Opportunities in the Opportunities in the Oil FieldOil Field

John RobyJohn Roby

December 9, 2008December 9, 2008

OverviewOverview

Personnel BackgroundPersonnel Background

Occidental Petroleum Occidental Petroleum

Fall of the Oil Price – What now?Fall of the Oil Price – What now?

Outlook for Young ProfessionalsOutlook for Young Professionals

Career InsightCareer Insight

QuestionsQuestions

Personnel BackgroundPersonnel Background

Graduate from the University of Texas at Graduate from the University of Texas at AustinAustin– Graduated spring 2006Graduated spring 2006– Mechanical Engineer by degreeMechanical Engineer by degree

Career DevelopmentCareer Development11stst year year– Participated in Oxy’s Engineering Training ProgramParticipated in Oxy’s Engineering Training Program

3 month rotations in drilling, production, reservoir and 3 month rotations in drilling, production, reservoir and facilities engineeringfacilities engineeringIntroduction to upstream engineering disciplinesIntroduction to upstream engineering disciplinesField timeField time

22ndnd year+ year+– Completions engineerCompletions engineer

Hydraulic fracture stimulationsHydraulic fracture stimulationsSand control designSand control design

– Production engineerProduction engineerBase production managementBase production management

– WorkoversWorkovers

Primary recovery and secondary recoveryPrimary recovery and secondary recoveryVoidage and subsidenceVoidage and subsidence

Occidental Petroleum Corporation

Occidental Oil & Gas Occidental Chemical

• A world leader in oil & gas production • A major North American chemical manufacturer

8,000 Employees (3500 Oil & Gas)$15+ billion revenue (2005)$26+ billion in assets (12/31/05)

WHAT IS OXY? WHAT IS OXY?

91%

9%

Oil & Gas Chemicals

2005 Earnings Contribution

12 14 17 24 25 27 3045

112136

251

387

KMG AHC EOG APA APC DVN MRO OXY COP CVX BP XOM

HOW BIG IS OXY?HOW BIG IS OXY?

Market Capitalization 5/1/06 ($b)

L.A. Basin

Salt LakeSan VicenteBeverly Hills

Sawtelle

Cheviot Hills

Los Angeles

Las Cienegas

Inglewood

Playa Del ReyPotrero

El SegundoRosecrans

Dominguez

Bandini

Montebello

Santa Fe Springs

WhittierSansinena

Brea Olinda

Yorba Linda

Kraemer

Coyote

RichfieldTorrance Long Beach

Seal Beach

Belmont Offshore

Huntington BeachNewportWilmington Oil Field

0 4 8 12

Pacific

Ocean

Scale in Miles

NN

California

Long Beach Unit

LA BASIN OIL FIELDSLA BASIN OIL FIELDS

L.A. Basin

Salt LakeSan VicenteBeverly Hills

Sawtelle

Cheviot Hills

Los Angeles

Las Cienegas

Inglewood

Playa Del ReyPotrero

El SegundoRosecrans

Dominguez

Bandini

Montebello

Santa Fe Springs

WhittierSansinena

Brea Olinda

Yorba Linda

Kraemer

Coyote

RichfieldTorrance Long Beach

Seal Beach

Belmont Offshore

Huntington BeachNewportWilmington Oil Field

0 4 8 12

Pacific

Ocean

Scale in Miles

NN

California

Long Beach Unit

LA BASIN OIL FIELDSLA BASIN OIL FIELDSOIL FIELD LOCATION

CUMULATIVE PRODUCTION

EST. REMAINING RESERVES

EST. RECOV. RESOURCES OXY

1 Prudhoe Bay Alaska 9.7 3.3 13

2 East Texas Texas 5.3 < 0.1 5.4

3 Wilmington California 2.5 0.3 2.8 THUMS

4 Midway-Sunset California 2.4 0.3 2.7

5 Kuparuk River Alaska 1.6 1 2.6

6 Wasson Texas 2 0.1 2.1 Permian

7 Kern River California 1.7 0.4 2.1

8 Yates Texas 1.4 0.6 2

9 Panhandle Texas 1.5 <0.1 1.5

10 Elk Hills California 1.1 0.3 1.4 Elk Hills

(billion bbls)

Top 10 oil fields in the US (based on recoverable volume)

THUMSTHUMSWorld Class Drilling

The Price RiseThe Price Rise

Contributing FactorsContributing Factors– Strong demand growth 2004 + Strong demand growth 2004 + – Non-OPEC resource Non-OPEC resource

access/growthaccess/growth– OPEC behaviour post 1999OPEC behaviour post 1999– Deference to efficiency Deference to efficiency

opportunitiesopportunities– Low spare capacityLow spare capacity– GeopoliticsGeopolitics– Falling value of US DollarFalling value of US Dollar– Energy as a financial Energy as a financial

commoditycommodityBP Statistical Review of World Energy June 2007

The FallThe Fall

Why the fallWhy the fall– Price adjustingPrice adjusting– Slowing economySlowing economy

