UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
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, 2008
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
|
Delaware |
1-9210 |
95-4035997 |
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer 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
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 Stephen I. Chazen, Occidental’s President and Chief Financial Officer, in connection with the February 7, 2008, Credit Suisse 2008 Energy Summit.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
|
99.1 |
Presentation dated February 7, 2008 |
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, 2008 |
|
/s/ JIM A. LEONARD |
|
|
|
Jim A. Leonard, Vice President and Controller (Principal Accounting and Duly Authorized Officer) |
EXHIBIT INDEX
|
99.1 |
Presentation dated February 7, 2008 |
EXHIBIT 99.1
February 2008
Stephen I. Chazen
President and
Chief Financial Officer
Credit Suisse
2008 Energy Summit
1
Full Year 2007 Results
($ in millions, except EPS data)
FY2007
FY2006
Reported Net Income
$5,400
$4,191
Reported EPS (diluted)
$6.44
$4.87
Core Results*
$4,405
$4,116
Core EPS (diluted)
$5.25
$4.78
+ 10% year-over-year
Oil and Gas production (mboe/day)
570
545
+5% year-over-year
Capital Spending
$3,497
$2,987
Cash Flow from Operations
$6,800
$6,400
Debt/Capital
7%
13%
ROE
26%
24%
ROCE*
24%
21%
* See attached for GAAP reconciliation
2
Three Distinct Business Models/Strategies
Stable Cash Business
US Oil & Gas
Stable production and long-lived reserves
Lower risk and good returns
High Capital efficiency
Generates large amounts of free cash flow to fund growth
Growth Business
Middle East/North Africa and Latin American Oil and Gas
Strong production growth
High returns
Other Value Enhancing
Chemicals
Midstream Assets
Dividend Growth
Share Repurchase
Cost Reduction Program
3
Worldwide Oil & Gas Operations
Hugoton
California
Permian Basin
Colombia
Libya
Oman
UAE
Yemen
Qatar
Argentina
Bolivia
4
Worldwide Production Outlook
Thousand BOE/Day
Assumes $80 WTI Price
466
2005
545
2006
570
2007
630
620
2008E
Midpoint 2008 growth = 9.6%
Note: As a result of PSC contracts, a -/+ $5 per barrel change in oil prices impacts production by +/- 4 mb/day
5
Reserves Replacement
Million BOE
Organic
Growth
Acquisitions
Total
Reserve
Replace %
Worldwide
Production
(million boe)
2007
182
60
242
116
209
2006
187
326
513
257
200
2005
231
139
370
216
171
2004
201
40
241
145
166
2003
229
107
336
202
166
3-Year Average
200
175
375
194
193
5-Year Average
206
134
340
187
182
6
Oil & Gas Capital Program
($ in millions)
2007
2008E
Growth Capital
1,100
1,400
Base Capital
2,100
2,200
Total Oil & Gas Capital
3,200
3,600
7
US Oil & Gas Operations – Stable Cash
Long Beach
Hugoton
Bravo Dome
Oxy Permian
Houston
Los Angeles
Bakersfield
Sheep Mountain
Elk Hills
&
California
Properties
2007 net production*
359 mboe/day
63% of worldwide total
2007 reserves*
2.15 billion boe
75% of worldwide total
* See attached for GAAP reconciliation.
8
US Oil & Gas Operations – Stable Cash
Thousand BOE/Day
US Oil and Gas Production
331
354
359
2005
2006
2007
Key Operations/Assets:
Permian Basin
California/Elk Hills Field
2007 Financial Data
Pre-tax Income
$4.1 Billion
After-tax Cash**
$2.5 Billion
Capital
$1.4 Billion
ROANCC
20%
ROANCC = Return On Average Net Capitalized Costs. **See www.oxy.com
Excludes production from Horn Mountain (GoM) resulting from asset swap with BP which closed in June 2007.
