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OCCIDENTAL PETROLEUM CORPORATION
Second Quarter 2016 Earnings Conference CallAugust 3, 2016
2
Cautionary Statements
Forward-Looking Statements
Portions of this presentation 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 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; reorganization or restructuring of Occidental's operations, not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; uncertainties about the estimated quantities of oil and natural gas reserves; 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 presentation. Unless legally required, Occidental does not undertake any obligation to update any forward looking statements, as a result of new information, future events or otherwise. Material risks that may affect Occidental’s results of operations and financial position appear in Part I, Item 1A “Risk Factors” of the 2015 Form 10-K.
Use of non-GAAP Financial Information
This presentation includes non-GAAP financial measures. You can find the reconciliations to comparable GAAP financial measures on the “Investors” section of our website.
• Operational excellence
On track to achieve high end of 4% - 6% production growth guidance for total FY 2016 production of 590 – 600 MBOED
• Optimal capital allocation
On track for original ~$3 billion 2016 capital budget
• Full-cycle cost leadership
Cost structure continues to improve
• Superior balance sheet
$3.8 billion of cash as of 6/30/2016, Dividend Increased
3
Second Quarter 2016Key Messages
4
Second Quarter 2016Core Production Growth & Reduced Production Costs
* Ongoing operations; excludes Williston, Piceance, Iraq, Bahrain, Yemen production volumes
Total Company Production*(MBOED)
552
609
2Q 2015 2Q 2016
$12.98
$10.57
2Q 2015 2Q 2016
Production Costs*($/boe)
5
Second Quarter 2016 EarningsAl Hosn Update
• Previous capacity guidance of 60 MBOED net
• Al Hosn Gas team carrying out detailed plant capacity reviews and optimizations to increase deliverability through the plant
• Plant operated at an average of 69 MBOED net in May & 68 MBOED net in Q2
6
Second Quarter 2016 Earnings Oman Update – Block 62
• Two new gas fields online (Fushaigah and Maradi Huraymah)
• Maradi Huraymah Gas Plant constructed in 12 months (On time and on budget)
• Current production from Block 62 ~22 MBOED (Gross)
• Excellent collaboration with Oman Government
Oman Block 62
• Best production in 16 years in ISSD
• Well design changes enhanced production from Shuaiba D well to set up enhanced development plan
• Improved ESP performance
7
Second Quarter 2016 Earnings Qatar Update
Abu Dhabi
Umm Sa’id
Doha
Al Hawailah
Dolphin
ISNDISSD
Block 12Al Rayyan
Qatar
48” Export Pipeline
• Llanos Norte (LLN)− Occidental discovered the giant
Caño Limón Field in 1983 (Cumulative production = 1.3 billion barrels of oil)
− Currently also conducting successful exploration activities
• La Cira - Infantas (LCI)− Partnership with Ecopetrol began
in 2006 to develop and waterfloodthe C sand
− Added development of A & B sands in 2015
• Teca Cocorná− Piloting steam flood
Second Quarter 2016 Earnings Colombia Update – Steam Flood Pilot
Oxy LLN
8
565590 – 600
Core Assets2015
Other DomesticDecline
PermianResources
Growth
Al HosnFull Capacity
Block 62 OmanStart-up
2016 CoreProduction
Outlook
• The increases in production from Al Hosn and Block 62, along with strong year over year production growth from Permian Resources will help us reach the higher end of our production guidance for 2016 of 4% to 6% growth
– Record high production at Al Hosn and Oman
4 – 6% Core AssetsProduction
Growth in 2016
Company-wide Oil & Gas Production from Core Assets (MBOED)
9
Second Quarter 20162016 Production Outlook
Note: Core assets exclude Bahrain, Iraq, Yemen, Williston and Piceance Basins
• On track to meet ~$3 billion capital budget
• Continued improvements in project designs and capital execution have helped us do more than expected with our $3 billion capital budget.
• Most cost reductions are due to efficiency gains, not service company unit cost reductions.
• ~80% of our drilling cost reductions are due to faster penetration rates achieved by the application of Oxy Drilling Dynamics, improved well construction design, lower cost of materials and enhanced logistics.
10
Second Quarter 2016 EarningsCapital Program
1Q16 2Q16 3Q16E 4Q16E
Permian Resources
Remaining Oil & Gas
Midstream & Chemicals
$687
2016 Capital Budget($ in millions)
Permian Resources
Remaining Oil & Gas
Midstream & Chemicals
$657
• In Permian Resources, cost savings due to improved efficiencies will be re-deployed into drilling incremental wells in 2H16 which will impact 2017 production.
