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Occidental Petroleum Corporationp
Third Quarter 2014 Earnings Conference Call
October 23, 2014
Third Quarter 2014 Earnings – Highlights
D ti il d ti (Bbl/d)
Results
282 000• Domestic oil production (Bbl/d)
• Total company production (boe/d)
282,0008% year / year growth
755,000
• Core earnings*
• Core diluted EPS*
$1.2 billion
$1.58
• YTD CFFO before WC
• Cash balance @ 9/30/2014
$8.6 billion
$2 9 billion• Cash balance @ 9/30/2014
• 3Q14 Shares repurchased
$2.9 billion
4.7 million
• YTD Shares repurchased
2*See Significant Items Affecting Earnings in the Investor Relations Supplemental Schedules.
21.2 million
Third Quarter 2014 Earnings –Oil & Gas Segment Pre-Tax Earnings
3Q14 vs. 2Q14($ in millions)
PRE-TAX
$1,902
($259)($37)
$2,118$70 $10
Core Results• 3Q14 $1.9 B• 2Q14 $2.1 B• 3Q13 $2.4 B
2Q14 Sales Price Sales Volumes Higher Operating All Others 3Q142Q14 Sales Price Sales Volumes Higher Operating Costs
All Others 3Q14
3
Third Quarter 2014 Earnings –Oil and Gas Total Company ProductionTotal company oil and gas production volume, averaged 755,000 BOE per day, an increase of 19,000 BOE in daily production from the second quarter.
75510
29
Company-wide Oil & Gas Production (mboe/d)(2)
9736
2Q14 Permian Other Domestic Colombia MENA Decline 3Q14
4Note: Excludes Hugoton production
Third Quarter 2014 Earnings –Oil and Gas Domestic Production
Met our domestic oil production growth guidance with a year over year increase of 20,000 BOE per day or about 8 percent, led by our Permian and California assets.
56
475Domestic Oil & Gas Production (mboe/d)
458
464
3Q13 2Q14 Oil Natural Gas & NGLs
3Q14
5Note: Excludes Hugoton production
Third Quarter 2014 Earnings –Oil and Gas Domestic ProductionDomestic Oil & Gas Production Excluding California (mboe/d)
4
3
315
305
308
3
305
3Q13 2Q14 Oil Natural Gas & NGLs
3Q14
6Note: Excludes California and Hugoton production
Third Quarter 2014 Earnings –Oil & Gas Realized Prices
WorldwideOil ($/bbl)
WorldwideNGLs ($/bbl)
Domestic Nat.Gas ($/mmbtu) WTI NYMEXBrent
Realized Prices Benchmark Prices
( ) ( ) ( )3Q14 $94.68 $40.26 $3.91 $97.17 $103.39 $4.17
WTI % 97% 41% 94%*
Brent % 92% 39%
2Q14 $100.38 $42.82 $4.28 $102.99 $109.77 $4.55WTI % 97% 42% 94%*Brent % 91% 39%
3Q13 $103.95 $40.53 $3.27 $105.83 $109.71 $3.62
WTI % 98% 38% 90%*Brent % 95% 37%
Price SensitivityPre-tax Income
Impact (Quarter)
Oil +/- $1/bbl = +/- $35 mm
NGL +/- $1/bbl = +/- $7 mm
Price Sensitivity Ex. California
Pre-tax Income Impact (Quarter)
Oil +/- $1/bbl = +/- $29 mm
NGL +/- $1/bbl = +/- $6 mmNGL +/- $1/bbl = +/- $7 mm
U.S. Nat Gas +/- $0.50/mmbtu = +/- $25 mm
7* As a % of NYMEX
NGL +/- $1/bbl = +/- $6 mm
U.S. Nat Gas +/- $0.50/mmbtu = +/- $15 mm
Third Quarter 2014 Earnings –Oil & Gas Production Costs
Production Costs ($/boe)
FY13 1Q14 2Q14 3Q14 YTD14 $13.76 $14.33 $14.68 $14.89 $14.64
DD&A ($/boe)
FY13 1Q14 2Q14 3Q14 YTD14
Taxes other than Income ($/boe)
$17.10 $16.86 $17.25 $17.45 $17.19
FY13 1Q14 2Q14 3Q14 YTD14$2.57 $2.94 $2.83 $2.64 $2.80
8
• 3Q14 Exploration expense was $53 million
Third Quarter 2014 Earnings –Chemical Segment Core Earnings
3Q14 vs. 2Q14($ in millions)
Guidance4Q14 expected t b $115
PRE-TAX
$133$9 ($6) ($1) $5 $140
to be ~$115 mm.
