OCCIDENTAL PETROLEUM CORPORATIONVicki A. Hollub
President & CEOUBS Global Oil and Gas Conference 2016
May 25, 2016
Vicki A. Hollub
Large Integrated MajorsCompany Market Cap ($B)XOM $372RDS $197CVX $188TOT $120BP $98ENI $55
Characteristics• Low or no growth• Higher returns• Stronger B/S; lower risk• Free cash flow• Consistent dividend growth
Why own Oxy?
Independent E&PsCompany Market Cap ($B)COP $54EOG $45PXD $27APC $25APA $22DVN $18
Characteristics• Generally higher growth• Lower returns• Weaker B/S; higher risk• Little or no free cash flow• Little or no dividends• Moving from gassy to oily
Oxy has positive elements of both groups, appealing to investors who seek a combination of moderate growth, above average returns and consistent dividend growth.
Oxy Uniquely
Positioned
$57 billion
2Updated as of 5/24/2016
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Keys to Success
Balance Sheet Strength• Ended 1Q16 with $3.2 Billion
cash• Debt of $7.6 Billion (24%
debt to capitalization ratio)
Diverse Portfolio• Long life cash flow assets• Significant growth potential
• 5% – 8 % long-term• Flexibility to ramp activity
up or down depending on market conditions
Talent Optimization• Maintain and continue to
develop staff• Increase use of advanced
technology and data analytics
Returns-Focused Strategy• Invest in projects that
generate long-term value with returns above cost of capital • Domestic +15% / Intern. +20%
• Leverage fast growth shale with low-decline EOR
Cash Flow Priorities
1. Base/Maintenance Capital
2. Dividends
3. Growth Capital
4. Share Repurchase
5. Acquisitions
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History Of Returning Cash To Shareholders
5
Period ending 2015 Cash DividendsShare
Repurchases Combined
3 – years $6.0 $4.0 $10.1
5 – years $9.6 $4.9 $14.5
10 – years $14.2 $9.1 $23.3
($ in Billions)
– Additionally, over the 10 years ending 2015:• We reinvested $54 billion of capital in the business;• We made cash acquisitions of $25 billion;• Our long-term debt increased by only $5.5 billion.
– We spun off California Resources Corp. to Oxy shareholders in 2014 valued at ~$2.3 billion.
Oil and Gas Focus Areas
Latin America
• Leading position in the Permian Basin.
• Permian Resources is a growth driver.
• Al Hosn Project, Oman and Qatar.
• Additional opportunities for growth with partner countries.
• Highest margin operations in Colombia.
• Additional opportunities for moderate growth with partner.
Oxy will be positioned to grow
• Oil production• Earnings & Cash Flow
per share• ROCE• Dividend stream
OxyChemHigh FCF, moderate growth business.
Oxy MidstreamIntegrated pipeline and marketing business to maximize realizations.
Oxy Runs A Focused Business
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MENA
United States
7
~$40.00
2014 2015 2016E
Total Spend per Barrel = Capital Spending + G&A + All Operating Costs
Global Oil & Gas Sales Volumes
• Internal performance metric to focus on operational efficiency, especially in consideration of the sharp decline in commodity prices.
• Portion of senior management’s incentive compensation is directly aligned with this performance metric
• Focuses on efficiency, financial returns, and free cash flow generation.
• Designed to help manage the reduction in overall spending while rewarding production growth.
Total Spend Per Barrel
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$13.58
$12.28 $11.86
2015 4Q15 1Q16
Ongoing Domestic Production Costs($/boe)
Overhead (SG&A)($ millions)
$1,503
$1,270
~$1,150
2014 2015 2016Target
Improved Cost Structure
Maintenance Sustaining Growth
2015 2016E
$5.6
$2.8 - $3.0
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2016 Capital Budget($ in bln) • Carefully reduce activity
levels without harming the strong progress on growth prospects
• Fund only those opportunities that exceed hurdle rates of return
• 2016 plan approximates expected cash from operations at around current prices
2016 Capital Outlook
• Multiple long-term investments to drive cash flow and earnings growth– Al Hosn
– Ethylene cracker JV
– Ingleside terminal
– Gas processing
• Capital spending will continue to decline and cash flows and earnings expected to grow as projects start-up.