• Additional capital (~$20 million) will be shifted to Colombia for projects that deliver attractive returns at current prices.
• As we complete several long-term projects in our chemicals and midstream segments, we expect to have increased flexibility with our capital program in 2017
11
Second Quarter 2016 EarningsCapital Program
1Q16 2Q16 3Q16E 4Q16E
Permian Resources
Remaining Oil & Gas
Midstream & Chemicals
$687
2016 Capital Budget($ in millions)
Permian Resources
Remaining Oil & Gas
Midstream & Chemicals
$657
• Ingleside Ethylene LLC− 50% / 50% Joint Venture with
MexiChem− 1.2 billion lbs / year cracker,
associated pipeline and storage− Long term supply agreement with
MexiChem
• Construction is on budget and on schedule
• Oxy’s share of capital is $725 million− ~90% of project capital spending is
completed and will decline sharply in 4Q16
• Start-up expected in 1Q17
12
Second Quarter 2016 EarningsEthylene Cracker on Schedule
Ingleside Ethylene Cracker – July 2016
Ingleside Ethylene Cracker – July 2016
13
Second Quarter 2016 EarningsIngleside Oil Terminal
• Terminal will have total oil storage capacity of ~2 million barrels and throughput capacity of ~300 thousand barrels per day
• Project is on budget and on schedule
Ingleside Export Facility Phase One Ingleside Export Dock
14
Second Quarter 2016Total Spend per BOE Continued Decline
~$40.00
~$27.00
2014 2015 2016Target
1H2016
Total Spend per BOE = Capital Spending + G&A + All Operating Costs
Global Oil & Gas Sales Volumes
• Internal performance metric to focus on operational efficiency, especially in consideration of the sharp decline in commodity prices
• Portion of senior management’s incentive compensation is directly aligned with this performance metric
• Focuses on efficiency, financial returns, and free cash flow generation
• Designed to help manage the reduction in overall spending while rewarding production growth
$28.50
~$62.00
15
Second Quarter 2016 EarningsStrong Balance Sheet
Sources Uses
Cash Balance
6/30/2016
1H16 Annualized Cash Flow* @ $39.52 /
barrel
2016 Capital
Program
Annual Dividends
~$3.5 bn
~$3.8 bn
~$2.3 bn
~$3.0 bn
• Ended 2Q16 with $3.8 billion of cash on hand, an increase of nearly $600 million from 1Q16
• Cash flows from operations exceeded capital spending in 1H16
• Collected the remaining $330 million of proceeds from the settlement with Ecuador
• Market value of current PAGP ownership is ~$800 million
Illustrative Sources & Uses of Cash
* Cash flow from operations before changes in working capital
16
Second Quarter 2016 EarningsStrategy for Profitable Growth in 2017
• Throughout this year we have consistently said that we will prudently manage our activity levels to stay positioned for profitable growth in 2017 while maintaining the flexibility necessary to maneuver through the uncertainty and volatility of this price environment.
• To prepare for growth in 2017, we will add up to 2 rigs to our Permian Resources business by the 4th quarter, depending on drilling efficiency improvements and increases in well productivities.
• The incremental capital for Colombia is also intended to support growth in 2017 and will be directed to development activities in La Cira - Infantaswhere we have a successful partnership with EcoPetrol to develop additional low decline waterfloods.
• Given the short-cycle nature of our Permian Resources business and the flexibility we have in our Colombia operations, we can adjust our capital spending up or down depending on the price environment.
17
Second Quarter 2016 EarningsStrategy for Profitable Growth in 2017
• We are also continuing to look for ways to expand our positions in the Permian through asset acquisitions.
Objective is to pursue opportunities in both enhanced oil recovery and our Resources business which provide meaningful synergies to enhance the value of our existing assets.
Our objective in acquiring additional enhanced recovery assets is to blend development of long life, low decline production with our faster growth unconventional development.
• While we continue to evaluate potential opportunities, we are return focused, and note that asset prices appear excessive when one considers the current product price environment.
• At our board meeting in July, we announced an increase in our annual dividend rate from $3.00 to $3.04 per share.
• Oxy has now increased its dividend every year for 14 consecutive years, and a total of 15 times during that period.
