OXY - Earnings call transcript Q4 2017 | Occidental Petroleum Corporatio

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Operator

Good day, everyone, and welcome to the Occidental Petroleum Corporation's Fourth Quarter 2017 Earnings Conference Call. After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded. And at this time, I'd like to turn the conference call over to Mr. Richard Jackson, VP of Investor Relations. ahead. go please Sir,

Richard A. Jackson

Jamie. Occidental everyone, Conference Petroleum's you, for Call. thank participating in Fourth Good Thank and morning, you Okay. Quarter XXXX

turn and a Ken Financial and of Officer; call On Vicki Vicki Elliott, Gas President the Burgher, us Operations; with Oil Jody moment, of Vice Chief and OxyChem. Hollub. International Domestic President and Gas; Senior Chief the President Cedric President to Executive In B.J. and today President I'll Hebert, of just Officer; Dillon, call over Hollub, are Oil

those As a to call statements. these securities contains of and differ that projections expressed laws. within certain from actual and federal risks statements the or reminder, today's cause implied the subject conference other to may forward-looking in are uncertainties These statements results meaning materially

factors that Form recent cause could company's differ results XX-K. the on is information Additional on available most to

XXXX quarter Vicki downloaded I to turn fourth please supplemental non-GAAP Investor the our call will presentation Our can and ahead. call go and Vicki, press schedules to at over www.oxy.com. earnings conference the our website slides reconciliations Relations GAAP Hollub. now release, the off be

Vicki A. Hollub

everyone. you, and Thank Richard, morning, good

Before I'd first our ensure we injury illness had like for and employee business our employee thank combined contractors to I rate for contractor had. a and their public. to efforts our workplace In ever XXXX about employees safe than employees, talk the results, and the we've best

using our flow Geismar, incremental assets OxyChem our Ingleside performance. from cash of and cash from our employees. it and is commitment capacity of generation project full quality which put budget our the zero portfolio is which our and our to injury embedded trend with raw a increased and safety result uses which had an and long & reflection of XXXX – and another I'll low in OXY of increased of completion on team international our crude making export the potential. is patented The additional enhanced exports in and XXXX. safety. I'll addition, allocating we our initiative that employee accomplishment items capital. provide technology performance with material management culture, warming then and breakeven part to process – consider from global with significant from then some within This employees and which indicates who of are. we Permian will It's for our OxyChem our some drive reinvestment increasing to in completed and flow improving we ethylene XXXX. XXXX Ingleside update illness enhancing will for represents cash The through by time the On for the growth the in in for terminal. We not It's production share focused want increasing our of Gas us. on highlights our details Oil Louisiana, breakeven next XXXX in climate-friendly industry-leading a Cedric ozone is safety In the value thank of of means plan. the in was assets plant, of owning portfolio, optimum behalf commissioned rate We our a operational In IIR that's from reached of plant located cracker, productivity, our replacement, disciplined refrigerants December used X.XX. increased OxyChem a reserves that key operations in capital an an value our conclude and XXXX, significant through depletion on on a value-based I XCPe, produce on Today, XXXX of board, improving resources, cash plan. program. XCPe flow that flow was what progress

Our benches the our down we Dunes deliver increased across drive our continued achieved where while capital initial record results These step long-term our adding to intensity production Resources fourth eight quarter. helped rates came Sand productivity in reserve and during Greater mostly have Permian change business, from potential. well results to

years two Oman row, in cash recoveries flow, Resources, ratio In billion replacement improvements achieved our approach. were $XX want we've all-in Equally and recognize XXX% to international nearly significant reserve and for in For achieved reserve in a of reserve production XX team. companywide, than our per we almost important costs costs of of BOE. a development replacement ratios with F&D in over Permian of less our where per data XXXX to X I earnings We'll focus value-based We've businesses was optimizing Oman on appendix similar F&D generated $X of and our F&D on an details record-setting XXX% BOE. additional release. billionth continue moment recently in through and our $X.XX a with to with barrel free provided of operated milestone the our We've XXXX take oil. a years a

XX, and With in continuing a in new we're partnership the Block X and our Oman. about long of extension history excited contract Block of success

to technologies like have improved our I'd how operations. emphasize advancing Lastly,

how Our that investment option technical in future increased and work unconventional the work these driven EOR finding lead XXXX. full-cycle began unconventional synergies our we with understanding Four One increasingly of This anthropogenic and innovative also progress of across in position. We're develop our the in XXXX combination employed. verification, injected return pilots step monitoring, or MRV, use and us in to between for with in first capital manmade value asset technical both subsurface on our unit Permian will our assets EOR reporting EPA assets, large and improve petrophysical sequestration COX together and provide in we're two the in our assets will COX. to important advancing and our them. work was our or Denver advancements positions has have value characterization significant plan primary in our recoveries industry more unconventional to

provides and accounting plan formal a for process. as geologic of permanent MRV EOR part our transparent Our sequestration

amounts South During of We the XXXX, EOR we'll represent will significant for the two and issued XXXX store our our unit XX for we asset, and assets reported Permian our assets These demonstrate in second Denver plan in at plans, EPA. both in that Hobbs two our the in through exists received COX sequestration COX. MRV MRV in the floods sequestered ever volume report assets to the applied for approval by XXXX. and our potential another

could making EOR available EOR for technical legislation and the costs on capture This incentivize and operations, provide forward policy that our to continuing can of have anthropogenic sequestration to through space. Another Act. important innovative This OXY MRV occurred significant the this in emerging development To opportunities advancement also term. more we our operations position FUTURE COX last combined grow EOR and teams the to solutions with carbon and future our when help for new COX our lower long must all advancements, COX subsurface carbon projects infrastructure to leadership look passed sequestration manage Congress advancements complement We week achieve. plans. worked of work have

on our from tax cash break even. will increase our progress be fund enabled a half three achieved net result growth flow summarize that dividend our combination operations our asset during to progress operational XXXX, mature and our differentiators our to maintenance We our on on which and refund hub the resources X. you metrics in we the technologies from in volumes XXXX, Southeast proceeds a Permian operations developed to several capital logistics The in through improvement advanced and XXXX. introduced that in visible Mexico, sales. continue plan This up ramp beginning cash production and technology; capital our recently with hand, results. XX% this to in our and cumulative of to multi-lateral of fund is and To we of the showed key of key value. New excellent our our significantly such Enhancements fully make as sustaining is and us subsurface slide SLX, first hub Resources will six-month portfolio to we years work with This to

