Occidental Petroleum Corporation

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 third 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 gap measure can be found in the schedules to our earnings release and on our website. I'll now turn the call over to Vicki.

Thank you, Jordan, and good afternoon, everyone. Our change delivered another quarter of exceptional performance across all of our business sectors. Despite weather disruptions and commodity price volatility, Resilient operational execution from our team helps to deliver the highest operating cash flow so far this year. Our strong financial results are a testament to the dedication and capabilities of our team, as well as the premium quality of our assets. I'll begin today by reviewing our third quarter performance and providing highlights from our oil and gas business, including the ongoing integration of Crown Rock. I'll also give an update on our direct air capture projects and then share the progress on our year-term debt reduction program. The new will cover our financial results and fourth quarter outlook, including increases in full-year guidance for each of our segments, and will provide insight of how we're looking at our 2025 capital plans. In the third quarter, our team's commitment and delivery across each of our business units enabled us to generate $1.5 billion in free cash flow before working capital. exceeding guidance in all three segments. Our oil and gas segment exceeded the high end of our production guidance and set a new company record for the highest quarterly U.S. production in our history. This was an outstanding achievement, made even more impressive considering there were three hurricanes that impacted operations across the Gulf of Mexico. This production outperformance was primarily driven by strong new oil performance and higher uptime throughout the Permian Basin. Our Midland Basin teams excelled, surpassing production guidance in our recently acquired Crown Rock assets and delivering the highest quarterly production in over five years across our legacy Midland Basin assets. Optimum geologic targeting drove new oil performance, supplemented by non-recurring OBO benefits. The Delaware Basin continues to perform at an industry-leading level, with our New Mexico performance being instrumental in our third quarter results. Most notably, a six-wheel Wolf Camp development project in our tank field in New Mexico produced an impressive 1.2 million barrels of oil in the first 90 days. In previous earnings calls, we highlighted that Oxy had eight of the top ten industry wells in the entire Delaware Basin from a six-month cumulative production standpoint. Today, I'm proud to announce that our Rockies team now claims eight of the top ten DJ Basin wells drilled since 2019. several of which came along in 2024. Such remarkable industry achievements are only possible because our teams relentlessly pursue innovation and excellence. Not only is our onshore development exceeding expectations on well productivity, we're also executing in a more efficient manner. For example, every new well drilled in the third quarter of the New Mexico development program is utilizing existing infrastructure. As discussed in the past, this significantly enhances project returns and, in many cases, enables secondary mesh developments to deliver stronger returns than our primary ditches. We continue to advance our drilling efficiency as evidenced by a 10% improvement in Permian unconventional drilling cycle times relative to last year. In the D.J. Basin, we successfully drilled a two-mile lateral in only 80 hours. And our teams reduced third quarter well costs by 20% compared to the first half of last year. More than just reducing well costs, these improvements also accelerate time to market, allowing us to turn capital dollars into production faster. Our teams continue to make well design and execution improvements with exceptional results. We expect to carry this momentum into 2025. Another factor in our success, along with continued well-performance leadership and capital efficiency progression, is our team's persistent focus on driving down lease operating expenses across our assets, which ultimately enhances our cash margins. Over the last year, we have meaningfully reduced our domestic operating expenses on a per-well basis. Looking to the fourth quarter, we anticipate continued progress will result in a greater than 20% year-over-year reduction in quarterly LOC for bearable. These steady improvements are driven by several factors, including increased uptime, improved CO2 utilization, and more recently, the integration of low-cost, high-margin ground rock barrels into our portfolio. Our teams continue to deliver their operational and technical strengths to drive margin expansion for both sides, reducing costs while constructing industry-leading wells. Turning to our chemicals and vitrine businesses, OxyChem outperformed in the third quarter, modestly exceeding guidance while overcoming disrupted Gulf weather. And our midstream segment also had another impressive quarter, with our marketing teams once again leveraging natural gas price dislocations between Baja and the Gulf Coast to deliver value to the company. Our demonstrated leadership and midstream expertise allowed us to optimize transport strategies, effectively bringing both our products and third-party volumes to market, even in adverse conditions. I'd like to now share more on the successful addition of Crown Rock to our Oxy portfolio since the acquisition closed in early August. We're thoroughly pleased with the integration of assets and, more importantly, people. We've been highly impressed with the legacy Crown Rock culture, as well as the stewardship exhibited in running day-to-day operations in a safe, profitable manner. Our focus these first months has been centered on safety, organizational integration, and retention of talent, and it's gone very well. There have been no significant safety incidents dating as far back as the December deal announcement, and that's a testament to the Crown Rocks team's proficiency and professionalism. The combined teams are now sharing best practices and identifying opportunities to enhance field operations through our combined