Natural Gas

Course:
011 & Gas Industry Operation and Markets
Conducted by:
Duke University (via Coursera)
Assignment:
OIi and Gas Company ProR/e
""
CXV Occldental Petroleum Corporation
~
Section 1 : What the Company Does
• Ocx:idental Petroleum Corporation is an international oil and aas exploration and production company.
Headquartered in Houston, It is one of the largest U.S. oil and 1as companies based on eqlity market
capitalization.
• It is categorized as a publidy traded organization !because its ownership is disp~d amo~ the
1eneral public in many shares of stock wtich are freely traded on a stock exchange/ewer the
counter markets.
• Ocx:ldental's exploration and production activities are concentrated in the followin1 three geographic
regions:
1. United States (Permian Basin • New Mexico, West Texas ; Mldcontinent • Colorado, So..ih Texas)
2. M idde East (Oman, Qatar, United Arab Emirates, Bahrain. Iraq, Libya, Yemen)
3. Latin America (Colombia, Bolivia)
• The following facts show why company is more dependent on demand for crude oil as compared to
raw natural gas:
1. Largest producer of oil in the Permian Basin in West Texas and southeast New Mexico.
2 . Largest independent oil producer in Oman.
3. No.2 oil producer in offshore Qatar.
• By market valur, it is among the top 10 US-based oil and gas comparies with the total si.ze of its
operations 1reater as compared to other competitors like Devon Energy, Valero Energy and Marathon
Petroleum . (Sourer: os ,epo,tftl by Smtisto}
Section 2: How the Company Has Perfc,11 ..ed
Relative Performance
• On May 28, 2015 JP Morgan's Phil Gresh and John Ravall initiated Occidental Petroleum Corp. (OXY)
with an Overwel1ht rating and $85 price tar1et, and placed it amon1 the preferred stocks in their U.S.
co~rage group that induded ConocoPhilips (COP), Chevron (CVX) and ExmnMobil (XOM ~ They wrote
Ocx:idental as a 1ood mix of defensive and offensi~ businesses, which they saw drivi~ production
growth at a compound amual growth rated rolChly 4.5% in the four-year period endin1 in 2018 in a
world d $70 oil in 2016 and beyond. {Sourtt:IAIUIDN'S • USEdldon}
Grown, Shrunk or Unchanged?
Occidental had shrunk since the industry downturn which started in second half ofthe year 2014.
• The market capitallzation at 2014 year-end was approximately $62.1 billion, which dropped to $56.3
billion in 2015 and $53.42 billion in 2016 as reported by St.atista and Goo1le Finance respectively.
• 011 andps seamrrt achieved core earnlnp d $S. 7 billion In 2014, compared with $7.0 billion In
2013. Lower domestic Nrnlnp resulted from lower crude oil and NGL prices, h l1her ope1'3tln1 costs,
and hllh« DD&A expense, partially offset by hl1her crude oil production volumes and Improved
rmlzed domestic ps prices. Where.s, lower International ea m ires reflected lower realized crude oil
prices and sales wlumes, i:artlaly offset by lower operatin1 expense and DD&A. ISoclKr. Flnondol
tutti ~,ull&Mal -..s llOJ4)
Section 3; What the SUCCflHI Haye Been for the Cqnpany

Significant successes over the past few years
ISouKe Fittoltdlll tutti loml llaulls 2m,)
• The company's worldwide prOl.'ed reserves Increased from 2.74 billion BOE at the end d 2013 to 2. 82
billion BOE at ~ar-end 2014, 1Mn1 the company an estimated reserve life of approximate~ 13 years
at current production levels.
• Permian Resources produced 75,000 BOEPO In 2014, a 1S percert Increase from 65,000 BOEPD In
2013.
• Nearlyth~-quarters of ~rmian EOR oil proclJctlon made Occidental the la,.est CO2 Injector in the
Permian and a world leader In application of EOR technolo1Y,
• Mairtainln1 •sin1le A• debt ratinp pve it a competitive advanta1e In ne1otiatin1 and wlnnin1 larae•
scale protects around the world, as weU as pr<Jlfld ln1 enhanced financial liquidity.
• The cash balanced $1.8 blllon exceeded the total debt d $6.8 billion at year-end, which helped the
company WNther the current period of lower oil prices.
Plans for the upcoming several years
• Occidental would maintain Its size and scale between the lar1e lntea,ated oil majors and the
Independent E&P companies to stay an attracti~ Investment alternative that combines positive
elements of both aroups.
• As Permian EOR business has the acilltv, scale and cost structure to operate In an ultra-low-price
en~ronment. it would lrwest suffldent capital to maintain cur re rt proclJction, theRby provldlrc free
cash flow to support our overall business.
• It would mairtaln a dsclpllned approach towards domestic acquisitions and divestitures and the
elll!cution of international contracts.
• The company would maintain a low debt to capitalization ratio and retain sufficient cash on hand
Furthermore, it will focus on lowerin1 its costs which over time mana1ement belie~s will correlate to
lncreaslrc and decrsslrc oil prices.

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Natural Gas

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Course:

011 & Gas Industry Operation and Markets

Duke University (via Coursera)

OIi and Gas Company ProR/e

Section 2: How the Company Has Perfc,11 ..ed

Grown, Shrunk or Unchanged?

Section 3; What the SUCCflHI Haye Been for the Cqnpany

ISouKe Fittoltdlll tutti loml llaulls 2m,)

Plans for the upcoming several years

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