$133 ( ) $140
Core Results3Q14 $140• 3Q14 $140 mm
• 2Q14 $133 mm• 3Q13 $181 mm
2Q14 Sales Price Sales Volume / Mix
Operations / Manufacturing
All Others 3Q14
9
Third Quarter 2014 Earnings –Midstream, Marketing & Other Segment Earnings
3Q14 vs. 2Q14
$219 ($115)($ in millions)
PRE-TAX
$219 ($115)
$11$10 $125
Core Results• 3Q14 $125 mm$• 2Q14 $219 mm• 3Q13 $212 mm
10
2Q14 Trading Power Generation All Others 3Q14
Third Quarter 2014 Earnings –YTD 2014 Cash Flow• The first nine months of 2014 included tax payments of $570 million related to the
gain on the sale of the PAGP units and our Hugoton assets
$12,000 YTD 2014($ in millions)($6,600)
3Q14Debt / Capital 16%Return on Equity* 12%
($400)
CFFO before
Working Capital
changes
q yReturn on Capital Employed* 11%
($1,650)($700)$8,600
Beginning C h
$2,900($2,100) $1,600
Available Cash Before
Working Capital
C
CapEx BridgeTex & Al Hosn C
Dividends Share Repurchases
Acquisitions & Other
Proceeds from
S
Commerical Paper
Ending Cash Balance
/ /
Cash
$3,400 12/31/13
($650)$1,400
Working Capital
Changes
Changes Capex Asset Sales 9/30/14
11* Note: Annualized; See attached GAAP reconciliation.
Third Quarter 2014 Earnings –California Resources
• We received cash proceeds of approximately $5 billion from the bond offering completed by California Resources.
– IRS rules mandate that use of these proceeds be restricted to share repurchases, dividend payments or debt retirement.
• We will be receiving an additional $1.2 billion of cash from California Resources concurrent with the spin-off in late November. p
– The use of those proceeds will be unrestricted.
• When Oxy completes the spin-off of California Resources at the end of November, we will reclassify their financial and operational results to discontinued operations for ourwill reclassify their financial and operational results to discontinued operations for our core results disclosure. As such, our fourth quarter core income will exclude all of California results, and income on a reported basis will include 2 months of California results.
• Total year results on a reported basis will include eleven months contribution from our California operations classified as discontinued.
– Included in the Investor Relations supplemental schedules is a pro forma table segregating Oxy’s sold and spun-off domestic production from our on-going operations for the historical
12
Oxy s sold and spun off domestic production from our on going operations for the historical quarterly 2013 and 2014 periods.