Finally, this on very quality, shareholders. makes with of returns production top ability a to period deliver long our ratio XXX% production high more replacement will and our that for F&D capital will us to employed tier return replace sustainable our and at to is total time, confident close low provide

proposition, Turning the X, dividends, option. others their our be a shareholders strategy result our years of a our management and and We've for proposition changed. of assets quality slide When the we been developed founded to not commitment to value continue dividend is of and not as many to this value to on team. discipline to which or pursue consistently an able our cut We has our chose view eliminate plan strengthen ours. growth, a to

over $XX shareholders XX, we've you past As billion slide can and buybacks. through dividends the share XX on years, back our see to given

scale, the Our and flow unique truly strong generation the free proposition, assets, of that with Permian our and we along can combined premium creates EOR Chemicals, a of international Resources with meaningful provide value growth our well. position Permian cash in growth dividends as

dividends flow items. not Our Sustaining capital also and non-discretionary changed. are cash priorities have

maintain to priority operationally first safe Our an environmentally and is business.

our XX priority past as we've dividend second grow done is the Our to years. for

long that we plan, term. consider disciplined production several and key our we support factors breakeven will look reinvestment beyond cash flow growth for As dividend

employed. Our on focused return capital on investment decisions are maximizing

projects in for they unless minimum invest XX% domestic deliver not a of XX% will and We international. for return

sustaining downside two, pricing. one, creation an five, rate; factors social net to four, and to for maximize risk, long-term and pacing opportunities value; cycles; three, protection a inevitable like appraising consider cost upside environmental improving commodity other The present potential and we capital opportunistic the secure structure industry-leading value growth carbon maintaining through decline inventory; are, low

looks various Now immediately our I'll beyond prices. we've illustrated slide at next achieving our steps plan, on this X, what what on you like as means this breakeven update where oil for

expect achieve Our breakeven schedule. our plan of this first complete to ahead priority and we to is

sustaining Our current breakeven capital, will our secure dividend production growth to and X% $XX WTI. plan at X%

to in at we This short WTI, and conservative a value-adding Any deliver we'll sustainability additional our approach long-cycle milestones, net strengthen $XX to this it's while cash retained projects reduce X% will to nominal improve and rate debt. similar remain in of opportunities. the debt flexibility to We will term investing year, metrics short that these the important the last to X% dividend and while us improve net growth. our payout at our ratio both dividend Beyond for further grow opportunistic. believe be giving flow our believe be prepared growth dividend means to

and reinvestment these At of will growing and our reduction, steps, payout weigh greater initial range within framework than opportunities growth ratio end higher accelerate and meaningfully. WTI, net towards to the more growing we're $XX we'll debt X% incremental dividend Beyond our able dividend I've and manage discussed. to improvement our X% the

Turning achieve to in program our capital breakeven of third to designed our this plan the year. slide was X, quarter

EPC which We free business to as program XX%. higher increase Similar receive significantly, rolled off expect our our EOR of in has billion progress will year towards The for be will we the modestly an approximately we We but expand expect to levels. results. business will times, to flow export generation. capital Permian purposes turn Oil breakeven capital, complete the financial will growth. & Cedric facility. over up now XXX,XXX Chemicals of sustaining Gas for Total beyond. generate the accommodate the by our to In capital of cash of of primarily day. this crude $X.X Midstream, production international terminal $X.X the Resources Ingleside will $X.X to plan, recently last growth breakeven per annual will total to billion. overall billion the our versus capital international in I'll X.X the which spending is a current and and awarded contracts review barrels in expansion spend Permian enhance X% international capacity to to sustain business, plan XXXX spend investment call is capital

Cedric W. Burgher

progress towards breakeven financial on at XXXX X, Thank results we On you, updated address begin our an update our and and breakeven with guidance. then plan plan will oil prices. our low have I Vicki. slide

we've this towards our progress targets. As substantial are segments made and shows, business exceeding chart the goal,

expect As quarter we last plan noted night's accomplish the by accelerated third press to have now the in release, timeline this and year. of further our

plan In Caustic further realizations, $XXX our additional in and the improvements Chemical export of begin growth quarter $XX business, our Jody of have oil are grew our category from we integration EOR XX,XXX sustainability the case fourth once As we In XX cash COX you debottlenecking business production. barrel, illustrates necessary appendix. and or achieve quarter. the first scenarios. business, per plan. remained soda Al our crude unit we have cost day Ken the quarter. you additional the towards improvement it slide. know, progress of market breakeven in milestones, business, Resources of achieved network business averaged our for the plant BOEs breakeven the savings profitability beyond and wider will on our BOE floods. sequentially, improved fourth on the achieve Midland-to-Gulf online the plan improvements $X will during breakeven towards have remaining plant In of EOR the our will Permian barrel in experiencing Gas guidance Dillon market million flow wells Midstream XCPe tell shown for timing key will beginning oil the leaving per of into the of Andres in came as that's business, the we and our operational next Slide plan. in the solidified price to give to expected per than the BOEs contributing the a business, XX,XXX $X.XX we The provided $XX Seminole-San of driver per our In terminal online Chemical assumption the price and you December per the the we goal. Coast capacity gains Chemicals $X.XX new most other making day Hosn and quarter, about details the our the upgrade initial spread businesses

