form8k-20130730.htm
 
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) July 30, 2013

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

Not Applicable
(Former name or former address, if changed since last report)

 
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):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition

On July 30, 2013, Occidental Petroleum Corporation released information regarding its results of operations for the three and six months ended June 30, 2013.  The exhibits to this Form 8-K and the information set forth in this Item 2.02 are being furnished pursuant to Item 2.02, Results of Operations and Financial Condition.  The full text of the press release is attached to this report as Exhibit 99.1.  The full text of the speeches given by Cynthia L. Walker and Stephen Chazen are attached to this report as Exhibit 99.2.  Investor Relations Supplemental Schedules are attached to this report as Exhibit 99.3.  Earnings Conference Call Slides are attached to this report as Exhibit 99.4.  Forward-Looking Statements Disclosure for Earnings Release Presentation Materials is attached to this report as Exhibit 99.5.  The information in this Item 2.02 and Exhibits 99.1 through 99.5, inclusive, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.


Section 8 – Other Events

Item 8.01.  Other Events

On July 30, 2013, Occidental Petroleum Corporation announced net income for the second quarter of 2013 of $1.3 billion ($1.64 per diluted share), compared with $1.3 billion ($1.64 per diluted share) for the second quarter of 2012.  The second quarter of 2013 included non-core items amounting to a net after-tax benefit of $46 million.  After excluding the non-core items, core income was slightly less than $1.3 billion ($1.58 per diluted share) for the second quarter of 2013, compared with $1.3 billion ($1.64 per diluted share) for the second quarter of 2012.

QUARTERLY RESULTS

The non-core items in the second quarter of 2013 included an $85 million after-tax gain from the sale of an investment in Carbocloro, a Brazilian chemical facility, and a $34 million after-tax charge for the estimated cost related to the employment and post-employment benefits for the Company's former Executive Chairman and the termination of certain other employees and consulting arrangements.

Oil and Gas

Oil and gas segment earnings were $2.1 billion for the second quarter of 2013, compared with $2.0 billion for the second quarter of 2012. The current quarter results reflected higher liquids volumes, lower operating costs and higher domestic realized prices for oil and natural gas, partially offset by higher DD&A rates and lower Middle East/North Africa realized oil prices.

Operating costs dropped significantly during the second quarter of 2013, compared with the second quarter of 2012.  The second quarter of 2013 domestic operating costs were $14.28 per barrel, compared to $17.73 in the second quarter of 2012 and $17.43 for the full year 2012.  For the entire company, the second quarter 2013 costs were $13.40 per barrel, compared to $14.99 for both the second quarter of 2012 and full year 2012.

For the second quarter of 2013, daily oil and gas production volumes averaged 772,000 barrels of oil equivalent (BOE), compared with 766,000 BOE in the second quarter of 2012. The second quarter
 
 
1
 
 
 
 
2013 production increase resulted from an 8,000 BOE per day increase in volumes from domestic operations, partially offset by lower volumes of 2,000 BOE per day from international operations.  Domestic production increases were achieved in California and the Permian.  Our second quarter domestic production was negatively impacted by 3,000 BOE per day due to severe storms in West Texas and the effect of planned turnarounds in the Permian.  Internationally, Colombian production was lower due to higher insurgent activity.  The impact of full cost recovery and other adjustments reduced production by 8,000 BOE per day.  Daily sales volumes increased from 759,000 BOE in the second quarter of 2012 to 764,000 BOE in the second quarter of 2013.  Sales volumes were lower than production volumes due to the timing of liftings in Middle East/North Africa and Colombia, which lowered pre-tax earnings for the second quarter by approximately $75 million.

Oxy’s realized price for worldwide crude oil declined by over 1 percent to $97.91 per barrel for the second quarter of 2013, compared with $99.34 per barrel for the second quarter of 2012.  Domestic crude oil prices improved 3 percent in the second quarter of 2013 to $95.08 per barrel, compared to $92.34 per barrel in the second quarter of 2012.  Middle East/North Africa prices declined 7 percent on a year-over-year basis to $101.83 per barrel in the second quarter of 2013, compared to $109.70 in the second quarter of 2012.  Worldwide NGL prices were $38.78 per barrel in the second quarter of 2013, compared with $42.06 per barrel in the second quarter of 2012.  Domestic gas prices increased 83 percent in the second quarter of 2013 to $3.82 per MCF, compared with $2.09 in the second quarter of 2012.

On a sequential quarterly basis, prices were about flat for worldwide oil, down 4 percent for NGLs and up 24 percent for domestic natural gas.  Domestic realized oil prices increased by about 4 percent while Middle East/North Africa prices decreased by about 5 percent, collectively resulting in flat prices worldwide.

Chemical

Chemical core earnings for the second quarter of 2013, after exclusion of the $131 million pre-tax gain from the sale of the investment in Carbocloro, were $144 million, compared with $194 million in the second quarter of 2012.  The lower earnings resulted from lower caustic soda export volumes due to continued weak economic conditions in Europe and slowing demand in Asia, particularly within the pulp and paper and alumina segments; reduced alumina demand in South America; continued weak export chlorinated organics pricing resulting from new organics production in Asia; and higher energy and feedstock costs.

Midstream, Marketing and Other

Midstream segment earnings were $48 million for the second quarter of 2013, compared with $77 million for the second quarter of 2012.  The decrease in earnings was caused by lower marketing and trading performance.

SIX-MONTH RESULTS

Net income for the first six months of 2013 was $2.7 billion ($3.32 per diluted share), compared with $2.9 billion ($3.55 per diluted share) for the same period in 2012.  Year-to-date 2013 core income was $2.6 billion ($3.27 per diluted share), compared with $2.9 billion ($3.56 per diluted share) for the same period in 2012.
 
 
2
 
 
 
 
Oil and Gas

Oil and gas segment earnings were $4.0 billion for the six months of 2013, compared with $4.5 billion for the same period of 2012.  The $500 million decrease reflected lower worldwide oil and NGL prices and higher DD&A rates, partially offset by higher domestic gas prices and lower operating costs.

Oil and gas production volumes for the six months were 768,000 BOE per day for 2013, compared with 760,000 BOE per day for the 2012 period.  Year-over-year, our domestic production increased by about 3.5 percent or 16,000 BOE per day.  In the second quarter of 2013, volumes were negatively impacted by severe storms in West Texas and the planned turnarounds in the Permian.  International production was 8,000 BOE per day lower due to a first quarter 2013 planned maintenance turnaround in Qatar, the impact of full cost recovery at our Dolphin operations and higher insurgent activity in Colombia.    Daily sales volumes were 755,000 BOE in the first six months of 2013, compared with 752,000 BOE for 2012. Sales volumes were lower than production volumes due to the timing of liftings in Middle East/North Africa.

Oxy's realized prices declined for crude oil and NGLs but increased for domestic natural gas on a year-over-year basis.  Worldwide realized crude oil prices were $97.99 per barrel for the six months of 2013, compared with $103.63 per barrel for the six months of 2012.  Worldwide NGL prices were $39.52 per barrel for the six months of 2013, compared with $47.52 per barrel for the six months of 2012.  Domestic gas prices increased from $2.46 per MCF in the six months of 2012 to $3.44 per MCF in the six months of 2013.

Chemical

Chemical core earnings were $303 million for the six months of 2013, compared with $378 million for the same period in 2012.  The lower 2013 earnings were primarily the result of higher energy and feedstock prices and continued weak export chlorinated organics pricing resulting from new organics production in Asia, partially offset by modest volume improvements across most products.

Midstream, Marketing and Other

Midstream segment earnings were $263 million for the six months of 2013, compared with $208 million for the same period in 2012.  The 2013 results reflected improved performance in marketing and trading in the first quarter of 2013 and better results in the power generation business, offset by weaker results in the gas processing and foreign pipeline businesses.

Forward-Looking Statements

Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance.  Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns domestically or internationally; political conditions and events; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks or
 
 
3
 
 
 
 
 insurgent activity; failure of risk management; changes in law or regulations; or changes in tax rates. 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 the prospective nature of events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. 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 affect Occidental’s results of operations and financial position appear in Part 1, Item 1A "Risk Factors" of the 2012 Form 10-K.  Occidental posts or provides links to important information on its website at www.oxy.com.
 
 
4
 
 
 
 
 
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Second Quarter
 
Six Months
($ millions, except per-share amounts)
 
2013
 
2012
 
2013
 
2012
SEGMENT NET SALES
                               
Oil and Gas
 
$
4,721
   
$
4,495
   
$
9,161
   
$
9,397
 
Chemical
   
1,187
     
1,172
     
2,362
     
2,320
 
Midstream, Marketing and Other
   
269
     
262
     
722
     
655
 
Eliminations
   
(215
)
   
(161
)
   
(411
)
   
(336
)
                                 
Net Sales
 
$
5,962
   
$
5,768
   
$
11,834
   
$
12,036
 
                                 
SEGMENT EARNINGS
                               
Oil and Gas
 
$
2,100
   
$
2,043
   
$
4,020
   
$
4,547
 
Chemical (a)
   
275
     
194
     
434
     
378
 
Midstream, Marketing and Other
   
48
     
77
     
263
     
208
 
     
2,423
     
2,314
     
4,717
     
5,133
 
                                 
Unallocated Corporate Items
                               
Interest expense, net
   
(29
)
   
(25
)
   
(59
)
   
(53
)
Income taxes
   
(901
)
   
(875
)
   
(1,745
)
   
(2,014
)
Other (b)
   
(166
)
   
(82
)
   
(227
)
   
(174
)
                                 
Income from Continuing Operations
   
1,327
     
1,332
     
2,686
     
2,892
 
Discontinued operations, net
   
(5
)
   
(4
)
   
(9
)
   
(5
)
                                 
NET INCOME
 
$
1,322
   
$
1,328
   
$
2,677
   
$
2,887
 
                                 
BASIC EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.65
   
$
1.64
   
$
3.33
   
$
3.56
 
Discontinued operations, net
   
(0.01
)
   
-
     
(0.01
)
   
(0.01
)
   
$
1.64
   
$
1.64
   
$
3.32
   
$
3.55
 
                                 
DILUTED EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.64
   
$
1.64
   
$
3.33
   
$
3.56
 
Discontinued operations, net
   
-
     
-
     
(0.01
)
   
(0.01
)
   
$
1.64
   
$
1.64
   
$
3.32
   
$
3.55
 
AVERAGE COMMON SHARES OUTSTANDING
                               
BASIC
   
804.9
     
810.3
     
804.8
     
810.4
 
DILUTED
   
805.4
     
811.0
     
805.3
     
811.2
 
                                 
(a) Chemical - The second quarter and six months of 2013 include a $131 million pre-tax gain for the sale of an
 investment in Carbocloro, a Brazilian chemical facility.
(b) Unallocated Corporate Items - Other - The second quarter and six months of 2013 include a $55 million pre-tax
 charge for the estimated cost related to the employment and post-employment benefits for the Company's former
 Executive Chairman and termination of certain other employees and consulting arrangements.
 
 
5
 
 
 
 
 
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Second Quarter
 
Six Months
($ millions)
 
2013
 
2012
 
2013
 
2012
CAPITAL EXPENDITURES
 
$
2,210
   
$
2,713
   
$
4,280
   
$
5,125
 
                                 
DEPRECIATION, DEPLETION AND
                               
AMORTIZATION OF ASSETS
 
$
1,303
   
$
1,087
   
$
2,562
   
$
2,172
 
 
 
6
 
 
 
 
 
Attachment 3
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
                                 
Occidental's results of operations often include the effects of significant transactions and events affecting earnings that vary widely and unpredictably in nature, timing and amount. Therefore, management uses a measure called "core results," which excludes those items. This non-GAAP measure is not meant to disassociate those items from management's performance, but rather is meant to provide useful information to investors interested in comparing Occidental's earnings performance between periods. Reported earnings are considered representative of management's performance over the long term. Core results is not considered to be an alternative to operating income reported in accordance with generally accepted accounting principles.
                                 
   
Second Quarter
($ millions, except per-share amounts)
 
2013
 
Diluted
EPS
 
2012
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
1,322
   
$
1.64
   
$
1,328
   
$
1.64
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
2,100
           
$
2,043
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
2,100
             
2,043
         
                                 
Chemicals
                               
Segment Earnings
   
275
             
194
         
Add:
                               
Carbocloro sale gain
   
(131
)
           
-
         
                                 
Segment Core Results
   
144
             
194
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
48
             
77
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
48
             
77
         
                                 
Total Segment Core Results
   
2,292
             
2,314
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(1,101
)
           
(986
)
       
Add:
                               
Charge for former executives and
                               
consultants **
   
55
             
-
         
Tax effect of pre-tax adjustments
   
25
             
-
         
Discontinued operations, net ***
   
5
             
4
         
                                 
Corporate Core Results - Non Segment
   
(1,016
)
           
(982
)
       
                                 
TOTAL CORE RESULTS
 
$
1,276
   
$
1.58
   
$
1,332
   
$
1.64
 
 
Interest expense, income taxes, G&A expense and other.
**
Reflects pre-tax charge for the estimated cost related to the employment and post-employment benefits for the
 
Company's former Executive Chairman and termination of certain other employees and consulting arrangements.
***
Amounts shown after tax.
 
 
7
 
 
 
 
 
Attachment 4
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                 
   
Six Months
($ millions, except per-share amounts)
 
2013
 
Diluted
EPS
 
2012
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
2,677
   
$
3.32
   
$
2,887
   
$
3.55
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
4,020
           
$
4,547
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
4,020
             
4,547
         
                                 
Chemicals
                               
Segment Earnings
   
434
             
378
         
Add:
                               
Carbocloro sale gain
   
(131
)
           
-
         
                                 
Segment Core Results
   
303
             
378
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
263
             
208
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
263
             
208
         
                                 
Total Segment Core Results
   
4,586
             
5,133
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(2,040
)
           
(2,246
)
       
Add:
                               
Charge for former executives and
                               
consultants **
   
55
             
-
         
Tax effect of pre-tax adjustments
   
25
             
-
         
Discontinued operations, net ***
   
9
             
5
         
                                 
Corporate Core Results - Non Segment
   
(1,951
)
           
(2,241
)
       
                                 
TOTAL CORE RESULTS
 
$
2,635
   
$
3.27
   
$
2,892
   
$
3.56
 

*
Interest expense, income taxes, G&A expense and other.
**
Reflects pre-tax charge for the estimated cost related to the employment and post-employment benefits for the
 
Company's former Executive Chairman and termination of certain other employees and consulting arrangements.
***
Amounts shown after tax.
 
