Good morning and welcome to the Occidental Petroleum Corporation second quarter 2016 conference call. Please note, this event is being recorded. I would now like to turn the conference over to Chris Degner, Senior Director of Investor Relations. Please go ahead.

Thank you, Laura. Good morning, everyone, and thank you for participating in Occidental Petroleum's second quarter 2016 conference call. On the call with us today are: Vicki Hollub, President and Chief Executive Officer; Jody Elliott, President of Oxy Domestic Oil & Gas; Sandy Lowe, President of Oxy International Oil & Gas; Chris Stavros, Chief Financial Officer; and Rob Peterson, President of OxyChem. In just a moment, I will turn the call over to Vicki Hollub. As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on factors that could cause results to differ is available on the company's most recent Form 10-K. Our second quarter 2016 earnings press release, the Investor Relations supplemental schedules, our non-GAAP to GAAP reconciliations, and the conference call presentation slides can be downloaded off our website at www.oxy.com. I'll now turn the call over to Vicki Hollub. Vicki, please go ahead. Vicki A. Hollub - President, Chief Executive Officer & Director: Thank you, Chris, and good morning, everyone. Last quarter I told you our game plan for this year has been to address the things within our sphere of influence to ultimately not only survive but thrive in the current weak commodity price environment. To that end, we're on target to achieve the higher end of our production guidance for 2016 while keeping our capital program on budget at $3 billion. We continue to make progress lowering our cost structure, which we know is critical to both short and long-term success. Our capital discipline and cost reduction efficiencies combined with improvement in new well productivity and better base production…

Thank you, Chris, and good morning, everyone. Today I will provide a review of our domestic operations during the second quarter and guidance on our program through the end of 2016. As Vicki discussed earlier, we slowed our Permian Resources drilling program as planned due to severely depressed product prices in the beginning of 2016. We strategically increased capital spending in the EOR business, which will drive increased production in future quarters and years. In order to prepare for growth in 2017, we plan to add two drilling rigs in our Resources business later this year. We will increase our operated rig count over the second half of the year to seven to eight drilling rigs in the Permian, five of these in Permian Resources. This is an increase from our previous guidance of four to five rigs. This incremental activity is a direct result of program savings from improved capital and operating efficiencies as well as improvements in base production management. Our team has performed extraordinarily well to capture these savings, which will be reinvested back into the business. As stated last quarter, our Permian Resources operation is being managed to maximize the value of our workforce, enhance our operational capabilities, invest in areas with existing infrastructure, and gather critical appraisal information to drive better well productivity. Our focus for the remainder of the year is to prepare the business for profitable growth in 2017. Turning to the performance of Permian Resources, in the second quarter we achieved daily production of 126,000 BOE per day, a 16% increase versus the prior year. Oil production decreased quarter over quarter by 5,000 barrels a day to 79,000 barrels per day. However, this was a 10% increase from a year ago. The decline was due to lower capital spending, with 14 wells…

Thank you. Jody. We will now open up the call for questions. And we would ask that you please limit your questions to just one and then a follow-up.

Thank you. Our first question will come from Doug Leggate of Bank of America Merrill Lynch.

Thanks and good morning, everybody. Vicki, adding a couple of rigs to the Permian at the back end of this year, I'm just curious: When you talk about priorities for the use of cash, ultimately where do you see that activity going? Is there a maximum? You've talked in the past about the proportion of growth that you'd want from the Permian at least to be limited in terms of not impacting your dividend policy. But is there a run rate that you would expect to be a normalized run rate as you start to add activity back, given the deep inventory you have? Vicki A. Hollub - President, Chief Executive Officer & Director: You're talking about run rate with respect to rig activity?

