-1--1-. -2--2- occidental petroleum corporation presented by the red baron’s juanice christian...
TRANSCRIPT
--11----11--
--22----22--
Occidental Petroleum CorporationOccidental Petroleum Corporation
Presented by the Red Baron’sPresented by the Red Baron’s
Juanice ChristianJuanice Christian
Randy CobbRandy Cobb
John LamplJohn Lampl
Ernesto MirandaErnesto Miranda
Eric YostEric Yost
--33----33--
ProgramProgram World Oil ConsumptionWorld Oil Consumption World Oil ProductionWorld Oil Production Hubbert’s PeakHubbert’s Peak Occidental Petroleum CorporationOccidental Petroleum Corporation
– Business ModelBusiness Model– CompetitorsCompetitors– ProductionProduction– FinancialsFinancials– ThreatsThreats
Red Baron’s ForecastRed Baron’s Forecast
--44----44--1
Spring 1999 Fall 2003
Source: The Economist
The Changing Perception of the Oil Industry’s Dynamics
PETRIE PARKMAN & Co.
Summer 2004 Summer 2004Source: The EconomistSource: The Economist
Is the U.S. Running Out of Oil?
Accordingly, in practical terms, the U. S. issue is already resolved.
The remaining question is:
World
--66----66--
World Oil Trading to Meet Demand
Source: BP
--77----77--
World Per Capita Annual Oil ConsumptionWorld Per Capita Annual Oil Consumption
0
5
10
15
20
25
30
U.S.
South
Kor
ea
Japa
n
Ger
man
y
Russia
Brazil
China
India
(Bb
ls)
∆ Demand ?
--88----88--
US Oil DemandUS Oil Demand
Source: http://www.eia.doe.govSource: http://www.eia.doe.gov
--99----99--
US Import SupplyUS Import Supply
Source: http://www.eia.doe.govSource: http://www.eia.doe.gov
--1010----1010--
--1111----1111--
--1212----1212--
0
5
10
15
20
25
30
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
E
2009
E
2014
E
2019
E
2024
E
Mill
ion
Ba
rre
ls p
er
da
y
United States Britain and Norway Persian Gulf Nations
Predicted production curve
Results match Hubbert’s prediction
World Oil Production – “Hubbert’s Peak”World Oil Production – “Hubbert’s Peak”
Source: Deffeyes, K.S. (2001), Hubbert’s Peak 5 PETRIE PARKMAN & Co.
?
--1313----1313--
Source: http://www.eia.doe.govSource: http://www.eia.doe.gov
--1414----1414--
0
20
40
60
80
100
120
140
160
180
200
Thousands
2002 1999 1996 1993 1990 1987 1984 1981 1978 1975 1972 1969 1966 1963 1960
Year
FIVE HIGHEST STATES'S # OIL WELLS
Oklahoma
Louisiana
Arkansas
Texas
CaliforniaSource: http://www.eia.doe.govSource: http://www.eia.doe.gov
--1515----1515--
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
70
19
68
19
66
19
64
19
62
19
60
19
58
0
200
400
600
800
1000
1200
1400
Millions
Year
Five Highest State's Oil Production
Oklahoma
Louisiana
Arkansas
Texas
California
Source: http://www.eia.doe.govSource: http://www.eia.doe.gov
--1616----1616--
A Popular Topic, but No Clear Public Consensus
“We’re draining our reserves dry.”
“Enough oil to last for 500 years.”
Houston Chronicle
May 30, 2004
Llewellyn King
Chairman & CEO
King Publishing Co.
Publisher for:
White House Weekly
& Energy Daily
Houston Chronicle
May 30, 2004
H. Sterling Burnett
Senior Fellow
National Center for
Policy Analysis
--1717----1717--
Red Baron’s View is that both statements are correct,
“We’re draining our reserves dry.”
Houston Chronicle
May 30, 2004
Llewellyn King
Chairman & CEO
King Publishing Co.
Publisher for:
White House Weekly
& Energy Daily
“Enough oil to last for 500 years .”
Houston Chronicle
May 30, 2004
H. Sterling Burnett
Senior Fellow
National Center for
Policy Analysis
CheapRed Baron’s Edit
^
, if the price is high enough.
Red Baron’s Edit
^
with slight editing….