 
8
 
 
 
 
 
Attachment 5
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Second Quarter
 
Six Months
   
2013
 
2012
 
2013
 
2012
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
                               
United States
                               
Oil (MBBL)
                               
California
   
88
     
88
     
88
     
87
 
Permian
   
145
     
138
     
146
     
139
 
Midcontinent and Other
   
28
     
23
     
28
     
20
 
Total
   
261
     
249
     
262
     
246
 
                                 
NGLs (MBBL)
                               
California
   
21
     
15
     
20
     
15
 
Permian
   
39
     
39
     
39
     
39
 
Midcontinent and Other
   
17
     
19
     
18
     
19
 
Total
   
77
     
73
     
77
     
73
 
                                 
Natural Gas (MMCF)
                               
California
   
260
     
269
     
262
     
268
 
Permian
   
160
     
151
     
168
     
153
 
Midcontinent and Other
   
372
     
420
     
378
     
416
 
Total
   
792
     
840
     
808
     
837
 
                                 
Latin America
                               
Oil  (MBBL) - Colombia
   
28
     
31
     
29
     
27
 
                                 
Natural Gas (MMCF) - Bolivia
   
13
     
14
     
13
     
14
 
                                 
Middle East / North Africa
                               
Oil (MBBL)
                               
Dolphin
   
7
     
9
     
6
     
9
 
Oman
   
67
     
62
     
66
     
63
 
Qatar
   
75
     
74
     
67
     
73
 
Other
   
44
     
36
     
45
     
41
 
Total
   
193
     
181
     
184
     
186
 
                                 
NGLs (MBBL)
                               
Dolphin
   
7
     
9
     
7
     
9
 
                                 
Natural Gas (MMCF)
                               
Dolphin
   
145
     
194
     
139
     
183
 
Oman
   
56
     
57
     
56
     
57
 
Other
   
232
     
230
     
238
     
224
 
Total
   
433
     
481
     
433
     
464
 
                                 
                                 
Barrels of Oil Equivalent (MBOE)
   
772
     
766
     
768
     
760
 
 
 
9
 
 
 
 
 
Attachment 6
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Second Quarter
 
Six Months
   
2013
 
2012
 
2013
 
2012
NET OIL, GAS AND LIQUIDS SALES PER DAY
                               
                                 
United States
                               
Oil (MBBL)
   
261
     
249
     
262
     
246
 
NGLs (MBBL)
   
77
     
73
     
77
     
73
 
Natural Gas (MMCF)
   
795
     
835
     
810
     
835
 
                                 
Latin America
                               
Oil  (MBBL) - Colombia
   
26
     
31
     
28
     
27
 
                                 
Natural Gas (MMCF) - Bolivia
   
13
     
14
     
13
     
14
 
                                 
Middle East / North Africa
                               
Oil (MBBL)
                               
Dolphin
   
7
     
8
     
6
     
8
 
Oman
   
63
     
60
     
68
     
63
 
Qatar
   
80
     
73
     
66
     
71
 
Other
   
36
     
34
     
32
     
36
 
Total
   
186
     
175
     
172
     
178
 
                                 
NGLs (MBBL)
                               
Dolphin
   
7
     
9
     
7
     
9
 
                                 
Natural Gas (MMCF)
   
433
     
481
     
433
     
464
 
                                 
                                 
Barrels of Oil Equivalent (MBOE)
   
764
     
759
     
755
     
752
 
 
 
10
 
 
 
 
Section 9 - Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits

(d)
 
Exhibits
     
99.1
 
Press release dated July 30, 2013.
     
99.2
 
Full text of speeches given by Cynthia L. Walker and Stephen Chazen.
     
99.3
 
Investor Relations Supplemental Schedules.
     
99.4
 
Earnings Conference Call Slides.
     
99.5
 
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.
 
 
11
 
 
 
 
 
 
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:  July 30, 2013
/s/ ROY PINECI
 
 
Roy Pineci, Vice President, Controller
 
 
and Principal Accounting Officer
 
 
 
 
 
 

EXHIBIT INDEX

Exhibit
Number
 
Description
     
99.1
 
Press release dated July 30, 2013.
     
99.2
 
Full text of speeches given by Cynthia L. Walker and Stephen Chazen.
     
99.3
 
Investor Relations Supplemental Schedules.
     
99.4
 
Earnings Conference Call Slides.
     
99.5
 
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.
 

 
 
ex99_1-20130730.htm
EXHIBIT 99.1


 
 

For Immediate Release: July 30, 2013

Occidental Petroleum Announces 2nd Quarter and Six Months of 2013 Income
  
 
Q2 2013 net income of $1.3 billion, or $1.64 per diluted share
 
Q2 2013 core income of $1.3 billion, or $1.58 per diluted share
 
Q2 2013 total company oil and gas production of 772,000 barrels of oil equivalent per day

 
LOS ANGELES, July 30, 2013 -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the second quarter of 2013 of $1.3 billion ($1.64 per diluted share), compared with $1.3 billion ($1.64 per diluted share) for the second quarter of 2012.  The second quarter of 2013 included non-core items amounting to a net after-tax benefit of $46 million.  After excluding the non-core items, core income was slightly less than $1.3 billion ($1.58 per diluted share) for the second quarter of 2013, compared with $1.3 billion ($1.64 per diluted share) for the second quarter of 2012.
In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, "Our total company production of 772,000 barrels of oil equivalent per day in the second quarter of 2013 was 6,000 barrels higher than production in the second quarter of 2012 and 9,000 barrels higher than production in the first quarter of 2013.  While our Qatar production rebounded to its prior level after the first quarter planned turnarounds, insurgent activity in Colombia and severe storms in West Texas, as well as planned turnarounds in the Permian, held back our overall production.  Excluding the effects of the storms, our domestic production is continuing to deliver the results we expected.
"We continue to see positive results from our focused drilling program and improved domestic operational efficiencies.  Year-to-date, we have achieved a 21-percent reduction in our drilling costs relative to total year 2012.  Domestic oil and gas operating expenses were $14.17 per BOE for the first half of 2013, a 19 percent improvement from total year 2012 rates.  Total company operating expenses were $13.66 per BOE for the first six months of 2013, a 9-percent improvement from year-end 2012 rates.  Our year-to-date capital spending is below the planned levels in part as a result of the early success of the cost-saving efforts.  Our focus on operational efficiency has helped us generate $6.4 billion of cash flow from operations before working capital changes and increase our cash balance to $3.1 billion from the year-end level of $1.6 billion."
 
QUARTERLY RESULTS
 
The non-core items in the second quarter of 2013 included an $85 million after-tax gain from the sale of an investment in Carbocloro, a Brazilian chemical facility, and a $34 million after-tax charge for the estimated cost related to the employment and post-
 
 
1 of 5
 
 
 
 
 
employment benefits for the Company's former Executive Chairman and the termination of certain other employees and consulting arrangements.
 
Oil and Gas
 
Oil and gas segment earnings were $2.1 billion for the second quarter of 2013, compared with $2.0 billion for the second quarter of 2012. The current quarter results reflected higher liquids volumes, lower operating costs and higher domestic realized prices for oil and natural gas, partially offset by higher DD&A rates and lower Middle East/North Africa realized oil prices.
Operating costs dropped significantly during the second quarter of 2013, compared with the second quarter of 2012.  The second quarter of 2013 domestic operating costs were $14.28 per barrel, compared to $17.73 in the second quarter of 2012 and $17.43 for the full year 2012.  For the entire company, the second quarter 2013 costs were $13.40 per barrel, compared to $14.99 for both the second quarter of 2012 and full year 2012.
For the second quarter of 2013, daily oil and gas production volumes averaged 772,000 barrels of oil equivalent (BOE), compared with 766,000 BOE in the second quarter of 2012. The second quarter 2013 production increase resulted from an 8,000 BOE per day increase in volumes from domestic operations, partially offset by lower volumes of 2,000 BOE per day from international operations.  Domestic production increases were achieved in California and the Permian.  Our second quarter domestic production was negatively impacted by 3,000 BOE per day due to severe storms in West Texas and the effect of planned turnarounds in the Permian.  Internationally, Colombian production was lower due to higher insurgent activity.  The impact of full cost recovery and other adjustments reduced production by 8,000 BOE per day.  Daily sales volumes increased from 759,000 BOE in the second quarter of 2012 to 764,000 BOE in the second quarter of 2013.  Sales volumes were lower than production volumes due to the timing of liftings in Middle East/North Africa and Colombia, which lowered pre-tax earnings for the second quarter by approximately $75 million.
Oxy’s realized price for worldwide crude oil declined by over 1 percent to $97.91 per barrel for the second quarter of 2013, compared with $99.34 per barrel for the second quarter of 2012.  Domestic crude oil prices improved 3 percent in the second quarter of 2013 to $95.08 per barrel, compared to $92.34 per barrel in the second quarter of 2012.  Middle East/North Africa prices declined 7 percent on a year-over-year basis to $101.83 per barrel in the second quarter of 2013, compared to $109.70 in the second quarter of 2012.  Worldwide NGL prices were $38.78 per barrel in the second quarter of 2013, compared with $42.06 per barrel in the second quarter of 2012.  Domestic gas prices increased 83 percent in the second quarter of 2013 to $3.82 per MCF, compared with $2.09 in the second quarter of 2012.
 
 
2 of 5
 
 
 
 
 
On a sequential quarterly basis, prices were about flat for worldwide oil, down 4 percent for NGLs and up 24 percent for domestic natural gas.  Domestic realized oil prices increased by about 4 percent while Middle East/North Africa prices decreased by about 5 percent, collectively resulting in flat prices worldwide.
 
Chemical
 
Chemical core earnings for the second quarter of 2013, after exclusion of the $131 million pre-tax gain from the sale of the investment in Carbocloro, were $144 million, compared with $194 million in the second quarter of 2012.  The lower earnings resulted from lower caustic soda export volumes due to continued weak economic conditions in Europe and slowing demand in Asia, particularly within the pulp and paper and alumina segments; reduced alumina demand in South America; continued weak export chlorinated organics pricing resulting from new organics production in Asia; and higher energy and feedstock costs.
 
Midstream, Marketing and Other
 
Midstream segment earnings were $48 million for the second quarter of 2013, compared with $77 million for the second quarter of 2012.  The decrease in earnings was caused by lower marketing and trading performance.
 
SIX-MONTH RESULTS
 
Net income for the first six months of 2013 was $2.7 billion ($3.32 per diluted share), compared with $2.9 billion ($3.55 per diluted share) for the same period in 2012.  Year-to-date 2013 core income was $2.6 billion ($3.27 per diluted share), compared with $2.9 billion ($3.56 per diluted share) for the same period in 2012.
 
Oil and Gas
 
Oil and gas segment earnings were $4.0 billion for the six months of 2013, compared with $4.5 billion for the same period of 2012.  The $500 million decrease reflected lower worldwide oil and NGL prices and higher DD&A rates, partially offset by higher domestic gas prices and lower operating costs.
Oil and gas production volumes for the six months were 768,000 BOE per day for 2013, compared with 760,000 BOE per day for the 2012 period.  Year-over-year, our domestic production increased by about 3.5 percent or 16,000 BOE per day.  In the second quarter of 2013, volumes were negatively impacted by severe storms in West Texas and the planned turnarounds in the Permian.  International production was 8,000 BOE per day lower due to a first quarter 2013 planned maintenance turnaround in Qatar, the impact of full cost recovery at our Dolphin operations and higher insurgent activity in Colombia.  Daily sales volumes were 755,000 BOE in the first six months of 2013, compared with
 
 
3 of 5
 
 
 
 
 
752,000 BOE for 2012. Sales volumes were lower than production volumes due to the timing of liftings in Middle East/North Africa.
Oxy's realized prices declined for crude oil and NGLs but increased for domestic natural gas on a year-over-year basis.  Worldwide realized crude oil prices were $97.99 per barrel for the six months of 2013, compared with $103.63 per barrel for the six months of 2012.  Worldwide NGL prices were $39.52 per barrel for the six months of 2013, compared with $47.52 per barrel for the six months of 2012.  Domestic gas prices increased from $2.46 per MCF in the six months of 2012 to $3.44 per MCF in the six months of 2013.
 
Chemical
 
Chemical core earnings were $303 million for the six months of 2013, compared with $378 million for the same period in 2012.  The lower 2013 earnings were primarily the result of higher energy and feedstock prices and continued weak export chlorinated organics pricing resulting from new organics production in Asia, partially offset by modest volume improvements across most products.
 
Midstream, Marketing and Other
 
Midstream segment earnings were $263 million for the six months of 2013, compared with $208 million for the same period in 2012.  The 2013 results reflected improved performance in marketing and trading in the first quarter of 2013 and better results in the power generation business, offset by weaker results in the gas processing and foreign pipeline businesses.
 
About Oxy
 
Occidental Petroleum Corporation (OXY) is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions.  Oxy is one of the largest U.S. oil and gas companies, based on equity market capitalization. Oxy's wholly owned subsidiary OxyChem manufactures and markets chlor-alkali products and vinyls.  Oxy is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company's worldwide operations.
 
Forward-Looking Statements
 
Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance.  Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for
 
 
4 of 5
 
 
 
 
 
Occidental’s products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns domestically or internationally; political conditions and events; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks or insurgent activity; failure of risk management; changes in law or regulations; or changes in tax rates. 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 the prospective nature of events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. 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 affect Occidental’s results of operations and financial position appear in Part 1, Item 1A "Risk Factors" of the 2012 Form 10-K.  Occidental posts or provides links to important information on its website at www.oxy.com.
 
