Course:

Oil & Gas Industry Operation and Markets

Conducted by:

Duke University (via Coursera)

Assignment:

Oil and Gas Company Profile

Section 1: What the Company Does

Occidental Petroleum Corporation is an international oil and gas exploration and production company.

Headquartered in Houston, it is one of the largest U.S. oil and gas companies based on equity market

capitalization.

It is categorized as a publicly traded organization because its ownership is dispersed among the general public in many shares of stock which are freely traded on a stock exchange/over the counter markets.

Occidental's exploration and production activities are concentrated in the following three geographic regions: 1. United States (Permian Basin - New Mexico, West Texas ; Midcontinent - Colorado, South Texas) 2. Middle 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 value, it is among the top 10 US-based oil and gas companies with the total size of its

operations greater as compared to other competitors like Devon Energy, Valero Energy and Marathon

Petroleum. (Source: as reported by Statista)

Section 2: How the Company Has Performed

Relative Performance

On May 28, 2015 JP Morgan’s Phil Gresh and John Royall initiated Occidental Petroleum Corp. (OXY) with an Overweight rating and $85 price target, and placed it among the preferred stocks in their U.S. coverage group that included ConocoPhillips (COP), Chevron (CVX) and ExxonMobil (XOM). They wrote Occidental as a good mix of defensive and offensive businesses, which they saw driving production growth at a compound annual growth rate of roughly 4.5% in the four-year period ending in 2018 in a world of $70 oil in 2016 and beyond. (Source: BARRON'S - US Edition)

Grown, Shrunk or Unchanged?

Occidental had shrunk since the industry downturn which started in second half of the year 2014.

The market capitalization 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 Statista and Google Finance respectively.

Oil and gas segment achieved core earnings of $5.7 billion in 2014, compared with $7.0 billion in 2013. Lower domestic earnings resulted from lower crude oil and NGL prices, higher operating costs, and higher DD&A expense, partially offset by higher crude oil production volumes and improved realized domestic gas prices. Whereas, lower international earnings reflected lower realized crude oil prices and sales volumes, partially offset by lower operating expenses and DD&A. (Source: Financial and Operational Results 2014)

Section 3: What the Successes Have Been for the Company

Significant successes over the past few years

(Source: Financial and Operational Results 2014) The company’s worldwide proved reserves increased from 2.74 billion BOE at the end of 2013 to 2.82

billion BOE at year-end 2014, giving the company an estimated reserve life of approximately 13 years at current production levels.

Permian Resources produced 75,000 BOEPD in 2014, a 15 percent increase from 65,000 BOEPD in

2013.

Nearly three-quarters of Permian EOR oil production made Occidental the largest CO2 injector in the Permian and a world leader in application of EOR technology.

Maintaining "Single A" debt ratings gave it a competitive advantage in negotiating and winning large-scale projects around the world, as well as providing enhanced financial liquidity.

The cash balance of $7.8 billion exceeded the total debt of $6.8 billion at year-end, which helped the

company weather the current period of lower oil prices.

Plans for the upcoming several years

(Source: Management discussions and analysis 2014) Occidental would maintain its size and scale between the large integrated oil majors and the

independent E&P companies to stay an attractive investment alternative that combines positive elements of both groups.

As Permian EOR business has the agility, scale and cost structure to operate in an ultra-low-price environment, it would invest sufficient capital to maintain current production, thereby providing free cash flow to support our overall business.

It would maintain a disciplined approach towards domestic acquisitions and divestitures and the

execution of international contracts.

The company would maintain a low debt to capitalization ratio and retain sufficient cash on hand. Furthermore, it will focus on lowering its costs which over time management believes will correlate to increasing and decreasing oil prices.

Bibliography

Company's official website

http://www.oxy.com/aboutOccidental/Pages/default.aspx

Company's Annual Report

http://www.oxy.com/investors/Reports/Pages/Annual-Report.aspx

1. Financial and Operational Results 2014

2. Management discussions and analysis 2014

Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Occidental_Petroleum

Google Finance

https://www.google.com/finance?catid=us-TRBC%3A50102020&ei=iZ7IVtmXNNfKuASdgZ24AQ

Statista, The Statistics Portal

http://www.statista.com/statistics/241625/top-10-us-oil-and-gas-companies-based-on-market-value/

BARRON'S (U.S. Edition)

http://blogs.barrons.com/stockstowatchtoday/2015/05/28/occidental-petroleum-is-a-better-bet-than-exxon-

chevron-jpmorgan/