9
Permian Basin Operations
New Mexico
Colorado
Bravo Dome
Salt Creek
Denver City Unit
Hugoton
Sheep Mountain
Kansas
Lubbock
Texas
Midland
Hobbs
Indian Basin
Area
Sharon Ridge
Cogdell
Seminole
Oxy Acreage
CO2 Pipelines
New Centurion Pipelines
Old Centurion Pipelines
To Cushing, OK
Large resource base
Low decline rate & long-lived
properties
Significant cash generation
Production (mboe per day)
2007: 198
Drilling rate: 300+ wells/yr
Integrate PXP acquisition
CO2 projects on track
Natural area for consolidation
10
California Operations
Bakersfield
Long Beach
Elk Hills
THUMS
Ventura
Los Angeles
Tidelands
California Production
2007: 131 mboe per day
Elk Hills Production (2007)
88 mboe/day
Elk Hills Drilling rate: 260+ wells/yr.
Shallow oil zone
Further shale development
EOR Opportunities
Nitrogen flood
CO2 pilots
Consolidation Opportunities
11
Plains Exploration Transactions
Properties acquired for $1.55 Billion
Occidental will purchase:
50% working interest in PXP's oil & gas properties located in the Permian Basin, West Texas and New Mexico which Oxy will operate.
50% working interest in PXP’s Piceance Basin oil & gas assets. PXP will operate and Oxy expects the properties to deliver multi-year production growth.
92 million boe of proved reserves and 13,500 boe per day of
current production.
12
Middle East/North Africa Oil & Gas – Growth
2007 net production*
135 mboe/day
24% of worldwide total
Qatar
UAE
Oman
Yemen
Libya
2007 reserves*
468 million boe
16% of worldwide total
* See attached for GAAP reconciliation.
13
Middle East/North Africa Oil & Gas – Growth
Thousand BOE/Day
Middle East/North Africa
Oil and Gas Production
103
119
135
2005
2006
2007
Key Operations/Assets:
Dolphin Project
Qatar ISND
Oman/Mukhaizna
Libya
2007 Financial Data
Pre-tax Income
$2.9 Billion
After-tax Cash
$0.8 Billion
Capital
$1.1 Billion
ROANCC**
26%
**ROANCC = Return On Average Net Capitalized Costs.
A-T Cash = Net income from continuing operations minus income owed by Oxy and
paid by
governmental entities on its behalf plus DD&A minus exploration and development costs incurred.
14
UAE / Qatar – Dolphin Project
Oxy’s interest is 24.5%
Gas delivery to UAE markets
began last July
Project expected to be fully
operational this month
Net Production (mboe/d)
2007 Exit Rate
43
1Q ’08E
53
1Q ’08E inc. $90 - $100 mm
at $90 oil price
Net capital $1.1 B at 12/31/07
ROCE similar to Middle
East/North Africa region
15
Oman – Mukhaizna Project
Project Status
173 total new wells drilled
in 2006 & 2007
Implemented a pattern
steam flood
2007 production exit rate
nearly tripled from Sept ‘05
Increase gross production
to 150,000 barrels/day
2008 Work Program
$350 – $375 mm (Net)
Drill approximately 175
wells
Steam flood expansion
continues
16
Libya Exploration & Development
Upcoming exploration wells
30-year agreement for major
redevelopment projects signed in
November 2007, subject to
Libyan government approval.
Covers approximately 2.5 billion
bbls of recoverable oil reserves.
Planned gross capex of $5 B
over 5 years (Oxy share $1.9 B)
Plan to increase gross production
from current rate of 100 mb/d to
300 mb/d.
Oxy group will receive 10 to 12%
of gross production after tax.
Upcoming exploration wells
Blocks 131/NC 150
Areas of recent discoveries
4 wells planned for 2008
17
Latin America Oil & Gas Operations –
Growth
2007 net production*
76 mboe/day
13% of worldwide total
Colombia
Bolivia
Argentina
2007 reserves*
244 million boe
9% of worldwide total
* See attached for GAAP reconciliation.
18
Latin America Oil & Gas Operations –
Growth
Thousand BOE/Day
Latin America
Oil and Gas Production
32
72
76
2005
2006
2007
Key Operations/Assets:
Colombia
Argentina
2007 Financial Data
Pre-tax Income
$0.7 Billion
After-tax Cash
$0.3 Billion
Capital
$0.5 Billion
ROANCC**
14%
**ROANCC = Return On Average Net Capitalized Costs.
A-T Cash = Net income from continuing operations minus income owed by Oxy and
paid by
governmental entities on its behalf plus DD&A minus exploration and development costs incurred.