--1818----1818--
March 5, 2005
--1919----1919--
--2020----2020--
--2121----2121--
Financial Information (millions of dollars) Q303 Q304 % Change
Corporate
Revenue (24)c 178,584 231,026 29.4
Net Income (24) 10,515 16,356 55.5
Worldwide Lines of Business Net Income
Petroleum (26) d 13,98 19,934 42.5
Oil and Natural Gas Production (20)e 10,821 14,552 34.5
Refining/Marketing (13)e 3,168 5,382 69.9
Downstream Natural Gas and Power (9) 773 998 29.2
Chemicals (9) 392 1,527 289.8
Domestic Net Income by Function
Oil and Natural Gas Production (13) 5,376 6,399 19.0
Refining/Marketing (13) 2,552 3,830 50.1
Foreign Net Income by Function
Oil and Natural Gas Production (6)
3,309 4,989 50.8
Refining/Marketing (4)
865 1,552 79.3
OCCIDENTAL PETROLEUM CORP OCCIDENTAL PETROLEUM CORP (NYSE: OXY)(NYSE: OXY)
--2222----2222--
--2323----2323--
Major Oil CompaniesMajor Oil Companies
--2424----2424--
0
10
20
30
40
50
60
70
80
Num
ber
Of
Com
pani
es
Industry Consolidation
14
Number of Independent Companies with Number of Independent Companies with Mkt Cap > $150 MM Mkt Cap > $150 MM
PETRIE PARKMAN & Co.
Source: http://www.eia.doe.govSource: http://www.eia.doe.gov
--2525----2525--
--2626----2626--
--2727----2727--
--2828----2828--
--2929----2929--
--3030----3030--
Refining/DownstreamRefining/Downstream
--3131----3131--
Hurricane IvanHurricane Ivan
--3232----3232--
Other Forces / Considerations
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
01/0
4/99
06/2
1/99
12/0
6/99
05/2
2/00
11/0
6/00
04/2
3/01
10/0
8/01
03/2
5/02
09/0
9/02
02/2
5/03
08/1
2/03
01/2
7/04
07/1
3/04
70.00
80.00
90.00
100.00
110.00
120.00
130.00
140.00
US $ per Euro Yen per $ US
US DollarUS Dollar
$1 = $1 = 0.757863EUR0.757863EUR2/27/052/27/05
$1 =$1 = 105.21 JPY105.21 JPY2/27/052/27/05
--3333----3333--
--3434----3434--
0%
1%
2%
3%
4%
5%
6%
7%
01/0
1/89
01/0
1/90
01/0
1/91
01/0
1/92
01/0
1/93
01/0
1/94
01/0
1/95
01/0
1/96
01/0
1/97
01/0
1/98
01/0
1/99
01/0
1/00
01/0
1/01
01/0
1/02
01/0
1/03
01/0
1/04
CPI Core CPI
01/0
1/05
01/0
1/05
InflationInflation
--3535----3535--
Changes in the Federal Fund Rate Changes in the Federal Fund Rate
SOURCE: The Washington Post | GRAPHIC: washingtonpost.comSOURCE: The Washington Post | GRAPHIC: washingtonpost.com
--3636----3636--
--3737----3737--
250
270
290
310
330
350
370
Jan-9
3
Oct-93
Jul-9
4
Apr-95
Jan-9
6
Oct-96
Jul-9
7
Apr-98
Jan-9
9
Oct-99
Jul-0
0
Apr-01
Jan-0
2
Oct-02
Jul-0
3
Apr-04
mm
bls
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$/bo
Inventory Oil Price
Source: BloombergSource: Bloomberg
U.S. Crude Oil Inventory VS Oil Price(The Last 13+ years)
Economic Jaws of Inventory & Price – Leading Indicator or Symptomatic Result?
--3838----3838--
Free Markets At Work:Free Markets At Work:
Impact of Rising Prices
•Conservation & Demand destruction
•Fuel switching
•Reserve & production expansion
•Increase in service costs
•Innovation & technology are rewarded ($$$)
Impact of Low Prices
•Unrestrained use & Demand stimulation
•Fuel switching
•Reserve & production contraction
•Pressure on service costs
•Low cost operators are rewarded ($$$) & technology advances
Sample Factors
--3939----3939--
Accuracy of the Market’s Vision on Prices
$10.00$15.00$20.00$25.00$30.00$35.00$40.00$45.00$50.00
Jan-
95Ju
l-95
Jan-
96Ju
l-96
Jan-
97Ju
l-97
Jan-
98Ju
l-98
Jan-
99Ju
l-99
Jan-
00Ju
l-00
Jan-
01Ju
l-01
Jan-
02Ju
l-02
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06
Actual Price
Forward Curve
Source: BloombergSource: Bloomberg
--4040----4040--
ConclusionConclusion World Oil Consumption - IncreasingWorld Oil Consumption - Increasing World Oil Production – Increasing to Meet DemandWorld Oil Production – Increasing to Meet Demand Hubbert’s Peak – Will Not Last ForeverHubbert’s Peak – Will Not Last Forever Occidental Petroleum CorporationOccidental Petroleum Corporation
– Business Model Business Model – CompetitorsCompetitors– ProductionProduction– FinancialsFinancials– ThreatsThreats
Red Baron’s Forecast Red Baron’s Forecast
Anything Is PossibleAnything Is Possible
--4141----4141--
Thank YouThank You
From the Red BaronsFrom the Red Barons
Juanice ChristianJuanice Christian
Randy CobbRandy Cobb
John LamplJohn Lampl
Ernesto MirandaErnesto Miranda
Eric YostEric Yost
You Decide
You Decide