highlighting We appendix have progress. this included slide in our a

quarter. My are the in towards markedly needs favor our have made slide progress We we next and and liquidity changed excited we by continue has breakeven. illustrates last communicate our XXXX, for pathway to progress incremental since will to our it

breakeven cash a deficit $X.X our fourth price current required end would attain We at Plains have $X.X more need had cash budget to of the capital flow adjusted and, $XX reflect new and cash the not to – XXXX. billion commodity our At our we flow value would a market of WTI cash chart of the cash approximately balance, during is the $XX than by covered a with we quarter, not deficit $XXX the billion. of WTI, of and we prices, At units million. a run plan

Resources to reported maximize BOEs start monetize evaluate day. net by to in Permian our production we addition, a result our came XXX,XXX quarter moment of results. In quarter results of and fourth XXX,XXX, per day BOEs per quarterly in BOEs EOR financial to a day. at XXX,XXX at to versus within to ongoing full X,XXX volumes. Permian acquisition BOEs I'd opportunity per slide expect our a to guidance per and I'd take our find present guidance. increased with like reconcile value came non-core International assets of operational Shifting production was Total XX, portfolio. and XXX,XXX to day. on to like production

a impact production, based pricing per X,XXX guidance assumption approximately $XX On or barrel international our or $X given was averaged a our per quarter side, over had Brent contracts, on assumption. sharing an $XX on barrel. fourth guidance of increase Production our that versus per BOE PSCs day Brent the

Brent in While overall, are volumes result positive production for it prices does clearly us. reduced net higher a

day, of BOEs day. day, and weather per downtime X,XXX items BOEs guidance. our international below of operator XX,XXX approximately Permian timing which outside reduced of fourth per impacts per production X,XXX third-party domestic the production domestic totaled side, BOEs and the The On quarter experienced BOEs approximately X,XXX our per day

rate. came our prior from $X.X of we of segment tax Resources cash capital across production marketing above billion Improvements we improved quarter Total Midstream NGL well year by exports fourth included which total billion. our budget as spreads nearly realized to respect higher and and attributed prices per improved earnings core pricing. growth. Gas budget and to Permian $X.X $X.XX. NGL prices mainly of $XXX in continue & and prices. a our capital Gas XXXX Earnings above detail, to XX% taxes revaluation spent in $X.X fourth caustic guidance will of production. fourth the was the prices, was higher the quarter sequentially and of tax This Operating result segments NGL fourth our & the production company increased oil the quarter. Ken deferred soda during Gas to higher through a XXX,XXX due program Realized of which as million with oil from our reform, are and fourth We million improve. with fundamentals $XXX X% was $X.X met capital million are earnings $XXX equates core benefit total Jody Oil production EPS XXX,XXX plan a guidance, in higher Reported and before growth core Chemicals execution for BOEs terminal. came & XX% our quarter. in from $XXX-million to about However, our quarter. our federal Oil to all related confident With improved we annual will increased earnings generate capital billion of margins EPS due working day. also of to to Reported along Oil XX% quarter decreased flow billion, XXXX, primarily range affirming significantly to and effective were in business higher oil to $X.XX capital

to provide Jody than an additional color billion on which sequentially our The the Permian XXX,XXX be will maintain to the capacity midpoint production expect BOEs to Al quarter detail for $XX of XXX,XXX outlook. additional will $XX at Gas range Gas Resources plant. volumes XX,XXX day. XXX,XXX production and to the the Hosn Hosn will Midstream, million first quarter ramp will impacted per Resources is the plan. to quarters. XXXX per drive range first to a during lower third this expansion annual International XXX,XXX production XXX,XXX quarter. $XX will XXX,XXX day day. PSC Dolphin. per equates breakeven rate we quarter, to assuming on of BOEs per XX%. and The are turnarounds total range XXXX $XXX first remaining growth we the to Al will in Ken income average of impact the give the XXXX a quarter for quarter provide to of production contracts. budget will production of $X.X million, international on $XX The from WTI by expected on XX,XXX oil $X.XX/BOE. to range per a $X Hosn Brent guidance the In In day, first budget Midland-MEH expect the prices of of Permian the BOEs first BOEs by between assumes details additional pre-tax WTI and higher Jody $XX day Brent and to generate spread more million of XX,XXX Al due Our Permian and BOEs of and $XX

In expect quarter. a levels. of On caustic approximate as million guidance of for $XXX current between year, we million for Al based Gulf remain accounts assuming the in a to range $X.XX prices quarter full Hosn spread to On first quarter expect Coast at year, full we sales billion, and earnings Chemicals, and the pre-tax income Dolphin. soda we first million turnarounds $X pre-tax pre-tax $XXX $XXX also of $X/BOE. range products certain a anticipate seasonality on The at income the improves first to

$XX a reminder, equates price income. in a caustic $XX-per-ton soda move a pre-tax million As in to

$XX.XX for Oil injectant the to development $XX.XX turn costs is with expense $XX.XX expected be EOR Gas to Cash offset expected domestic oil expected finally, on call I'll to business Permian are a Gas DD&A we are lower to compared operating business BOE per the costs. the to higher which operating energy-related average for & for and costs now last approximately year, Our during in cash costs last XXXX, XXXX $XX.XX Lower BOE, And, $X over and to year. higher Resources, expected as XX, sensitivities. Permian are under result of costs. largely the slide compared to Oil by finding flow average per for have in purchased Jody. price-sensitive you provided & be key

Joseph C. Elliott

XXXX good business. incredible Cedric, domestic Thank and for was you, year morning, an our everyone.