19
Colombia Operations
Covenas
Ayacucho
Bucaramanga
La Cira Infantas
Venezuela
Colombia
CNA Pipeline
Oleoducto de
Colombia
Vasconia
Barranca
Caricare
Arauca
Caño Limon
Politically Stable Country
Production (mboe per day)
2007: 37
Caño Limon
Legacy Oil Field
Near Field Exploration Success
Contract Life Extended to Field
Economic Limit
La Cira-Infantas
EOR Project With Large
Remaining Reserves
Commercial phase of
development and production
tracking original plans
20
Argentina Operations
Brazil
Cuyo Basin
Uruguay
Neuquen Basin
Argentina
San Jorge Basin
Oxy Blocks
Inventory of 700 drilling locations
2008E: 220 to 240 wells
2007: 156 wells
2007 production – 36 mboe/day
Completion of 8 waterflood projects
initiated in 2007
Additional technology driven
opportunities
Consolidation opportunities
Increase production to 70 mboed
by 2011
21
Other Value Enhancing
Chemicals Operations
Midstream Assets – Pipelines
Dividend Growth
Share Repurchase
Cost Reduction Program
22
Chemicals Operations
($ Millions)
Period ending 12/31/07
3-Year
5-Year
Average
Average
2007
Pre-tax Earnings
$764
$586
$601
Free Cash Flow*
$823
$662
$655
Capital Spending
$225
$190
$251
* See attached for GAAP reconciliation.
23
Capital Allocation Philosophy
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
24
Business Risk Factors
Level of Risk Acceptable to Occidental
Risk Factor
Low
Middle
High
Exploratory
ü
Commodity
ü
Political
ü
Engineering
ü
Reinvestment
ü
Financial
ü
25
Gross Cash Flow Uses
Percentage of Total
2003
2004
2005
2006
2007
Capital
45
43
36
41
40
Acquisitions
19
5
31
26
16
Share Repurchase
—
—
—
21
14
Debt Reduction & Cash
23
42
26
3
21
Dividends
13
10
7
9
9
100
100
100
100
100
26
Creating Shareholder Value – Dividends
Annual Dividend Payout per share
Establishing a track record of consistent dividend increases
$0.50
$0.52
$0.55
$0.645
$0.80
$0.94
$1.00
27
Share Repurchase Program
Spent $1.13 billion to repurchase 20.6 million shares
during 2007 at an average price of $54.75 a share.
Repurchased 51.2 mm shares since program
inception in February 2006 at an average price of
$50.84 a share.
6.3 million shares remained under the current 55
mm share repurchase authorization as of 12/31/07.
28
Cost Reduction Program
Oxy has embarked on a Cost Reduction Program
The impact of the Program:
It will affect operating and G&A costs;
Restructuring charge taken in 2007 totaling $25 mm;
Expect a similar amount to be taken in 2008;
Improvements made in our procurement function;
Combined savings realized from this program are expected to be
$200 mm in 2008 with a longer-term annualized run-rate of $300 mm.
The primary focus of this program is on the more mature
areas of the company, as opposed to our areas of growth.
29
Summary - Corporate Strategy/Philosophy
Focus on core areas – long-term production growth
of 5 - 8% CAGR
US - California & Permian Basin
Middle East/North Africa
Latin America
Maintain strong balance sheet
Maintain “A” credit rating
Maintain investment discipline
Create value
Capture EOR projects with large volumes of oil in place
Acquire assets with upside potential
Maintain top quartile financial returns
Maximize free cash flow from chemicals
Continue to increase the dividend regularly
30
Creating Shareholder Value
Oxy’s Shareholder Equity versus Equity Market Value
• Building a History of Generating Shareholder Value
($ in millions)
Change In
Equity Market Value
Change In
Shareholders’ Equity
Market Value per $ of Equity Retained
1 – Year
$22,560
$3,571
6.3
3 – Year
$40,420
$12,226
3.3
5 – Year
$52,867
$16,505
3.2
10 – Year
$53,571
$18,537
2.9
Financial Data for period ending December 31, 2007.