Third Quarter 2014 Earnings –US Oil & Gas Pro Forma Data
Production(Mboe/d) 3Q14 2Q14 1Q14 4Q13 3Q13 2Q13 1Q13Permian Resources 77 72 67 64 62 64 68Permian Resources 77 72 67 64 62 64 68Permian EOR 148 144 145 143 150 146 149Midcontinent and Other 90 92 90 88 93 88 91
Ongoing Operations 315 308 302 295 305 298 308Ongoing Operations 315 308 302 295 305 298 308Hugoton - 6 18 18 18 19 19California 160 156 154 157 153 153 151
Total 475 470 474 470 476 470 478
($ / boe) 3Q14 2Q14 1Q14 4Q13 3Q13 2Q13 1Q13Cash operating costs $14.89 $14.66 $14.18 $13.55 $13.24 $12.59 $12.41
Ongoing Domestic Operating Costs
Taxes other than on Income $4.37 $4.92 $4.95 $4.55 $4.94 $4.54 $4.20DD&A expense $18.54 $18.44 $17.96 $16.77 $16.56 $16.55 $16.58
13
Exploration expense ($mm) $6 $14 $10 $14 $10 $23 $20
Third Quarter 2014 Earnings –4Q14 & FY 2014 Guidance Summary
Oil & Gas Segment *
• Domestic 4Q 2014 Production*Oil: continued Permian production growth
Price Sensitivity (excludesPre-tax Income
Impact − Oil: continued Permian production growth.− NGLs: modest decline– Natural gas: modest decline
California) (Quarter)Oil +/- $1/bbl = +/- $29 mm
NGL +/- $1/bbl = +/- $6 mm• International 4Q 2014 Production
– Volumes expected to increase with Al Hosn Gas project coming on-line.Positive impact from production sharing
U.S. Nat Gas +/- $0.10/mmbtu = +/- $3 mm
Chemical Segment– Positive impact from production sharing
contracts sensitive to price.
• Exploration expense: $60 mm in 4Q14.
• ~$115 mm pre-tax income in 4Q14.
Midstream Segment• Positive impact from start up of
BridgeTex pipeline.
Corporate• 4Q14 Income tax rate: 40%
14* EXCLUDES California volumes
Third Quarter 2014 Earnings – Permian
Permian Resources• 24% production growth (year / year) in 3Q14• 80,000+ boe/d exit rate in 2014E• 100,000+ boe/d exit rate in 2015E
Permian EORPermian Resources
Production
226207
64120+
/d)
Permian Resources211198
5748
212
67 72
216
77
226
(mbo
e/
150 144144147150 148
15
2011 2012 2013 1Q14 2Q14 3Q14 2014E 2015E 2016E
Third Quarter 2014 Earnings –California Resources Spin-Off Update
• Board of Directors authorized California Resources spin-off
– Distribution expected to occur on November 30Major
Producing – Record date is November 17
• Oxy shareholders will receive 0.4 shares of CRC for each share of Oxy
• Oxy will distribute ~310 million shares of CRC
Basins
Sacramento Basin y
and retain ~75 million shares of CRC– After the spin-off and within 18 months, Oxy intends to
conduct an exchange offer for the remaining CRC shares, further reducing Oxy shares outstanding.
Basin
• California Resources completed its debt financing and distributed ~$5.0 billion to Occidental as a tax-free dividend on October 9.
– Dividend of ~$1.2 billion from a term loan / credit facility ill h t ith th i ff
San Joaquin Basin
will happen concurrent with the spin-off
• California operations will be classified as discontinued operations in 4Q14
– Given significant historical investments in California, we expect lower unit rates for cash operating costs DD&A and
Ventura Basin Los
Angeles Basin
expect lower unit rates for cash operating costs, DD&A and F&D costs, and improved reserve replacement ratios on a historical and ongoing basis for Oxy.
16
Oxy Land PositionCRC Fee / Lease Acreage
Third Quarter 2014 Earnings –Strategic Initiative Update
• In the Williston and Piceance basins, given the current product price environment we plan to operate these assets with less capital in order to generate free cash and Hugoton Sale
Strategic Initiatives
p gshift our investment toward our higher growth and higher return operations in the Permian Basin.
• In the Middle East, we continue to make progress in ti ti ith t t d ti l
g
18 Mboe/d – 1Q14
$1.3 bn pre-tax proceeds
negotiations with our partners towards a partial monetization.
– Our goal is to improve the businesses’ ability to grow profitably from a somewhat smaller base.