• The dividend increase reflects the commitment to our shareholders to grow our dividend annually.
• With improved capital efficiency in our Permian Resources business, the start-up of the ethylene cracker in Chemicals combined with long-lived base production and a portfolio of high quality opportunities, we expect continued future dividend growth.
18
Second Quarter 2016Dividend Increase
Second Quarter 2016 EarningsCash Flow Priorities
1. Base/Maintenance Capital
2. Dividends
3. Growth Capital
4. Share Repurchase
5. Acquisitions
19
• Jack B. Moore, former Chairman of Cameron International Corporation, has been elected to Oxy’s Board of Directors.
• Mr. Moore, 62, served as Chairman of the Board for Cameron International Corporation from 2011 until it was acquired by Schlumberger in April 2016. He joined Cameron in 1999 and served as CEO from 2008 to 2015 and as President from 2008 to 2014. Prior to joining Cameron, he held various management positions at Baker Hughes Incorporated, where he was employed for 23 years.
• Mr. Moore is a graduate of the University of Houston with a B.B.A. degree; he also attended the Advanced Management Program at Harvard Business School.
20
Second Quarter 2016Board of Directors Election
• Total ongoing oil production (Bbl/d)*
• Total ongoing production (BOED)
• Core results**
• Core diluted EPS**
• 2Q16 CFFO before Working Capital & Other
• 2Q16 Capital Expenditures
• Cash balance @ 6/30/2016
Results386,000~flat YoY*
609,000
($136) million
($0.18)
$935 million
$657 million
$3.8 billion
Second Quarter 2016Core Results
21*Excludes Iraq and Bahrain
**See Significant Items Affecting Earnings in the Earnings Release Attachments.
590 (3) (2)
24
1Q16 Permian Other Domestic MENA andColombia
2Q16
Second Quarter 2016Oil and Gas Total Company Production – Ongoing Operations
Company-wide Oil & Gas Core Production* (MBOED)
• In 2Q 2016, total company oil and gas production volumes averaged 609,000 BOED, an increase of 19,000 BOE in daily production from 1Q 2016.
22*Core production excludes Piceance, Iraq and Bahrain production volumes
609
298
307 (7)
- 2 302
2Q15 1Q16 Oil NGLs Natural Gas 2Q16
Second Quarter 2016Oil and Gas Domestic Production
Domestic Oil & Gas Production* (MBOED)
23*Core production excludes Williston and Piceance production volumes
254
283 (4) 8
20 307
2Q15 1Q16 Oil NGLs Natural Gas 2Q16
Second Quarter 2016Oil and Gas International Production
International Oil & Gas Production* (MBOED)
• International production was up 24,000 BOED in 2Q 2016 with Al Hosn running at full capacity and Block 62 in Oman increasing.
24*Core production excludes Iraq, Bahrain, Yemen production volumes
WorldwideOil ($/bbl)
WorldwideNGLs ($/bbl)
Domestic Nat.Gas ($/mmbtu) WTI NYMEXBrent
Realized Prices Benchmark Prices
2Q16 $39.66 $14.59 $1.46 $45.59 $46.97 $1.97
WTI % 87% 32% 74%*
Brent % 84% 31%
1Q16 $29.42 $10.86 $1.50 $33.45 $35.08 $2.07WTI % 88% 32% 73%*Brent % 84% 31%
2Q15 $54.55 $18.06 $2.09 $57.94 $63.50 $2.73
WTI % 94% 31% 77%*Brent % 86% 28%
25
Second Quarter 2016Oil & Gas Realized Prices
* As a % of NYMEX
Beginning CashBalance12/31/15
CFFO BeforeWorking Capital
Change inWorking Capital
& Other
CapitalExpenditures
Dividends DebtRetire/Proceeds
Asset SaleProceeds,Ecuador &
Other
Ending CashBalance 6/30/16
1H 2016($ in millions)
$3,750
$1,750
$4,400
2Q16Debt / Capital 27%
26
Second Quarter 2016YTD 2016 Cash Flow
($1,350)
($810)
($1,150)
$10
$900
1,4501,250
0
500
1,000
1,500
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2045
2046
27
Second Quarter 2016Debt Maturity Schedule
$ million Retired / Called maturitiesNew Issuances
• New issuances extended the dollar-weighted average maturity of debt by over 5 years.