• Increased flexibility on capital budget in 2016 and 2017
Committed Project Capital($ in millions)
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$1,300
$800
$500
$100
2014 2015 2016E 2017E
Committed Project Capital Declining
EOR Business• 2015 Production - 145 MBOEPD• 1 million net acres• 1.9 Billion BOE remaining in reserves
and resourcesResources (Unconventional)• 2015 Production – 110 BMOEPD• 1.5 million net acres• 8,500 identified well locationsMidstream• 12 processing plants• 1,900 miles of pipeline
– CO2 pipelines– Oil infrastructure and pipelines– Marketing business
Permian Basin Is The Core Domestic Asset
Oxy Acreage
Oil Pipelines
CO2 Pipelines
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Cumulative % of total 3.1 million
BOEPD
Oxy is the Largest Permian Basin Producer
12Source: Wood Mackenzie, 9/23/15, Company Net Working Interest Production Rates
-
50
100
150
200
250
300
350
NET
MB
OEP
D O
PER
ATED
PR
OD
UC
TIO
N Gas Liquids Average
10% 50% 75%
Given the current oil price environment, we will focus on investment to achieve four core goals:
Accelerate geoscience, characterization and modeling programs to enhance recovery, productivity and field economic returns
Minimize base decline and set up major growth programs in both Resources and EOR segments
Focus resources on game changing technologies and applications
Accelerate continued improvements in execution and cost
Expect to operate 4 - 5 rigs in the Permian over the remainder of the year
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2016 Permian Strategy
• 1.5 million net acre position
• Shorter cycle – faster growth
• Significant improvements in capital execution efficiency and reduction in operating expenses
• Will run 2-4 drilling rigs in development areas– Maintain momentum with
efficiency improvements– Continue to optimize ultimate
recoveries• Integrate seismic with data
analytics from producing wells to further evaluate inventory
Permian Resources Summary
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2016 Focus Areas
• Total of ~8,500 locations in horizontal inventory
• ~3,400 total locations economic at less than $60 / barrel which is an increase of approximately 700 locations from previous version
• ~350 locations economic below $40 / barrel
Continuing to lower economic hurdle points through reservoir characterization and optimization, improved productivity, reduced well costs, and faster time to market
Drilling Inventory Based on Q4 Costs
Better Well Productivity and
Lower Cost
4%
14%
40%
48%
60%
100%
Permian Resources – Drilling Inventory
15
16
• Total production grew 31% year-over-year to 128 MBOED.
– Oil production grew 35% year-over-year to 84 MBOD.
• We have leveraged and extended our industry leading practices from our EOR business to drive improvements in base management to minimize decline.
6475
110118
128
35 43 71 76 84
2013 2014 2015 4Q15 1Q16 2Q16EProduction (MBOED)
Oil NGL Gas
Permian Resources Production
Completion optimization efforts have significantly increased value
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• Increased proppant to 1,500 lbs/ft
− Testing up to 2,000 lbs/ft
• Evaluating cluster spacing and fluid design
• Monitoring cumulative production results of
recently drilled extended laterals
• Preparing to transition to produced water base
fluid in development areas to decrease costs82% Oil
Offsetting increased completion costs with continued drilling efficiencies
New Design – 4 Wells 78% Oil
Old Design – 8 Wells 83% Oil
• Decreased drilling cost/lateral ft by greater than 20% from 2015
• Current drilling, completion and hookup cost $5.9mm
• Expect to realize continued savings - 2H 2016 target well cost $5.5mm
Southeast New Mexico Recent Performance
DR
ILLI
NG
DAY
S 4337
20 19 17 1913
2014 1Q15 2Q15 3Q15 4Q15 1Q16 Best
$5.3$2.9 $2.7
$5.6
$3.4 $2.7
2014 Current Best
DrillingCompletions
$10.9
$6.3$5.4
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Permian Resources – Manufacturing ModeW
ELL
CO
ST $
MM
Delaware Wolfcamp A 4,500’ HZ
$3.7$2.3 $1.9
$5.5
$3.8 $3.4
2014 Current Best
DrillingCompletions
$9.2
$6.1$5.3
WEL
L C
OST
$M
M
East Midland Wolfcamp A 7,500’ HZ
46
3120 18 17 16
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2014 1Q15 2Q15 3Q15 4Q15 1Q16 Best
DR
ILLI
NG
DAY
S
• Continued focus on reducing field operating costs during 2016
− Downhole expense $/boe reduced 36% from Q1 2015
− Company operated operating expense down ~37% ($/boe) from Q1 2015
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$13.02
$11.41 $10.87
$9.74 $8.72
$-
$5.00
$10.00
$15.00
1Q15 2Q15 3Q15 4Q15 1Q16
Permian Resources Opex/BOE
Surface Downhole Supports Energy Other
Permian Resources Continued Opex Reduction
• 1.0 million net acres
• Shift more capital to longer-cycle EOR to take advantage of lower cost of materials and services
• Inventory includes projects that have F&D costs of $3-$12/BOE
• Incremental production will come on line in 6-18 months after the start of CO2 injection
• Debottlenecking and bolt-on equipment to existing infrastructure will increase CO2injection capacity by 25% over the next 5 years
