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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 5, 2004
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 Wilshire Boulevard
Los Angeles, California 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Item 9. Regulation FD Disclosure
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Attached as Exhibit 99.1 is the presentation made on February 5, 2004 by
Dr. Dale R. Laurance, President of Occidental Petroleum Corporation, at the 2004
Credit Suisse First Boston Energy Summit.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: February 4, 2004 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
EXHIBIT INDEX
99.1 Presentation made by Dr. Dale R. Laurance
EXHIBIT 99.1
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Occidental Petroleum Corporation
[OXY LOGO]
Dale Laurance
President
Occidental Petroleum Corporation
2004
CREDIT SUISSE FIRST BOSTON
ENERGY SUMMIT
Vail, Colorado
February 5, 2004
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1
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Performance Goals [OXY LOGO]
o Top Quartile Total Return to Shareholders
o Top Quartile Financial Performance
- Return on equity
- Return on capital employed
o Top Quartile Operational Performance
- Profits per BOE
- Free cash flow per BOE
- Finding and development costs per BOE
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2
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Overall Business Strategy [OXY LOGO]
OIL AND GAS
o Focus on large, "legacy" oil
and gas assets in U.S.,
Middle East and Latin
America
[PHOTO]
CHEMICALS
o Harvest cash
BALANCE SHEET
o Maintain strong balance
sheet
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3
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Oil & Gas Business Model [OXY LOGO]
o Create value throughout
the oil & gas business
cycle [PHOTO]
- Exploration
- Enhanced recovery
- Acquisitions
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4
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Return on Equity [OXY LOGO]
Oxy's Ranking Within Oil & Gas Industry: 1997-2002*
[the following is a tabular representation of graphical materials]
1997 1998 1999 2000 2001 2002
- ---------- ---------- ---------- ---------- ---------- ----------
1 1 1 1 1 OXY
2 2 2 OXY OXY 2
3 3 3 3 3 3
4 4 4 4 4 4
5 5 5 5 5 5
6 6 6 6 6 6
7 7 7 7 7 7
8 8 8 8 8 8
9 9 9 9 9 9
10 OXY OXY 10 10 10
11 11 11 11 11 11
OXY 12 12 12 12 12
13 13 13 13 13 13
*Based on rolling three-year averages versus 12 large-cap competitors
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5
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Return on Equity [OXY LOGO]
2000-2002 Average
(Percentage)
[the following is a tabular representation of graphical materials]
STOCK SYMBOL RETURN ON EQUITY
- ------------ ----------------
OXY 22.2
XOM 20.4
UCL 18.7
APA 15.7
BR 15.2
AHC 13.2
CVX 12.3
BP 11.7
KMG 10.1
DVN 8.1
APC 7.3
MRO 7.1
COP 6.5
Income applicable to common shares in 2000-2002 divided by average equity during
the year - per SEC filings.
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6
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Return on Capital Employed [OXY LOGO]
Oxy's Ranking Within Oil & Gas Industry: 1997-2002*
[the following is a tabular representation of graphical materials]
1997 1998 1999 2000 2001 2002
- ---------- ---------- ---------- ---------- ---------- ----------
1 1 1 1 1 1
2 2 2 2 2 OXY
3 3 3 3 OXY 3
4 4 4 4 4 4
5 5 5 OXY 5 5
6 6 6 6 6 6
7 7 7 7 7 7
8 8 8 8 8 8
9 OXY OXY 9 9 9
10 10 10 10 10 10
11 11 11 11 11 11
12 12 12 12 12 12
OXY 13 13 13 13 13
*Based on rolling three-year averages versus 12 large-cap competitors
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7
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Return on Capital Employed [OXY LOGO]
2000-2002 Average
(Percentage)
STOCK SYMBOL RETURN ON CAPITAL EMPLOYED
- ------------ --------------------------
XOM 17.9
OXY 13.7
APA 11.0
UCL 10.9
BP 9.9
BR 9.8
CVX 9.3
AHC 8.3
KMG 6.7
MRO 5.9
DVN 5.5
APC 4.9
COP 4.7
Total 2000-2002 income before interest expense divided by average capital
employed (average debt plys equity); interest is added back after-tax (using 35%
statutory rate, not effective rate). See Addendum for GAAP reconciliation.
