fourth Quarter 2013 Earnings -
California Production
California Production
45
• Share of production from Elk Hills
and Long Beach has declined from
64% in 2009 to 44% in 2013.
and Long Beach has declined from
64% in 2009 to 44% in 2013.
• This shift will continue going
forward and the larger share of
higher growth projects with further
accelerate the growth rate in
coming years.
forward and the larger share of
higher growth projects with further
accelerate the growth rate in
coming years.
Shift in California Production Mix
92
95
105
110
92
Liquids Production
45
46
Fourth Quarter 2013 Earnings - Appendix
4Q13 & FY2013 FINANCIAL & OPERATING
DATA, VARIANCES & GUIDANCE
DATA, VARIANCES & GUIDANCE
46
Fourth Quarter 2013 Earnings - Highlights
• Domestic oil production (Bbl/d)
• Total production (Boe/d)
• Operating costs
• Capital program
• Core earnings
• Core diluted EPS
• 2013 CFFO before WC
• YE Cash balance
• 2013 Shares repurchased
47
See Significant Items Affecting Earnings in the Investor Relations Supplemental Schedules.
Results
270,000
750,000
Exceeded Target
8% Reduction
8% Reduction
Exceeded Target
24% Reduction
24% Reduction
$1.4 billion
$1.72
$12.3 billion
$3.4 billion
10.6 million
47
Fourth Quarter 2013 Earnings - Highlights
4Q13-Over-3Q13 Impacts
• Lower oil and gas results
- Lower U.S. oil prices
- Lower NGLs and natural gas
sales volumes
sales volumes
+ Higher MENA oil prices
+ Higher oil sales volumes
• Lower margins in marketing
and trading, largely due to
commodity price movements
and trading, largely due to
commodity price movements
• Lower Chemicals core earnings
due to seasonal trends
due to seasonal trends
48
*See Significant Items Affecting Earnings in the Investor Relations Supplemental Schedules.
Core Diluted EPS*
$1.72
$1.97
$1.83
48
49
4Q13 vs. 3Q13
($ in millions)
Core Results
•2Q13 $2.1 B
•3Q13 2.4 B
•4Q12 2.3 B
Fourth Quarter 2013 Earnings -
Oil & Gas Segment Earnings
Oil & Gas Segment Earnings
($42)
49
50
Fourth Quarter 2013 Earnings -
Oil and Gas Total Production
Oil and Gas Total Production
750
(6)
(5)
(10)
4
779
Company-wide Oil & Gas Production (mboe/d)
767
Severe winter weather caused significant damage to infrastructure and logistics capability that has
continued to somewhat impact production in January. We expect a return to normal operations with
no effect on production in February.
continued to somewhat impact production in January. We expect a return to normal operations with
no effect on production in February.
50
51
(6)
Fourth Quarter 2013 Earnings -
Oil and Gas Domestic Production
Oil and Gas Domestic Production
475
(3)
476
3
470
Domestic Oil & Gas Production (mboe/d)
51
Fourth Quarter 2013 Earnings -
Oil & Gas Realized Prices
Oil & Gas Realized Prices
Worldwide
Oil ($/bbl)
Worldwide
NGLs ($/bbl)
Domestic Nat.
Gas ($/mmbtu)
4Q13 | $99.27 | $44.69 | $3.33 |
WTI % | 102% | 46% | 92%* |
Brent % | 91% | 41% | |
3Q13 | $103.95 | $40.53 | $3.27 |
WTI % | 98% | 38% | 90%* |
Brent % | 95% | 37% | |
4Q12 | $96.19 | $45.08 | $3.09 |
WTI % | 109% | 51% | 92%* |
Brent % | 87% | 41% |
$97.46 | $109.35 | $3.64 |
$105.83 | $109.71 | $3.62 |
$88.18 | $110.08 | $3.37 |
WTI
NYMEX
Price Sensitivity | Pre-tax Income Impact (Quarter) | |
Oil +/- $1/bbl | = | +/- $38 mm |
NGL +/- $1/bbl | = | +/- $8 mm |
U.S. Nat Gas +/- $0.50/mmbtu | = | +/- $25 mm |
Brent
Realized Prices
Benchmark Prices
52
* As a % of NYMEX
52
53
Fourth Quarter 2013 Earnings -
Oil & Gas Production Costs & Taxes
Oil & Gas Production Costs & Taxes
FY12 1Q13 2Q13 3Q13 4Q13 FY13
Domestic $17.43 $14.06 $14.28 $14.65 $14.74 $14.43
Total $14.99 $13.93 $13.40 $13.60 $14.13 $13.76
Production Costs ($/boe)
• Taxes other than on income, which are generally related to product prices,
were $2.57 per barrel for FY13, compared with $2.39 per barrel for FY12.
were $2.57 per barrel for FY13, compared with $2.39 per barrel for FY12.
• 4Q13 exploration expense was $60 million. We expect 1Q14 exploration
expense to be ~$80 million.
expense to be ~$80 million.