-0-
 
Contacts:
 
Melissa E. Schoeb (media)
melissa_schoeb@oxy.com
310-443-6504
 
or
 
Chris Stavros (investors)
chris_stavros@oxy.com
212-603-8184
 
For further analysis of Occidental's quarterly performance, please visit the
website: www.oxy.com

 
 
 
 
 
 
5 of 5
 
 
 
 
 
 
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Second Quarter
 
Six Months
($ millions, except per-share amounts)
 
2013
 
2012
 
2013
 
2012
SEGMENT NET SALES
                               
Oil and Gas
 
$
4,721
   
$
4,495
   
$
9,161
   
$
9,397
 
Chemical
   
1,187
     
1,172
     
2,362
     
2,320
 
Midstream, Marketing and Other
   
269
     
262
     
722
     
655
 
Eliminations
   
(215
)
   
(161
)
   
(411
)
   
(336
)
                                 
Net Sales
 
$
5,962
   
$
5,768
   
$
11,834
   
$
12,036
 
                                 
SEGMENT EARNINGS
                               
Oil and Gas
 
$
2,100
   
$
2,043
   
$
4,020
   
$
4,547
 
Chemical (a)
   
275
     
194
     
434
     
378
 
Midstream, Marketing and Other
   
48
     
77
     
263
     
208
 
     
2,423
     
2,314
     
4,717
     
5,133
 
                                 
Unallocated Corporate Items
                               
Interest expense, net
   
(29
)
   
(25
)
   
(59
)
   
(53
)
Income taxes
   
(901
)
   
(875
)
   
(1,745
)
   
(2,014
)
Other (b)
   
(166
)
   
(82
)
   
(227
)
   
(174
)
                                 
Income from Continuing Operations
   
1,327
     
1,332
     
2,686
     
2,892
 
Discontinued operations, net
   
(5
)
   
(4
)
   
(9
)
   
(5
)
                                 
NET INCOME
 
$
1,322
   
$
1,328
   
$
2,677
   
$
2,887
 
                                 
BASIC EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.65
   
$
1.64
   
$
3.33
   
$
3.56
 
Discontinued operations, net
   
(0.01
)
   
-
     
(0.01
)
   
(0.01
)
   
$
1.64
   
$
1.64
   
$
3.32
   
$
3.55
 
                                 
DILUTED EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.64
   
$
1.64
   
$
3.33
   
$
3.56
 
Discontinued operations, net
   
-
     
-
     
(0.01
)
   
(0.01
)
   
$
1.64
   
$
1.64
   
$
3.32
   
$
3.55
 
AVERAGE COMMON SHARES OUTSTANDING
                               
BASIC
   
804.9
     
810.3
     
804.8
     
810.4
 
DILUTED
   
805.4
     
811.0
     
805.3
     
811.2
 
                                 
(a) Chemical - The second quarter and six months of 2013 include a $131 million pre-tax gain for the sale of an
 investment in Carbocloro, a Brazilian chemical facility.
(b) Unallocated Corporate Items - Other - The second quarter and six months of 2013 include a $55 million pre-tax
 charge for the estimated cost related to the employment and post-employment benefits for the Company's former
 Executive Chairman and termination of certain other employees and consulting arrangements.
 
 
 
 
 
 
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Second Quarter
 
Six Months
($ millions)
 
2013
 
2012
 
2013
 
2012
CAPITAL EXPENDITURES
 
$
2,210
   
$
2,713
   
$
4,280
   
$
5,125
 
                                 
DEPRECIATION, DEPLETION AND
                               
AMORTIZATION OF ASSETS
 
$
1,303
   
$
1,087
   
$
2,562
   
$
2,172
 
 
 
 
 
 
 
Attachment 3
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
                                 
Occidental's results of operations often include the effects of significant transactions and events affecting earnings that vary widely and unpredictably in nature, timing and amount. Therefore, management uses a measure called "core results," which excludes those items. This non-GAAP measure is not meant to disassociate those items from management's performance, but rather is meant to provide useful information to investors interested in comparing Occidental's earnings performance between periods. Reported earnings are considered representative of management's performance over the long term. Core results is not considered to be an alternative to operating income reported in accordance with generally accepted accounting principles.
                                 
   
Second Quarter
($ millions, except per-share amounts)
 
2013
 
Diluted
EPS
 
2012
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
1,322
   
$
1.64
   
$
1,328
   
$
1.64
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
2,100
           
$
2,043
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
2,100
             
2,043
         
                                 
Chemicals
                               
Segment Earnings
   
275
             
194
         
Add:
                               
Carbocloro sale gain
   
(131
)
           
-
         
                                 
Segment Core Results
   
144
             
194
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
48
             
77
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
48
             
77
         
                                 
Total Segment Core Results
   
2,292
             
2,314
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(1,101
)
           
(986
)
       
Add:
                               
Charge for former executives and
                               
consultants **
   
55
             
-
         
Tax effect of pre-tax adjustments
   
25
             
-
         
Discontinued operations, net ***
   
5
             
4
         
                                 
Corporate Core Results - Non Segment
   
(1,016
)
           
(982
)
       
                                 
TOTAL CORE RESULTS
 
$
1,276
   
$
1.58
   
$
1,332
   
$
1.64
 
 
Interest expense, income taxes, G&A expense and other.
**
Reflects pre-tax charge for the estimated cost related to the employment and post-employment benefits for the
 
Company's former Executive Chairman and termination of certain other employees and consulting arrangements.
***
Amounts shown after tax.
 
 
 
 
 
 
Attachment 4
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                 
   
Six Months
($ millions, except per-share amounts)
 
2013
 
Diluted
EPS
 
2012
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
2,677
   
$
3.32
   
$
2,887
   
$
3.55
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
4,020
           
$
4,547
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
4,020
             
4,547
         
                                 
Chemicals
                               
Segment Earnings
   
434
             
378
         
Add:
                               
Carbocloro sale gain
   
(131
)
           
-
         
                                 
Segment Core Results
   
303
             
378
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
263
             
208
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
263
             
208
         
                                 
Total Segment Core Results
   
4,586
             
5,133
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(2,040
)
           
(2,246
)
       
Add:
                               
Charge for former executives and
                               
consultants **
   
55
             
-
         
Tax effect of pre-tax adjustments
   
25
             
-
         
Discontinued operations, net ***
   
9
             
5
         
                                 
Corporate Core Results - Non Segment
   
(1,951
)
           
(2,241
)
       
                                 
TOTAL CORE RESULTS
 
$
2,635
   
$
3.27
   
$
2,892
   
$
3.56
 

*
Interest expense, income taxes, G&A expense and other.
**
Reflects pre-tax charge for the estimated cost related to the employment and post-employment benefits for the
 
Company's former Executive Chairman and termination of certain other employees and consulting arrangements.
***
Amounts shown after tax.
 
 
 
 
 
 
Attachment 5
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Second Quarter
 
Six Months
   
2013
 
2012
 
2013
 
2012
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
                               
United States
                               
Oil (MBBL)
                               
California
   
88
     
88
     
88
     
87
 
Permian
   
145
     
138
     
146
     
139
 
Midcontinent and Other
   
28
     
23
     
28
     
20
 
Total
   
261
     
249
     
262
     
246
 
                                 
NGLs (MBBL)
                               
California
   
21
     
15
     
20
     
15
 
Permian
   
39
     
39
     
39
     
39
 
Midcontinent and Other
   
17
     
19
     
18
     
19
 
Total
   
77
     
73
     
77
     
73
 
                                 
Natural Gas (MMCF)
                               
California
   
260
     
269
     
262
     
268
 
Permian
   
160
     
151
     
168
     
153
 
Midcontinent and Other
   
372
     
420
     
378
     
416
 
Total
   
792
     
840
     
808
     
837
 
                                 
Latin America
                               
Oil  (MBBL) - Colombia
   
28
     
31
     
29
     
27
 
                                 
Natural Gas (MMCF) - Bolivia
   
13
     
14
     
13
     
14
 
                                 
Middle East / North Africa
                               
Oil (MBBL)
                               
Dolphin
   
7
     
9
     
6
     
9
 
Oman
   
67
     
62
     
66
     
63
 
Qatar
   
75
     
74
     
67
     
73
 
Other
   
44
     
36
     
45
     
41
 
Total
   
193
     
181
     
184
     
186
 
                                 
NGLs (MBBL)
                               
Dolphin
   
7
     
9
     
7
     
9
 
                                 
Natural Gas (MMCF)
                               
Dolphin
   
145
     
194
     
139
     
183
 
Oman
   
56
     
57
     
56
     
57
 
Other
    232       230       238       224  
Total
   
433
     
481
     
433
     
464
 
                                 
                                 
Barrels of Oil Equivalent (MBOE)
   
772
     
766
     
768
     
760
 
 
 
 
 
 
 
Attachment 6
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Second Quarter
 
Six Months
   
2013
 
2012
 
2013
 
2012
NET OIL, GAS AND LIQUIDS SALES PER DAY
                               
                                 
United States
                               
Oil (MBBL)
   
261
     
249
     
262
     
246
 
NGLs (MBBL)
   
77
     
73
     
77
     
73
 
Natural Gas (MMCF)
   
795
     
835
     
810
     
835
 
                                 
Latin America
                               
Oil  (MBBL) - Colombia
   
26
     
31
     
28
     
27
 
                                 
Natural Gas (MMCF) - Bolivia
   
13
     
14
     
13
     
14
 
                                 
Middle East / North Africa
                               
Oil (MBBL)
                               
Dolphin
   
7
     
8
     
6
     
8
 
Oman
   
63
     
60
     
68
     
63
 
Qatar
   
80
     
73
     
66
     
71
 
Other
   
36
     
34
     
32
     
36
 
Total
   
186
     
175
     
172
     
178
 
                                 
NGLs (MBBL)
                               
Dolphin
   
7
     
9
     
7
     
9
 
                                 
Natural Gas (MMCF)
   
433
     
481
     
433
     
464
 
                                 
                                 
Barrels of Oil Equivalent (MBOE)
   
764
     
759
     
755
     
752
 
 
 
 
 
 
 
 
 
ex99_2-20130730.htm
EXHIBIT 99.2

Occidental Petroleum Corporation

CYNTHIA L. WALKER
Executive Vice President and Chief Financial Officer

– Conference Call –
Second Quarter 2013 Earnings Announcement

July 30, 2013
Los Angeles, California


Thank you Chris, and good morning everyone.  Thank you for taking the time to join us on our call today.  My comments will reference several slides in the conference call materials that are available on our website.
Overall in the second quarter, we continued the trend of solid execution seen in the first quarter.  We produced 772,000 barrels per day, essentially in-line with our expectations, adjusting for certain events during the quarter.  Our operating cost and capital efficiency programs remain on track.  We had core earnings of $1.3 billion or $1.58 per diluted share.  For the six months of 2013, we generated $6.4 billion of cash flow from operations before changes in working capital and ended the quarter with $3.1 billion of cash on our balance sheet.
If you turn to slide 3, you’ll see a summary of our earnings for the quarter.  Core income was slightly under $1.3 billion or $1.58 per diluted share.  Compared to the first quarter of 2013, overall the current quarter results reflected improved oil and gas results driven by higher oil volumes,

 
1
 
 
 
 

off-set by lower earnings in the marketing and trading businesses, largely due to commodity price movements, and higher equity compensation expense resulting from an improved stock price.
Now, I will discuss the segment performance for the oil and gas business and begin with earnings on slide 4.  Oil and gas earnings for the second quarter of 2013 were $2.1 billion, an increase over both the first quarter of 2013 and the second quarter of 2012.  On a sequential quarter-over-quarter basis, improvements came from higher oil volumes, in particular in the Middle East/North Africa following the resumption of production after facility turnarounds in Qatar and Dolphin.  Better realized domestic oil and gas prices were offset by lower realized international oil prices.  The improvement in the domestic realized prices is mainly attributable to the easing of oversupply in the Permian, which significantly improved differentials for our Permian oil production.  There were also modest increases in exploration expense.
Moving to slide 5.  As I mentioned a moment ago, production for the quarter was 772,000 barrels per day, an increase of 9,000 barrels over the first quarter and 6,000 barrels over the year ago quarter.  On a sequential quarterly basis, these results reflect the resumption of production in Qatar and Dolphin and growth in California as a result of our drilling program.  Elsewhere domestically we saw the impact of natural decline due to our reduced natural gas drilling activity.  Also reflected are the impacts of weather and planned gas plant turnarounds in our Permian business as well as insurgent activity in Colombia.  Combined, these events reduced production by 7,000 barrels per day during the quarter.  Also, on a year-over-year basis, full cost recovery and other adjustments under our production sharing and similar contracts, reduced production by 8,000

 
2
 
 
 
 

barrels per day.  The impact on a sequential quarterly basis was not significant.  Overall, while there were a number of events impacting production this quarter, the underlying business is performing essentially as expected.
If you turn to slide 6, I will discuss our domestic production in more detail.  Our domestic production was 470,000 barrels per day, a decrease of 8,000 barrels per day from the first quarter of 2013, driven by the factors on the previous slide, and an increase of 8,000 barrels per day from the second quarter of 2012.  Focusing on our commodity composition, oil production was essentially flat versus the first quarter, adjusting for the effects of the severe weather in the Permian.  Natural gas and NGL volumes were 5,000 barrels per day lower than the first quarter, excluding the impact of the planned gas plant turnarounds.  This reduction primarily reflects natural decline in the Midcontinent due to lower drilling activity and third-party processing bottlenecks in the Permian.
Total sales volumes were 764,000 barrels per day in the second quarter of 2013 compared to 746,000 barrels per day in the first quarter.  Middle East/North Africa sales volumes were 31,000 barrels per day higher, mostly due to the timing of liftings, as well as the effects of the first quarter maintenance turnarounds.  Overall sales volumes were lower than production volumes during the quarter due to the timing of liftings.  The pick-up in insurgent activity in Colombia caused a delay in two large liftings scheduled around the end of June.  Coupled with the effect of other timing issues in the Middle East/North Africa, delayed liftings reduced the second quarter pre-tax earnings by approximately $75 million or about $0.06 per share on an after-tax basis.  We expect the third quarter liftings in Colombia to be at their normalized levels barring another pick-up in insurgent activity.

