Occidental Petroleum Corporation

Good afternoon and welcome to Occidental's second quarter 2024 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 Jordan Tanner, Vice President of Investor Relations. Please go ahead.

Thank you, Drew. Good afternoon, everyone, and thank you for participating in Occidental's second quarter 2024 earnings conference call. On the call with us today are Vicki Holub, President and Chief Executive Officer, Sunil Matthew, Senior Vice President and Chief Financial Officer, Richard Jackson, President, Operations, U.S. Onshore Resources and Carbon Management, and Ken Dillon, Senior Vice President and President, International Oil and Gas Operations. This afternoon, 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 afternoon. We'll also reference a few non-GAAP financial measures today. Reconciliations to the nearest corresponding GAAP measure can be found in the schedules to our earnings release and on our website. I will now turn the call over to Vicki.

Thank you, Jordan, and good afternoon, everyone. I'll begin today by highlighting another quarter of exceptional execution across our business sector. Our teams delivered strong operational performance during the second quarter. Our technical and operational excellence, paired with a high-quality asset portfolio, continue to deliver value across our businesses. Last week, we further strengthened our portfolio through the addition of Crown Rocks assets in the Midland Basin. We were also pleased to announce that our strategic divestiture program is progressing, and we have clear line of sight to meeting the debt reduction targets we set out when we announced the deal last December. This afternoon, I'll cover our second quarter results and operational performance, as well as our Crown Rock integration plans. Sunil will then review our financial results and guidance, including an increase in full-year guidance for our midstream earnings. In the second quarter, we delivered Oxy's highest quarterly production in four years for both Total Company and U.S. Onshore. This exceeds the midpoint of Total Company production guidance, generating $1.3 billion in free cash flow before working capital. This was driven by exceptional execution across our business segments with notably strong Permian new well performance and higher production uptime, along with outperformance in the Gulf of Mexico. We're exceeding our production expectations for onshore new wells across all our basins and are continuing to achieve operational efficiencies as we execute our capital program. This year to date, we've seen approximately 10% improvement in our unconventional well costs compared to the first half of last year, putting us ahead of our planned well cost savings. These savings have been achieved through lower non-productive time, increased FRAC utilization, operational efficiency gains, and facilities optimization as part of our focused program to lower well cost, decrease time to market, and increase free cash flow. We anticipate further acceleration in time to market in the second half of the year. Importantly, we continue to deliver industry-leading performance in secondary bench development, supporting long-term economics and inventory replenishment. The momentum we are generating on development cost across many facets should translate to capital efficiency improvements as we look toward the end of the year and into 2025. In addition to improved capital efficiency and continued well-performance leadership, our teams have driven down lease operating expenses across our domestic assets to enhance our cash margins. In the second quarter, our per BOE lease operating expenses decreased over $0.60 a barrel, a 6% improvement relative to the average of the prior three quarters. We have several more optimization initiatives planned for the second half of the year, which should give us a favorable outlook toward year end. For example, in our Permian EOR business, we are finding ways to utilize CO2 more efficiently in our reservoirs. We're also optimizing our artificial lift, which has led to reduced failure rates and associated downhole maintenance costs. In the Delaware Basin, we've decreased water disposal costs by doubling the volume of water recycles. relative to the first half of last year. Water stewardship remains a key priority in our operations, and I'm pleased to highlight a recent milestone in which we recycled a cumulative 50 million barrels in our Midland South Curtis Ranch treatment facility. In addition, we have now recycled over 150 million barrels in our New Mexico operations since 2019. Overall, we have built solid oil and gas segment momentum as we move into the second half half of 2024. This gives us confidence to maintain our full-year production guidance, excluding Crown Rock, for our total company and Permian assets, despite the expected divestiture of 15,000 DOE per day in the fourth quarter. Our midstream business significantly outperformed in the second quarter, with an adjusted pre-tax income more than $180 million higher than the guidance midpoint. Our domestic gas marketing teams followed up on the success of their first quarter by utilizing their extensive market intelligence and transportation capability to benefit from regional pricing dislocations. Furthermore, as healthy storage levels and stable permitting output continued from earlier in the year, the second quarter presented abnormally high planned and unplanned maintenance on takeaway pipelines. Our teams capitalized on this opportunity highlighting the value the diversity of our asset base provides. As we look ahead to the second half of the year, we anticipate fewer opportunities for optimization after the Matterhorn pipeline is placed in service, which is expected in the coming months. However, our teams will be prepared to act if additional bottlenecks arise. Looking now at our low-carbon businesses, we're excited by the advancements we're making. As construction of Stratos, our first direct air capture facility, moves forward, our low-carbon ventures team continues to demonstrate that demand for carbon dioxide removal credits is growing. In July, we announced an agreement with Microsoft for the sale of 500,000 metric tons of CDR credits over six years from Stratos. The agreement is the largest single purchase of direct air capture CDR credits to date and highlight the increasing recognition of carbon engineering's technology as a solution to help organizations achieve their net zero goals. I would now like to talk about how pleased we are to integrate CrownRock into the greater Oxy portfolio. We closed the acquisition on August 1st, and we continue to be impressed with CrownRock's efficient operations and employee talent. As we have discussed previously, this acquisition complements and enhances our premier Permian portfolio with the addition of high-margin production and low break-even undeveloped inventory. We are excited about the subsurface and geologic potential of these assets, and our technical teams are eager to apply their subsurface expertise and workflows to generate maximum value. We're also looking forward to leveraging our newfound scale in the Midland Basin. Over the years, we've seen how scale has driven significant technical advancements and operational efficiencies in our other basins. We're confident that as we integrate our middle and basin assets, we'll unlock meaningful efficiencies through infrastructure sharing, resource utilization, and by bringing together best practices from each of our organizations. Our combined teams have made great strides in the past several days getting to know each other and integrating Crown Rock into Oxy's organizations. On our next call, we're looking forward to telling you more about our post-Crown Rock enhanced portfolio and how the integration is advancing. One of the many benefits of this acquisition was the opportunity to high-grade Oxy's existing portfolio of assets. In December, we laid out plans for a $4.5 to $6 billion divestiture program to be completed within 18 months of the acquisition's close. Given the inventory depth of our onshore portfolio, We welcome the opportunity to monetize some of these assets at an attractive price. As we announced last week, the divestiture program is progressing well. Since the start of the year, we have closed or announced approximately $1 billion of Permian Basin divestitures. The proceeds from these sales will go directly toward debt reduction. This progress on divestitures, coupled with a robust organic cash flow underpinned by our steady focus on operational excellence, has positioned us well to reduce our debt in the near term. Sunil will address this in more detail, but we're excited that we're on track to retire approximately $3 billion of debt during the third quarter, which speaks to both the quality of our assets and our future cash flow potential. Now I'll hand the call over to Sunil to provide more details about our second quarter financial results, our guidance, and progress on strategic financial actions.