53
54
4Q13 vs. 3Q13
($ in millions)
Guidance
1Q14 expected
to be ~$100 mm
to be ~$100 mm
Fourth Quarter 2013 Earnings -
Chemical Segment Core Earnings
Chemical Segment Core Earnings
Core Results
•4Q13 $ 128 mm
•3Q13 181 mm
•4Q12 180 mm
54
($ in millions)
Fourth Quarter 2013 Earnings -
Midstream Segment Earnings
Midstream Segment Earnings
Core Results
•4Q13 $68 mm
•3Q13 $212 mm
•4Q12 $75 mm
55
56
Fourth Quarter 2013 Earnings - FY 2013 Cash Flow
FY 2013
($ in millions)
Cash Flow
From
Operations
before
Working
Capital
changes
From
Operations
before
Working
Capital
changes
$12,300
($8,800)
Beginning
Cash $1,600
12/31/12
Cash $1,600
12/31/12
$3,400
FY’13
Debt / Capital 14%
Debt / Capital 14%
Return on Equity 14%
Return on Capital Employed* 12%
* Note: Annualized; See attached GAAP reconciliation.
56
Long-term investment ~ 25% +
Long-term investment ~ 20% +
Americas Oil &Gas
51%
Americas Oil &Gas
53%
57
*Does not reflect any of the effects of our Strategic Review initiatives.
Fourth Quarter Earnings -
Capital Spending 2013 Actual & 2014 Estimate
Capital Spending 2013 Actual & 2014 Estimate
57
50
Fourth Quarter 2013 Earnings -
2014 Capital Estimate - Domestic Oil & Gas
61
• Domestic Oil & Gas development
capital will be ~49% of our total
capital program.
capital will be ~49% of our total
capital program.
– Permian rig count to increase
slightly as we swap horizontal
for vertical rigs.
slightly as we swap horizontal
for vertical rigs.
– Total domestic oil and gas capital
is expected to increase ~$800 mm
compared to 2013.
is expected to increase ~$800 mm
compared to 2013.
– Permian and CA should each
increase about $400 mm on a
year-over-year basis.
increase about $400 mm on a
year-over-year basis.
– Midcontinent will remain flat at
around $900 mm.
around $900 mm.
– Capital will continue to be directed
to oil projects.
to oil projects.
58
58
Fourth Quarter 2013 Earnings -
2014 Capital Estimate
2014 Capital Estimate
International
• Total Al Hosn Gas Project capital should decline ~20% from the 2013
levels, and will make up ~7% of our total capital program for 2014.
levels, and will make up ~7% of our total capital program for 2014.
• Qatar capital spending is expected to increase ~$200 mm for the
North Dome Phase V development plan.
North Dome Phase V development plan.
Exploration
• Should increase ~35% from 2013.
• Focus of the domestic program will be in the Permian basin and CA,
with additional international drilling in Bahrain and Oman.
with additional international drilling in Bahrain and Oman.
U.S. Midstream
• Increase ~$200 mm to ~$700 mm for the BridgeTex pipeline project,
scheduled to be operational in the 2H14, and to begin construction of
an LPG export terminal and crude terminal at Ingleside.
scheduled to be operational in the 2H14, and to begin construction of
an LPG export terminal and crude terminal at Ingleside.
Chemicals
• Capital will be ~$500 mm, which includes the Ingleside Ethylene cracker
scheduled to begin construction in 3Q14.
scheduled to begin construction in 3Q14.
59
59
60
Fourth Quarter 2013 Earnings -
1Q14 & FY 2014 Guidance Summary
1Q14 & FY 2014 Guidance Summary
Oil & Gas Segment*
• 2014 Total Production
of 780 - 790 Mboe/d.
of 780 - 790 Mboe/d.
• Domestic FY 2014
− Oil - 280 - 295 mboe/d,
~9% increase.
~9% increase.
– NGLs - flat.
– Natural gas - modest decline.
• Domestic 1Q14 production flat.
• International FY 2014
– Production volumes:
+5,000 boe/d in 1Q14. flat for
remainder of year; any Al Hosn
production would be incremental.
+5,000 boe/d in 1Q14. flat for
remainder of year; any Al Hosn
production would be incremental.
• Exploration expense: $80 mm in 1Q14.
• Production Costs: ~$14 / boe for FY 2014.
• DD&A: ~$17.40 for FY 2014
Price Sensitivity | Pre-tax Income Impact (Quarter) | |
Oil +/- $1/bbl | = | +/- $38 mm |
NGL +/- $1/bbl | = | +/- $8 mm |
U.S. Nat Gas +/- $0.50/mmbtu | = | +/- $25 mm |
Chemical Segment
• ~$100 mm pre-tax income in 1Q14.
Corporate
• Capital Spending: ~$10.2 billion.
• Income tax rate: 40% - 41%.
* Does not reflect any of the effects of our Strategic Review initiatives.
60
Fourth Quarter 2013 Earnings Conference Call
Q&A
61
| Occidental Petroleum Corporation | ||||||
| Return on Capital Employed (ROCE) | ||||||
| For the Twelve Months Ended December 31, | ||||||
| Reconciliation to Generally Accepted Accounting Principles (GAAP) | ||||||
| 2012 | 2013 | |||||
| RETURN ON CAPITAL EMPLOYED (%) | 10.3% | 12.2% | ||||
| GAAP measure - net income | 4,598 | 5,903 | ||||
| Interest expense | 117 | 110 | ||||
| Tax effect of interest expense | (41 | ) | (39 | ) | ||
| Earnings before tax-effected interest expense | 4,674 | 5,974 | ||||
| GAAP stockholders' equity | 40,048 | 43,372 | ||||
| Debt | 7,623 | 6,939 | ||||
| Total capital employed | 47,671 | 50,311 | ||||