31
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; operational interruptions; 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. The United
States Securities and Exchange Commission (SEC) permits oil and natural gas
companies, in their filings with the SEC, to disclose only proved reserves demonstrated
by actual production or conclusive formation tests to be economically producible under
existing economic and operating conditions. We use certain terms in this presentation,
such as recoverable reserves, that the SEC's guidelines strictly prohibit us from using in
filings with the SEC. Certain information in this presentation is shown on a combined
basis; however, the information is disclosed separately on our web site
at www.oxy.com.
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.
32
33
|
Occidental Petroleum Corporation |
|
|
|
|
|
Return on Capital Employed (% ) |
|
|
|
|
|
($ Millions) |
|
|
|
|
|
Reconciliation to Generally Accepted Accounting Principles (GAAP) |
2006 |
2007 | ||
|
GAAP measure - earnings applicable to common shareholders |
4,191 |
|
5,400 |
|
|
Interest expense |
131 |
|
199 |
|
|
Tax effect of interest expense |
(46 |
) |
(70 |
) |
|
Earnings before tax-effected interest expense |
4,276 |
|
5,529 |
|
|
GAAP stockholders' equity |
19,252 |
|
22,823 |
|
|
DEBT |
|
|
|
|
|
GAAP debt |
|
|
|
|
|
Debt, including current maturities |
2,790 |
|
1,788 |
|
|
Non-GAAP debt |
|
|
|
|
|
Capital lease obligation |
25 |
|
25 |
|
|
Subsidiary preferred stock |
75 |
|
- |
|
|
Total debt |
2,890 |
|
1,813 |
|
|
Total capital employed |
22,142 |
|
24,636 |
|
|
Return on Capital Employed (%) |
21 |
|
24 |
|
Occidental Petroleum Corporation
Core Results
Reconciliation to Generally Accepted Accounting Principles (GAAP)
|
($ millions, except per-share amounts) |
Twelve |
|
|
|
|
Twelve |
|
|
| ||
|
|
Months |
Diluted |
|
Months |
Diluted | ||||||
|
|
2007 |
EPS |
|
2006 |
EPS | ||||||
|
Total Reported Earnings |
5,400 |
|
$ |
6.44 |
|
|
4,191 |
|
$ |
4.87 |
|
|
Less significant items excluded from core results: |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Russia investment |
412 |
|
|
|
|
|
- |
|
|
|
|
|
Gain on sale of Lyondell shares |
326 |
|
|
|
|
|
90 |
|
|
|
|
|
Litigation settlements |
112 |
|
|
|
|
|
108 |
|
|
|
|
|
Gain on sale of oil & gas interests |
35 |
|
|
|
|
|
- |
|
|
|
|
|
Gain on sale of exploration properties, net of impairments |
29 |
|
|
|
|
|
- |
|
|
|
|
|
Deferred tax reversal - compensation program changes |
- |
|
|
|
|
|
(40 |
) |
|
|
|
|
Severance accrual |
(25 |
) |
|
|
|
|
- |
|
|
|
|
|
Plant closure |
(47 |
) |
|
|
|
|
- |
|
|
|
|
|
Debt purchase expense |
(167 |
) |
|
|
|
|
(31 |
) |
|
|
|
|
Tax effect of pre-tax adjustments |
(2 |
) |
|
|
|
|
(41 |
) |
|
|
|
|
Discontinued operations, net of tax |
322 |
|
|
|
|
|
(11 |
) |
|
|
|
|
Total |
995 |
|
|
|
|
|
75 |
|
|
|
|
|
Total Core Results |
4,405 |
|
$ |
5.25 |
|
|
