Occidental Petroleum Corporation

Good morning and welcome to the Occidental's fourth quarter 2019 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jeff Alvarez, Vice President of Investor Relations. Please go ahead.

Thank you, Alyssa. Good morning, everyone, and thank you for participating in Oxenel Petroleum's fourth quarter 2019 conference call. On the call with us today are Vicki Holub, President and Chief Executive Officer, Cedric Berger, Senior Vice President and Chief Financial Officer, Ken Dillon, President, International Oil and Gas Operations, BJ Hebert, President of OxyChem, and Oscar Brown, Senior Vice President, Strategy, Business Development, and Integrated Supply. This morning, we will refer to slides available on the investor section of our website. The presentation includes a cautionary statement on slide two regarding forward-looking statements that will be made on the call this morning. I'll now turn the call over to Vicki. Vicki, please go ahead.

Thank you, Jeff, and good morning, everyone. The integration of our business into one cohesive Oxy is progressing extremely well. We are ahead of schedule to fully capture value from our $2 billion Synergy program. We have repaid approximately a third of our debt related to the acquisition, and we have the best people in place to leverage our superior assets to deliver outstanding operational results. As many of you may know, 2020 marks Oxy's 100-year anniversary. Success over Oxy's first century was driven by technical expertise, the ability to adapt quickly, and our ceaseless drive to lead our industry forward through innovative problem solving. These same attributes, combined with our unique and defining approach to sustainability in a low-carbon world, will be integral to ensuring our leadership and success over the next 100 years. Before I touch on the fourth quarter and value capture progress, I'd like to thank our remarkable employees who continue to work hard and responsibly deliver excellent results. Whether their focus is on drilling the best wells with industry-leading capital intensity, operating our chemical plants efficiently, maximizing product margins, or delivering on our value capture and deleveraging targets, our teams continue to lead with passion to drive positive results. Every day our people demonstrate that they are exceptional at what they do while achieving the best safety performance in our history. Moving to slide three, as an innovative and sustainable energy leader, we intend to be at the forefront of our industry. The opportunity before us is immense, and our teams are energized and ready for the challenge. Our technical expertise, particularly in subsurface characterization, is a competitive advantage that allows us to maximize the value of our assets. All of our core assets are free cash flow positive and maintain dominant positions in the prolific basins or markets in which we operate. Our focused portfolio includes multiple decades of high return, short to medium cycle development opportunities with primary, secondary, and tertiary recovery options. The short-cycle, high-return nature of our unconventional assets combined with our low-declined conventional assets provide the flexibility to allocate capital to maximize cash margins, especially when taking into account our advantaged midstream position. Leading the industry as a low-cost operator has always been important to us, as this metric will become progressively relevant in the years ahead. As secondary and tertiary methods become more attractive in recovering additional barrels from basins currently in primary recovery, our advanced technical excellence and decades of industry leadership in CO2-enhanced oil recovery position us to be the lowest-cost operator across multiple basins. As the assets we acquired are developed, we will utilize our subsurface and operating expertise to improve productivity and reduce full-cycle costs. Our diversified portfolio with decades of high return inventory and our ability to produce high margin barrels enables us to generate sustainable free cash flow to return to our shareholders, foremost in the form of our dividend, which is one of the defining characteristics of our company. As an innovative and sustainable leader, Oxy must boldly drive improvement on all fronts, including reducing emissions. Our commitment to sustainability is woven into the fabric of our organization. I'm proud that we were the first U.S. headquartered oil and gas company to endorse the World Bank's initiative to reduce routine flaring globally. This important effort is fully aligned with our strategic commitments. We plan for the future through the lens of being a best-in-class operator with an unmatched portfolio of assets and the goal of reducing our greenhouse emissions while executing our strategy to excel in a low-carbon world. Now moving to slide five. The fourth quarter was our first full quarter as a combined company, and we continued to demonstrate our position as a best-in-class operator. Our businesses outperformed across the board. Our production of 1.4 million BOE per day from continuing operations exceeded the midpoint of guidance by 78,000 BOE per day. We accomplished this while spending $400 million less than our full year