Yes, and capital expenditures. Is there a limit as to how much you would want to allocate there because obviously in a rising oil price environment, you guys have got a lot of levers you could pull? Vicki A. Hollub - President, Chief Executive Officer & Director: Right. Currently for at least next year and 2017, and it's hard to predict for 2018. But for 2017, we intend to stay pretty close to the capital allocation that we have for this year, and that's assuming that prices are as we expect. And I will say that we expected the prices to be in the neighborhood of where they are right now, and that's why we took a conservative approach to our capital this year. We do expect some improvement next year but we're not sure how much that will be, so we're going to wait till toward the end of this year to determine exactly what our capital program for 2017 will be. But our expectation is that if things are as we expect them to be that we would be close to $3 billion. We might spend a little bit more than that if prices are a little bit better than we expect. But the run rate for our company going forward with the assets that we currently have would continue to be in the $3 billion to $3.5 billion, maybe a little bit more, but not a whole lot more than that.

Maybe just a quick follow-up to that. Perhaps a better way to ask the question, Vicki, is what's the operating capacity that you have in the Permian? Do you have a lot of headroom where you could add rigs without necessarily having to increase capability? Vicki A. Hollub - President, Chief Executive Officer & Director: We have the capacity to increase significantly. We will be more limited by our disciplined approach, but we certainly have kept the capability within our organization. We have the ability to put the infrastructure in in the Permian, so we have I would say significant ability. At one time, we were running over 25 rigs. And we could, if prices were in the range that would warrant that, we could get back to that. But bearing in mind now that back when we were running 25 rigs, we were not as efficient as we are today. We're significantly improved with our efficiencies, so we could get actually the same amount of productivity with half the number of rigs that we were at at that time. So I don't see us going back to a 25 rig count in the Permian unless we expand our operations and our footprint. But we could easily go back to somewhere in the neighborhood of up to 15 rigs reasonably and still have the capacity to do it. I think we could get ahead of it with our infrastructure as well. And actually, Jody could talk a little bit more, if you'd like, about the infrastructure development and how we're trying to stay ahead of it. He's got teams working on development plans for our key areas that will put us we believe well ahead so that we could ramp up to levels of that activity without being encumbered by regulatory issues and/or infrastructure issues.

Got it. My follow-up, Vicki – I don't want to take up too much time – my follow-up is a bit of an obtuse question, and I apologize in advance. The use of cash, the priority for use of cash, acquisition is still at the bottom of that list. And your commentary and the slide deck again points to a fairly big bid/ask spread as it relates to CO2. However, your currency is also quite valuable, so I'm just wondering. Should we be thinking a little bit out of the box in terms of whether Oxy would be prepared to use equity to make a CO2 add to the portfolio? And I'll leave it there, thanks. Vicki A. Hollub - President, Chief Executive Officer & Director: I'll say that the way you should view the capital priorities right now is just the two that I mentioned. Certainly, maintenance of our operations is the highest priority. Dividends are second. But when you look at the other possibilities, whether it's organic growth or share repurchases or acquisitions, those three really depend on the situations that we're in, and so those three can vary over time or according to the environment that we're in. I would say that for today, as per my comments about M&A, we are certainly looking at acquiring and expanding – acquiring assets and expanding our position in the Permian. And we would be for the right project, for the right opportunity, certainly be willing to use our equity to do that.

I appreciate the answer. Thanks, Vicki.

And the next question will come from Phil Gresh of JPMorgan.

Hi, good morning. Vicki A. Hollub - President, Chief Executive Officer & Director: Good morning.

The first question is just maybe following up on your commentary about capital spending for 2017. How would you tie that spending to what kind of growth you think you could achieve across the portfolio, factoring in that Permian Resources will be declining and leveling off in the fourth quarter? I'm thinking not only in Permian Resources, but also internationally when you think about the growth you're seeing out of Oman and what you talked about with Al Hosn. Vicki A. Hollub - President, Chief Executive Officer & Director: I would say with the future the way we view it and what we expect to see in 2017, we're going to try to achieve within our range of growth targets, but possibly on the lower end if prices are still on the lower end and we don't see fundamentals driving prices up. So we're going to wait pretty much to the end of this year to make final decisions on it. But we do believe that in a price environment that's certainly better than where we are today is what we would need to continue to grow. But Permian Resources, we will grow Permian Resources next year. The question for us is whether or not we'll grow other areas within our company for next year, and that will all depend on what oil prices do.

And just to clarify, the historical range that you're referring to? Vicki A. Hollub - President, Chief Executive Officer & Director: The historical range is 4% to 6%.

