UNITED STATES
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 7, 2007
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
|
|
10889
Wilshire Boulevard
|
90024 |
|
(Address of principal executive offices) |
(ZIP code) |
Registrant’s telephone number, including area code:
(310) 208-8800
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 7 – Regulation FD
Item 7.01. Regulation FD Disclosure
Attached as Exhibit 99.1 is a presentation made by Occidental management in connection with the February 8, 2007, Credit Suisse Energy Summit.
1
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 7, 2007 |
/s/ Jim A. Leonard | |
|
Jim
A. Leonard, Vice President and Controller
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EXHIBIT INDEX
|
99.1 |
Presentation dated February 2007 |
EXHIBIT 99.1
February 8, 2007
Stephen I. Chazen
Senior Executive Vice President
and
Chief Financial Officer
Credit Suisse
2007 Energy Summit
1
Full-Year 2006 Results
FY2006
FY2005
Core Income ($ mm)*
$4,349
$3,732
Core EPS (diluted)
$5.05
$4.56
ROE
24%
41%
ROCE*
21%
33%
Oil and Gas Earnings ($ mm)
$7,239
$5,968
Oil and Gas production (mboe/d)
601
526
+ 53 mboe/day from Vintage
+ 15 mboe/day from Libya
WTI Oil Price ($/bbl)
$66.23
$56.56
Oxy’s Worldwide Realized Oil price
$56.57
$49.18
Exploration Expenses ($ mm)
$295
$314
Capital Spending ($ mm)
$3,005
$2,324
*See Appendix for GAAP reconciliation
2
2006 Cash Flow
($ in millions)
$8,700
Beginning
Cash
$2,400
Cash
Flow From
Operations
$6,300
Available
Cash
$1,250
Asset Sale
Proceeds
$3,000
Capex
$2,500
Acquisitions
$895
Debt
Reduction
$645
Dividends
$1,500
Share
Repurchase
$190
Other
$1,600
Ending Cash
Balance
12/31/06
3
Corporate Strategy
Focus on core areas - production growth of 5 - 8% CAGR
US - California & Permian Basin
Middle East-North Africa
Latin America
Maintain strong balance sheet
Maintain “A” credit rating
Maintain investment discipline
Create value
Capture EOR projects with large volumes of oil in place
Acquire assets with upside potential
Maintain top quartile financial returns
Maximize free cash flow from chemicals
Continue to increase the dividend regularly
4
Worldwide Oil & Gas Operations
Long Beach
Permian Basin
Horn Mountain
Hugoton
Elk Hills
Colombia
Libya
Pakistan
Oman
U.A.E.
Yemen
Qatar
.
.
Argentina
Bolivia
5
Competitive Advantages
Economies of scale
Infrastructure
Operating experience
Large technical data base
Strong regional relations
6
2006 Reserves Replacement
Production Replacement Rate of 245 Percent
Proved Reserve Additions from All Sources of 518 mm boe,
Compared to Production of 211 mm boe
Total Oil and Gas Costs Incurred of $7.49 Billion*
2006 Year-End Consolidated Reserves Increased 12
Percent from Prior Year to 2.87 Billion boe
2006 Year-End Reserves-to-Production Ratio of 13.6 Years
Increased Proved Developed Reserves to 78 percent of
Total Proved Reserves from 74 percent at Year End 2005
* Excluded in the 2006 acquisitions cost is a related step-up for
deferred income taxes of $1.34 billion for the purchase of Vintage Petroleum Inc.
There was no goodwill recorded for this acquisition.
7
Reserves Replacement
Million BOE
Organic
Growth
Acquisitions
Total
Organic
(% Total)
Worldwide
Production
(million boe)
2006
192
326
518
37
211
2005
233
139
372
63
183
2004
211
40
251
84
181
2003
233
107
340
69
181
2002
168
66
234
72
175
3-Year Average
212
168
380
56
192
5-Year Average
207
136
343
60
186
8
Things To Watch For In 2007
Continued Production Growth In Argentina
Start-Up of the Dolphin Project Around Mid-Year
Continued Ramp-Up in Drilling Activity at the Mukhaizna
Project in Oman
Drilling of 14 to 16 Exploratory Wells in Libya
Expect to Announce Success in Winning at Least Two High
Potential Projects in the Middle East/North Africa This Year
9
Argentina – Growth
2006 production – 36 mboe/day
Inventory of 700 drilling locations
2006: 135 wells
2007: 190 wells
Identified waterflood opportunities
Additional technology driven
opportunities
Consolidation opportunities
Increase production to 70 mboed
by 2011
San Jorge
Basin
Cuyo
Basin
10
UAE / Qatar – Dolphin Project
Oxy’s interest is 24.5%
Project status
Export pipeline complete
Platforms, wells &
receiving facilities on or
ahead of schedule
Project start-up expected
around mid-2007
Ramp up production toward
2 bcf/day by year-end
11
Oman – Mukhaizna Project
Project Overview
Gross Capital – $3.8 Billion
1800+ wells
Central processing facility
Water treatment plant
Steam generation facilities
Pipelines
2007 Work Program
$400 – $450 MM (Net)
Drill approximately 120
wells
Steam injection continues
12
Libya Update
2006 Production of
23 mbbls/day
Expect to drill 14 to
16 exploration wells
in 2007
10 to 12 onshore
wells
4 offshore wells
Seismic completed –
Blocks 106, 124,
163, NC 150,
offshore
2006 Drilling Program
Current Seismic Activity
Completed Seismic Program
NC143
NC145
NC150
NC74
NC144
NC29
36
53
35
52
163
131
59
106
124
103
102
13
Oil & Gas Capital Program
($ in millions)
2006
2007
Growth Capital
650
1,000
Base Capital
2,150
2,100
Total Oil & Gas Capital
2,800
3,100
14
Worldwide Production Outlook
Thousand Barrels/Day
Assumes $50 WTI Price
498
2005
574
2006
610
590
2007E
660
620
2008E
696
636
2009E
730
646
2010E
Excludes production from the Vanyoganneft joint venture in Russia which was sold in January 2007.