 
3
 
 
 
 

Our realized prices for the quarter and the comparison to benchmark prices are summarized on slide 7.  Compared with the first quarter, our worldwide crude oil realized price was almost flat as the reduction in Brent during the second quarter was offset by improved realizations for our Permian production.  We continue to experience weakness in NGL pricing domestically which contributed to a 4 percent decrease in worldwide NGL realized prices, while domestic natural gas realized prices experienced a 24 percent increase driven by improvement in the benchmark.  We have also included updated price sensitivities.
Next, I will cover production costs on slide 8.  Oil and gas production costs were $13.40 per barrel in the second quarter.  For the first six months of 2013, production costs were $13.66 per barrel compared to $14.99 per barrel for the full year 2012.  The largest improvement was seen in our domestic operations, where production costs were $3.26 per barrel lower in the first six months of 2013 from the full year of 2012, which represents annualized cost savings of over $500 million, exceeding our previously stated goals.    International production costs have remained fairly consistent with 2012 levels excluding the impact of the facilities turnarounds in Qatar and Dolphin which affected the first quarter of 2013.
Taxes other than on income, which are generally related to product prices, were $2.66 per barrel for the first six months of 2013, compared with $2.39 per barrel for the full year of 2012.
Second quarter exploration expense was $78 million.  We expect third quarter 2013 exploration expense to be about $90 million for seismic and drilling in our exploration programs.
Turning to Chemical segment core earnings on slide 9.  Second quarter earnings were $15 million lower than the first quarter, primarily the

 
4
 
 
 
 
 
result of lower caustic soda export volumes due to weak economic conditions in Europe, slowing demand in Asia, and reduced demand for alumina in South America.  We expect third quarter 2013 earnings to improve to approximately $170 million, benefiting from higher seasonal demand and continued strong PVC sales into construction markets.
On slide 10 is a summary of Midstream segment earnings.  They were $48 million for the second quarter of 2013, compared to $215 million in the first quarter of 2013 and $77 million in the second quarter of 2012.  The 2013 sequential quarterly and year-over-year decrease in earnings resulted mainly from lower marketing and trading performance driven by commodity price movements during the quarter.
The worldwide effective tax rate on core income was 41 percent for the second quarter of 2013.  We expect our combined worldwide tax rate in the third quarter of 2013 to remain at about the 41 percent level.

 
5
 
 
 
 

Finally, I will discuss our year-to-date 2013 cash flow on slide 11.  In the first six months of 2013, we generated $6.4 billion of cash flow from operations before changes in working capital.  This amount includes an approximate $380 million cash inflow from the collection of a tax receivable.  Working capital changes decreased our cash flow from operations by approximately $200 million to $6.2 billion.  Net capital expenditures for the first six months of 2013 were $4.2 billion, of which $2.2 billion was spent in the second quarter.  We generated approximately $270 million of cash from the sale of our investment in Carbocloro in the quarter and used $225 million for acquisitions of domestic oil and gas assets.  After paying dividends and other net flows, our cash balance was $3.1 billion at June 30.  Our debt outstanding remains unchanged, and our debt-to-capitalization ratio was 15 percent at quarter-end.  Our annualized return on equity for the first six months of 2013 was 13 percent and return on capital employed was 11 percent.
I will now turn the call over to Steve Chazen to discuss other aspects of our operations and provide guidance for the third quarter of the year.
______________
Throughout this presentation, barrels may refer to barrels of oil, barrels of liquids or barrels of oil equivalents or BOE, which include natural gas, as the context requires.

 
6
 
 
 
 
 
Occidental Petroleum Corporation
 
STEPHEN CHAZEN
President and Chief Executive Officer

– Conference Call –
Second Quarter 2013 Earnings Guidance

July 30, 2013
Los Angeles, California


Thank you, Cynthia.
Occidental’s domestic oil and gas segment continued to execute on our liquids production growth strategy.  Our first half domestic oil production of 262,000 barrels per day was an increase of about 7 percent from the first half of 2012 production of 246,000 barrels per day.  The second quarter domestic production of 470,000 barrel equivalents per day, consisting of 338,000 barrels of liquids and 792 million cubic feet per day of gas, was a decrease of 8,000 barrel equivalents per day compared to the first quarter of 2013.  Liquids production decreased slightly due to planned gas plant maintenance turnarounds in the Permian, which impacted natural gas liquids production.  Plant turnarounds also impacted our gas production, which, coupled with lower drilling on gas properties and natural decline, comprised the bulk of the total domestic production decline.  A number of severe storms affecting the Permian region also lowered our domestic

 
7
 
 
 
 
 
production.  The second quarter domestic production was generally in line with our expectations, except for the impact of storms.
We are executing a focused drilling program in our core areas and to date we are running ahead of our full-year objectives to improve domestic operational and capital efficiencies.  For example, we have reduced our domestic well costs by 21 percent and operating costs by about 19 percent relative to 2012.  This is ahead of our previously stated targets of 15 percent well cost improvement and total oil and gas operating costs below $14 a barrel for 2013.  We believe we can sustain the benefits realized to date, achieve additional savings in our drilling costs and reach our 2011 operating cost levels over time without a loss in production or sacrificing safety.  The purpose of these initiatives is to improve our return on capital.

I will now turn the discussion over to Vicki Hollub who will provide details of our California drilling programs and of the capital and operational efficiency initiatives we have implemented.  Vicki is the executive vice president of our California operations.  Prior to her current role, she ran our Permian CO2 business.

Thank you, Steve.
We are a California company and are committed to being a responsible partner in the numerous communities in which we operate, spanning from north of Sacramento to south of Long Beach.  We are the state’s largest producer of natural gas and the largest oil and gas producer on a gross operated barrels of oil equivalent basis.  We provide locally sourced energy to help Californians cool their homes and drive their cars.  Since

 
8
 
 
 
 

2010, we have created 3,000 new jobs, invested over $8.5 billion in the state and paid $900 million in state and local taxes.
We are also the largest oil and gas mineral acreage holder in California with more than 2.1 million net acres in some of the most prolific hydrocarbon producing areas of the state.  Our vast acreage position has diverse geologic characteristics and numerous reservoir targets, providing us with development opportunities that range from conventional to steam and water floods and unconventional.  We plan to continue investing and providing energy for the state for decades to come.
This morning I would like to give you a look at the progress we have made in California this year.  When we started the year, our overall objective was to position our portfolio for long-term profitable growth while achieving immediate wins to have a successful year.  Our specific goals were:
 
Deliver a predictable outcome for this year given the constraints of working in California.
 
Advance projects with solid returns, low execution risk and long term growth.
 
Reduce our drilling and completion costs to improve our finding and development costs and our project economics.
 
Reduce our operating costs without affecting production to improve our current earnings and free cash flow.
 
Build a growing and highly predictable lower decline base of production.
 
Test out various exploration/development concepts both from a cost improvement and execution predictability perspective.

 
9
 
 
 
 

Restructuring
In 2012, we restructured our business units to create teams organized around the unique characteristics of each of our asset groups, resulting in a 5th business unit dedicated to managing our heavy oil properties. This heavy oil team has added the expertise necessary to accelerate the development of our existing steam floods and evaluate new opportunities.
In addition, we created 3 technical teams to better manage the complex geology of the reservoirs in California:  One team is dedicated to the design of new water floods or the optimization of existing floods.  Another will work exclusively on the aggressive application of EOR technologies, including steam floods, where they are technically and economically feasible.  The third team will focus on unconventional development opportunities to optimize recoveries from the Monterey and other key shale plays in California.  We believe this structure gives us the ability to grow our California operations more efficiently, maximize the benefits from the improvement in operating and capital costs that we have already achieved and drive additional improvements in our cost structure.
Operating Efficiency
As you know, we are engaged in a company-wide effort to reduce our operating costs and improve capital efficiency in order to improve our returns.  In California, we have significantly reduced operating as well as drilling costs, exceeding our targets, and expect to save at least $175 million this year in operating costs through these efforts.  On the last call, we provided a thorough breakdown of the efforts being made in all domestic assets and we have achieved similar success in California.

 
10
 
 
 
 

We have reduced our overall operating expenses by $3.50/BOE from $23.20/BOE in 2012 to an expected average of $19.70 for all of 2013.  Almost half of these reductions have been in well servicing as a result of high-grading our well service rigs and eliminating less efficient ones, better planning and scheduling of jobs, reducing lower value adding jobs and adding Oxy supervision through reduction of contract well-site operators.
Improvements and innovations in surface operations account for another 35% of the reduction. Activities contributing to these reductions include optimization of the use of chemicals, improved water handling, fuel and power cost reductions and lower rental equipment use.
Capital Efficiency
We have also improved our capital efficiency by about 15% year-to-date compared to the full year 2012.  This success was achieved by focusing on four key elements of our capital program.  First, we have locked in our drilling programs for a minimum of 2 months and in some areas up to 9 months.  This reduced our non-productive times associated with rig moves and third party services and helped to reduce our equipment rental costs. Second, we have revised well designs to more appropriately fit the wellbore characteristics and production expectations for each well.  Third, we have optimized drilling equipment and fluids to reduce the time required to drill wells.  Finally, we have improved our contracting strategies to incentivize our service providers to optimize overall performance through integrated service applications while reducing unit costs.  In many instances, such as in the Rose Field, we have been able to generate significant savings through the application of one or more of the concepts I just mentioned, and then applied those same concepts to other wells across the state, which has allowed us to duplicate the savings.

 
11
 
 
 
 
 
Many innovative ideas are being generated and implemented by our California teams across the state.  As we have stated several times before, many of those ideas are being generated by our people at the grass-roots level, which tend to generate individually modest cost improvements that accumulate to significant amounts across all of our projects as successes are replicated.  Our people have embraced this effort and are committed to improve operations of our assets at every level by reducing costs and continuing to improve safety everywhere we operate.  While the results we have seen so far are very positive and impressive, we believe that we can achieve even more improvements in both operating and capital costs going forward.
Capital Program
After reviewing our California assets as a whole and taking into consideration market conditions, we adjusted our capital strategy at the start of this year to allocate a higher percentage of our annual budget to lower decline projects such as our water floods and steam floods.  For this year, we plan to spend almost 65% of our California capital on water and steam floods or approximately $625 million on water floods and $370 million on steam floods out of the $1.5 billion total.  We will spend about 25% of the capital on unconventional projects and the remaining 10% on primary drilling projects.  Further, given the market conditions, we have increased the portion of our capital on oil and gas liquids development, which will represent about 99% of our California capital for this year.
California has unique opportunities with diverse and complex geology.  This geologic complexity leads to a broad spectrum of hydrocarbon fields and reservoir types.  The depth, quality and drive mechanisms of the reservoirs vary across the many producing basins and

 
12
 
 
 
 

within individual basins as well. Those varied characteristics, along with product prices, cost and returns determine the mix of the type of projects to be included in our program each year.  The significant strides we have made in reducing our capital and operating costs that I described have given us the flexibility to include a large number of potential projects in our development pipeline.  For example, depending on the type of project and location, our drilling costs in California, including completion and hook-up costs, range from $250,000 to $7 million, with expected ultimate recoveries of 30 MBOE to 550 MBOE per well, giving us a wide range of opportunities and variability.
Given our diverse portfolio of opportunities in California, we have sufficient inventory to sustain this strategy in the future, for at least another 5 years, and probably even for 10 years or more, while adjusting the liquids versus gas mix as conditions warrant.  We believe this approach will provide the best opportunity for growth of the California operations and make it a significant growth engine for Oxy.
Now, I would like to share some highlights about each of those project types, beginning with water floods.
Water Floods
Water floods are among our core competencies.  We have several new water flood projects in progress this year at various stages, from screening to implementation, in addition to a number floods where we are engaged in redevelopment, expansion or optimization activities.
We will spend most of our water flood capital to further optimize our most developed project, the giant Wilmington Field, where our Long Beach Business Unit is continuing to have success in reserves recovery.  Wilmington is a long standing water flood where the keys to redevelopment

 
13
 
 
 
 

success are effective reservoir characterization, performance surveillance, modeling and advances in directional drilling technology.  This year we will drill 135 new wells including 35 horizontal wells targeting attic oil and fault isolated zones within this multi-pay reservoir.  In Wilmington, we have used a combination of vertical and horizontal wells depending on the location.  Vertical or slant wells can be cost effective in certain locations.  In others, horizontal wells are drilled to target specific sand intervals within the larger water flood zone which have not been effectively swept by the injected water.  These wells can have average Initial Production or (IP) rates over three-times higher than similar vertical wells at a cost of just 20% more than comparable vertical wells.
We believe there is still significant potential to be realized in the Wilmington Field.  For example, since we acquired this asset in 2000, proved reserves have steadily grown.  In fact, yearend 2012 proved reserves remain slightly higher than 2000 levels despite 12 years of production, resulting in more than a two-fold proved reserve increase during this period.  We currently have an inventory of over 1,000 future well locations in the Wilmington Field.  We believe that a successful development program focused on those wells over the next 7 years will deliver reserves of up to 100 MMBOE.
Just south of Wilmington, we are starting the redevelopment of the Huntington Beach Field with two new fit-for-purpose rigs, an onshore rig, which has an enclosure specifically designed for drilling in urban areas, and an offshore rig.  We expect both of those rigs to arrive and start drilling towards the end of the year.  So far, we have identified 128 well locations to drill which will take 4-5 years using the 2 rigs we have currently committed.  We expect to add more well locations as we learn more through our

 
14
 
 
 