PAGP IPO
$1.4 bn pre-tax proceedsp y
– Over time, we expect to achieve a similar balance in our asset mix, with at least 60% of our oil and gas production coming from the United States.
California Spin-Off
25% remaining interest
• Over time, we expect to monetize our remaining interest in the General Partner of Plains All American Pipeline which is valued at more than $4 billion, in addition to some other midstream assets when market conditions warrant.
California Spin Off
160 Mboe/d – 3Q14
$6.2 bn after-tax distribution
17
Third Quarter 2014 Earnings – Use of Proceeds
• Expect to generate a large amount of cash proceeds from the strategic initiatives
• The bulk of these proceeds will be used for to share repurchases, we also hope to i t i th b i th h tt ti b lt t i iti ireinvest in the business through attractive bolt-on property acquisitions in our core
area of the Permian Basin.
• Opportunities may exist for accretive property acquisitions that have current production, growth prospects and complement our existing acreage. We have no p oduct o , g o t p ospects a d co p e e t ou e st g ac eage e a e ointention of acquiring public companies.
• We have repurchased approximately 31 mm of the company's shares for nearly $3 billion since the end of 3Q13.
• 76 million shares remain authorized under the current repurchase program.
Shares Outstanding (mm) FY2013 3Q14Shares Outstanding (mm) FY2013 3Q14Weighted Average - Basic 804.1 777.4Weighted Average - Diluted 804.6 777.7Basic Shares Outstanding 795.2 775.4
18
Third Quarter 2014 Earnings – Capital Outlook
• Significant amount of long-term investment, including capital for the BridgeTex pipeline and the Al Hosn Gas project, is nearing completion.
Capital Breakdown Excluding California
• Expect our overall capital program to decline in 2015 given the absence of California and the completion of multiple long-term projects.
Expect a significant decline in our spending in the Midstream• Expect a significant decline in our spending in the Middle East as we begin to reap the benefits of some of our earlier long-term investments.
• Vast majority of capital budgeted for next year will b ll t d t d ti il d d illi
Permian
Midstream, Chemicals, Exploration and Other
be allocated to our domestic oil and gas drilling opportunities where we will maintain flexibility in our budget.
• Some of the reduction in the program on long-term
Other Domestic
projects will be allocated to profitable growth opportunities in Permian Resources, Midstream and Chemicals.
• If lower crude oil prices persist or fall further, we will
MENA
19
adjust our capital program to manage within our cash flow.
Third Quarter 2014 Earnings – Production Outlook
• Expect Permian Resources to deliver production growth of at least 20% in 2015, primarily from oil.
− Expect the Resources business to exit 2014 at over 80,000 BOE per day and to exit 2015 at over 100,000 BOE per day.
• Total domestic production should grow 5% - 8%, reflecting a modest decline in natural gas and NGLs.
• In the Middle East, first production from the Al Hosn Gas project is anticipated later this quarter. Oxy’s net share of production is expected to ramp toward 60,000 BOE per day during the first half of next year.next year.
8 – 10%Production Growth in 2015
Company-wide Oil & Gas Production Excluding California (mboe/d)
580595
580573
20
1Q14 2Q14 3Q14 Permian Growth Al Hosn Start Up 2015 Production Outlook
Note: Excludes California and Hugoton production
Third Quarter 2014 Earnings – Outlook
• We expect our cash balance to exceed our total debt at year end.
• Oxy is built to thrive in this environment with our core properties in theOxy is built to thrive in this environment with our core properties in the Permian EOR business and production sharing contracts in the Middle East which provide relatively stable cash flow.
• Following the execution of the California spin-off, Oxy’s philosophy ofFollowing the execution of the California spin off, Oxy s philosophy of disciplined capital allocation will continue.
– Our core businesses will continue to focus on delivering moderate volume growth, generating higher earnings and cash flow per share, as well as improved g , g g g g p , pfinancial returns.