Our our plan workflows teams to our improvements that derisked We and to key drive breakeven leveraged subsurface monetized long-term significant added our assets. non-strategic results. capability three operating with flow assets value and cash

we EOR business. unit EOR enhance Andres low the to COX our acquired First, decline Seminole-San Permian

Second, a are we strategic Resources additional we invested Midland we capital third, and our up multi-bench area cored plan developing. into Permian Basin development now

We value-adding will look transactions. to continue XXXX in additional portfolio review our and for

unit. Resources business. development Permian improved quarter, over provided reducing of increased petrophysical outstanding We've Andres production drilling over Permian in BOE, per per made want our to X,XXX by and BOE by per at flow units development also Seminole-San highlight progress a the reduced quarter across value-based $X XX% an technology. in fourth Resources X% quarter Our approach we productivity. XXXX. new by analysis XX% economics fourth progress operating to In approximate one gross drove improvement EOR costs OpEx recently I the a in well. of future day, or and XX%. acquired flaring well of results we've reduced also $X.XX advancing improvement costs by significant Breakthroughs geomechanics by from the Permian just In BOE our lowered $XXX,XXX

provide believe four with we've Midland that mentioned, implemented we operating across this results just the scale upside development and encouraging they OXY our about realize plans will future future value XX-year position, Vicki excited The We're are and and beyond us represent. into option EOR will to pilots Progressing opportunity allow replicate. to recovery. difficult initial EOR this advantage pilots Basins. the with history projects over be EOR and incorporate Delaware these technology primary extremely that an and our As of different unconventional

in Permian almost additional XXX locations to team of represents less pace. This net year. breakeven at our XXXX, the beginning enabling XX-rig locations target laterals of set XX, sustainable. are at that slide to inventory drill years by resulted acre $XX development added XXX the the a locations four to than the double are Turning improvements Resources and longer XX,XXX consolidate from cost trades The on us well additional facilities. based in Over additional lower and XXX added performance repeated total an an

We On focus grow of one area another inventory believe results are extremely total of of slide Greater made XXXX the pleased XX, on pace. inventory multiple our development innovative progress excess breakeven quarter, online the our that appraisal improving development our XX delivered with and across and our a value-based brought in Sand new and drilling Dunes quarter to In technology play-leading will well. we our Avalon fourth continue wells in benches.

fourth Our wells results in as in quarter change quarter. the the continued productivity we had step new achieved third had

BOE XX/XX a Fed Our and achieved peak day XX-hour Cedar a Canyon in per rate X,XXX the January, of that as continues of X,XXX online BOE day. increase XXH in to brought record XXXX per rate confidence XX-day

across will X-D our As understanding drivers more of other Dunes. Greater and localized undeveloped XXXX, call, emerging I continue in gives us high we'll our rate technologies integrate the in further analytics locations for continued return production X,XXX our to that data we mentioned deploy of across than improvement. seismic, deliver last confidence position In Sand wells

Mexico Spring all Turkey MBOE XXH Turkey performing to six State expectations. quarter in over XXX The development modular a want also five are XX and above new produced has New X-XX Track wells highlight Track. Sand in in section in Dunes, the Greater called fourth online the days, I Xrd area Bone Beyond

at over Track barrel. XX% Turkey return all-in of a expect deliver per We rate to $XX

quarter XX, Innovative only Track achieve production On ahead costs and OXY improvements discuss growth multiple BOE New were for efficiencies positions. approach operations for smaller secured Mexico expect advantages. facilities several development this Northern now sections, Turkey acreage sequencing six and is of to We're We characterization significant plan the scale and Basin. allows us us execute breakeven basin-wide our to of on across extremely This walk leverage and subsurface for region in our regional continued to XX,XXX of scale across modular this has in productivity allows While XXXX. in I'll to milestone. development design us critical put confident third sections using while optimization slide development outlook leverage reduce in operating as XXXX. ability development XXXX. through Permian per day quarter to Resources the fourth well our the in The resources have the plan Delaware

Looking quarter day BOE production growing BOE a execution of to December performance XXXX, well fourth contributed and the rate good of XX,XXX at the day. per by XXX,XXX quarter, from exit prior and achieving per

Xrd with Spring there's so and delivery. total-year now enhances value-based online right reduces change development to pad incurred in plans ensure the based downtime incurred the we and fourth to a to the X,XXX no development for from of development we BOE trucking. rig decision was a can during In the Spring facilities Bone move our Track, made first downtime. quarter However, This the a development on Texas allow results pad to Xnd to multi-bench area. day activity, and is this Delaware OBO changed number third-party development pace our approximately Turkey cost differently per the quarter, or the we due quarter, in Bone larger area, the This additional pipeline of but processing Track, first two-well disruptions, change wells delays better-than-expected weather four-well Turkey due and production

XXXX for production not year. strong range production early our quarter approximately outlook the change We've weather impacted progress by to been BOE by our for provided X,XXX has January per this does First freezing a help follow quarterly day. as again, achieve breakeven plan, with XX, on Consistent is our growth program. XXXX production XX% the approximately On capital XQ slide our XXXX. XXXX capital billion. we flow details we're set year XQ provided to cash from for Resource Permian our But to $X.X

areas We that total appraise plan We growth non-operated least two XX rigs. six a new at fund rigs will our opportunities. an additional will and development to benches operate of net future provide across

benefits sand hub, as quarter. of online We which be and and our will our The for created delivery is by now fully partners. second of also realizing of Aventine, allow partnerships the better and logistics start and the end with margins will part OXY maintenance efficiencies provide the will Aventine operational project

target project safety logistics, improvement last per savings costs. well, implications we Aventine we is mile believe and and initial higher well operating in time-to-market, $XXX,XXX value per site between from future as the expect $XXX,XXX much but well full are Our to