Rating OutlookS&P A Stable
Fitch A Stable
Moody’s A3 Stable
• FY 2016 Total Production Outlook – Core Assets (Excludes Iraq, Bahrain & Piceance)
– Total volumes of 590,000 – 600,000 BOED
• 3Q16 Total Production Outlook – Core Assets (In 3Q16, Reported Production = Core Production)
– Total production of 600,000 – 605,000 BOED
– Domestic production decline by ~10,000 BOED
• Permian EOR flat versus 2Q16
• Permian Resources of ~116,000 BOED
– International production increase of 6,000 – 8,000 BOED driven by ramp up of Oman Block 62
28
Second Quarter 2016FY and 3Q 2016 Production Outlook
Oil & Gas Segment
• FY 2016E Total Production – Core Assets– 590,000 – 600,000 BOED
• 3Q16E Production – Core Assets(In 3Q16, Reported Production = Core Production)
– Total production of 600,000 – 605,000 BOED– Permian EOR production flat– Permian Resources of ~116,000 BOED– Domestic declines by ~10,000 BOED– International production increase of 6,000 – 8,000
BOED driven by ramp up of Oman Block 62
Cash Flow Sensitivities
• A $1 / bbl change in WTI oil price affects annual operating cash flows by ~$100 million
• A $0.50 / Mmbtu change in domestic natural gas prices affects annual operating cash flows by ~$45 million
DD&A – FY 2016E• Oil & Gas: ~$15.00 / BOE• Chemicals and Midstream: $655 mm
Exploration Expense• ~$25 mm in 3Q16E
Midstream
• ($20) – ($40) mm pre-tax loss in 3Q16E
Chemical Segment• ~$130 mm pre-tax income in 3Q16E
Corporate• FY 2016E Domestic tax rate: 40% • FY 2016E Int'l tax rate: 60%• Interest expense of $75 mm in 3Q16E
29
Second Quarter 20163Q16 & FY 2016 Guidance Summary
43 71 84 79
2014 2015 1Q16 2Q16 3Q16E 2016E 2017E
Oil NGL Gas
Second Quarter 2016 Earnings Permian Resources Production
30
• Total production grew 16% year-over-year to 126 MBOED
– Oil production grew 10% year-over-year to 79 MBOD
• 2Q 2016 activity was down compared to 1Q 2016
– 14 wells online in 2Q vs 37 in 1Q
– Improved well productivity and base management contributing to moderate production decline
• Increase in activity expected in 2H16
• Continuing appraisal efforts and increasing knowledge of the rock
75
110
128 126116 ~121
MBOED
0.8
0.6 0.5 0.4
0.2
0.8
0.8
0.6 0.6
0.4
1.72
1.52
1.101.06
0.66
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2014 2015 Q1 2016 Q2 2016 Best
$MM
/ 1,
000'
of L
ater
al
Permian Resources Cost ($MM) / 1,000' of Perforated Lateral
Drilling Completions
~5,100' ~6,300' ~5,600' ~6,800' 9,677'AverageLateral Length:
Second Quarter Earnings 2016 – Permian Resources Manufacturing Mode: Drilling / Completions
Move to Manufacturing Mode Significantly Reduced Well Cost
31
13.6
25.2 25.9
36.3
0
5
10
15
20
25
30
35
40
2014 2015 Q1 2016 Q2 2016
1,00
0' o
f Lat
eral
Permian Resources1,000' of Lateral Per Rig Per Quarter
Well Performance: Texas Delaware – Wolfcamp A
32
Second Quarter Earnings 2016 – TX Delaware Basin Recent Performance
• Buzzard State 21 11H three month cumulative production of
110 MBOE – 75% oil
• HB Morrison B 12H three month cumulative production of
101 MBOE – 84% oil
OXY Operated Acreage
354467
BOED / 1000’
73% Oil
66% Oil
270239
256215300224
74% Oil
231261
256191
77% Oil
904
1,174
1,632
1,751
1,817
1,717
1,208
1,573
1,947
1,981
2,050
2,265
All 2015
All 2016
BUZZARD STATEUNIT #17H
BUZZARD STATEUNIT #15H
BUZZARD STATEUNIT #16H
HB MORRISON15H
Peak 24 Hour 30 Day
73% Oil
66% Oil
74% Oil
77% Oil
43
25
19
13
- 5
10 15 20 25 30 35 40 45 50
2014 2015 1H16 Best
DRILL DAYSDelaware Wolfcamp A 4,500’ HZ
Second Quarter Earnings 2016– TX Delaware Basin Manufacturing Mode: Drilling / Completions
Move to Manufacturing Mode Significantly Reduced Well Cost
Rig Release to Rig Release
33
$5.3 $3.6 $2.9 $2.7
$5.6
$4.1
$3.3 $2.7
$10.9
$7.7
$6.2 $5.4
$-
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
2014 2015 1H16 Best
GR
OSS
WEL
L C
OST
$M
M
WELL COSTDelaware Wolfcamp A 4,500‘ HZ
Drilling Completions
Optimization efforts have significantly increased value
34
Second Quarter Earnings 2016 – Southeast New Mexico Recent Performance