combined company capital budget of 8.6 billion. This demonstrates that our longstanding commitment to capital discipline remains paramount. Pro forma production for full year 2019 also exceeded guidance by 28,000 BOE per day. And we expect to grow production by 2% in 2020 off this higher base, and we've lowered our already reduced 2020 capital budget by another $100 million. Spending less to produce more barrels demonstrates our industry-leading capital intensity and the value we will create for shareholders. That said, as global commodity prices have declined sharply in recent days, we are prepared to reduce our spending if the current environment does not improve. We are monitoring the situation closely and retain the flexibility to adjust our budget if needed. We continue to execute on our divestiture program. In January, we closed the sale of our South Africa block to Total for net proceeds of approximately $90 million. This follows the close of an aggregate of $1.5 billion in divestitures in the fourth quarter. We applied the proceeds from these asset sales and $500 million of free cash flow to repay $2 billion of debt. And we recently announced our 182nd consecutive quarterly dividend, an outstanding record that few other companies can claim. Returning cash to shareholders through our sector-leading dividend is an integral part of our philosophy. In the fourth quarter, we returned approximately $710 million of cash, an amount we fully expect to continue to grow. Moving now to slide six, we continue to outperform expectations in capturing value through synergies. Since closing the acquisition and on a run rate basis, we have completed 60% of our $2 billion synergy targets since closing the acquisition, including $799 million of overhead synergies, $83 million of operating synergies, and $323 million of capital synergies. We expect that our success in lowering costs will enable us to fully achieve our $900 million overhead synergy target in 2020, a year earlier than originally promised. We also have announced divestitures totaling $10.2 billion net of taxes since closing the acquisition, demonstrating significant progress towards achieving our target of $15 billion. We repaid 32% of the debt raised for the Anadarko acquisition with proceeds from the divestitures closed to date, along with the $500 million in free cash flow that I referenced earlier. Our total balance sheet debt has decreased by approximately 30% since the close. We repaid $7 billion of debt in the second half of 2019 and have a clear line of sight on closing the remaining transactions necessary to meet our divestiture target. Operationally, our achievements are as significant as our cost reductions, with the potential to accomplish much more. Moving now to slide seven. As an example, let's look at what we have accomplished on the Legacy Anadarko Texas Delaware acreage. We are recovering more barrels per section with fewer wells and are lowering costs by applying our unique subsurface capability and development approach, similar to the advancements we made on legacy OxyDelaware acreage. Already, we have drilled a record well in the Silver Tip area, showcasing our ability as a premier operator in the Permian Basin. We are enhancing our best-in-class Permian capital intensity by continuously improving time to market. We drilled our first five 10,000-foot wells in silvertip 18% faster than those drilled prior to closing the deal. And this is just the start. We have many more improvements to implement. We are already saving $1.9 million per well completion by utilizing Oxy's advanced Atlas casing design. We're able to pump frack stages, particularly at the toe of the well, at much higher rates with lower treating pressures. Our completion design produces improved stimulation, faster pump times, and uses significantly less water. Put simply, when including the optimized well count, we are spending 26% less in total capital to recover 7% more oil. Oxy's asset operability is unmatched and has greatly improved across the acquired assets by applying our base management expertise and best practices. Our relentless drive for efficiency has reduced production downtime by 22% on the acquired Delaware Basin acreage. We're also seeing downtime improvements across many of the other acquired assets, which is further improving cash flow and value. Additionally, we are working diligently with our partners and leaseholders to significantly reduce obligation wells and short laterals, allowing us to maximize value by focusing near-term activity on long-term development in our core areas. As we had committed to do, slide 8 shows the measures we'll update each quarter to track the success of our progress. We have created a company with ample opportunities to efficiently allocate capital from a position of strength across a portfolio with sector-leading returns. We have made significant progress in divesting assets, reducing debt, and capturing synergies. As part of our commitment to creating long-term value for our shareholders, we will continue to reduce debt, strengthen our balance sheets, and enhance our ability to return even more cash to shareholders. I'll now hand the call over to Cedric, who will walk you through our financial results and guidance.