Okay, so you still think you could hit the low end of that range next year? Vicki A. Hollub - President, Chief Executive Officer & Director: We do, in the price range that we would expect.

Got it, okay. And of that $3 billion, I know you gave this number a couple quarters ago. But what do you think is your sustaining capital requirement at this point for the total company? Vicki A. Hollub - President, Chief Executive Officer & Director: I'm sorry, you cut out. Could you ask that question again?

What do you think the sustaining capital requirement is for the total company at this point? I know you gave that number a couple quarters ago in your slides. I'm curious if the view is the same or if that's changed at all. Vicki A. Hollub - President, Chief Executive Officer & Director: With the increased production that we have now, the capital that would be required to offset declines would be in the neighborhood of about $2.3 billion to $2.4 billion.

Got it. Okay, thank you. I'll turn it over.

And next we have a question from Ed Westlake of Credit Suisse. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Just I guess the first question is just on that production outlook for 2017, very helpful. Given the improvement in the D&C days and the well performance, I guess, and the investments in EOR, I would have expected 2017 to be perhaps a little bit stronger than that, so maybe just talk through. Is it timing of when you complete the wells, pad drilling type stuff? Vicki A. Hollub - President, Chief Executive Officer & Director: It's really a lot more around the uncertainty of the price environment, and it has a lot less to do with our capability to do it. What we want to do is ensure that we're conservative with our capital programs. We have the potential and the opportunities to certainly not only meet the upper end but exceed it, but we're really trying to be careful about what we forecast and what programs we set up for next year. I can tell you that what we'll do is that we'll put the program together. We always do that at the end of this year, and we'll firm it up by first of next year. But what our teams have done during this downturn in this slower period is they've enabled us to have a lot more flexibility next year to be able to ramp up should we need to or should we have the opportunity to do so. And the ramp up could be not just in Permian Resources. As I mentioned earlier, the ramp up could be in Colombia as well. And in addition to that, we expect that because of the situation with Al Hosn, overall, Al Hosn will have a…

This is Jody, and good morning. It's more than a sweet spot. I think we're encouraged with Southeast New Mexico across the board, multiple bench development. These examples are over in our Cedar Canyon area. But further east of that area, there's acreage with even more benches that are prospective. So very encouraged with Southeast New Mexico, and the rig adds that we're talking about will likely be in the Delaware and in New Mexico. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Okay, thanks very much, well done.

And the next question comes from Ryan Todd of Deutsche Bank.

Great, thanks, maybe a couple. One, in regards to 2017 capital, can you talk about what you believe the year-on-year change in cash balance is driven by the Chemicals business? For example, how much capital do you see rolling off into 2017 relative to incremental cash flow from the startup of the cracker? Vicki A. Hollub - President, Chief Executive Officer & Director: Yes, for the Chemicals cash flow, we expect that capital this year is around $500 million. Next year it should drop to less than $400 million. The following year it would be back down to basically its maintenance levels of around $250 million. So we'll have around $300 million in cash flow from Chemicals this year and expect that by 2018 that would be up to around $900 million, potentially a little bit more than that depending on product prices in the Chemical business.

Okay, so that should free up significant capital, I guess, in 2017. It would be, even at that $3 billion world, to be reinvested back into the organic upstream business. Vicki A. Hollub - President, Chief Executive Officer & Director: That's correct. We had about – total including the Chemicals and the Midstream business, we had this year $500 million of committed capital and almost $400 million of that's coming off for 2017. That will be redeployed into – most of that into the Permian Resources business.

Perfect, thanks, and then maybe just one follow-up on portfolio rationalizations. At this point, you guys have been very active over the last 12 to 18 months. Is it all done? Is there anything left to be done in terms of streamlining the portfolio? I'm not sure if you mentioned this in the prior comments or if I missed it. Within that regard, PAGP [Plains GP Holdings, LP], what would you need to see to further monetize that? Christopher G. Stavros - Chief Financial Officer & Senior Vice President: Ryan, most of the rationalization in terms of Oil & Gas and certainly Middle East operations is largely behind us. We've done that over the last year or so. From a corporate asset perspective, we still have, as you point out, the Plains units. So there are about 80 million units of that, and they've just gone through their simplification process. So we'll let that close out here formally in the latter part of the year, fourth quarter with their plan. And then this is not a strategic investment on our part, so I would tell you that we don't look to hold on to that longer term. So that's an option in terms of liquidity that we've got, market value $800 million or thereabouts.

