--11----11--

--22----22--

Occidental Petroleum CorporationOccidental Petroleum Corporation

Presented by the Red Baron’sPresented by the Red Baron’s

Juanice ChristianJuanice Christian

Randy CobbRandy Cobb

John LamplJohn Lampl

Ernesto MirandaErnesto Miranda

Eric YostEric Yost

--33----33--

ProgramProgram World Oil ConsumptionWorld Oil Consumption World Oil ProductionWorld Oil Production Hubbert’s PeakHubbert’s Peak Occidental Petroleum CorporationOccidental Petroleum Corporation

– Business ModelBusiness Model– CompetitorsCompetitors– ProductionProduction– FinancialsFinancials– ThreatsThreats

Red Baron’s ForecastRed Baron’s Forecast

--44----44--1

Spring 1999 Fall 2003

Source: The Economist

The Changing Perception of the Oil Industry’s Dynamics

PETRIE PARKMAN & Co.

Summer 2004 Summer 2004Source: The EconomistSource: The Economist

Is the U.S. Running Out of Oil?

Accordingly, in practical terms, the U. S. issue is already resolved.

The remaining question is:

World

--66----66--

World Oil Trading to Meet Demand

Source: BP

--77----77--

World Per Capita Annual Oil ConsumptionWorld Per Capita Annual Oil Consumption

0

5

10

15

20

25

30

U.S.

South

Kor

ea

Japa

n

Ger

man

y

Russia

Brazil

China

India

(Bb

ls)

∆ Demand ?

--88----88--

US Oil DemandUS Oil Demand

Source: http://www.eia.doe.govSource: http://www.eia.doe.gov

--99----99--

US Import SupplyUS Import Supply

Source: http://www.eia.doe.govSource: http://www.eia.doe.gov

--1010----1010--

--1111----1111--

--1212----1212--

0

5

10

15

20

25

30

1949

1954

1959

1964

1969

1974

1979

1984

1989

1994

1999

2004

E

2009

E

2014

E

2019

E

2024

E

Mill

ion

Ba

rre

ls p

er

da

y

United States Britain and Norway Persian Gulf Nations

Predicted production curve

Results match Hubbert’s prediction

World Oil Production – “Hubbert’s Peak”World Oil Production – “Hubbert’s Peak”

Source: Deffeyes, K.S. (2001), Hubbert’s Peak 5 PETRIE PARKMAN & Co.

?

--1313----1313--

Source: http://www.eia.doe.govSource: http://www.eia.doe.gov

--1414----1414--

0

20

40

60

80

100

120

140

160

180

200

Thousands

2002 1999 1996 1993 1990 1987 1984 1981 1978 1975 1972 1969 1966 1963 1960

Year

FIVE HIGHEST STATES'S # OIL WELLS

Oklahoma

Louisiana

Arkansas

Texas

CaliforniaSource: http://www.eia.doe.govSource: http://www.eia.doe.gov

--1515----1515--

20

02

20

00

19

98

19

96

19

94

19

92

19

90

19

88

19

86

19

84

19

82

19

80

19

78

19

76

19

74

19

72

19

70

19

68

19

66

19

64

19

62

19

60

19

58

0

200

400

600

800

1000

1200

1400

Millions

Year

Five Highest State's Oil Production

Oklahoma

Louisiana

Arkansas

Texas

California

Source: http://www.eia.doe.govSource: http://www.eia.doe.gov

--1616----1616--

A Popular Topic, but No Clear Public Consensus

“We’re draining our reserves dry.”

“Enough oil to last for 500 years.”

Houston Chronicle

May 30, 2004

Llewellyn King

Chairman & CEO

King Publishing Co.

Publisher for:

White House Weekly

& Energy Daily

Houston Chronicle

May 30, 2004

H. Sterling Burnett

Senior Fellow

National Center for

Policy Analysis

--1717----1717--

Red Baron’s View is that both statements are correct,

“We’re draining our reserves dry.”

Houston Chronicle

May 30, 2004

Llewellyn King

Chairman & CEO

King Publishing Co.

Publisher for:

White House Weekly

& Energy Daily

“Enough oil to last for 500 years .”

Houston Chronicle

May 30, 2004

H. Sterling Burnett

Senior Fellow

National Center for

Policy Analysis

CheapRed Baron’s Edit

^

, if the price is high enough.

Red Baron’s Edit

^

with slight editing….

