Occidental Petroleum Corporation

Good morning and welcome to the Occidental's fourth quarter 2020 earnings conference call. All participants will be in 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, Andrew. Good morning, everyone, and thank you for participating in Occidental's fourth quarter 2020 conference call. On the call with us today are Vicki Holub, President and Chief Executive Officer, and Rob Peterson, Senior Vice President and Chief Financial Officer. 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 will now turn the call over to Vicki. Vicki, please go ahead.

Thank you, Jeff, and good morning, everyone. 2020 was a year of extreme volatility for our industry and the world. With a year now behind us, Our operations have returned to a normalized activity level in support of stabilizing our full-year production at our fourth quarter 2020 rate. We entered 2021 with an improved financial position by taking the necessary steps to protect our asset base and de-risk our balance sheet. I'm particularly proud of our teams who leveraged our technical expertise to mitigate production decline while relentlessly lowering costs. The capability of our outstanding employees to consistently deliver remarkable results safely was key to our ability to navigate the challenges of the last year, as well as the challenges presented by the winter storm last week. This morning, we'll provide details of our full-year 2021 plan. This plan maintains our best-in-class capital intensity, even with the modest activity increase we started in the fourth quarter of 2020. We'll also provide an update on our divestiture and deleveraging progress, as well as reviewing our financial results and guidance for the year ahead. Throughout 2020, we focused on maintaining the integrity of our production and asset base, as well as lowering overhead and operating costs. Our achievements have positioned us to build on our track record of operational excellence and efficiency gains as we stabilize production in 2021. In the fourth quarter, our businesses continued to outperform and generate momentum for a strong start to this year. We exceeded our production guidance while continuing to deliver lower than expected operating costs for the quarter. Our oil and gas operating costs of $6.80 per BOE and domestic operating costs of $6.05 per BOE continue to demonstrate the lasting impact of our cost reduction measures as our domestic operating costs were significantly below our original expectations for the year. Although our activity slowed in the second and third quarters, our teams did not miss a step as we normalized activity in the fourth quarter. Our onshore domestic assets went from running 22 drilling rigs in the first quarter down to zero in the second quarter, and then returning to 11 rigs by the end of the year. Operationally, we continued to outperform our expectations and deliver efficiency improvements with new drilling and completion records. Our Texas-Delaware and EJ Basin teams demonstrated our consistent drive for efficiency by exceeding our original well-caught synergy targets in the quarter, an achievement we're very proud of. No matter how favorable or challenging the environment in which we operate, we never take our eye off safety. Many of our teams tied or set new safety records last year, while our company-wide performance was our best ever as we simultaneously worked to minimize the risk from COVID-19. We transitioned into 2021 with an improved financial position having achieved our divestiture target for 2020. We closed approximately $2.8 billion of asset sales, $2.4 billion of which closed in the fourth quarter. In 2020, we utilized the divestiture proceeds to strengthen our balance sheet by reducing debt and liabilities by approximately $2.4 billion and $300 million respectively. We also completed a successful refinancing program extending approximately $7 billion of debt maturities. Together, these achievements place us in a strong position for the year ahead so we can focus on reducing debt and improving our business while maximizing the value of our unmatched asset base. The progress we made last year in reducing operating costs will continue into 2021 as the synergies we delivered and the vast majority of our additional cost savings remain in place. These savings are now embedded in our ongoing operations. We expect to deliver overhead of $1.8 billion, which represents full retention of all synergies and a significant portion of our additional cost reductions. We'll continuously seek new opportunities to lower costs and expand margins as we move forward. We expect to spend $2.9 billion of capital in 2021 to sustain our production at our fourth quarter production rate. Our plans are based on a $40 WTI price environment, and we are prepared to flex spending lower if necessary. If oil prices continue to improve this year, we will not increase capital in support of production growth. The flexibility and optionality that our scale and asset base provide are often underappreciated. We are equipped to adjust to future potential commodity price dips or regulatory changes while being positioned to leverage the benefits of future price uplifts. Likewise, our capital and spending plans retain a high degree of flexibility, allowing us to adapt to a changing macro environment. The level of capital spending required in 2021 to sustain our production demonstrates our ability to deliver best-in-class capital intensity, even in a period where we're not growing production. Leveraging our technical expertise, particularly in subsurface characterization, enables us to drill the best wells while we continue to pursue new ways to lower costs with the goal of spending less to produce more barrels. The efficiency of our capital development coupled with our low base decline and our relentless pursuit of maximizing every barrel from our existing wells allows us to hold our production flat with capital of $2.9 billion in 2021. We are pleased with the progress achieved to date in closing divestitures and reducing debt, especially given the challenging market in 2020. We exceeded our $2 billion divestiture target with the closing of the mineral and surface acreage in Wyoming, Colorado, and Utah, as well as our onshore assets in Columbia. Post-Columbia, we are targeting an additional $2 to $3 billion of asset sales to be announced by mid-2021. We are making progress towards this new target and have already closed approximately $350 million of transactions. As we near the end of our large-scale divestiture program, we will continue to balance transaction timing with price realization and will not sacrifice value to close transactions quickly. As commodity prices continue to strengthen, we expect the value that buyers place on assets to adjust accordingly. We will always prioritize obtaining value for our shareholders over meeting a deadline or divestiture target, which we've imposed upon ourselves. As Rob will speak to in a moment, our debt reduction efforts combined with our ability to refinance $7 billion of near-term maturities over the last year places us in a favorable position. We continuously review our portfolio to ensure we have the optimal mix of free cash flow generation, capital efficiency, and low-decline assets. We now have one of the best portfolios in Oxy's 100-year history, but this doesn't mean that we have stopped looking for opportunities to improve our asset base. We frequently complete acreage trades to core up positions and operatorship, and on occasion may pursue opportunities where we see outstanding value in a bolt-on acquisition. For example, we recently exercised a preferential right to increase our working interest in the Lucius Project, which we operate in the Gulf of Mexico. We expect that our investment will pay back in slightly over a year in a $40 oil price environment. Our oil and gas highlights slide includes just a few of the many achievements our business delivered in the fourth quarter. Even during a period of increasing activity, we continue to improve uptime and reduce time to market by lowering drilling and completion times. This includes our Gulf of Mexico operations, who beat their previous FUD to first production record by three days. Additionally, we'll continue to push the envelope on driving out costs. and achieved our original capital synergies for well-cost savings in the Texas Delaware and DJ Basin almost one year ahead of schedule. We are pleased to have been awarded a new concession, Onshore Block 5 in Abu Dhabi, which is adjacent to Onshore Block 3, where we've been conducting exploration work. Following the award of Block 5, we made a multi-reservoir discovery in Block 3. We still have more exploration and appraisal work to complete, but are highly encouraged by the results to date. Last year, we communicated a revised framework for excess cash flow, which prioritizes maintaining our low-cost production base, reducing debt, and strengthening our balance sheet. Our cash flow priorities remain unchanged, as we do not anticipate growing production for at least this year. Our immediate goal is to continue reducing debt and, with the support of a strengthened balance sheet, return capital in a more meaningful way to our common shareholders. I'll now hand the call over to Rob, who will walk you through our financial results and guidance for the first quarter and full year ahead.