We provide will in we excited and results the I'll year, to will and also even can. and Ken. updates incredible now and XXXX. we're as continue and implement pilots progressing confident about turn was unconventional more and EOR over you, XXXX, new share Thank XXXX pilots call an

Kenneth Dillon

We business and morning, strong our Jody, with summarized The slide achievements had good in focus international on business of XX. during was a the year Thanks, the everyone. XXXX twofold.

the cash cash business of which to the in tune billion was flow. priority generation over delivered free $X upstream First

partners. and technology in priority pipeline upon for on countries, the our in of use our OXY our is continuing This was builds drilling returns focused Second to and core of and core develop operational It inventory the successes Colombia. seismic a in latest Oman X-D potential excellence countries. our strong projects including

all of that delivered on-time and history. international of today. HES continue shown be are topics OXY's achieving best Our major as slide on-budget to There did like we while a I'd on in XX. And to this mention projects performance number the

by from XXXX additional turnaround, Al year, during on gas during year XXXX achieve shown only cumulative utilizing for be contributed be the production inlets $XX we This quarter. completed a per a absorbers. XX,XXX XX,XXX the quarter Last XXXX. third million an of will original during the to first Gas BOE plant XXXX. rate first from able the optimize in new This we will versus XX,XXX per during the annual Hosn and and the quarter modify were the able XX. per for to the the process the as debottlenecking for This quarter bring the will is quarter BOE approximately plan debottlenecking the plant in this second third which patent-pending of plants to First in XX%, begin will slide day, to XX,XXX no day to peak quarter debottleneck additional approximately expansion capital. XX% to BOE Production of We're day we day the in the turnaround, BOE production XXXX plant in to achieve in capital. to increase per fourth will approximately our

our Next, sharing a our and pilot expectations, Cira-Infantas adjacent expertise La recoveries Oman. of XX, sanction We our field. economic development area year. XXXth like continues projects exceeds opportunities in to enhances excited the and Northern the see barrels a production rates. at excellent successfully we Block day well, exceed about continued and of like to an continued I'd exploration recently organization's to of Block in talk this are in Block the we're will with The consolidation just synergies renewed December, XX. performance This contract a projects of ahead the our which highlight discovery moving the about the project XX,XXX of position and field. of examples The and reached we in Colombia. Both Steamflood achieved towards We several X of the project and contract of TECA I'd gas our production be enhancing our complex position for our position. fields. development was signed the anniversary for mature milestone of In in the these hurdle international

and million in our net Colombia, for Lastly, I'd programs step-out like XX We're the the our turn pipeline. I work team the back the in we've will call disciplined commitment very in about with countries. excited thank performed in how which barrels to Oman over the resource to XXXX pleased been Vicki. successful with to now and added business and drilling of opportunities have its two safety.

Vicki A. Hollub

you, since we've been Thank like close on this the I'd topic. compensation by Ken. commenting engaging with investment on community to executive

level, on the incentive shareholders. with XXXX and of incentives long-term compensation questions. capital alignment on and OXY our use will performance cash with XX%. return We'll and a historical as returns-based short-term We long-term have for XX% target of total. both up comprise for with key metrics impact The executive open improves our target, your changes capital is employed a At practices return policy our employed-based the This a expanded XX% about at of by target target will now cash of it our compensation. compensation consistent incorporating short

Operator

at we'll session. this and Ladies the gentlemen, question-and-answer time begin

with Fargo. go today comes question ahead first Our from Read Wells from Please Roger your question.

Roger D. Read

of Yeah. just is mentioned the like – productivity, break Thanks. opportunities lateral productivity at could versus you've could number in length of times, out in that improvement to Good all is there? things know, you you or rock, all If go change morning. improvement. well much And how that the design that that or was curious, a and a stages there changes we better the talk are between physical multiple slide X, the well I way about

Joseph C. Elliott

Roger. It's a combination Good This morning. is of really Yes, Jody. both.

lateral the to you in is XX%. about length aren't back look increase in the a of is in included lateral in year productivity order remember length. based you this yet improvement the XX% wells If at cumulative, six-month of of lot number. half online our improvement good a XXXX, a it's have that But on the overall that came on so And

them, length-driven. So work we performance-driven it's but we length, lateral lateral lot completion flow land we it's that a where to bit but more But volume. to than the both, stimulated design how increase again, combination then these optimize unit wells, do place a little changes and continued about, a of rock

Roger D. Read

sort get on All any right. an guess Thanks. at to all Can improvement I on of internal productivity a target? or continued hazard you

Joseph C. Elliott

working, still day in frac And teams I to or we're we're to the I in I offset don't think can shut And quarter of Greater and our with with those get I our doing in and continue out. improvements I reducing rates, think side, new to every surprised nearby. throw number better technology going know I frac some work make. I Dunes, frac issues to even on because got more think it's see of lead side Sand out execution if addition in better whether the designs rates. are the having We've wells things some completion the coming a ahead. to this mean, hits and I there's

improve only online. trying to production So that's to minimize are already performance, we're the trying we not base

Roger D. Read

issues Okay. seen we've Kind of then. getting rid elsewhere the parent/child of

Joseph C. Elliott

Exactly.