--1818----1818--

March 5, 2005

--1919----1919--

--2020----2020--

--2121----2121--

Financial Information (millions of dollars) Q303 Q304 % Change

Corporate

Revenue (24)c 178,584 231,026 29.4

Net Income (24) 10,515 16,356 55.5

Worldwide Lines of Business Net Income

Petroleum (26) d 13,98 19,934 42.5

Oil and Natural Gas Production (20)e 10,821 14,552 34.5

Refining/Marketing (13)e 3,168 5,382 69.9

Downstream Natural Gas and Power (9) 773 998 29.2

Chemicals (9) 392 1,527 289.8

Domestic Net Income by Function

Oil and Natural Gas Production (13) 5,376 6,399 19.0

Refining/Marketing (13) 2,552 3,830 50.1

Foreign Net Income by Function

Oil and Natural Gas Production (6)

3,309 4,989 50.8

Refining/Marketing (4)

865 1,552 79.3

OCCIDENTAL PETROLEUM CORP OCCIDENTAL PETROLEUM CORP (NYSE: OXY)(NYSE: OXY)

--2222----2222--

--2323----2323--

Major Oil CompaniesMajor Oil Companies

--2424----2424--

0

10

20

30

40

50

60

70

80

Num

ber

Of

Com

pani

es

Industry Consolidation

14

Number of Independent Companies with Number of Independent Companies with Mkt Cap > $150 MM Mkt Cap > $150 MM

PETRIE PARKMAN & Co.

Source: http://www.eia.doe.govSource: http://www.eia.doe.gov

--2525----2525--

--2626----2626--

--2727----2727--

--2828----2828--

--2929----2929--

--3030----3030--

Refining/DownstreamRefining/Downstream

--3131----3131--

Hurricane IvanHurricane Ivan

--3232----3232--

Other Forces / Considerations

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

01/0

4/99

06/2

1/99

12/0

6/99

05/2

2/00

11/0

6/00

04/2

3/01

10/0

8/01

03/2

5/02

09/0

9/02

02/2

5/03

08/1

2/03

01/2

7/04

07/1

3/04

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

US $ per Euro Yen per $ US

US DollarUS Dollar

$1 = $1 = 0.757863EUR0.757863EUR2/27/052/27/05

$1 =$1 = 105.21 JPY105.21 JPY2/27/052/27/05

--3333----3333--

--3434----3434--

0%

1%

2%

3%

4%

5%

6%

7%

01/0

1/89

01/0

1/90

01/0

1/91

01/0

1/92

01/0

1/93

01/0

1/94

01/0

1/95

01/0

1/96

01/0

1/97

01/0

1/98

01/0

1/99

01/0

1/00

01/0

1/01

01/0

1/02

01/0

1/03

01/0

1/04

CPI Core CPI

01/0

1/05

01/0

1/05

InflationInflation

--3535----3535--

Changes in the Federal Fund Rate Changes in the Federal Fund Rate

SOURCE: The Washington Post | GRAPHIC: washingtonpost.comSOURCE: The Washington Post | GRAPHIC: washingtonpost.com

--3636----3636--

--3737----3737--

250

270

290

310

330

350

370

Jan-9

3

Oct-93

Jul-9

4

Apr-95

Jan-9

6

Oct-96

Jul-9

7

Apr-98

Jan-9

9

Oct-99

Jul-0

0

Apr-01

Jan-0

2

Oct-02

Jul-0

3

Apr-04

mm

bls

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$/bo

Inventory Oil Price

Source: BloombergSource: Bloomberg

U.S. Crude Oil Inventory VS Oil Price(The Last 13+ years)

Economic Jaws of Inventory & Price – Leading Indicator or Symptomatic Result?

--3838----3838--

Free Markets At Work:Free Markets At Work:

Impact of Rising Prices

•Conservation & Demand destruction

•Fuel switching

•Reserve & production expansion

•Increase in service costs

•Innovation & technology are rewarded ($$$)

Impact of Low Prices

•Unrestrained use & Demand stimulation

•Fuel switching

•Reserve & production contraction

•Pressure on service costs

•Low cost operators are rewarded ($$$) & technology advances

Sample Factors

--3939----3939--

Accuracy of the Market’s Vision on Prices

$10.00$15.00$20.00$25.00$30.00$35.00$40.00$45.00$50.00

Jan-

95Ju

l-95

Jan-

96Ju

l-96

Jan-

97Ju

l-97

Jan-

98Ju

l-98

Jan-

99Ju

l-99

Jan-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06

Actual Price

Forward Curve

Source: BloombergSource: Bloomberg

--4040----4040--

ConclusionConclusion World Oil Consumption - IncreasingWorld Oil Consumption - Increasing World Oil Production – Increasing to Meet DemandWorld Oil Production – Increasing to Meet Demand Hubbert’s Peak – Will Not Last ForeverHubbert’s Peak – Will Not Last Forever Occidental Petroleum CorporationOccidental Petroleum Corporation

– Business Model Business Model – CompetitorsCompetitors– ProductionProduction– FinancialsFinancials– ThreatsThreats

Red Baron’s Forecast Red Baron’s Forecast

Anything Is PossibleAnything Is Possible

--4141----4141--

Thank YouThank You

From the Red BaronsFrom the Red Barons

Juanice ChristianJuanice Christian

Randy CobbRandy Cobb

John LamplJohn Lampl

Ernesto MirandaErnesto Miranda

Eric YostEric Yost

You Decide

You Decide