 

reservoir modeling and surveillance as we have done in the analog Wilmington Field.  We believe that we can increase our production from this field by 10,000 BOEPD and develop reserves of at least 50 MMBOE.
Another significant project for us is the water flood expansion at Buena Vista Field where we expect to drill more than 150 wells over the next 5 years. We believe we can increase the Buena Vista production by 4,000 BOEPD and deliver reserves of 28 MMBOE.
In addition, our Vintage unit, which is the team that manages our San Joaquin Valley and Ventura County water floods, gas properties in the Sacramento Valley and unconventional projects outside of Elk hills, has several water floods in the pilot phase this year, several under evaluation for redevelopment and a long list of potential projects going through the water flood screening process.
In total, we will spend around 40% of our 2013 California capital program on water flood projects that are expected to generate returns exceeding 20% on average.
Steam Floods
In addition to water floods, our steam flood activities have also been a sizeable focus this year.  Our steam floods in California are highly profitable, taking advantage of the gas versus oil price spread allowing us to use cheap gas to generate steam, which is then injected to produce oil.  We believe these projects can deliver attractive returns with a combination of gas prices as high as $6 per MCF and oil prices as low as $80 per barrel.  Typical rates of return for these projects are expected to be 25% or better.
The two largest steam flood projects for 2013 are in the Kern Front and Lost Hills fields being managed by our newly formed heavy oil team.  These two fields contain over 1 Billion barrels of original oil in place on a

 
15
 
 
 
 

combined basis, with an estimated 870 million barrels remaining in place.  We are in the process of expanding our steam generation capacity in both fields and these projects are progressing as expected.
We have drilled 100 wells in these two areas year-to-date, and with the recent addition of 2 rigs, we expect to drill an additional 200 wells the second half of this year.  As a result of our activity in these projects, production from our Heavy Oil Business Unit is expected to increase by around 3,000 BOEPD by the end of the year over our 2013 entry rate.  Full development of these steam floods is a multi-year endeavor  and we believe that over time we can increase our heavy oil production by 15,000 BOEPD, developing reserves of 120 MMBOE.
We are also preparing to pilot two smaller steam floods in Oxnard and the Midway Sunset area by the beginning of next year. With the success of these projects, we expect to be able to develop an additional 45 MMBOE of reserves.
Our total steam flood spending will constitute about 25% of our total California capital in 2013. Over the next 5 years, we expect to drill 1,500 steam flood wells.
As we shift capital to greater water and steam flood opportunities, we expect a lag of about 6 – 9 months before we see sustained production growth as the flow of new projects reaches a steady level.  We are in this transition period but are now beginning to see the initial phases of growth from these projects.
Unconventional
In addition to shale plays, our unconventional opportunities include those reservoirs that have low permeability and require special recovery processes to flow. Currently, about one-third of our California production is

 
16
 
 
 
 

from unconventional reservoirs.  This year we plan to drill more than 70 unconventional wells.
We have more than 1,000,000 prospective acres for unconventional resources which we believe contain up to 7 Billion BOE of recoverable reserves.  We have drilled approximately 1,300 unconventional wells in California since 1998.  More than 1,000 of these have been in and around Elk Hills, including the Monterey and other key shale plays.  Our current year plan includes 53 unconventional wells from multiple shale plays around Elk Hills with varying costs and expected performance depending on the well’s location and its particular structure.  All of these 53 wells are part of continuing development programs that are delivering a better than 20% rate of return.  Our ongoing program around Elk Hills is expected to increase our ultimate recovery by about 150 MMBOE.
An example of unconventional opportunities we are pursuing outside of Elk Hills includes drilling and development of the Rose Field.  We purchased this field in late 2009 and drilled one appraisal well in 2011, 8 development wells in 2012 and 6 horizontal wells this year with plans to continue drilling.  Results have been very good with average IP rates exceeding our expectations and estimated ultimate recoveries of approximately 155 MBOE per well on average.  We believe our returns from this field will be around 25% over the course of the development program.
We also plan to drill additional unconventional wells in South Belridge and the Buena Vista areas this year. Success in these areas could ultimately provide more than 100 well locations and up to 35 MMBOE of net reserves.

 
17
 
 
 
 

Elk Hills
A discussion of the future potential of California would not be complete without a separate discussion of Elk Hills which we acquired in 1998.  At that time, Elk Hills had gross proved reserves of 545 MMBOE (424.5 MMBOE net to Oxy).  Our cumulative production since our acquisition in 1998, combined with our current proved reserves is almost double the proved reserves for Elk Hills at the time of the acquisition, which shows that we continue to generate ways to get more out of these reservoirs.  And we are not done with Elk Hills.
In recent years, our growth in California has come from projects outside of Elk Hills.  This is due to our big challenge at Elk Hills where the underlying base decline rate without any capital expenditures would be around 25%.  However, we are now looking at additional opportunities, which we expect will further increase the reserves at Elk Hills and help to mitigate the decline rate, possibly reducing it by as much as 50%. Those opportunities include water floods, steam floods as well as potential polymer and CO2 floods that could be implemented over the next 3-10 years.  The significant operating and capital efficiency improvements made by the Elk Hills team will improve the profitability of these water flood and EOR opportunities.
I would like to also point out that our plant operations team at Elk Hills has done a great job of optimizing run time and reliability from our new cryogenic gas plant.  Currently, the team is operating the plant at greater than 98% up time and they have extracted record volumes of NGL’s from the gas streams this year.

 
18
 
 
 
 

Elk Hills still has more than 900 MMBOE of remaining reserves and resources that can be recovered through water flooding and current proven EOR technologies in which we have considerable expertise.  So we are going to continue our development efforts at Elk Hills.
Exploration
Our California Exploration program has delivered solid results over the last 5 years since we ramped it up.  From 2007 through 2012 we have drilled over one hundred exploration wells across the California basins in both conventional and unconventional plays.  A full two-thirds of our wells found hydrocarbons, and a large portion of these successful wells resulted in commercial production.  We have been busy over the last few years acquiring 3D seismic over a significant portion of our acreage and this has contributed to our high rate of success.  Access to this new seismic data and working closely with our operating groups has allowed our exploration staff to build creative and innovative programs.
Last year, for instance, we made a significant unconventional discovery in the San Joaquin basin.  Continued appraisal drilling and testing this year established reserves and resources of approximately 50 MMBOE.  The full development of this discovery is expected to require drilling 100 wells.  In addition to the 50 MMBOE we have established, we are testing and/or planning wells in late 2013 and 2014 that, if successful, will double this volume.  Further, this concept has repeatability and we plan to extend this play through much of our California acreage.
Our 2013 exploration program, which includes 15 wells, is on track to deliver results consistent with prior years and we continue to build inventory to ensure we have a robust exploration program going forward into 2014 and beyond.

 
19
 
 
 
 
 
Conventional Gas Properties
Finally, I would like to briefly touch on our gas development prospects in the state.  In the Sacramento basin of Northern California, we have established a sizeable natural gas position with over 318,000 net acres and 66 MMcfd (11,000 Boepd) of dry gas production.  We estimate that we operate, through our Vintage Business, over 80% of all production in the region.  Our current focus in the area is to optimize our current production mostly with inexpensive workovers and a modest drilling program of 8 new wells in 2013 and 14 in 2014.  We believe that the range of possible projects that are available on our acreage gives us the ability to ramp up our development efforts with attractive returns at prices of around $5.00 per mcf.  Currently, we have identified total reserves and contingent resources of about 300Bcf.  We believe our acreage held about 10Tcf of original gas in place with about 2Tcf currently remaining.
As you can see, we have a large inventory of water flood, steam flood and EOR opportunities in California in and outside of Elk Hills as well as significant upside in unconventional opportunities.  All of these opportunities will continue to be an important part of our California development plans for the future and will make California a significant growth asset for Oxy.  The mix of projects in the next couple of  years will be similar to this year as we continue to commit a larger portion of our capital to lower decline projects to manage our capital program more effectively and control escalation in spending, while achieving healthy production growth.

 
20
 
 
 
 

In closing, I would like to summarize the progress we have made against the goals we established at the beginning of the year:
 
We are executing a $1.5 billion capital program this year, which takes into account the constraints of working in California.  We expect to generate free cash flow after capital in excess of $1 billion.  Our program incorporates opportunities resulting from improvements we are already seeing regarding permitting in the state.
 
We shifted our development program towards a higher percentage of lower decline projects such as our water and steam floods.  With continued improvements in permitting, we should be able to grow our capital spend to around $2 billion in 2014, with further increases beyond that, reaching around $2.5 billion annually on a sustainable basis.  With this program, we expect to grow at least within the corporate target rates of 5 to 8% annually for the next ten years, while earning returns of over 20%.
 
We have improved our capital efficiency by about 15% year-to-date compared to the full year 2012.  We expect to further improve on these results going forward, which will improve our finding and development costs and returns.
 
We have reduced our overall operating expenses by $3.50/BOE from $23.20/BOE in 2012 to an expected average of $19.70 for all of 2013.  This reduction translates to cost savings of over $175 million for the year contributing to our earnings and cash flow.
 
We have identified at least 5,500 well locations and will add more as we continue to evaluate additional acreage and project opportunities.

 
21
 
 
 
 

 
We are working on several new water flood projects in addition to a number of floods where we are engaged in redevelopment, expansion or optimization activities.  We are taking advantage of the gas versus oil price differences and expanding our steam flood opportunities giving us a highly profitable set of projects to work with going forward.  We are continuing our focus on a number of unconventional opportunities across the state, including the Monterey shale, to give us further growth prospects.  And finally, we are continuing our focused exploration and 3D seismic acquisition program, which has delivered a high percentage of commercially successful projects, the most recent example being our significant unconventional discovery in the San Joaquin basin.

We have a large and diverse portfolio of opportunities available to us across the state.  We are very excited about the future of our California operations and the role it will play in contributing to the Company’s overall growth.

I will now turn the call back to Steve Chazen.

Thank you, Vicki.
I will now turn to our third quarter outlook.
Production
Domestically, we continue to expect solid growth in our oil production for the year.  Based on the nature and timing of our drilling programs this year, such as steam floods in California, and the timing of several gas plant maintenance turnarounds in the Permian, we expected

 
22
 
 
 
 

production growth to occur in the second half of the year.  We have achieved the drilling targets we set in the first half of the year.  As a result, we expect that our second half average domestic oil production will be about 6,000 to 8,000 barrels a day higher than the first half average, the increases coming mainly from the Permian and California.  We expect the modest declines in our domestic gas and NGLs production that we have seen in the second quarter to continue as a result of our reduced drilling on gas properties and natural decline, as well as additional gas plant turnarounds scheduled in our Permian business the rest of the year.
Internationally, we expect more cost pool depletions in our contracts in Qatar and Yemen, which will result in less cost recovery barrels from those locations.  However, we expect total international production to be about flat in the second half of the year compared to the second quarter volumes, assuming no renewed pick-up in insurgent activity in Colombia and stable spending levels in Iraq.  We expect international sales volumes to increase in the second half and recoup well over half of the underlift we have experienced in the first half.
Capital Program
The first six months' capital spending was $4.2 billion, with $2.2 billion spent in the second quarter.  We expect the second half of the year spending rate to be higher.  Our annual spending level is expected to be generally in line with the $9.6 billion program I have previously discussed.  The positive effect of our capital efficiency efforts is starting to become noticeable in our spending patterns.  As a result, we believe there is a reasonable possibility our total spending may be somewhat lower than the program amount I just mentioned while still drilling the number of wells we set out as a goal at the beginning of the year.

 
23
 
 
 
 

As you can see, the business is doing well and we are continuing to make progress on our operational goals.  With regard to our strategic business review, we presented various options to our Board of Directors.  Our review of these options is progressing well, although it is not yet complete, so the Board will continue to evaluate the alternatives.  We expect to have additional information regarding our plans towards the end of the year.

An affiliate of Plains All American (PAA) filed a registration statement yesterday with the SEC for a public offering of interests in Plain's general partner.  We own 35 percent of the general partner interests and we expect to monetize a portion as part of the proposed offering.
Now we're ready to take your questions.

 
24
 
 
 
 

Note: For additional information, see the registration statement, a copy of which is available on the SEC's website.  No sales of securities will take place until the registration statement becomes effective.