Roger D. Read

with changing my follow-up. And for or don't Cedric. I Vicki, just Okay. for then maybe know you, direction

With the here? out the company shareholder method now XXXX? XXXX certainly prices, and dividend the What's at line company how preferred about or current of sight to returns you the for moves effectively share breakeven the into repurchases at of $XX or as do think there

Vicki A. Hollub

in you've cash when we in accelerate we reserves. a our where and most that levels, that we're it those the do the you and but looking lot and compare with we that value. But more pace potentially repurchases and scenarios we dividends from go divide is and development in because total do that. value, when to shareholders, that way hard don't dividends, are us destroy today it would finding the back we often Chemical of be we the that in sort bit and a our at stock buy of development by including of share that you're as to we that And scenarios look the we at investing time, Then of Well, by that you do then doing. value think the is shares showed the normal, the businesses have directly it company, sense assuming value lower than adds we would that total over and little those cash, the prefer impact given have the but into incremental company, repurchases. in of seen because want the those to to scenarios, projects Midstream of scenario, the debt we and, makes done the of share it's projects the for we cost proved most your the predict you in graph, But your and kind would taking said, that calculation

be want our others make want because to talk doing certainly sure it. buying potential doing. would we we've want it let about something the buying back. in we're we of that consider as that to don't We stock advance, eliminate we that would it talked others about So that know to never We

we as undervalued to limits bias calculation approach, this pretty the it natural think consider the that straightforward. that we and makes stock's So always our think

Roger D. Read

that. All you. Thank right. Appreciate

Operator

Our ahead with Singer next Brian question. from Sachs. from question Please go Goldman your comes

Brian Singer

Thank you. Good morning.

Vicki A. Hollub

Good morning.

Brian Singer

contracts, you which expectation that bit Delaware, focus on particular, well on reduce costs inflation about $XX and to As I little path more to have to in you downside? of and what are risk have how talk I in you the you achieving design we think wanted breakeven, And efficiency to about a slide? XX. the can the just think the drivers exposed to your slide the on a more and your relative upside bit the risk there in market improvements also to Based the the

Joseph C. Elliott

is securing couple inflationary ago per one Hey, we inflationary X,XXX Spring Mexico. with a XX,XXX-foot an in even do different. would on drilling something capital in capitalized includes looked well. in more cycle, range like to in resources cost is completion ability probably what we in it's offset XX% space. what in artificial three-string the well our Xnd down back we design, period. sand a see area pumping of see with X% a we slide so all-in everything, It's The drive an an obviously. cost. lift, pressure improvements type inflation, overhead, and at when its of hookup, started foot Aventine New But example Brian. drove startup a then, back our It's flowback, separating This pounds the and years really This from anticipating now of XXXX, assumes service we're to We first It's in is XXXX, Bone completion, XX% XX Jody. the the the and in our and

down facility, acid time things number I they're a location. of to market OxyChem the people sand a because hydrochloric time goods that unit securing a reduce instead will country on with supply, drive our of of to delivery the the rail on for the could and time new resources, in but truck, system mile securing Schlumberger work part just market, equation maintaining talk the place cost. last bigger working there's focused logistics much than So we And about things oil trucking on just for long Aventine, sand drive but a not required there, tubular lot that of delivery

There's naming improve So the things a off capital in we few. I'm business. believe of continue intensity our the to a structure, the that work long of unconventional just list cost

Brian Singer

is that? the one cost achievement would example, to this Thanks. are baked billion type to relative And just $X.X Resources needs into well this capital Permian magnitude capital lower lead know but of of for or I reductions budget

Joseph C. Elliott

we Yes, today. we've from flat are in of where kind baked

I of as we work generation next there's upside technology. So opportunity this through think

So in those our are assumption, getting flat some started just that's in there Aventine. of but we're with

Brian Singer

XXXX, And added Thanks. new new to XXX locations in talk how six more acreage that about you in then acreage Permian to XXXX? to said benches the bit can little and the think you're the planning the plan appraise evaluate you a you I in compares

Joseph C. Elliott

you in to Xnd so with. lot scale Draw work other Lower benches really those Xrd C of a Spring Bone Xnd and net acres, in Wolfcamp Greater Avalon, Spring, success Bone, Bone, Bone Xst Draw. Mexico, it's Greater Barilla is XX,XXX Yeah, Barilla gives New

Brian Singer

Great. Thank you.

Operator

Our with your Phil Gresh Please comes ahead JPMorgan. from from go next question. question

Vicki A. Hollub

you could a international. We have comment another did hold from second? Phil, just Ken,

Kenneth Dillon

entry this product we're our fleets Drilling the lines. start and OXY in IOCs drilling various us for continuing Yes, of drivers in in X.X moment, analytics. at because XXXX, new the rig the deflation modifications some the competition of discipline still in-house internationally, of and at completion mainly Dynamics software same data Jody, on market, technology, of drilling but just to to side, follow rolled OXY on we making see and forces also We out and from and hardware, arena the the the market NOCs international

these year-on-year partners, in the years lines. and you in completion million drilling that And product look this and if side look XX% reduced continue year. you costs in Oman over hoping we've that, in and Colombia, ourselves saved in will last North XX% by and in North our we've the for Colombia $XXX and If we're three over Oman

Vicki A. Hollub

Phil, morning. Okay. good

Phil M. Gresh

Good morning.

in to production towards which billion, range there's capital that. to Vicki, down at as talked back had $X.X about $X.X I'm with of of $X.X coming have growth on talked question billion. year in spending, look you're I guess the comes back kind you've meaningful the that XXXX a First a of about you breakeven. CapEx we the step to ahead, is Obviously, hitting the previously this wondering billion of the accelerating But commitment upper end

there to that spending talked next So in latest your will your that. just on thoughts roll-off year? want of or the be driving CapEx opening thinking get a or lower And tradeoffs about various is anything you remarks, but about infrastructure commitment bit a specific you're a materially

Vicki A. Hollub

CapEx breakeven get X% target to XXXX, once still X% with our that certainly year $X.X it to $X.XX our below X% go in going means plan, be we'll our is billion the next growth we but to we'll Well, to back today where to we're original range. billion toward growth. able year reduce forecasting back to more And to the the to targeting that X% growth. this and We're X% XX% dividend

Phil M. Gresh

Okay. Got it.