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8
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2000-2002 Average Profitability* [OXY LOGO]
$/BOE
STOCK SYMBOL PROFITABILITY
- ------------ -------------
OXY 9.64
APA 6.92
XOM 6.28
BP 5.80
COP 5.38
CVX 5.33
BR 4.97
UCL 4.77
MRO 4.29
APC 4.18
KMG 3.76
AHC 3.64
DVN 3.18
* Exploration & production income after taxes and before interest and
non-recurring impairments - divided by BOE sales.
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9
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2000-2002 Free Cash Flow* [OXY LOGO]
$/BOE
STOCK SYMBOL FREE CASH FLOW
- ------------ --------------
OXY 9.37
AHC 6.01
XOM 5.52
MRO 5.47
BR 5.30
APA 5.05
CVX 4.24
BP 4.13
DVN 3.96
UCL 3.64
KMG 3.59
COP 3.16
APC 0.15
* Exploration and production income after taxes and before interest, plus DD&A,
plus exploration expense, less capital (excluding acquisitions) - divided by
BOE sales. See Addendum for GAAP reconciliation.
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10
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Production Replacement [OXY LOGO]
[the following is a
tabular representation [photo]
of graphical materials]
YEAR PRODUCTION REPLACEMENT
- ---- ----------------------
2001 140%
2002 140%
2003 184%
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11
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Finding & Development Costs [OXY LOGO]
$/BOE - All Sources
[the following is a
tabular representation [photo]
of graphical materials]
YEAR FINDING & DEVELOPMENT COSTS
- ----------------- ---------------------------
2001 $4.80
2002 $4.65
2003 $4.27
2001-2003 Average $4.53
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12
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Finding & Development Costs* [OXY LOGO]
2000-2002 Average
All Sources
($/BOE)
[the following is a tabular representation of graphical materials]
STOCK SYMBOL FINDING & DEVELOPMENT COSTS
- ------------ ---------------------------
OXY 4.09
COP 4.14
XOM 4.41
BP 4.48
CVX 4.56
APA 5.66
BR 7.05
KMG 7.32
DVN 7.93
APC 7.98
UCL 8.14
MRO 10.01
AHC 12.17
* COP adjusted for Conoco purchase
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13
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2002 Proven Reserves By Country [OXY LOGO]
Million BOE
[the following is a tabular representation of graphical materials]
COUNTRY PROVEN RESERVES
- -------- ---------------
US 1,756
Qatar 199
Ecuador 104
Oman 67
Yemen 57
Colombia 47
Russia 47
Pakistan 34
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14
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Production [OXY LOGO]
Thousand BOE/Day
2002 2003 % Increase
-------- -------- ----------
U.S.A. 326,000 345,000 6
Middle East 93,000 94,000 NM
Latin America 48,000 57,000 19
Other 48,000 51,000 7
-------- -------- ----------
Total 515,000 547,000 6
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15
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2003 Acquisitions [OXY LOGO]
Permian Basin
o Proven reserves
* Approximately 103 [photo]
million BOE
o Purchase price
* Approximately
$3.10/BOE
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16
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Latin America - New Projects [OXY LOGO]
[map of Ecuador]
Ecuador
Oxy Net Production 2003 25,000 Barrels/Day
Oxy Net Production 2004 Forecast 45,000 Barrels/Day
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17
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Middle East - New Projects [OXY LOGO]
[map of Middle East]
Dolphin
Oxy's Interest.................................................24.5%
Oxy Net Reserves Estimate.................................300 MM BOE
Oxy Net Production Estimate...........................65,000 BOE/Day
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18
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Oil & Gas Production Forecast [OXY LOGO]
Thosand BOE/Day
[the following is a tabular representation of graphical materials]
2001 2002 2003 2004E 2005E 2006E
------ ------ ------ ------ ------ ------
U.S. 66% 64% 63% 63% 58% 55%
Middle East 18% 18% 17% 17% 22% 26%
Latin America 7% 9% 10% 10% 12% 11%
Other 9% 9% 10% 10% 8% 8%
Total 476 515 547 575* 590* 620*
* 5% Average Annual Growth Rate
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19
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Future Growth Projects [OXY LOGO]
o Exploration
- Current plans to drill 30-40 wells in 2004
o EOR/Development
- Continued application of EOR techniques
* Elk Hills
* Permian
* Qatar
- New opportunities in & around core areas