  
25
 
 
 
 
 
Occidental Petroleum Corporation
Return on Capital Employed (ROCE)
For the Six Months Ended June 30, 2013
Reconciliation to Generally Accepted Accounting Principles (GAAP)
         
         
         
RETURN ON CAPITAL EMPLOYED (%)
11.2%
   
         
         
         
GAAP measure - net income
2,677
     
Interest expense
59
     
Tax effect of interest expense
(21
)
   
Earnings before tax-effected interest expense
2,715
     
         
GAAP stockholders' equity
41,850
     
Debt
7,626
     
Total capital employed
49,476
     
         
         
ROCE - Annualized for the six months of June 30, 2013
       
ex99_3-20130730.htm
EXHIBIT 99.3
Investor Relations Supplemental Schedules
 
 
Investor Relations Supplemental Schedules
Summary
($ Millions, except per share amounts)
               
               
               
               
 
2Q 2013
 
2Q 2012
               
Core Results ($ millions)
 
$1,276
   
$1,332
EPS - Diluted
 
$1.58
   
$1.64
               
Reported Net Income ($ millions)
 
$1,322
   
$1,328
EPS - Diluted
 
$1.64
   
$1.64
               
Total Worldwide Sales Volumes (mboe/day)
 
764
     
759
 
Total Worldwide Production Volumes (mboe/day)
 
772
     
766
 
               
Total Worldwide Crude Oil Realizations ($/BBL)
 
$97.91
   
$99.34
Total Worldwide NGL Realizations ($/BBL)
 
$38.78
   
$42.06
Domestic Natural Gas Realizations ($/MCF)
 
$3.82
   
$2.09
               
Wtd. Average Basic Shares O/S (millions)
 
804.9
   
810.3
Wtd. Average Diluted Shares O/S (millions)
 
805.4
   
811.0
               
               
 
YTD 2013
 
YTD 2012
               
Core Results ($ millions)
 
$2,635
   
$2,892
EPS - Diluted
 
$3.27
   
$3.56
               
Reported Net Income ($ millions)
 
$2,677
   
$2,887
EPS - Diluted
 
$3.32
   
$3.55
               
Total Worldwide Sales Volumes (mboe/day)
 
755
     
752
 
Total Worldwide Production Volumes (mboe/day)
 
768
     
760
 
               
Total Worldwide Crude Oil Realizations ($/BBL)
 
$97.99
   
$103.63
Total Worldwide NGL Realizations ($/BBL)
 
$39.52
   
$47.52
Domestic Natural Gas Realizations ($/MCF)
 
$3.44
   
$2.46
               
Wtd. Average Basic Shares O/S (millions)
 
804.8
   
810.4
Wtd. Average Diluted Shares O/S (millions)
 
805.3
   
811.2
               
Shares Outstanding (millions)
 
805.8
   
809.9
               
Cash Flow from Operations ($ millions)
$
6,200
   
$
6,000
 
 
 
1
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
2013 Second Quarter
Net Income (Loss)
($ millions, except per share amounts)
                           
                           
 
Reported
             
Core
 
Income
 
Significant Items Affecting Income
 
Results
Oil & Gas
$
2,100
               
$
2,100
 
                           
                           
Chemical
 
275
     
(131
)
Carbocloro sale gain
   
144
 
                           
Midstream, marketing and other
 
48
                 
48
 
                           
Corporate
                         
Interest expense, net
 
(29
)
               
(29
)
                           
Other
 
(166
)
   
55
 
Charge for former executives and consultants (a)
   
(111
)
                           
                           
Taxes
 
(901
)
   
25
 
Tax effect of pre-tax adjustments
   
(876
)
                           
                           
Income from continuing operations
 
1,327
     
(51
)
       
1,276
 
Discontinued operations, net of tax
 
(5
)
   
5
 
Discontinued operations, net
   
-    
 
Net Income
$
1,322
   
$
(46
)
     
$
1,276
 
                           
                           
Basic Earnings Per Common Share
                         
Income from continuing operations
$
1.65
                     
Discontinued operations, net
 
(0.01
)
                   
Net Income
$
1.64
               
$
1.58
 
                           
Diluted Earnings Per Common Share
                         
Income from continuing operations
$
1.64
                     
Discontinued operations, net
 
-    
                     
Net Income
$
1.64
               
$
1.58
 
                           
                           
                           
(a) Reflects pre-tax charge for the estimated cost related to the employment and post-employment benefits for the
  Company's former Executive Chairman and termination of certain other employees and consulting arrangements.
 
 
2
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
2012 Second Quarter
Net Income (Loss)
($ millions, except per share amounts)
                           
                           
 
Reported
             
Core
 
Income
 
Significant Items Affecting Income
 
Results
Oil & Gas
$
2,043
               
$
2,043
 
                           
Chemical
 
194
                 
194
 
                           
Midstream, marketing and other
 
77
                 
77
 
                           
Corporate
                         
Interest expense, net
 
(25
)
               
(25
)
                           
Other
 
(82
)
               
(82
)
                           
Taxes
 
(875
)
               
(875
)
                           
                           
Income from continuing operations
 
1,332
     
-    
         
1,332
 
Discontinued operations, net of tax
 
(4
)
   
4
 
Discontinued operations, net
   
-    
 
Net Income
$
1,328
   
$
4
       
$
1,332
 
                           
                           
Basic Earnings Per Common Share
                         
Income from continuing operations
$
1.64
                     
Discontinued operations, net
 
-    
                     
Net Income
$
1.64
               
$
1.64
 
                           
Diluted Earnings Per Common Share
                         
Income from continuing operations
$
1.64
                     
Discontinued operations, net
 
-    
                     
Net Income
$
1.64
               
$
1.64
 
 
 
3
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
2013 Six Months
Net Income (Loss)
($ millions, except per share amounts)
                           
                           
 
Reported
             
Core
 
Income
 
Significant Items Affecting Income
 
Results
Oil & Gas
$
4,020
                $
4,020
 
                           
Chemical
 
434
     
(131
)
Carbocloro sale gain
   
303
 
                           
Midstream, marketing and other
 
263
                 
263
 
                           
Corporate
                         
Interest expense, net
 
(59
)
               
(59
)
                           
Other
 
(227
)
   
55
 
Charge for former executives and consultants (a)
   
(172
)
                           
                           
Taxes
 
(1,745
)
   
25
 
Tax effect of pre-tax adjustments
   
(1,720
)
                           
                           
Income from continuing operations
 
2,686
     
(51
)
       
2,635
 
Discontinued operations, net of tax
 
(9
)
   
9
 
Discontinued operations, net
   
-
 
Net Income
 
2,677
     
(42
)
       
2,635
 
                           
                           
Basic Earnings Per Common Share
                         
Income from continuing operations
$
3.33
                     
Discontinued operations, net
 
(0.01
)
                   
Net Income
$
3.32
               
$
3.27
 
                           
Diluted Earnings Per Common Share
                         
Income from continuing operations
$
3.33
                     
Discontinued operations, net
 
(0.01
)
                   
Net Income
$
3.32
               
$
3.27
 
                           
                           
(a) Reflects pre-tax charge for the estimated cost related to the employment and post-employment benefits for the
  Company's former Executive Chairman and termination of certain other employees and consulting arrangements.
 
 
4
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
2012 Six Months
Net Income (Loss)
($ millions, except per share amounts)
                           
                           
 
Reported
             
Core
 
Income
 
Significant Items Affecting Income
 
Results
Oil & Gas
$
4,547
               
$
4,547
 
                           
Chemical
 
378
                 
378
 
                           
Midstream, marketing and other
 
208
                 
208
 
                           
Corporate
                         
Interest expense, net
 
(53
)
               
(53
)
                           
Other
 
(174
)
               
(174
)
                           
Taxes
 
(2,014
)
               
(2,014
)
                           
                           
Income from continuing operations
 
2,892
     
-    
         
2,892
 
Discontinued operations, net of tax
 
(5
)
   
5
 
Discontinued operations, net
   
-    
 
Net Income
$
2,887
   
$
5
       
$
2,892
 
                           
                           
Basic Earnings Per Common Share
                         
Income from continuing operations
$
3.56
                     
Discontinued operations, net
 
(0.01
)
                   
Net Income
$
3.55
               
$
3.56
 
                           
Diluted Earnings Per Common Share
                         
Income from continuing operations
$
3.56
                     
Discontinued operations, net
 
(0.01
)
                   
Net Income
$
3.55
               
$
3.56
 
 
 
5
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
Worldwide Effective Tax Rate
                             
 
QUARTERLY
 
YEAR-TO-DATE
 
2013
 
2013
 
2012
 
2013
 
2012
REPORTED INCOME
QTR 2
 
QTR 1
 
QTR 2
 
6 Months
 
6 Months
Oil & Gas
2,100
   
1,920
   
2,043
   
4,020
   
4,547
 
Chemical
275
   
159
   
194
   
434
   
378
 
Midstream, marketing and other
48
   
215
   
77
   
263
   
208
 
Corporate & other
(195
)
 
(91
)
 
(107
)
 
(286
)
 
(227)
 
Pre-tax income
2,228
   
2,203
   
2,207
   
4,431
   
4,906
 
                             
Income tax expense
                           
Federal and state
332
   
292
   
254
   
624
   
700
 
Foreign
569
   
552
   
621
   
1,121
   
1,314
 
Total
901
   
844
   
875
   
1,745
   
2,014
 
                             
Income from continuing operations
1,327
   
1,359
   
1,332
   
2,686
   
2,892
 
                             
Worldwide effective tax rate
40%
 
38%
 
40%
 
39%
 
41%
                             
                             
 
2013
 
2013
 
2012
 
2013
 
2012
CORE RESULTS
QTR 2
 
QTR 1
 
QTR 2
 
6 Months
 
6 Months
Oil & Gas
2,100
   
1,920
   
2,043
   
4,020
   
4,547
 
Chemical
144
   
159
   
194
   
303
   
378
 
Midstream, marketing and other
48
   
215
   
77
   
263
   
208
 
Corporate & other
(140
)
 
(91
)
 
(107
)
 
(231
)
 
(227
)
Pre-tax income
2,152
   
2,203
   
2,207
   
4,355
   
4,906
 
                             
Income tax expense
                           
Federal and state
331
   
292
   
254
   
623
   
700
 
Foreign
545
   
552
   
621
   
1,097
   
1,314
 
Total
876
   
844
   
875
   
1,720
   
2,014
 
                             
Core results
1,276
   
1,359
   
1,332
   
2,635
   
2,892
 
                             
Worldwide effective tax rate
41%
 
38%
 
40%
 
39%
 
41%
 
 
6
 
 
 
Investor Relations Supplemental Schedules
 

OCCIDENTAL PETROLEUM
2013 Second Quarter Net Income (Loss)
Reported Income Comparison
                         
   
Second
 
First
       
   
Quarter
 
Quarter
       
   
2013
 
2013
 
B / (W)
Oil & Gas
 
$
2,100
   
$
1,920
   
$
180
 
Chemical
   
275
     
159
     
116
 
Midstream, marketing and other
   
48
     
215
     
(167
)
Corporate
                       
Interest expense, net
   
(29
)
   
(30
)
   
1
 
Other
   
(166
)
   
(61
)
   
(105
)
Taxes
   
(901
)
   
(844
)
   
(57
)
Income from continuing operations
   
1,327
     
1,359
     
(32
)
Discontinued operations, net
   
(5
)
   
(4
)
   
(1
)
Net Income
 
$
1,322
   
$
1,355
   
$
(33
)
                         
Earnings Per Common Share
                       
Basic
 
$
1.64
   
$
1.68
   
$
(0.04
)
Diluted
 
$
1.64
   
$
1.68
   
$
(0.04
)
                         
                         
Worldwide Effective Tax Rate
   
40%
   
38%
   
-2%
                         
                         
                         
OCCIDENTAL PETROLEUM
2013 Second Quarter Net Income (Loss)
Core Results Comparison
                         
   
Second
 
First
       
   
Quarter
 
Quarter
       
   
2013
 
2013
 
B / (W)
Oil & Gas
 
$
2,100
   
$
1,920
   
$
180
 
Chemical
   
144
     
159
     
(15
)
Midstream, marketing and other
   
48
     
215
     
(167
)
Corporate
                       
Interest expense, net
   
(29
)
   
(30
)
   
1
 
Other
   
(111
)
   
(61
)
   
(50
)
Taxes
   
(876
)
   
(844
)
   
(32
)
Core Results
 
$
1,276
   
$
1,359
   
$
(83
)
                         
Core Results Per Common Share
                       
Basic
 
$
1.58
   
$
1.69
   
$
(0.11
)
Diluted
 
$
1.58
   
$
1.69
   
$
(0.11
)
                         
Worldwide Effective Tax Rate
   
41%
   
38%
   
-3%
 
 
7
 
 
 
Investor Relations Supplemental Schedules
 
 
 
 
8
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
2013 Second Quarter Net Income (Loss)
Reported Income Comparison
                         
   
Second
 
Second
       
   
Quarter
 
Quarter
       
   
2013
 
2012
 
B / (W)
Oil & Gas
  $
2,100
    $
2,043
    $
57
 
Chemical
   
275
     
194
     
81
 
Midstream, marketing and other
   
48
     
77
     
(29
)
Corporate
                       
Interest expense, net
   
(29
)
   
(25
)
   
(4
)
Other
   
(166
)
   
(82
)
   
(84
)
Taxes
   
(901
)
   
(875
)
   
(26
)
Income from continuing operations
   
1,327
     
1,332
     
(5
)
Discontinued operations, net
   
(5
)
   
(4
)
   
(1
)
Net Income
  $
1,322
    $
1,328
    $
(6
)
                         
Earnings Per Common Share
                       
Basic
 
$
1.64
   
$
1.64
   
$
-    
 
Diluted
 
$
1.64
   
$
1.64
   
$
-    
 
                         
                         
Worldwide Effective Tax Rate
   
40%
   
40%
   
0%
                         
                         
                         
                         
                         
OCCIDENTAL PETROLEUM
2013 Second Quarter Net Income (Loss)
Core Results Comparison
                         
   
Second
 
Second
       
   
Quarter
 
Quarter
       
   
2013
 
2012
 
B / (W)
Oil & Gas
  $
2,100
    $
2,043
    $
57
 
Chemical
   
144
     
194
     
(50
)
Midstream, marketing and other
   
48
     
77
     
(29
)
Corporate
                       
Interest expense, net
   
(29
)
   
(25
)
   
(4
)
Other
   
(111
)
   
(82
)
   
(29
)
Taxes
   
(876
)
   
(875
)
   
(1
)
Core Results
  $
1,276
    $
1,332
    $
(56
)
                         
Core Results Per Common Share
                       
Basic
 
$
1.58
   
$
1.64
   
$
(0.06
)
Diluted
 
$
1.58
   
$
1.64
   
$
(0.06
)
                         
Worldwide Effective Tax Rate
   
41%
   
40%
   
-1%
 
 
9
 
 
 
Investor Relations Supplemental Schedules
 
 
 
 
10
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
                             
     
Second Quarter
   
Six Months
     
2013
 
2012
   
2013
 
2012
NET PRODUCTION PER DAY:
                           
                             
United States
                           
Oil (MBBL)
                           
 
California
 
88
   
88
     
88
   
87
 
 
Permian
 
145
   
138
     
146
   
139
 
Midcontinent and other
 
28
   
23
     
28
   
20
 
 
Total
 
261
   
249
     
262
   
246
 
NGLs (MBBL)
                           
 
California
 
21
   
15
     
20
   
15
 
 
Permian
 
39
   
39
     
39
   
39
 
Midcontinent and other
 
17
   
19
     
18
   
19
 
 
Total
 
77
   
73
     
77
   
73
 
Natural Gas (MMCF)
                           