Cedric W. Burgher

live able said flow, including dividend, to as just plan, complete once is within low Phil, this would I cash even my we the be add, Cedric. remarks, $XX. I and the prepared cover we will as in as

at low to environment part into our will price will that even so the And within what the sustain and have all the going question your of cash depends dividend commodity to be prices answer on flow. But base we ability XXXX. commodity

Phil M. Gresh

a order XXXX, I ask billion for to $X.XX billion? my what's would I And the baked remarks that be but higher magnitude of there, international heard in There a and into spend comment prepared could maybe was if of question. some the about second the $X.X clarification just

Vicki A. Hollub

did we could additional rigs what comment projects on of of cycle the So significant, We it the that. in – up be are Oman levels. and you terms wouldn't do vary in and Ken, these operations Permian like have have because picking an actually vary shorter we could international that? almost activity can some that we

Kenneth Dillon

net exploration resource. year. and Part up we of added did year wells barrels our Yes. million the picking this last on is focus that We've XX of step-out wells

is year, get goal these Our up online. them to this call

will in capital the towards of that. go some So Colombia

Phil M. Gresh

resources – coming that barrel. $X the I the Okay. per that I $XX.XX so, And think past. the barrel. barrel question $X the my second model, The U.S. for on a given XQ is it. than OpEx hugely little think talked sub-$X barrels to around of you've guidance Got the then higher at but a not a my are incremental bit And about in It's ended

pieces cost have of color I'm price trying you just cetera? et some given EOR there, oil is the moving to the any if the higher where So about understand and maybe

Joseph C. Elliott

Yeah, Phil. It's Jody.

with exited $X.XX. we So of in Resources, OpEx quarter fourth

below expense operating $X.XX. XXXX expect XXXX We like in below We'll exit $X. to more be $X,

growth production to will drive Resources additional continue OpEx. that So down

– the that EOR there's kind oil indexed is and is is some control the things two things or of rig pretty one flat. contract the On oil The there's we COX move work things on fundamental side indexed The to price, oil with part contracts two components. to those of price. are price, that

oil cost up. the of goes COX goes So up, price as

is XXXX The than XXXX. this other injecting more we're in about we COX will year in almost X%

the expanded projects. flood so comes production the through end, on and consuming we've you As front and COX started and new obviously the the a go several we've you those that's lifecycle know as others, of

Phil M. Gresh

Got it.

$XX to closer EOR barrel? per So is then

Joseph C. Elliott

it number have of right front me. you. in Yeah, the get here We'll I don't to

Phil M. Gresh

a Thanks lot. Okay.

Operator

your Herrlin from John comes with question Société ahead Générale. Our go from next question. Please

John P. Herrlin

you, Permian Thanks. wondering in expecting are going what pursuing mentioned is one only help venture? EOR the your Like things this on the about Hi. been Resources, corporate it. Will manage was with wells that. you joint everything's the be by costs the Most And was their That's you're then on you, Schlumberger to I activity Yeah. other working with more these I do venture venture. to the the to covered. curious of out future? call of joint or in get just Aventine

Joseph C. Elliott

Be to talk glad Sure. about both.

space, in when look So production. XX% recovering the X%, of primary you unconventional the EOR work you're the at production,

So tremendous a there's resource there.

materially objective economically. how or that is and can the it do challenge we So the increase

has gas both injection, either trials we've demonstrated it the can oil. recover the and short and the conventional in flood it. project. it oil long doesn't lab producers And incremental inject actually the behave COX nature we oil COX the in so And quite a where traditional it's cycle injection miscible The or like in then you with cycle to to a field, is quick, recovery you so push

objective from the understand development take then to unconventional and plans space pilot full how to in do pilots to and scale, we going is it So affects the how that continue forward.

John P. Herrlin

this (XX:XX)? is dealing fracture So or matrix you're porosity with

Joseph C. Elliott

you're Your a details. more in matrix about permeability unconventional and sandstone That's a shale, micro. we'll behavior's is ready the the of different. the to you're so part all as matrix. learning in of more the geology It's whether talk of not that a It's we're disclose function or whether

John P. Herrlin

Great.

Joseph C. Elliott

that With site. Aventine is regard at Aventine, companies to multiple

set support Turkey is from Greater So Aventine up Track Sand area. Dunes Greater Mexico, the then all way to New and our

each logistics tools, sand new logistics It's In it's mile In pumping providing It's drilling the and more And and country it's tubular SANDSTORM. frac, goods, area so it's infrastructure we're based where starting. the on is. so transload, that's it's what Schlumberger, last With a treat current oil – securing Texas Delaware facility, service, the it's it's really you Texas cementing, the about by location. ACL transload. just improvements sand Delaware, called the delivery. it's sand system it's OxyChem

we full And have Texas. don't to sands in so transload buildout secured. an the scale have Aventine-like regional the closer of facility, It's we but

sand sand just sites. in of impact, the the And driven. is Delaware. securing take the opening supply the will a just of couple in really, sand. XX% on we'll Our good; miles you mine regional shortly, in advantage It's that has really it's infrastructure you Midland think well of about proximity Basin, that of a that give pretty be number to reduction the stats provider New To and so the Texas the a Mexico of

XX You we're the go sand SANDSTORM XX load tons in miles. when can starting million this of versus that miles X you XX up to And new then, million per haul year, tons. put we system from almost

that math, that million of the equation. X.X miles drives out do another You

a So fewer truckloads over it's metric also of period. tons XX,XXX X,XXX reduces It COX. five-year

reduces works. will way the our And required new really about the mile SANDSTORM accident last it statistics. number of the part on-site, It improve the this, the You safety. because think automated nature system, of then, of that's people of

three And in as well. So design that Mexico, both across then, apply SANDSTORM New as hub and Texas Midland. those would the technology complexity and logistics varies move Delaware areas you

John P. Herrlin

Thank Great. you.