* Oman gas project (mid-2004)
o Acquisition
- Consolidation opportunities in & around core areas
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20
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Chemicals [OXY LOGO]
o Role of chemicals business
- Generates free cash flow
- Average annual free cash flow 1993-2002
x $260 million/year*
x $290 million/2003
* See Addendum for non-GAAP reconciliation
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21
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Non-core Investments [OXY LOGO]
$ Millions
1/28/04
----------
[LYONDELL LOGO] 39.5 million shares (22%) $ 680
[PREMCOR LOGO] 9.0 million shares (12%) $ 280
----------
$ 960
Implied Value ($/Oxy Share) $2.50
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22
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Total Debt & Debt/Capitalization Ratio [OXY LOGO]
Total Debt - $ Millions
[the following is a tabular representation of graphical materials]
YEAR TOTAL DEBT
- ---- ----------
2000 6,354
2001 4,890
2002 4,759
2003 4,570
Debt/Cap - Percentage
[the following is a tabular representation of graphical materials]
YEAR DEBT/CAP
- ---- --------
2000 57
2001 46
2002 43
2003 37
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23
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Interest Expense [OXY LOGO]
$ Millions
[the following is a tabular representation of graphical materials]
YEAR INTEREST EXPENSE
- ---- ----------------
2000 546
2001 432
2002 320
2003 272*
* Excludes $61 million debt repayment fee
o Impact of $269 million in pre-tax interest savings
- Net improvement of $0.45 per share
- Horn Mountain -
[photo]
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24
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Dividend Increase [OXY LOGO]
o 2002 Board of Directors Actions
- Increased 2003 dividend rate by 4% to $1.04/share
- Announced plans to evaluate dividend policy annually
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25
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Comparative Total Returns [OXY LOGO]
3 Years (12/31/00 - 12/31/03)*
(Percent)
[the following is a tabular representation of graphical materials]
STOCK SYMBOL TOTAL RETURNS
- ------------ -------------
OXY 93.1
APA 36.4
MRO 32.4
COP 19.9
BP 14.4
BR 14.1
CVX 13.7
UCL 2.6
XOM 1.6
DVN (4.9)
KMG (22.6)
AHC (22.8)
APC (26.8)
* Data Source: Bloomberg
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26
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Comparative 2003 Total Returns [OXY LOGO]
(21/31/02 - 12/31/03)*
(Percent)
[the following is a tabular representation of graphical materials]
STOCK SYMBOL TOTAL RETURNS
- ------------ -------------
MRO 61.1
OXY 53.0
APA 50.4
COP 39.8
CVX 35.3
BR 31.3
BP 26.5
DVN 25.2
UCL 23.8
XOM 20.6
KMG 9.3
APC 7.5
AHC (1.0)
* Data Source: Bloomberg
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27
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Corporate Governance [OXY LOGO]
o GovernanceMetrics International (GMI)
- Oxy awarded top corporate governance score
* One of 15 US and 2 Canadian companies out of 1,000 US and
600 international companies to receive a top rating of 10.0
o Institutional Shareholder Services (ISS)
- Oxy ranks in top 5% of S&P 500 Index Companies
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28
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Summary [OXY LOGO]
o Disciplined growth
- Oil & gas production growth averaging 5% per year
- # 1 in profits & free cash flow/BOE
- # 1 in return on equity
- Top quartile returns on capital employed
- Top quartile replacement costs
- Competitive dividend
o Business strategy successful
- Profitable growth
- Disciplined investment decisions
o Top quartile total returns to shareholders
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29
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[OXY LOGO]
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30
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Statements in this presentation that contain words such as "will" or
"expect", or otherwise relate to the future, are forward-looking and
involve risks and uncertainties that could significantly affect
expected results. Factors that could cause results to differ
materially include, but are not limited to: global commodity pricing
fluctuations, and supply/demand considerations, for oil, gas and
chemicals; higher-than-expected costs; and not successfully
completing (or any material delay in) any expansion, capital
expenditure, acquisition, or disposition. Occidental disclaims any
obligation to update any forward-looking statements.
