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Occidental Petroleum Management Discussion Q3 Results – Earnings Call Transcript.

Occidental Petroleum Management Discussion Q3 Results â¿¿ Earnings Call Transcript.

Occidental Petroleum (



Q3, 2010 Earnings Call

October 19, 2010; 11:30 am ET


Ray Irani - Chairman & Chief Executive Officer

Stephen Chazen

- President & Chief Operating Officer

Bill Albrecht - Vice President; President of Oxy Oil and Gas, USA

Sandy Lowe - Vice President; President of Oxy Oil and Gas - International Production

Christopher Stavros - Vice President of Investor Relations

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Jason Gammel - Macquarie

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Philip Dodge – Tuohy Brothers

John Herrlin – Societe Generale

Monroe Helm – Barrow Hanley



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Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Occidental Petroleum third quarter 2010 earnings release conference call. (Operator Instructions). Mr. Stavros, you may begin your conference.

Christopher Stavros

Thank you Christie, and good morning, everyone. Welcome to Occidental Petroleum's third quarter 2010 earnings conference call. Joining us on the call this morning from Los Angeles are Dr. Ray Irani, Oxy's Chairman and Chief Executive Officer, Steve Chazen, our President and Chief Operating Officer, Bill Albrecht, President of Oxy’s U.S. Oil and Gas Operations, and Sandy Lowe, President of our International Oil and Gas business.

In a moment, I will turn the call over to Dr. Irani for some opening remarks and comments regarding the new management structure we’ve announced recently. Steve Chazen will then review our third quarter and year-to-date 2010 financial and operating results.

Our third quarter earnings press release, Investor Relations supplemental schedules and the conference call presentation slides, which refer to Steve's remarks, can be downloaded off of our website at


I will now turn the call over to Dr. Irani. Dr. Irani, please go ahead.

Ray Irani

Thank you Chris, and good morning ladies and gentlemen. I’m very enthusiastic about the new management structure we announced last week. Both for myself and for Oxy.

The new structure will assure Oxy of continue of a winning team both in terms of our experience and effective management, and in terms of our emphasis on a highly successful business strategy. To recap the new structure, I informed the Board of Directors for my desire to delinquish the position of Chief Executive Officer effective at the May 2011 annual meeting of stockholders, and to continue as full time Executive Chairman. I recommended to the board that Steve Chazen replaced me as CEO, the board agreed with this new structure.

Steve, he is a proven leader, he has been inner group member of our Senior Management team for many years. Steve Joined Oxy in 1994, as an Executive VP Corporate Development. Became Chief Financial Officer in 1999, President in 2007 and Chief Operating Officer earlier this year. He was also elected to the Board of Directors in 2010. He has made and will continue to make significant contribution to Occidental’s ongoing success and development.

This is a carefully developed and long anticipated senior management transition. Steve and I have had an extra ordinary productive partnership for many years. Clearly maintaining this partnership is in the best interest of Oxy and the stockholders. And I look forward to continuing this partnership in future years.

Nearly 20 years as I have been CEO our management team has transformed Oxy from a conglomerates of unrelated business entities with the market capitalization of $5 billion into the fourth largest oil and gas company in the United States with the market capitalization today of $67 billion.

Oxy has lead its proxy peer group in total stockholder return. With cumulative returns of 76% over the past three years, 204% over the past five years and 870% over the past 10 years. I’m very proud of these accomplishments. Our management team is strong and cohesive and would be ready willing enabled under this new structure to take Oxy to new heights and performance and excellence. I’ll now turn the call over to Steve Chazen for the details on our third quarter performance.

Stephen Chazen

Thank you Ray. Net income was $1.2 billion or $1.46 per diluted share in the third quarter of 2010 compared to $927 million or $1.14 per diluted share in the third quarter of 2009. In complementing the operations of $1.47 per diluted share in the third quarter this year, compared to $1.14 per diluted share in third quarter of last year.

Here is the second breakdown for the third quarter. Oil and gas third quarter 2010 segment earnings were $1.7 billion compared to $1.5 billion of third quarter last year. Improvement in 2010 was driven mostly by higher commodity prices additional contributions from higher volumes. Realize curd oil prices increased 13% in 2010; domestic natural gas prices improved 38% in third quarter of 2009. Partially offsetting these gains were higher DD&A rates and higher operating expenses, partly resulting from fully expensing CO2 cost in 2010.

Production for the third quarter of 2010, were 751,000 BOE a day, 6.5% increase compared to 705,000 BOE a day the third quarter of 2009. Mostly year-over-year production increases came from Middle East, North Africa with smaller increases in Argentina and United States. The world wide oil and gas sales volume for the third quarter 2010 were 749,000 barrels of oil equivalent per day.

An increase of over 6.5% compared with the 702,000 BOE a day in the third quarter of last year. Sales volume differs from production volumes do mainly to the timing of lifting in Argentina. Exploration expenses $83 million in the quarter. Oil and gas cash production cost excluding production and property taxes were $10.25 a barrel for the first nine months of 2010. Last year’s 12 months cost were $9.37 a barrel.

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