15
Worldwide Production Outlook
Does not depend on exploration success
Does not include future acquisitions
Does not include new EOR/development projects
Does not include swap/sale of mature non-
operated properties
Range reflects timing differences
16
Oil Price Sensitivity
WTI Price
($/Barrel)
PSC
Production Impact
(Barrels/Day)
$40
+ 10,000
$60
- 8,000
17
Additional Growth Opportunities
(Thousand BOE/Day)
Production
Growth Rate
Base Production (2010)…….…
646 - 730
5.3%-8.0%
New EOR/development projects
Middle East/North Africa ….
50 - 75
Latin America……………....
20 - 30
Exploration …………………….
20 - 40
Domestic acquisitions ………..
35 - 50
Mature non-operated …………
(10 - 20)
Total ……………………………
761 - 905
8.9%-12.7%
Excludes production from the Vanyoganneft joint venture in Russia which was sold in January 2007.
18
Creating Shareholder Value
New projects must meet expectations for good
returns
Return Targets*
Domestic – 15+%
International – 20+%
Compare new projects & asset acquisitions with
share repurchases
Make decisions based on creating long-term
value for shareholders
*Assumes Moderate Product Prices
19
Creating Shareholder Value
Oxy’s Shareholder Equity versus Equity Market Value
Building a History of Generating Shareholder Value
($ in millions)
Change In
Equity Market Value
Change In
Shareholders Equity
Market Value per $ of Equity Retained
1 - Year
$10,386
$4,152
2.5
3 - Year
$23,166
$11,255
2.1
5 - Year
$32,589
$13,550
2.4
20
Gross Cash Flow Uses
Percentage of Total
2003
2004
2005
2006
Capital
43
43
42
44
Acquisitions
19
5
20
23
Share Repurchase
—
—
—
23
Debt Reduction & Cash
26
42
30
—
Dividends
12
10
8
10
100
100
100
100
21
Conclusion - Focus on Key Metrics
Focus on key performance metrics that drive top
quartile financial returns
Continue to improve quality of assets
Optimize profit/BOE
Keep controllable costs in check
Keep finding & development costs low
Grow reserves at a rate exceeding production
Maintain financial discipline
Maintain “A” credit rating
Optimize free cash flow/BOE
Achieve top quartile returns on equity & capital
employed
Generate top quartile total shareholder returns
22
Occidental Petroleum Corporation
Statements in this presentation that contain words such as "will,"
"expect" or "estimate,"
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: exploration risks such as drilling of unsuccessful
wells, global commodity pricing fluctuations and supply/demand considerations for oil,
gas and chemicals; higher than expected costs; political risks; changes in tax rates;
unrealized acquisition benefits or higher than expected integration costs; and not
successfully completing (or any material delay in) any expansion, capital expenditure,
acquisition or disposition. You should not place undue reliance on these forward-looking
statements which speak only as of the date of this presentation. 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. Additionally, the SEC requires
oil and natural gas companies, in their filings, to disclose non-financial statistical
information about their consolidated entities separately from such information about their
equity holdings and not to show combined totals. Certain information in this presentation
is shown on a combined basis; however, the information is disclosed separately in the
Appendix. U.S investors are urged to consider carefully the disclosure in our Form 10-K,
available through 1-888-699-7383 or at www.oxy.com. You also can obtain a copy from
the SEC by calling 1-800-SEC-0330.