4,116 |
|
$ |
4.78 |
|
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 |
|
% of Total | |||||||||
|
PRODUCTION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
260 |
|
593 |
|
359 |
|
|
- |
|
- |
|
- |
|
|
260 |
|
593 |
|
359 |
|
|
63% |
|
Latin America |
74 |
|
40 |
|
81 |
|
|
(5 |
) |
- |
|
(5 |
) |
|
69 |
|
40 |
|
76 |
|
|
13% |
|
Middle East / North Africa |
119 |
|
81 |
|
133 |
|
|
2 |
|
- |
|
2 |
|
|
121 |
|
81 |
|
135 |
|
|
24% |
|
Total |
453 |
|
714 |
|
573 |
|
|
(3 |
) |
- |
|
(3 |
) |
|
450 |
|
714 |
|
570 |
|
|
100% |
Natural gas volumes have been converted to equivalent BOE based on energy content of 6,000 cubic feet of gas to one barrel of oil
Worldwide Reserves
Reconciliation to Generally Accepted Accounting Principles (GAAP)
|
|
Consolidated Subsidiaries |
|
Other Interests |
|
Worldwide |
|
| |||||||||||||||
|
|
OIL |
GAS |
BOE |
|
OIL |
GAS |
BOE |
|
OIL |
GAS |
BOE |
|
% of Total | |||||||||
|
RESERVES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US |
1,707 |
|
2,672 |
|
2,152 |
|
|
- |
|
- |
|
- |
|
|
1,707 |
|
2,672 |
|
2,152 |
|
|
75% |
|
Latin America |
214 |
|
208 |
|
249 |
|
|
(5 |
) |
- |
|
(5 |
) |
|
209 |
|
208 |
|
244 |
|
|
9% |
|
Middle East / North Africa |
305 |
|
963 |
|
465 |
|
|
3 |
|
- |
|
3 |
|
|
308 |
|
963 |
|
468 |
|
|
16% |
|
Total |
2,226 |
|
3,843 |
|
2,866 |
|
|
(2 |
) |
- |
|
(2 |
) |
|
2,224 |
|
3,843 |
|
2,864 |
|
|
100% |
Chemicals Free Cash Flow
Reconciliation to Generally Accepted Accounting Principles (GAAP)
($ Millions)
|
|
2003 |
2004 |
2005 |
2006 |
2007 | |||||
|
Occidental Petroleum Consolidated Statement of Cash Flows | ||||||||||
|
Cash flow from operating activities |
3,074 |
|
3,878 |
|
5,337 |
|
6,353 |
|
6,798 |
|
|
Cash flow from investing activities |
(2,131 |
) |
(2,428 |
) |
(3,161 |
) |
(4,383 |
) |
(3,128 |
) |
|
Cash flow from financing activities |
(513 |
) |
(821 |
) |
(1,187 |
) |
(2,819 |
) |
(3,045 |
) |
|
Change in cash |
430 |
|
629 |
|
989 |
|
(849 |
) |
625 |
|
|
Chemicals Free Cash Flow |
|
|
|
|
|
|
|
|
|
|
|
Core results (see reconciliation below) |
221 |
|
416 |
|
784 |
|
906 |
|
601 |
|
|
Depreciation & amortization expense |
221 |
|
260 |
|
268 |
|
279 |
|
304 |
|
|
Roundings |
(2 |
) |
(1 |
) |
1 |
|
1 |
|
1 |
|
|
Capital expenditures (excluding acquisitions) |
(120 |
) |
(155 |
) |
(173 |
) |
(251 |
) |
(251 |
) |
|
Free cash flow |
320 |
|
520 |
|
880 |
|
935 |
|
655 |
|
|
|
Core |
Cash |
Capital |
|
|
|
| |||
|
|
Results |
Flow |
Spending |
|
|
|
| |||
|
3-Year Average (2005-2007) |
764 |
|
823 |
|
225 |
|
|
|
|
|
|
5-Year Average (2003-2007) |
586 |
|
662 |
|
190 |
|
|
|
|
|
|
Segment income |
221 |
|
416 |
|
614 |
|
906 |
|
601 |
|
|
Less: significant items affecting earnings |
|
|
|
|
|
|
|
|
|
|
|
Hurricane insurance charges |
- |
|
- |
|
11 |
|
- |
|
- |
|
|
Write-off of plants |
- |
|
- |
|
159 |
|
- |
|
- |
|
|
Core results |
221 |
|
416 |
|
784 |
|
906 |
|
601 |
|