• Increased proppant to 1,500 lbs/ft creating increased
reservoir stimulation and complexity
• Target development well cost of $5.5mm
• Choke management and gas lift injection
optimization minimize lateral cleanouts and
accelerate production
• Produced water fracs will further reduce well costs
Increased focus on New Mexico
New Design – 4 Wells 73% Oil
Old Design – 8 Wells 78% Oil
• Expect to increase New Mexico activity in Q3
• Continuing to appraise and delineate multiple benches in core areas
– Initial results indicate high return, multi-bench development potential
• Integrated field development planning will guide execution for maximum value
– Development pace, bench sequencing, maximize facility utilization, pad drilling
35
Second Quarter Earnings 2016 – East Midland Basin Recent Performance
OXY Operated Acreage
BOED / 1000’
90% Oil180165
131
140115
113
17516090% Oil
89% Oil 175152
• Optimize completion designs with geology throughout the field
– Decreased cluster spacing and increased proppant per lateral foot
– Increased stimulated rock volume and frac complexity
– Reduced completion costs per 1,000’ of lateral
• Initial results positive, continuing to evaluate and improve trials
Cost Efficiency Efforts: Wolfcamp A
936
884
1,061
1,207
1,286
1,135
1,021
1,222
1,323
1,407
All 2015
All 2016
MERCHANT1404A
WALDRONEUNICE 1308WA
WALDRONEUNICE 1306WA
Peak 24 Hour 30 Day
90% Oil
89% Oil
89% Oil
‐
30
60
90
120
150
180
0 30 60 90 120 150 180
Cumulative MBO
E
Days Online
South Curtis Ranch Lower Spraberry 10,000'
Completion optimization efforts have significantly increased value
36
Second Quarter Earnings 2016 –West Midland Performance
• 56% improvement in cumulative BOE production
• Increased proppant concentration to 1,500 lbs/ft
– Tested up to 1,800 lbs/ft
– Early evaluation favorable with 100 mesh
• Slickwater zipper fracs with reduced cluster and
stage spacing
• Extended reach laterals completed 100% plug-n-
perf
• Successful cleanout to TD during initial
completion
• Complete section development to maximize
recovery and reduce offset interference
New Design – 8 Wells 89% Oil
Old Design – 9 Wells 90% Oil
Best performer – SCR 433SH
$3.7 $2.4 $2.4 $1.9
$5.5
$4.6 $4.0 $3.4
$9.2
$7.1 $6.4
$5.3
$-
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
2014 2015 1H16 Best
GR
OSS
WEL
L C
OST
$M
M
WELL COSTEast Midland Wolfcamp A 7,500' Hz
Drilling Completions
Second Quarter Earnings 2016 – East Midland Basin Manufacturing Mode: Drilling / Completions
Move to Manufacturing Mode Significantly Reduced Well Cost
Rig Release to Rig Release
37
46
19 16
11
-
5
10
15
20
25
30
35
40
45
50
2014 2015 1H16 Best
DRILL DAYSEast Midland Wolfcamp A 7,500’ Hz
$11.41 $10.87
$9.74 $8.72
$8.33
$-
$5.00
$10.00
$15.00
2Q15 3Q15 4Q15 1Q16 2Q16
Permian Resources Opex / BOE
Surface Downhole Supports Energy Other
• Continued focus on reducing field
operating costs during 2016
– Surface expense $/boe reduced 43% from Q2 2015
– Downhole expense $/boe reduced 22% from Q2 2015
– Company operated operating expense down 29% ($/boe) from Q2 2015
– Taken action on over 700 “Cost Stand Down Day” ideas (53%) resulting in significant savings in opex, capex, and G&A
38
Second Quarter Earnings 2016 – Permian Resources Continued Opex Reduction
• Focused on maximizing
production from existing wells
– High return, quick payback projects with low development cost
– Developing additional knowledge of reservoirs to enhance future development opportunities
– Expecting 2016 annual average uplift over 6,000 net boepd
39
Second Quarter Earnings 2016 – Permian Resources Production Optimization
0.9
1.9
2.8
3.9
4.7
5.4
0
1
2
3
4
5
6
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
Net
MB
OEP
D
Permian Resources Production Optimization (MBOEPD)
Capital Workovers Clean-OutsLift Revisions Well Enhancement
Cum
ulat
ive
40
Second Quarter 2016Permian EOR
• Stable and low-decline base production at an advantaged cost
• Permian EOR business remains profitable in the current downturn.