23
24
Appendix
25
Occidental Petroleum
Corporation
Return on Capital Employed (%)
($ Millions)
|
Reconciliation to Generally Accepted Accounting Principles (GAAP) |
2005 |
2006 |
|||
|
GAAP measure - earnings applicable to common shareholders |
5,281 |
4,182 |
|||
|
Interest expense |
201 |
131 |
|||
|
Tax effect of interest expense |
(70 |
) |
(46 |
) | |
|
Earnings before tax-effected interest expense |
5,412 |
4,267 |
|||
|
GAAP stockholders' equity |
15,032 |
19,184 |
|||
|
DEBT |
|
|
|||
|
GAAP debt |
|||||
|
Debt, including current maturities |
2,919 |
2,790 |
|||
|
Non-GAAP debt |
|
|
|||
|
Capital lease obligation |
25 |
25 |
|||
|
Subsidiary preferred stock |
75 |
75 |
|||
|
Trust preferred securities |
- |
- |
|||
|
Total debt |
3,019 |
2,890 |
|||
|
Total capital employed |
18,051 |
22,074 |
|||
|
Return on Capital Employed (%) |
33.3 |
21.3 |
Occidental Petroleum
Corporation
Core Income
Reconciliation to Generally Accepted Accounting Principles (GAAP)
|
($ millions, except per-share amounts) |
Twelve
|
Diluted
|
Twelve
|
Diluted
| ||||||
|
Total Reported Earnings |
4,182 |
$ |
4.86 |
5,281 |
$ |
6.45 | ||||
|
Oil and Gas |
||||||||||
|
Segment earnings |
7,239 |
5,968 |
||||||||
|
Less: |
||||||||||
|
Contract settlement |
- |
(26 |
) |
|||||||
|
Hurricane insurance charge |
- |
(18 |
) |
|||||||
|
Segment core earnings |
7,239 |
6,012 |
||||||||
|
Chemicals |
| |||||||||
|
Segment earnings |
901 |
607 |
||||||||
|
Less: |
||||||||||
|
Write-off of plants |
- |
(159 |
) |
|||||||
|
Hurricane insurance charge |
- |
(11 |
) |
|||||||
|
Segment core earnings |
901 |
777 |
||||||||
|
Total Segment Core Earnings |
8,140 |
6,789 |
||||||||
|
Corporate |
||||||||||
|
Corporate results - non segment * |
(3,958 |
) |
(1,294 |
) |
||||||
|
Less: |
||||||||||
|
Debt purchase expense |
(31 |
) |
(42 |
) |
||||||
|
Gain on sale of Lyondell shares |
90 |
140 |
||||||||
|
Gain on sale of Premcor-Valero shares |
- |
726 |
||||||||
|
State tax issue charge |
- |
(10 |
) |
|||||||
|
Settlement of federal tax issue |
- |
619 |
||||||||
|
Reversal of tax reserves |
- |
335 |
||||||||
|
Deferred tax reversal - compensation program changes |
(40 |
) |
- |
|||||||
|
Equity investment impairment |
- |
(15 |
) |
|||||||
|
Equity investment hurricane insurance charge |
- |
(2 |
) |
|||||||
|
Hurricane insurance charge |
- |
(10 |
) |
|||||||
|
Litigation settlements |
108 |
- |
||||||||
|
Tax effect of pre-tax adjustments |
(41 |
) |
(219 |
) |
||||||
|
Discontinued operations, net of tax |
(253 |
) |
238 |
|||||||
|
Cumulative effect of accounting changes, net of tax |
- |
3 |
||||||||
|
Corporate core results - non segment |
(3,791 |
) |
(3,057 |
) |
||||||
|
Total Core Earnings |
4,349 |
$ |
5.05 |
3,732 |
$ |
4.56 | ||||
* Interest expense, income taxes, G&A expense and other, and non-core items.
Worldwide
Production
Thousand Barrels of Oil Equilavent per Day
Reconciliation to Generally Accepted Accounting Principles (GAAP)
|
Consolidated Subsidiaries |
Other Interests |
Worldwide | ||||||||||||||||||
|
OIL |
GAS |
BOE |
OIL |
GAS |
BOE |
OIL |
GAS |
BOE | ||||||||||||
|
PRODUCTION |
||||||||||||||||||||
|
2005 |
389 |
674 |
501 |
22 |
15 |
25 |
411 |
689 |
526 |
|||||||||||
|
2006 |
456 |
735 |
578 |
19 |
22 |
23 |
475 |
757 |
601 |
|||||||||||
|
Less - Russia |
||||||||||||||||||||
|
2005 |
- |
- |
- |
25 |
15 |
28 |
25 |
15 |
28 |
|||||||||||
|
2006 |
- |
- |
- |
23 |
22 |
27 |
23 |
22 |
27 |
|||||||||||
|
Continuing Operations |
||||||||||||||||||||
|
2005 |
389 |
674 |
501 |
(3 |
) |
- |
(3 |
) |
386 |
674 |
498 |
|||||||||
|
2006 |
456 |
735 |
579 |
(4 |
) |
- |
(4 |
) |
452 |
735 |
574 |
|||||||||