Less demandLess demand

– Increase value of the Increase value of the US DollarUS Dollar

– Divisions between Divisions between OPEC membersOPEC members

– Energy as financial Energy as financial commoditycommodity

Forecasting future Forecasting future demanddemand

US Oil Price

30405060708090

100110120130140150

Oct 05,2007

Nov 24,2007

Jan 13,2008

Mar 03,2008

Apr 22,2008

Jun 11,2008

Jul 31,2008

Sep 19,2008

Nov 08,2008

$/B

BL

US Oil Price

Energy Information Administration

The Future of Oil PriceThe Future of Oil Price

Current WTI price – $44.61Current WTI price – $44.61– temporary phasetemporary phase

Price will reboundPrice will rebound– Barclays Survey estimates oil Barclays Survey estimates oil

will average between $75 to will average between $75 to $100/bbl range over next 5 $100/bbl range over next 5 yearsyears

Demand will increaseDemand will increase– Increase in Asian Increase in Asian

developmentdevelopment– World economy will reboundWorld economy will rebound

……Opportunities will continue to Opportunities will continue to grow for young engineersgrow for young engineers

A Barrel of Crude Oil A Barrel of Crude Oil Provides:Provides:

Gasoline - 19.5 gallonsGasoline - 19.5 gallons

Fuel Oil - 9.2 gallonsFuel Oil - 9.2 gallons

Jet Fuel - 4.1 gallonsJet Fuel - 4.1 gallons

Asphalt - 2.3 gallonsAsphalt - 2.3 gallons

Kerosene - 0.2 gallonsKerosene - 0.2 gallons

Lubricants - 0.5 gallonsLubricants - 0.5 gallons

Petrochemicals,Petrochemicals,other products - 6.2 gallonsother products - 6.2 gallons

One Barrel =One Barrel =42 gallons42 gallons

American American Petroleum Petroleum

Institute, 1999Institute, 1999

Setting The Stage : Oil Setting The Stage : Oil Supply RequirementsSupply Requirements

Existing FieldProduction

IEA & NPC

• Exploration 38%• Reserves Growth 38%• EOR 18%• Unconventional 6%

100 MMBD

We Need More Trained People, Improved Efficiency, and Better Technology

Our industry challenge…U.S. Our industry challenge…U.S. human resourceshuman resources

% O

F U

.S.

WO

RK

FO

RC

E

AGE DISTRIBUTION

Source: U.S. Dept of Labor

0

5

10

15

20

25

20 25 30 35 40 45 50 55 60 65 70

OVER HALF OF THE WORKFORCE ELIGIBLE TO RETIRE IN NEXT 10 YEARS

AGE

“Facing The Hard Truths About Energy”A Comprehensive View To 2030 Of Global Oil And Natural Gas, National Petroleum Council Study

Bottom line: You are well positioned

Imbalances at Regional levelImbalances at Regional level

Major excess

Major deficit

Source: SBC analysis, 5 years average

Career OpportunitiesCareer Opportunities

EngineeringEngineering– Petroleum, Chemical, Mechanical, OthersPetroleum, Chemical, Mechanical, Others

GeoscienceGeoscience– Geology, GeophysicsGeology, Geophysics

SciencesSciences– All basic sciences - researchAll basic sciences - research

BusinessBusiness– Finance, HR, ManagementFinance, HR, Management

SPE 2008 Salary SurveySPE 2008 Salary Survey

Great financial Great financial compensation early in compensation early in careercareer

Engineers and Engineers and Geologist earn more Geologist earn more early in careerearly in career

Continue increase Continue increase over past few yearsover past few years

SPE International and Western Management Group

Keys to Obtaining a Job Keys to Obtaining a Job 5 pieces of advice5 pieces of advice

1.1. ExperienceExperienceInternships, externship, class projectsInternships, externship, class projects

2.2. Keep an updated resumeKeep an updated resume

3.3. Know the industryKnow the industryRead news articles, talk with industry professionalsRead news articles, talk with industry professionals

4.4. Be openBe openLook at both service companies and operatorsLook at both service companies and operators

5.5. Take advantage of SPETake advantage of SPENetworkingNetworking

Keys to Success in Early Career Keys to Success in Early Career 5 pieces of advice5 pieces of advice

1.1. Ask questions, and learnAsk questions, and learnNot just in your discipline but all areasNot just in your discipline but all areas

2.2. Field exposureField exposure

3.3. Build a technical base Build a technical base Don’t get in a hurry for the next promotion Don’t get in a hurry for the next promotion

4.4. Work well with othersWork well with others

5.5. Being a manager is not the only measure Being a manager is not the only measure of successof success

Bottom LineBottom Line

Our industry has many challenges….that’s part of what Our industry has many challenges….that’s part of what makes it fun and a great place to workmakes it fun and a great place to work

The world is counting on us to solve energy challenges The world is counting on us to solve energy challenges and provide energy….energy is vital to our worldand provide energy….energy is vital to our world

Your professional development is in your hands – Your professional development is in your hands – pursue excellencepursue excellence

You have chosen a noble careerYou have chosen a noble career

QUESTIONS?