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Permian EOR Strategy
CO2 Supply & Processing
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 5 10 15 20 25 30 35 40
Number of Projects
ChevronApache
Kinder Morgan
Exxon
Occidental
Size of bubble = CO2 EOR Production VolumeU.S. CO2 EOR Projects
Num
ber o
f Inj
ectio
n W
ells
DenburyAnadarko
Hess
EOR Survey
• Inject 1.9 billion cubic feet a day• Operate 31 CO2 EOR projects
World Leader in CO2 Enhanced Oil Recovery
Source: Oil & Gas Journal 2012 Biennial EOR Survey
Permian EOR can operate at cash costs as low as $22 per BOE
Sensitive to O&G Prices Partially Discretionary
$14.1
$4.7
$4.7
$4.0
$2.7
$0
$5
$10
$15
$20
$25
$30
$35
Well, SurfMaint
Injectant Energy Taxes SG&A
$ / B
OE
2015 Permian EOR Cost Structure$55 WTI, $3.00 NYMEX
$10.8
$4.0
$2.2$3.2
$1.8
$0
$5
$10
$15
$20
$25
$30
$35
Well, SurfMaint
Injectant Energy Taxes SG&A
$ / B
OE
2015 Permian EOR Cost Structure$35 WTI, $2.00 NYMEX
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Permian EOR Cost Structure
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• The ROZ development is a vertical expansion of the CO2 flooded interval. • Utilize work-over rigs to drill the extra depth into additional CO2 floodable sections of
the reservoir. • The ROZ underlies most of our major EOR properties with current projects in South
Hobbs and West Seminole and can be developed between $3 and $7 per BOE.
ResidualOil Zone
Main OilColumn
GeologicSeal
Water Zone
OriginalProducer
DeepenedROZ
Producer
OriginalInjector New ROZ
Injector
DeepenedROZ
Injector
Producing OilWater Contact
Residual Oil Zone Development
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Middle East Summary
OmanOman
UAEUAE
Focus Areas
• Reduced footprint in the Middle East.
• Strategy is to grow businesses in the core countries of UAE, Oman and Qatar.
• Oxy has stopped investment in Libya, Yemen, and Iraq and has agreed to exit Bahrain.
• The Al Hosn gas project is currently producing over 60 MBoed (net to Oxy).
• At full production, annualized operating cash flow is expected to be $300 to $600 million depending on commodity prices
Middle East Footprint
Al Hosn Project
QatarQatar
Average annual Chemicals EBIT of almost $600 Million over last three years with earnings and cash flow growth expected from the start-up of the Ingleside Ethylene Cracker.
• Currently have spent ~80% of total project capital of ~$725 mm (net) for the MexiChem Ethlyene Cracker JV.
• Facilities to become commercially operational in early 2017.
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Chemicals – Ethylene Cracker Update
MexiChem Ethylene Cracker JV
MexiChem Ethylene Cracker JV
• A key to long term success is to take advantage of this downturn to improve our future:– Major cost structure changes
– Further advances in improved recovery
– Investment in people
– Portfolio expansion
• Diverse portfolio– Two businesses in one of the best basins in the world
– Long life, low decline, value adding, cash flow generating assets
– Flexibility to ramp up or down depending on market conditions
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Summary – Key to Success / Strengths
• Data Analytics
• Technology (new or different)
• Technical excellence of our people
Cautionary StatementPortions of this presentation contain forward-looking statements and involve risks and uncertainties that couldmaterially affect expected results of operations, liquidity, cash flows and business prospects. Words such as"estimate," "project," "predict," "will," "would," "should," "could," "may," "might," "anticipate," "plan," "intend,""believe," "expect," "aim," "goal," "target," "objective," "likely" or similar expressions that convey theprospective nature of events or outcomes generally indicate forward-looking statements. Factors that maycause Occidental's results of operations and financial position to differ from expectations include but are notlimited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’sproducts; higher-than-expected costs; the regulatory approval environment; reorganization or restructuring ofOccidental's operations; not successfully completing, or any material delay of, field developments, expansionprojects, capital expenditures, efficiency projects, acquisitions or dispositions; lower-than-expectedproduction from development projects or acquisitions; exploration risks; general economic slowdownsdomestically or internationally; political conditions and events; liability under environmental regulationsincluding remedial actions; litigation; disruption or interruption of production or manufacturing or facilitydamage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks orinsurgent activity; failure of risk management; changes in law or regulations; or changes in tax rates. Youshould not place undue reliance on these forward-looking statements, which speak only as of the date of thispresentation. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Material risks that may affectOccidental’s results of operations and financial position appear in Part 1, Item 1A “Risk Factors” ofOccidental's 2015 Form 10-K.
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