– Our Permian Resources business will represent the key area of oil growth within our domestic operations.
21
Third Quarter 2014 Earnings –Permian Resources Summary
Total Production (boe/d) 77 000
Growing production and increasing operational efficiency
Active RigsTotal Production (boe/d) 77,000
Oil Production (bbls/d)vs. 2Q-2014
43,000 8% Increase 3Q14
4Q14
19
26
5
4
vs. 3Q-2013 26% Increase
Well Costvs. 2013
20128% Reduction
29% R d ti
2Q14 17 7
Horizontal Verticalvs. 2012 29% Reduction
Capital Expenditures $472MM
Active Rigs 24
Well Activity
6787
7567 5971
Active Rigs 24
Wells Drilled 75 / 44 Hz
Wells Online 71 / 36 Hz
59
Wells Online 71 / 36 Hz1Q14 2Q14 3Q14
Drill Online
22
Third Quarter 2014 Earnings –Permian Resources Core Areas
Delaware BasinDelaware Basin
Bench Gross WellsB S i 1 500
Midland Basin
Bench Gross WellsSpraberry 450
Midland Basin
Bone Spring 1,500 Wolfcamp A 800 Wolfcamp B 650 Wolfcamp C 700 Other 600
Spraberry 450 Wolfcamp A 250 Wolfcamp B 350 Wolfcamp C 550 Wolfcamp D/Cline 700
Central Basin
Platform
Other 600 Vertical 350 Total 4,600 HZ Development Ready 1,450 Net WI Wells 3,500
p /Vertical 200 Total 2,500 HZ Development Ready 1,050 Net WI Wells 2,300
A i l
DevelopmentLegend
Delaware Basin
Val Verde Basin
Appraisal
Val Verde Basin Marathon Thrust Belt
23
Third Quarter 2014 Earnings –Permian Resources Delaware
Delaware BasinGeologic Age
Active RigsBenches
1st Bone Spring
Avalon
Brushy Canyon
Cherry Canyon
Bell CanyonDelawareDelaware
BasinBasin
3Q14
4Q14
11
15
1
2
B
A
3rd Bone Spring
2nd Bone Spring
1st Bone Spring
cam
p
PermianVal Verde Basin
Marathon Thrust Belt
W ll A ti it
2Q14 10 2
Horizontal Vertical
34
4941
35 3340D
C
Wol
fc
DevelopmentLegend
Well Activity
1Q14 2Q14 3Q14
Appraisal
Exploration
1Q14 2Q14 3Q14
Drill Online
24
Third Quarter 2014 Earnings –Permian Resources Delaware
Well PerformanceBOEPD / 1000’Texas Delaware – Wolfcamp A/B
Q3 Avg
Ryman 14 #5H
1 067
1,365
1,355
1,600 292249
311245
Q2 YTD Avg834
1,067
1,175 Barilla Draw
245
303215
‐ 1,000 2,000
Peak 24 Hr 30 Day
Completed zipper frac on Anna Katherine #5H and #6H
R d d l ti t b $700M Reduced completion cost by $700M
Avg. Peak Rate = 1,600 BOEPD; Avg. 30 Day Rate = 1,225 BOEPD
Totsy 206H in Wolfcamp C with Avg. Peak Rate = 1,356 BOEPD and Avg. 30 Day Rate = 912 BOEPD
Increasing sand ol mes b 35% Increasing sand volumes by 35%
Increasing lateral length to 5,500 feet
25
Third Quarter 2014 Earnings –Permian Resources Midland BasinBenches Active Rigs
MidlandMidland
Midland Basin
Y t
Geologic Age
BasinBasin
Middle SpraberryUpper Spraberry
Clear ForkSan AndresGrayburg
Yates
Permian
3Q14
4Q14
8
11
4
2
Val Verde Basin
Marathon Thrust Belt
D / CLINE
C
B
ALower SpraberryMiddle Spraberry
Wol
fcam
p
Permian
2Q14 7 5