 
California
 
260
   
269
     
262
   
268
 
 
Permian
 
160
   
151
     
168
   
153
 
Midcontinent and other
 
372
   
420
     
378
   
416
 
 
Total
 
792
   
840
     
808
   
837
 
                             
                             
Latin America
                           
Oil (MBBL)
Colombia
 
28
   
31
     
29
   
27
 
                             
Natural Gas (MMCF)
Bolivia
 
13
   
14
     
13
   
14
 
                             
                             
Middle East / North Africa
                           
Oil (MBBL)
                           
 
Dolphin
 
7
   
9
     
6
   
9
 
 
Oman
 
67
   
62
     
66
   
63
 
 
Qatar
 
75
   
74
     
67
   
73
 
 
Other
 
44
   
36
     
45
   
41
 
 
Total
 
193
   
181
     
184
   
186
 
                             
NGLs (MBBL)
Dolphin
 
7
   
9
     
7
   
9
 
                             
Natural Gas (MMCF)
                           
 
Dolphin
 
145
   
194
     
139
   
183
 
 
Oman
 
56
   
57
     
56
   
57
 
  Other   232     230       238     224  
 
Total
 
433
   
481
     
433
   
464
 
                             
                             
Barrels of Oil Equivalent (MBOE)
   
772
   
766
     
768
   
760
 

 
11
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
         
SUMMARY OF OPERATING STATISTICS
         
                             
     
Second Quarter
   
Six Months
     
2013
 
2012
   
2013
 
2012
NET SALES VOLUMES PER DAY:
                           
United States
                           
Oil (MBBL)
   
261
   
249
     
262
   
246
 
NGLs (MBBL)
   
77
   
73
     
77
   
73
 
Natural Gas (MMCF)
   
795
   
835
     
810
   
835
 
                             
Latin America
                           
Oil (MBBL)
   
26
   
31
     
28
   
27
 
Natural Gas (MMCF)
   
13
   
14
     
13
   
14
 
                             
Middle East / North Africa
                           
Oil (MBBL)
                           
 
Dolphin
 
7
   
8
     
6
   
8
 
 
Oman
 
63
   
60
     
68
   
63
 
 
Qatar
 
80
   
73
     
66
   
71
 
 
Other
 
36
   
34
     
32
   
36
 
 
Total
 
186
   
175
     
172
   
178
 
                             
NGLs (MBBL)
Dolphin
 
7
   
9
     
7
   
9
 
                             
Natural Gas (MMCF)
   
433
   
481
     
433
   
464
 
                             
                             
Barrels of Oil Equivalent (MBOE)
   
764
   
759
     
755
   
752
 
 
 
 
12
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
 SUMMARY OF OPERATING STATISTICS
           
     
Second Quarter
 
Six Months
     
2013
 
2012
 
2013
 
2012
                                   
OIL & GAS:
                                 
REALIZED PRICES
                                 
United States
                                 
Oil ($/BBL)
     
95.08
     
92.34
     
93.33
     
97.88
 
NGLs ($/BBL)
     
39.70
     
43.75
     
40.15
     
49.14
 
Natural gas ($/MCF)
     
3.82
     
2.09
     
3.44
     
2.46
 
                                   
Latin America
                                 
Oil ($/BBL)
     
98.85
     
98.15
     
103.29
     
100.40
 
Natural Gas ($/MCF)
     
11.32
     
12.06
     
11.46
     
11.84
 
                                   
Middle East / North Africa
                                 
Oil ($/BBL)
     
101.83
     
109.70
     
104.40
     
112.28
 
NGLs ($/BBL)
     
29.14
     
29.32
     
32.65
     
34.76
 
                                   
Total Worldwide
                                 
Oil ($/BBL)
     
97.91
     
99.34
     
97.99
     
103.63
 
NGLs ($/BBL)
     
38.78
     
42.06
     
39.52
     
47.52
 
Natural Gas ($/MCF)
     
2.83
     
1.72
     
2.60
     
1.97
 
                                   
INDEX PRICES
                                 
WTI oil ($/BBL)
     
94.22
     
93.49
     
94.30
     
98.21
 
Brent oil ($/BBL)
     
103.35
     
108.90
     
108.00
     
113.63
 
NYMEX gas ($/MCF)
     
4.00
     
2.28
     
3.68
     
2.55
 
                                   
REALIZED PRICES AS PERCENTAGE OF INDEX PRICES
                                 
Worldwide oil as a percentage of WTI
     
104%
     
106%
     
104%
     
106%
 
Worldwide oil as a percentage of Brent
     
95%
     
91%
     
91%
     
91%
 
Worldwide NGLs as a percentage of WTI
     
41%
     
45%
     
42%
     
48%
 
Domestic natural gas as a percentage of NYMEX
     
95%
     
91%
     
93%
     
97%
 
                                   
                                   
                                   
     
Second Quarter
 
Six Months
     
2013
 
2012
 
2013
 
2012
Exploration Expense
                                 
United States
   
$
45
   
$
80
   
$
85
   
$
141
 
Middle East / North Africa
     
33
     
16
     
43
     
53
 
     
$
78
   
$
96
   
$
128
   
$
194
 
 
 
13
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
                                 
                                 
   
Second Quarter
 
Six Months
Capital Expenditures ($MM)
 
2013
 
2012
 
2013
 
2012
Oil & Gas
                               
California
 
$
362
   
$
580
   
$
679
   
$
1,103
 
Permian
   
436
     
508
     
871
     
937
 
Midcontinent and other
   
208
     
418
     
426
     
842
 
Latin America
   
75
     
67
     
145
     
109
 
Middle East  / North Africa
   
549
     
430
     
1,096
     
858
 
Exploration
   
103
     
183
     
181
     
354
 
Chemical
   
103
     
75
     
168
     
117
 
Midstream, marketing and other
 
336
     
422
     
656
     
754
 
Corporate
   
38
     
30
     
58
     
51
 
 
TOTAL
 
2,210
     
2,713
     
4,280
     
5,125
 
Non-controlling interest contributions
 
(39
)
   
-    
     
(65
)
   
-    
 
   
$
2,171
   
$
2,713
   
$
4,215
   
$
5,125
 
                                 
                                 
Depreciation, Depletion &
 
Second Quarter
 
Six Months
Amortization of Assets ($MM)
2013
 
2012
 
2013
 
2012
Oil & Gas
                               
Domestic
 
$
732
   
$
582
   
$
1,472
   
$
1,170
 
Latin America
   
27
     
31
     
57
     
56
 
Middle East  / North Africa
   
395
     
328
     
740
     
663
 
Chemical
   
87
     
86
     
172
     
171
 
Midstream, marketing and other
 
52
     
54
     
102
     
100
 
Corporate
   
10
     
6
     
19
     
12
 
 
TOTAL
$
1,303
   
$
1,087
   
$
2,562
   
$
2,172
 
 
 
14
 
 
 
Investor Relations Supplemental Schedules
 
 
OCCIDENTAL PETROLEUM
 
CORPORATE
 
($ millions)
 
                         
   
30-Jun-13
 
31-Dec-12
                         
CAPITALIZATION
                       
                         
Long-Term Debt (including current maturities)
   
$
7,626
       
$
7,623
   
                         
EQUITY
   
$
41,850
       
$
40,048
   
                         
Total Debt To Total Capitalization
     
15%
       
16%
 
 
 
15
ex99_4-20130730.htm
EXHIBIT 99.4
 
Occidental Petroleum Corporation
Second Quarter 2013 Earnings Conference Call
July 30, 2013
 
 
 
 
1
 
 
 
 
Second Quarter 2013 Earnings - Highlights
 Total Production (Boe/d)
 Operating costs
 Capital program
 Core earnings
 Core diluted EPS
 YTD CFFO before WC
 Cash balance @ 6/30/2013
2
See Significant Items Affecting Earnings in the Investor Relations Supplemental Schedules.
Results
772,000
On track
On track
$1.3 billion
$1.58
$6.4 billion
$3.1 billion
 
 
 
 
2
 
 
 
 
Second Quarter 2013 Earnings - Highlights
Quarter-over-Quarter Impacts
 Improved oil and gas results.
 + Increased oil volumes, primarily in
 MENA.
 + Increased domestic realized oil and
 gas prices.
  Lower international realized oil prices.
 Lower marketing and trading
 income.
 Higher equity compensation
 expense.
3
See Significant Items Affecting Earnings in the Investor Relations Supplemental Schedules
Core Diluted EPS
$1.58
$1.69
$1.64
 
 
 
 
3
 
 
 
 
4
2Q13 vs. 1Q13
($ in millions)
Core Results
•  2Q13    $2.1 B
•  1Q13      1.9 B
•  2Q12      2.0 B
Second Quarter 2013 Earnings - Oil & Gas
Segment Earnings
$246
 
 
 
 
4
 
 
 
 
5
Second Quarter 2013 Earnings - Oil and Gas Total
Production
772
(2)
(3)
(7)
2
19
766
Company-wide Oil & Gas Production (Mboe/d)
763
2Q13 Impacts (Mboe/d)
•  Permian weather &
   gas plant turnarounds
4
3
•  Colombia activity
 
 
 
 
5
 
 
 
 
6
(1)
Second Quarter 2013 Earnings - Oil and Gas
Domestic Production
462
(5)
478
(2)
470
Domestic Oil & Gas Production (Mboe/d)
2Q13 Impacts (Mboe/d)
•  Permian weather -
   oil impact
1
2
•  Plant turnaround -
   gas impact
 
 
 
 
6
 
 
 
 
Second Quarter 2013 Earnings - Oil & Gas
Realized Prices
Worldwide
Oil ($/bbl)
Worldwide
NGLs ($/bbl)
Domestic Nat.
Gas ($/mmbtu)
2Q13
$97.91
$38.78
$3.82
 Benchmark %
104% *
41% *
95%
1Q13
$98.07
$40.27
$3.08
 Benchmark %
104% *
43% *
91%
2Q12
$99.34
$42.06
$2.09
 Benchmark %
106% *
45% *
91%
$94.22
$103.35
$4.00
 
 
 
$94.37
$112.64
$3.37
 
 
 
$93.49
$108.90
$2.28
 
 
 
WTI
NYMEX

Price Sensitivity
Pre-tax Income
Impact
Oil +/- $1/bbl
=
+/- $38 mm
NGL +/- $1/bbl
=
+/- $8 mm
U.S. Nat Gas +/- $0.50/mmbtu
=
+/- $30 mm
Brent
Realized Prices
Benchmark Prices
7
* Note: As a % of WTI Oil.
 
 
 
 
7
 
 
 
 
8
Second Quarter 2013 Earnings - Oil & Gas
Production Costs
               FY12       1Q13      2Q13    YTD13
 Domestic  $17.43 $14.06 $14.28 $14.17
 Total   $14.99 $13.93 $13.40 $13.66
Production Costs ($/boe)
 ~$500 million annualized domestic cost savings versus
 full year 2012.
 
 
 
 
8
 
 
 
 
9
* Higher energy and feedstock costs.
2Q13 vs. 1Q13
($ in millions)
Guidance
3Q13 expected
to be ~$170 mm
Second Quarter 2013 Earnings - Chemical Segment
Core Earnings
Core Results
•  2Q13   $144 mm
•  1Q13    159 mm
•  2Q12    194 mm
 
 
 
 
9
 
 
 
 
10
2Q13 vs. 1Q13
($ in millions)
Second Quarter 2013 Earnings - Midstream
Segment Earnings
Core Results
•  2Q13    $48 mm
•  1Q13    215 mm
•  2Q12     77 mm
 
 
 
 
10
 
 
 
 
11
Second Quarter 2013 Earnings - YTD 2013 Cash Flow
YE2012 vs. YTD2013
($ in millions)
Cash Flow
From
Operations
before
Working
Capital
changes
$6,000
$150
Beginning
Cash $1,600
12/31/12
$3,100
     YTD’13
 Debt / Capital   15%
 Return on Equity  13%
 Return on Capital Employed* 11%
* Note: Annualized; See attached GAAP reconciliation.
 