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31
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Addendum [OXY LOGO]
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Return on Capital Employed (ROCE) [OXY LOGO]
Reconciliation to Generally Accepted Accounting Principles (GAAP)
Annual Average
2000-2002
($ Millions)
--------------
GAAP measure - earnings applicable
to common stockholders ------------------------- $ 1,238
Interest Expense --------------------------------- 393
Tax effect of interest expense ------------------- (138)
Earnings before tax-effected interest expense ---- $ 1,493
GAAP average stockholders' equity ---------------- $ 5,575
Average debt
GAAP debt
Notes payable -------------------------------- $ 18
Debt, including current maturities ----------- 3,937
Non-GAAP debt
Capital lease obligation --------------------- 26
Subsidiary preferred stock ------------------- 25
Gas sale agreements -------------------------- 231
Trust preferred securities ------------------- 464
Non-recourse debt ---------------------------- 633
Average total debt ------------------------------- $ 5,334
Total average capital employed ------------------- $ 10,909
ROCE --------------------------------------------- 13.7%
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o Return on capital employed (ROCE) is calculated by dividing earnings
applicable to common shares, before interest expense, by average capital
employed (average debt plus equity); interest is added back after-tax (using a
35% statutory rate, not the effective rate).
o Occidental management considers ROCE a useful measure because it indicates
the return on all capital, both debt and equity, employed in the business.
Occidental management believes that ROCE is an additional measure of efficiency
when used in conjunction with Return on Equity, which measures the return on
only the shareholders' equity portion of the total capital employed.
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Oil & Gas: Free Cash Flow/BOE [OXY LOGO]
Reconciliation to Generally Accepted Accounting Principles (GAAP)
Annual Average
Occidental Petroleum consolidated 2000-2002
statement of cash flow ($ Millions)
--------------
Cash flow from operating activities -------------- $ 2,338
Cash flow from investing activities -------------- (1,797)
Cash flow from financing activities -------------- (564)
Change in cash ----------------------------------- $ (23)
Annual Average
2000-2002
($ Millions)
--------------
FAS 69 GAAP Oil & Gas results of operations ------ $ 1,761
Depreciation, Depletion & Amortization ----------- 744
Exploration expense ------------------------------ 151
Capital expenditures (excluding acquisitions) ---- (942)
Free cash flow from operations ------------------- $ 1,714
Sale volumes (million BOE) ----------------------- 183
Cash flow per BOE -------------------------------- $ 9.37
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o There is no GAAP free cash flow measure comparable to this calculation;
operating cash flow, investing cash flow, financing cash flow, and change in
cash calculated in accordance with GAAP are presented above for reference.
o Oxy calculates free cash flow per barrel of oil equivalent (BOE) by taking
the exploration and production income after taxes but before interest, adding
back the depreciation, depletion & amortization and exploration expense, and
subtracting from that amount, total capital expenditures excluding acquisitions.
The result is then divided by the BOE sale volumes.
o Occidental management believes that free cash flow per BOE is a useful
measure to show the net cash results of the Oil and Gas operation on a per
barrel basis. This measure is useful to compare the performance among companies
of varying sizes.