middle-basin positions, as well as constructing our 2025 development plan. As the new will cover later, we envision a consistent level of investment in premier Permian asset next year. I want to highlight a few areas where our teams are identifying opportunities for operational improvements and cost efficiency. The first one I'll mention is leveraging Oxy's supply chain expertise to reduce cost of materials and construction. We're also evaluating opportunities to leverage our broader Permian FRI4s and overall resources to accelerate time to market and increase utilization rate. We've spoken in the past about the ample water capacity and network associated with these new assets, how well they fit with our existing water assets, and how they can benefit our legacy business. Recently, we've identified nearly $10 million in expected savings for a singular development plan in the first quarter of 2025, made possible by water integration across assets. We think this opportunity is just the first of many as we leverage shared infrastructure across our combined positions. We also see opportunities to enhance the base production through improved operability and artificial lint design. Already, we are seeing incremental base production improvements in Cranrock assets. Because of this, and stronger than anticipated UL performance, our third quarter production volumes exceeded the expectations that we laid out in August. We're now projecting a 9,000 BDOE per day increase to our fourth quarter exit rate for these assets. We're still in the early stages of integration, but are very excited about the opportunities ahead. By bringing our teams together, we expect to unlock new values and achieve even greater success. Turning now to our low-carbon businesses, I'd like to provide an update on our direct air capture project. Construction of Stratos, which will be the largest direct air capture facility in the world, is progressing smoothly and to plans. As we have previously shared, we have faced the construction sequence of Stratos to help integrate the latest advancements in our research and development efforts. We have been thoroughly impressed with the infusion of talent, passion, and performance coming from the Carbon Engineering team over the last year, driving an innovation cycle that's moving even faster than we anticipated. Collaboration within our technical teams across IFC paired with insights from the CE Innovation Center have given rise to incredible technological breakthroughs in engineering design innovation, which we will integrate into the continued build-out of Stratos. The new design will feature fewer air contactors and fewer pellet reactors, which should reduce operating expenses and increase reliability. We expect to bring the initial 250,000 tons per annum of capacity online in mid-2025 with the additional 250,000 tons to phase in during the next year, incorporating those improvements. This disciplined approach not only generates value for Stratos, but will benefit and de-risk future DAC builds. We're also advancing our South Texas DAC project and recently achieved a significant milestone with the U.S. Department of Energy awarding the project up to $500 million for the initial DAC facility of the site. This grant could potentially increase by $150 million for the development of an expanded regional carbon network in South Texas. The award is momentous in furthering commercial-scale DAC in the United States and validates our ability to accelerate the on the technology. A combination of factors will drive our continued progress in this market and technology. And you're seeing them work together now in time. First, our innovative technical teams continuous investment in R&D, or enhancing grid world projects. Second, we are leveraging project and operational margins from Stratus and applying them to enhance future designs. Third, government support and third-party capital are serving as catalysts to accelerate investment in developing DAC technology at climate-relevant scale, while also solidifying our leading position in the emerging markets. We're excited about the progress made to date in constructing Stratus. improving the DAC technology, driving demand in the voluntary and compliance carbon credit markets. Through the development of Stratos, OPSI is taking a leading role to demonstrate to the developing compliance markets that DAC-plus geologic storage is a large-scale, highly durable, and economic tool for all's approach to climate change. We believe we can help hard-to-abate industries like aviation and maritime meet their net-zero goals with DACs. which can also serve as complementary solutions along with sustainable aviation and climate fuels. Equally as important, CO2 from our DAC can also enable us to produce net zero oil for our EOR operations, providing resources the U.S. needs for energy security and energy the world will continue to need for decades to come. We also recognize that we are in a pivotal moment for power and utilities in our country. especially with the proliferation of data centers and AI increasing the need for reliable, low-cost, low-emissions power. Over the coming decades, we believe Oxy will be uniquely positioned to contribute to this growing sector for our equity investments in net power and our ability to provide DAX solutions at scale to meet the increased demand for carbon dioxide removal credits for large-scale data centers and power generators. Finally, I want to share with you some of the recent progress we've made in debt reduction. In December, we made a commitment to repay over $4.5 billion of debt within 12 months of closing the Crown Rock application. Progress in our divestiture program, including the closing of rural jobs, the sale of a portion of our West Holdings in the third quarter, combined with our continuing strong organic cash flow, has put us well ahead of schedule. In fact, during the third quarter, we repaid $4 billion nearly 90% of our year-term commitment, and that's within just two months of the Crown of Iraq closing. We remain fully committed to achieving our medium-term principal debt target of $15 billion. I'll now hand the call over to Sunil to provide more details about our third quarter financial results, guidance, and capital plan.