• EOR business expected to generate free cash flow this year in the current oil price environment
• Drilling costs are running 23% below our benchmark target.
• Capital savings will be reinvested into additional wells and CO2flood expansions.
CO2 Supply & Processing
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 5 10 15 20 25 30 35 40
Num
ber o
f Inj
ectio
n W
ells
Number of Projects
Denbury
Chevron
Apache
Anadarko
Oxy
Kinder Morgan
Hess
Exxon
Size of bubble = CO2 EOR Production Volume
All of Oxy’s CO2 operations
are in the Permian Basin
• Oxy is the largest handler of CO2 in the Permian- Injects 1.9 billion cubic feet a day- Operates 31 CO2 EOR projects Source: Oil & Gas Journal 2014 Biennial EOR Survey
Second Quarter 2016World Leader in Enhanced Oil Recovery
U.S. CO2 EOR Projects
41
Main Oil Column CO2 Flood:
• Started CO2 injection into Phase 1 in September 2015 (ahead of schedule)
• Phase 1 and Phase 2 will develop 28 MMBOE at just over $10 / BOE
42
Residual Oil Zone (“ROZ”) Potential:
• Four pattern initial development to begin in 2016
• Full ROZ expansion ~50 patterns; 80 MMBOE
Waterflood
Phase 1 & 2 CO2 Flood
ROZ Initial Development
Second Quarter 2016South Hobbs: CO2 Flood and Expansion Areas
South Hobbs ROZ
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Gro
ss B
OPD
South Hobbs Unit Production and CO2 Flood Forecast
SOUTH HOBBS TARGETS 5 per. Mov. Avg. (SOUTH HOBBS)
Waterflood
Phase 1 CO2 Flood
43
• The ROZ development is a vertical expansion of the CO2 flooded interval. • The ROZ underlies most of our major EOR properties with current projects in South
Hobbs and West Seminole and can be developed between $3 and $7 per BOE.
Second Quarter 2016Residual Oil Zone Development
ResidualOil Zone
Main OilColumn
GeologicSeal
Water Zone
OriginalProducer
DeepenedROZ
Producer
OriginalInjector New ROZ
Injector
DeepenedROZ
Injector
Producing OilWater Contact
• Completed 74 well deepenings and recompletions along with 28 new wells year-to-date
• Anticipate an additional 30 deepenings and recompletions and 22 new wells in 2H16
Drilled a 2nd Bone Spring appraisal well in the Texas Delaware region with encouraging results, which we believe will add additional bench potential to the long term development plan in this area
Drilled and completed two horizontal Wichita Albany wells on existing HBP acreage on the Central Basin Platform. We are encouraged by the early results of these lower decline rate wells and would anticipate drilling 6 to 8 follow-up wells in the play in the next 12-18 months
One of our horizontal rigs from Permian Resources drilled two deep CO2 source wells, which will help provide long term supplies of CO2 to help support our vast inventory of EOR development projects
44
Second Quarter 2016Permian Appraisal Activity
45
Second Quarter 2016Permian Summary
154181 192 186
2014 2015 1Q16 2Q16 3Q16E 2016E 2017E
Oil NGL Gas
~265260
MBOED
270273255
222
• Expect to increase to 7 – 8 rigs in 2H16
• Successfully enhancing completion methods across Permian Resources acreage position
• Achieving better than expected results in both Permian businesses which will allow us to invest the savings into additional wells in each respective business
• Expect production growth in 2017 with added rigs in Permian Resources and additional investment in Permian EOR
SECOND QUARTER 2016 EARNINGS CONFERENCE CALL Q&A