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Chemicals: Free Cash Flow [OXY LOGO]
Reconciliation to Generally Accepted Accounting Principles (GAAP)
Annual Average
Occidental Petroleum consolidated 2000-2002
statement of cash flow ($ Millions)
--------------
Cash flow from operating activities -------------- $ 1,427
Cash flow from investing activities -------------- (940)
Cash flow from financing activities -------------- (486)
Change in cash ----------------------------------- $ 1
Annual Average
2000-2002
($ Millions)
--------------
GAAP Chemical segment results,
excluding Petrochemicals ----------------------- $ 268
Depreciation, Depletion & Amortization ----------- 174
Capital expenditures (excluding acquisitions) ---- (182)
Free cash flow from operations ------------------- $ 260
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o There is no GAAP free cash flow measure comparable to this calculation;
operating cash flow, investing cash flow, financing cash flow, and change in
cash calculated in accordance with GAAP are presented above for reference.
o Oxy calculates free cash flow by taking Chemical segment income, excluding
the Petrochemical business results, after state taxes but before interest,
adding back the depreciation, depletion & amortization, and subtracting from
that amount, total capital expenditures excluding acquisitions. |X| Occidental
management believes that free cash flow is a useful measure to show net cash
results of the Chemical operations.
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Occidental Petroleum Corporation [OXY LOGO]
FASB 69 Part 2 - Costs Incurred
For the Year Ended December 31, 2003
(in millions)
Consolidated Subsidiaries
-------------------------
United Latin Middle Other Other Total
States America East Eastern Total Interests 3 Worldwide
--------- --------- --------- --------- --------- --------- ---------
Property Acquisition Costs
Proved Properties 345 -- 19 -- 364 -- 364
Unproved Properties 4 -- -- -- 4 -- 4
--------- --------- --------- --------- --------- --------- ---------
349 -- 19 -- 368 -- 368
Exploration Costs 27 30 17 24 98 (1) 97
Development Costs 465 98 516 18 1,097 10 1,107
--------- --------- --------- --------- --------- --------- ---------
Costs Incurred 1 2 841 128 552 42 1,563 9 1,572
========= ========= ========= ========= ========= ========= =========
1 Excludes capitalized CO2 costs of $48 million in 2003
2 Excludes asset retirement obligation current year capitalized costs of $12
million in 2003.
3 Includes equity investees' costs in Russia and Yemen, partially offset by
minority interest for a Colombian affiliate.
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Occidental Petroleum Corporation [OXY LOGO]
FASB 69 Part 4 - Proved Developed and Undeveloped MBOE Reserves Summary
For the Year Ended December 31, 2003
BOE RESERVES
Balance at Dec. 31, 2002 1,755 158 322 34 2,269 42 2,311
Revisions of previous estimates (3) -- 8 1 6 6 12
Improved recovery 69 6 21 -- 96 6 102
Extensions & discoveries 11 11 118 1 141 6 147
Purchases of proved reserves 107 -- -- -- 107 -- 107
Sales of proved reserves (8) -- -- -- (8) -- (8)
Current year production (125) (23) (34) (8) (190) (10) (200)
--------- --------- --------- --------- --------- --------- ---------
Balance at Dec. 31, 2003 1,806 152 435 28 2,421 50 2,471
========= ========= ========= ========= ========= ========= =========
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Occidental Petroleum Corporation [OXY LOGO]
Finding and Development Costs per Barrel and Reserve Replacement
For the Year Ended December 31, 2002
FINDING AND DEVELOPMENT COSTS $ 4.57 $ 7.53 $ 3.76 $ 21.00 $ 4.47 $ 0.50 $ 4.27
Calculation:
Costs incurred 841 128 552 42 1,563 9 1,572
Reserve replacements
Revisions of previous estimates (3) -- 8 1 6 6 12
Improved recovery 69 6 21 -- 96 6 102
Extensions & discoveries 11 11 118 1 141 6 147
Purchases of proved reserves 107 -- -- -- 107 -- 107
--------- --------- --------- --------- --------- --------- ---------
184 17 147 2 350 18 368
--------- --------- --------- --------- --------- --------- ---------
$ 4.57 $ 7.53 $ 3.76 $ 21.00 $ 4.47 $ 0.50 $ 4.27
RESERVE REPLACEMENT 147% 74% 432% 25% 184% 180% 184%
Calculation:
Reserve replacements 184 17 147 2 350 18 368
Production 125 23 34 8 190 10 200
147% 74% 432% 25% 184% 180% 184%
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