Operator

question. Our Molchanov next question ahead go James. comes Raymond Pavel with your Please from from

Pavel S. Molchanov

Resources the don't up in taking is question. versus parallel for going but think as guidance I oil liquids Thanks percent the to Permian words, it So, generally gas, by to going be and broadly the throughout increase is year, gas/oil this know year? gas? ratio, give you other remain a stable we between broadly XX-plus it about

Joseph C. Elliott

and the this actually of our – bit were cuts oil XXXX. little XX% to XX% XX% kind XXXX, is right Pavel, for of Yeah. Jody. a increases In on total around it

the about stays mix your So same.

Pavel S. Molchanov

January affected a then, of extent what quick of in in And Helpful. the particular, lot pipeline is affecting international fields a seen on guidance by Colombia. QX major that? attacks headlines, your one To number a Okay. about We've Colombia.

Kenneth Dillon

Colombian lot our XXXX. year. Ecopetrol look best to the steady XXXX at collaboration our we're with QX full excellent partner is In same since thanks That's in a last continue planning I with way government, think – work and of production to to quarter-by-quarter. field of the the support and XXXX, our QX the the and approaches in answer to production's remained

Pavel S. Molchanov

BOE But for many in how if year-to-date, you have Okay. lost can day you share guess a I example, that? Colombia,

Kenneth Dillon

the basically moment variation a it's think gave a answer I ago. on I

areas result with as the a the basically our the moment. is major fields on mainly Our of steady We're production and Ecopetrol. we've seeing the government that work at impacts it's with at not from And our done moment.

Pavel S. Molchanov

it. Appreciate enough. Fair Okay.

Operator

comes Our your Securities. Leo question. ahead NatAlliance Please Mariani from from question next go with

Leo P. Mariani

about I talk the sort the between little Hey, you I this but one Permian right, I of Delaware. way and just rig in think really roughly this up capital you're I sustain in maybe if talk Permian Is to thinking know you the sub the next Resources that that how this and in guys. hoping I bit year, those kind capital could division years around? about that had don't Midland going splitting Resources a was seeing basins? year, was broadly something two to or of over move the is terms just about of Midland XX you're you're couple Delaware. in with Can going

Joseph C. Elliott

count. can Yeah, online, at you at ways, you rig different look look it can two can you kind look at wells of

Turkey see Delaware changing continuing don't a drastically. Mexico, out again, bench a Track's develop we've Texas a had X in new rig New Texas But operated, development in rig Xnd Turns X the years. the of look in XX couple that to We about so great in fairly inventory, again, online, New throughout wells thought about XX% Mexico, example. consistent we're Midland, about in and that's rigs or running probably you there. at If Delaware, Midland. in we And – next From XX% of things. got single the and it's a stays wells two. I X we're learn Bone XX% Spring that

and more asked could learn I and we he we as EOR. question, about OpEx about $XX our inventory, So that how back to want a It's we think go about And to change adjust. obviously, barrel. Phil's

Leo P. Mariani

it can to largely talk going could gas Are year. then think bit Oman. the And incremental guys I guys Is potential production? maybe plans signed mentioned as you XXXX? a right. late about Oman to XX? recently starting see you in well When All oil you targets? there little for capital budget start had in you think last Block we some see I that to incremental in be

time? say over as that about So of what develops can kind it you

Kenneth Dillon

fits three that discovery two on and we're due work jigsaw. XX on from currently perfectly slide think with wells I the Yeah, reservoirs Block can XX, the completely block the you in There's to as into see the blocks. familiar Oman map North other the

the production. we is driving The goal have have domestically. internationally value, We approach up same as not just

this and So year. start plans basically the reprocess some up a existing with production block, the of seismic short-term year, next plan development have drilling are end come towards the probably to the on and

of a work study coming up value-based So this year, invested with small and development capital amounts relatively plan. mainly

Leo P. Mariani

for any All might or an something you sell That's there see XXXX you thing down $X you it's thing years? And kind mentioned, right. really last your assets here billion to guess just look guys. and management, ongoing the Do helpful. I portfolio might take of to you $X.X billion. anything horizon in of several that where on is that's out

Vicki A. Hollub

Well, the only do in we're continuing satisfied we're look where assets certainly out thing are things, for the that we that The assets, are. for to our way core and Permian. inventory with is

XX So years, any for XX to us we non-core time to the or things that's us, Plains and that that's and, monetize. to consider still when course, soon like can for that units anything say we or that's can't I have we would certainly get monetize, non-strategic sell of soon, we

Leo P. Mariani

you much. Thank very

Vicki A. Hollub

All right. Thank you.

Vicki A. Hollub

So I for to like want I'd you thank your to questions, and you our leave takeaways call. all from three with

dividend breakeven plan, our delivery our still we're reduction. across additional to businesses. debt disciplined we'll all but we're through optimizing we're with reinvestment provide schedule second, of in net focused ahead And on First, our of security and our

metrics our priorities. Lastly, our executive comp expanded use returns-based of incentive with shareholder align

of and have our rest the day. XXXX. good So for forward joining we're looking a call, you Thank to

Operator

that thank We attending. do Ladies for call. today's you gentlemen, and conclude conference does

disconnect now your may You lines.

Occidental Petroleum Corporatio (OXY) 14 Feb 182017 Q4 Earnings call transcript