 
 
 
11
 
 
 
 
12
Second Quarter 2013 Earnings -
Key Performance Metrics - Domestic Production
 Occidental’s domestic oil and gas segment continued to execute on our
 liquids production growth strategy.
  2Q13 domestic production of 470 mboe/d, consisting of 338 mboe/d of liquids and 792 mmcf/d of gas.
  Planned plant maintenance and storms in the Permian negatively impacted production during 2Q13.
  2Q13 domestic production generally in line with our expectations, except for the impact of storms.
Total Domestic Oil Production
+16 mboe/d
production
growth
Total Domestic Production
+16 mboe/d
production
growth
 
 
 
 
12
 
 
 
 
13
Second Quarter 2013 Earnings - Capital Efficiency
& Operating Cost Reduction Program
 Focused drilling program in our core areas
  Reduced our domestic well costs by 21% and operating costs by ~19% relative to
 2012, ahead of previously stated targets of 15% well cost improvement and total oil
 and gas operating costs below $14/boe for 2013.
 Believe we can sustain the benefits realized to date, achieve additional savings
 in our drilling costs and reach our 2011 operating cost levels without a loss in
 production or sacrificing safety.
 The purpose of these initiatives is to improve our return on capital.
Production Costs ($/boe)
 
 
 
 
13
 
 
 
 
Second Quarter 2013 Earnings - California Oil & Gas
14
 
 
 
 
14
 
 
 
 
Second Quarter 2013 Earnings - California
Operations Highlights
 Largest producer of natural gas and
 oil and gas on a gross operated BOE
 basis.
 Largest oil & gas mineral acreage
 holder, with more than 2.1 mm net
 acres.
 Diverse geologic characteristics and
 numerous reservoir targets, range
 from conventional to steam and water
 floods and unconventional.
15
 
 
 
 
15
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - 2013 Strategic Objectives
2013 Objectives
 Deliver predictable outcome given constraints of working in California.
 Advance projects with solid returns, low execution risk and long term
 growth.
 Reducing drilling and completion costs to improve finding and
 development costs and our project economics.
 Reduce operating costs without affecting production to improve current
 earnings and free cash flow.
 Build a growing, highly predictable and lower decline base of production.
 Test various exploration and development concepts from a cost
 improvement and execution predictability perspective.
16
 
 
 
 
16
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - New Organizational Structure
 Restructured business units to create teams organized around
 the unique characteristics of each asset group, resulting in a
 5th business unit dedicated to managing heavy oil properties.
 Created 3 technical teams to enhance recovery from the complex
 reservoirs in California.
  Allows us to grow California operations more efficiently and maximize the
 benefits of our improved cost structure.
17
Elk Hills
Vintage
LA Basin
Long Beach
Heavy Oil
Business Units
Water Flood
EOR/Steam
Flood
Unconventional
New Technical Teams
California Operations
New Unit
 
 
 
 
17
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Operating Efficiency
 Significantly reduced operating costs as well as drilling costs
 in California, exceeding our targets.
  Expect to save at least $175 million this year in operating costs.
18
 
 
 
 
18
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Capital Efficiency
 Improved capital efficiency by ~15% compared to 2012
  Locked in drilling programs
  Revised well designs
  Optimized drilling equipment and fluids to reduce drill time
  Improved contracting strategies
19
 
 
 
 
19
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Capital Program
20
Sufficient inventory to sustain this
strategy for at least 5 years, likely
10+ years, with flexibility to adjust
liquids vs. gas production based
on market conditions.
California 2013 Capital - $1.5 bn
 
 
 
 
20
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Water Floods
21
 Water floods are a core
 competency of Oxy.
 Several new projects in
 progress and a number of
 floods where we are engaged
 in redevelopment, expansion
 or optimization activities.
 Wilmington Field
 Huntington Beach
 Expect 20%+ returns from
 2013 water flood capital.
Los Angeles Basin
 
 
 
 
21
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Water Floods
 Most water flood capital directed to
 optimize our most developed project,
 the giant Wilmington Field.
  135 new wells including 35 horizontal
 wells.
  Horizontal wells can have average IP
 rates over 3x higher than a similar
 vertical well at a cost of just 20% more.
 Since acquiring the asset in 2000,
 proven reserves have steadily grown
 despite 12 years of production.
  1,000+ future well locations.
  Up to 100 MMBOE of reserve
 potential over next 7 years.
22
Wilmington Field Water Flood
 
 
 
 
22
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Water Floods
 Huntington Beach Field Redevelopment
  Adding two new fit-for-purpose rigs, one designed for drilling in urban areas.
  Expect to begin drilling towards year end 2013.
  128 well locations identified, providing 4-5 years of inventory using the 2 rigs.
  Expect to add more well locations applying reservoir modeling and surveillance
 as we’ve done in the analog Wilmington Field.
  We believe that we can increase our production from this field by 10,000 boe/d
 and develop reserves of at least 50 MMBOE.
 Buena Vista Field
  Drill 150+ wells over next 5 years.
  Increase production by 4,000 boe/d and add 28 MMBOE of reserves.
 Have several other water floods in the pilot phase this year, several
 under evaluation for redevelopment and a long list of potential
 projects in the water flood screening process.
23
 
 
 
 
23
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Steam Floods
 Steam flood activities have been a focus in 2013
  Highly profitable, taking advantage of the gas versus oil price spread
 where cheap gas is used to generate steam, which is then injected to
 produce oil.
 These projects can deliver attractive returns at a combination
 of gas prices as high as $6 per MMCF and oil prices as low as
 $80 per barrel.
  Typical rates of return expected to be 25% or better.
24
 
 
 
 
24
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Steam Floods
25
 Kern Front and Lost Hills
  2 largest steam floods
  > 1 billion barrels of original oil in
 place; ~ 870 million barrels oil
 remaining in place
  Added 2 rigs and expect to drill
 ~200 wells in 2H13 and grow
 production by 3,000 BOEPD vs. 2013
 entry rate and with full development
 increasing by 15,000 BOEPD over
 time.
  Believe this could develop
 120 MMBOE of reserves.
 Oxnard and Midway Sunset Area
  With these pilot steam floods, we
 expect to develop an additional 45
 MMBOE of reserves.
Ventura (Oxnard)
Bakersfield
Lost Hills
Kern Front
 
 
 
 
25
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Steam Floods
 Total steam flood spending will constitute ~25% of total
 California capital in 2013.
  Expect to drill >1,500 steam flood wells over the next 5 years.
 With shift of capital to water and steam flood opportunities,
 we expect a lag of about 6 to 9 months before seeing
 sustained production growth as the flow of new projects
 reaches a steady level.
 Currently in a transition period but are now beginning to see
 the initial phases of growth from these projects.
26
 
 
 
 
26
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Unconventional
 In addition to shale plays, our
 “unconventional” opportunities
 include reservoirs that have low
 permeability, which require special
 recovery processes to flow.
 ~1/3rd of our California production
 is from unconventional reservoirs.
 Plan to drill >70 unconventional
 wells in 2013.
 >1,000,000 prospective acres.
 Up to 7 Billion BOE of recoverable
 reserves.
27
“Unconventional”
Production
“Unconventional”
Production
Sacramento
Sacramento
San
Francisco
San
Francisco
Los Angeles
Los Angeles
Bakersfield
Bakersfield
Oxy Acreage
 
 
 
 
27
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Unconventional
 Drilled ~1,300 unconventional wells
 in California since 1998.
 >1,000 of these are in and around
 Elk Hills, including the Monterey
 and other key shale plays.
 2013 plan includes 53
 unconventional wells from multiple
 shale plays around Elk Hills with
 varying costs and performance.
  Program delivers 20%+ ROR
 Ongoing program around Elk Hills
 is expected to increase ultimate
 recovery by ~150 MMBOE.
28
 
 
 
 
28
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Unconventional
 Pursuit of Unconventional
 Opportunities outside Elk Hills
 includes the Rose Field.
 Acquired in late 2009, drilled 1
 appraisal well in 2011, 8 development
 wells in 2012 and 6 horizontal wells
 in 2013.
 Very good results with average IP
 rates exceeding expectations.
  Believe returns from this field will
 be ~25% over the course of the
 development program.
 Plan to drill unconventional wells in
 South Belridge and Buena Vista this
 year.
  Could provide >100 well locations
 and 35 MMBOE of net reserves.
29
 
 
 
 
29
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Elk Hills
30
Elk Hills Field
 Have almost doubled proved
 reserves since acquisition in
 1998.
 Goal is to reduce the underlying
 25% base decline rate by as much
 as half.
  EOR projects (steam, water, polymer,
 CO2 floods) could be implemented
 over the next 3-10 years.
  OPEX/CAPEX reductions will improve
 profitability of these water flood and
 EOR opportunities.
 New cryogenic gas plant up time
 >98% with record NGL yields.
 Elk Hills has 900+ MMBOE of
 remaining reserves and resources
 recoverable through water floods
 and proven EOR technologies.
 
 
 
 
30
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Exploration
 >100 exploration wells drilled over past 5 years.
 Two thirds have found hydrocarbons and a large portion of these
 resulted in commercial production.
 3D seismic has been acquired over a significant portion of our acreage
 contributing to our high rate of success.
 Made significant unconventional discovery in San Joaquin basin last year
  Continued appraisal drilling and testing this year established reserves and resources of
 ~50 MMBOE.
  Full development of this discovery is expected to require drilling 100 wells.
  In addition to the 50MMBOE we’ve established, we are testing and/or planning wells
 in late 2013 and 2014 that, if successful, will double this volume.
  Further, this concept has repeatability and we plan to extend this play through much of our
 California acreage.
 2013 exploration program, which includes 15 wells, is on track to deliver
 results consistent with prior years, and we continue to build inventory to
 ensure we have a robust exploration program going forward into 2014
 and beyond.
31
 
 
 
 
31
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Conventional Gas Properties
 Established sizeable conventional
 natural gas position in the
 Sacramento Basin.
  >318,000 net acres.
  ~66 MMcf/d of dry gas production.
  Largest operator in region (80%+).
 Optimize production with workovers
 and modest drilling program of 8 new
 wells in 2013 and 14 in 2014.
 Ability to ramp development with gas
 prices at ~$5.00 per mcf.
 Identified total reserves and
 contingent resources of ~300 Bcf.
  ~10 Tcf of original gas-in-place.
  ~2 Tcf remaining.
32
Oxy Properties operated by Vintage
business unit
Sacramento Basin
 
 
 
 
32
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Summary
 Large inventory of diverse projects.
  Water floods
  Steam floods
  Additional EOR (CO2, polymer floods, etc.)
  Unconventional
 Similar mix of projects in near-term with larger portion of
 capital allocated to lower decline projects while achieving
 healthy production growth.
33
 
 
 
 
33
 
 
 
 
Second Quarter 2013 Earnings - California
Operations - Summary
Progress toward 2013 Goals:
 $1.5 billion capital program and expect to generate free cash flow of over
 $1 billion.
  With continued improvements in permitting, should be able to grow capital
 budget to $2.0 billion in 2014, with further increases beyond that to ~$2.5 billion
 on a sustainable basis.
 Expect production growth of at least 5-8% annually with > 20% ROR.
 Improved capital efficiency by 15% and reduced operating expenses by
 ~$3.50/boe, saving at least $175 million in 2013.
 Have identified 5,500+ well locations across large and diverse portfolio
 and will add more through future projects.
 Exploration program delivered high rate of success, including significant
 unconventional discovery in San Joaquin basin.
34
 
 
 
 
34
 
 
 
 
35
Second Quarter 2013 Earnings -
2013 Production Outlook
 Domestically, we continue to expect solid growth in our oil
 production for the year.
  Based the nature and timing of our drilling program, such as steam
 flood drilling in California, and the timing of gas plant maintenance
 turnarounds in the Permian, we expected production growth to occur
 in the 2nd half of the year.
  We have achieved the drilling targets we set in 1H13.
  As a result, we expect that 2H13 average domestic oil production
 will be ~ 6,000 to 8,000 barrels a day higher than the 1H13 average,
 the increases coming mainly from the Permian and California.
  We expect the modest declines in our domestic gas and NGLs
 production that we have seen in 2Q13 to continue as a result of our
 reduced drilling on gas properties and natural decline as well as
 additional gas plant turnarounds scheduled in our Permian business
 the rest of the year.
 
 
 
 
35
 
 
 
 
36
Second Quarter 2013 Earnings -
2013 Production Outlook
 Internationally, we expect more cost pool depletions in our
 contracts in Qatar and Yemen, which will result in less cost
 recovery barrels from those locations.
 However, we expect total international production to be
 about flat in 2H13 compared to 2Q13 volumes, assuming
 no renewed pick-up in insurgent activity in Colombia and
 stable spending levels in Iraq.
 We expect international sales volumes to increase in 2H13
 and recoup well over half of the underlift we have experienced
 in 1H13.
 
 
 
 
36
 
 
 
 
 The first six months' capital spending was $4.2 billion, with
 $2.2 billion spent in the second quarter.
 We expect the second half of the year spending rate to be
 higher. Our annual spending level is expected to be generally
 in line with the $9.6 billion program.
 The positive effect of our capital efficiency efforts is starting
 to become noticeable in our spending patterns.
 As a result, we believe there is a reasonable possibility our
 total spending may be somewhat lower than the program
 amount just mentioned while still drilling the number of wells
 we set out as a goal at the beginning of the year.
Second Quarter 2013 Earnings -
2013 Capital Outlook
37
 
 
 
 
37
 
 
 
 
 With regard to our strategic business review, we presented various
 options to our Board of Directors.
 Our review of these options is not yet complete, so the Board will
 continue to evaluate the alternatives. We expect to have additional
 information regarding our plans towards the end of the year.
 Plains All American (PAA) filed a registration statement with the SEC
 for a public offering of part of its interests in Plain’s general partner
 (GP). We own 35 percent of the GP interests, and we expect to
 monetize a portion as part of the proposed offering.
Second Quarter 2013 Earnings
38
Note: For additional information, see the registration statement, a copy of which is available on the SEC's
website. No sales of securities will take place until the registration statement becomes effective.
 
 
 
 
38
 
 
 
 
39
Second Quarter 2013 Earnings -
2H13 Guidance Summary
Oil & Gas Segment
 Domestic Production
  Oil - 6,000 to 8,000 bopd growth
  NGLs - modest decline
  Natural gas - modest decline
 International
  Production volumes - similar to 2Q13
  Sales volumes - increase in 2H13 to recoup over half the underlift vs. 1H13
 Exploration expense: $90 mm in 3Q13
Chemical Segment
 ~$170 mm operating income in 3Q13
Corporate
 Capital spending: $9.6 billion for FY 2013
 Income tax rate: ~41%
 
 
 
 
39
 
 
 
 
Second Quarter 2013 Earnings Conference Call
Q&A
 
 
 
 
40
ex99_5-20130730.htm
EXHIBIT 99.5

Forward-Looking Statements
 
Portions of this report contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects.  Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.  Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s specific products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns domestically or internationally; political conditions and events; liability under environmental regulations and litigation for remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks or insurgent activity; failure of risk management; changes in law or regulations; or changes in tax rates. 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 the prospective nature of events or outcomes generally indicate forward-looking statements.  You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report.  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 affect Occidental’s results of operations and financial position appear in Part I, Item 1A “Risk Factors” of the 2012 Form 10-K.

We use certain terms in this presentation, such as expected ultimate recovery, recoverable reserves, net reserves, remaining recoverable reserves and resources, established reserves and resources, gas in place and original oil in place, that United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from using in our SEC filings.  These terms represent our internal estimates of volumes of oil and gas that are potentially recoverable through exploratory drilling or additional drilling or recovery techniques and are not intended to correspond to probable or possible reserves as defined by SEC regulations.  By their nature these estimates are more speculative than proved, probable or possible reserves and subject to greater risk they will not be realized.