Horizontal Vertical
3338
343226
31
Well ActivityD / CLINE
Simpson
Mississippian LimeBarnett Shale
MontoyaOrdovician
Mississippian
Appraisal
DevelopmentLegend
Ellenburgerp
1Q14 2Q14 3Q14
Drill Online
Appraisal
Exploration
26
Third Quarter 2014 Earnings –Permian Resources Midland Basin
934
Spraberry, Wolfcamp A / BWell Performance
128
BOEPD / 1000’Mabee Ranch
St. Andrews
DR 4027H
SCR 3526H
671
913
731
1,437
934 128125
129South Curtis Ranch (SCR)
Guitar
17079
0 1000 2000
Q2 YTD Avg
Q3 Avg
500
541752
731
P k 30 D
12995
Dora Roberts Merchant
Powell Ranch
12281
0 1000 2000Peak 30 Day
Successful Spraberry wells (SCR 3526H, 2 wells flowing back)
Completed 10,000’ Lateral in DR4027H
Continue aggressive testing program in Wolfcamp A/B Well Spacing, cluster spacing and count
Fluid System, Proppant Type and Concentration, Surfactants y , pp yp ,
Increased lateral length and sand concentrations
27
Third Quarter 2014 Earnings –Permian Resources Guidance
Production (Mboe/d)• Strong 2014 performance
Rapidly translating the knowledge 120+ • Rapidly translating the knowledge gained in our appraisal efforts to value
5764 67 72
77 • Positioned required resources to
execute accelerated development in 2015
48 57
• Maintain flexibility to optimize activity levels
• Expect to meet 2014 growth rate of20
11
2012
2013
1Q14
2Q14
3Q14
015E
016E
• Expect to meet 2014 growth rate of 15% to 18%
• On track to meet 2016 production t t f 120+MBOED 2 2 1 2 3 20 20
28
target of 120+MBOED
Third Quarter 2014 Earnings –OXY Permian Gathering / Takeawayg y
Cushing
Centurion
Central/Midland BasinsSENM/
DE Basins
Colorado City
SlaughterBasin
Seaway
BridgeTex (50%) Midland-South
y Sea ay
WTG
Houston
LongHornSouth
Corpus Christi
Cactus 2Q15
B id T St t d U i L t S t 2014
Owned
3rd Party
BridgeTex Started Up in Late Sept 2014
29
Third Quarter 2014 Earnings –Takeaway Capacity Impact on Prices
$102009 2010 2011 2012 2013 2014
Midland WTI to LLS Differential ($/Bbl)
$0
$5
$10
2014 YTD Avg. - (~$12)/Bbl2011-14 YTD Avg. -(~$16)/Bbl
($15)
($10)
($5)
($25)
($20)
($15)
Longhorn
BridgeTex
Start-up
(300MBPD)Sun
Longhorn
Expansion
(50MBPD)
($40)
($35)
($30) Start-up
(225MBPD)
Sun
Start-up
(80MBPD)
(50MBPD)
($40)Balanced Takeaway Constrained Takeaway
30
Third Quarter 2014 Earnings –Permian Infrastructure Value Drivers
$20
$14$16$18$20
~ $0-10+/Bbl
$6$8
$10$12
$/B
bl
~ $1-3/Bbl
~$1-3/Bbl
$0$2$4$6
T iff R Shi P d /ShiT iff R P d /ShiShiTariff Revenue Shipper Producer/Shipper
(Advantaged Pipeline Tariff) (Higher Prices/Mkt Opportunities)
Takeaway Capacity Commitments are Key to Capturing Value
Tariff Revenue Producer/ShipperShipper
Takeaway Capacity Commitments are Key to Capturing Value
* Illustrative Purposes Only 31
Third Quarter 2014 Earnings Conference CallQ&AQ&A