Okay, thank you.

The next question is from Paul Sankey of Wolfe Research.

Hi, everybody. Thank you. Vicki, you keep talking about the oil price you're assuming. I assume that that's $50-ish. Previously, you had said that you would add rigs once you became confident that $50 would be sustained along the strip. I assume that you're maintaining the view that $50-plus is what we're going to see and hence you want to accelerate. Vicki A. Hollub - President, Chief Executive Officer & Director: That's pretty close to right. We do expect it to be $50 or above in 2017, but certainly we're not as bullish as some people. We're taking, as I said, a conservative view, but it would be fundamentally above $50.

And hence the minor acceleration I guess we'll call it? Vicki A. Hollub - President, Chief Executive Officer & Director: Right.

On the Permian deal, I think you said very clearly you don't want to make a corporate acquisition. I think you need something material to make it worth your while. My sense is that the recent $1 billion type asset packages would not really be of a sufficient scale for you guys to really work the CO2 business in the way that you want to. Vicki A. Hollub - President, Chief Executive Officer & Director: The way we view it is the Permian, as you know, is a huge place. There are lots of opportunities. We're looking at this as a goal and an objective in terms of our total expansion, and there are multiple ways to get there. We could get there with several different options, and what we've done is prioritized our options. And we're working pretty much a lot of things to try to ensure that we reach our goals. But we're happy...

Can you specify – sorry. I was going to ask you. Can you just specify what the goals are? Vicki A. Hollub - President, Chief Executive Officer & Director: The goals are to try to match what our growth profile could be in EOR with Resources. And we haven't really put what that means in terms of exact production volumes or anything like that out there because it's hard to do at this point with respect to the EOR business. But we're really in a position because of where our operations are with respect EOR in the Permian, we've got the ability in multiple areas to play a Pac-Man approach where we can acquire a lot of smaller assets that could total up to make a material difference to us as a cumulative acquisition. So we're not opposed to looking at a variety of smaller deals. And again, because of our position, we would have the capability to do that and make it still fit within our goals to try to make sure that these are synergistic with our current operations.

And then on the CO2 side? Vicki A. Hollub - President, Chief Executive Officer & Director: That's actually what I'm talking about. We're going to do the same thing in both Resources and CO2 because we have the ability around the areas that we currently operate to add additional properties.

Okay. So what you're saying is on either side you could go smaller or larger basically in terms of adding assets? Vicki A. Hollub - President, Chief Executive Officer & Director: That's correct.

Is that something – I think you're more or less saying that you feel it's necessary if you're going to maintain the scale of growth that you're aiming for. Vicki A. Hollub - President, Chief Executive Officer & Director: Yes, the scale of growth is much easier in the Resources business. In the EOR business, the issue that we have today is that we're constrained by some of our infrastructure. So we feel like some of the expanding to our footprint would enable us to also expand our infrastructure to support some growth, accelerated growth, with not only what we have but what we could potentially pick up.

Right. And I think just finally for me, just you are somewhat short, I think, if not short, depending on your growth plans, of CO2 itself? Vicki A. Hollub - President, Chief Executive Officer & Director: Currently, we don't see an issue with the CO2 that we would need to accelerate growth. We're trying to look at options for where we get the CO2, but I don't see that being a bottleneck for us. I see the current bottleneck being just the fact that it doesn't make sense to accelerate some of our floods where our plants are sized more appropriately for a full field development. So that's really some of the bottleneck is the infrastructure around the existing plants.

Thank you very much, Vicki. Vicki A. Hollub - President, Chief Executive Officer & Director: Okay.

And next we have Guy Baber from Simmons. Guy Allen Baber - Simmons & Company International: Good morning, everybody. Thanks for taking my question. I wanted to start off with the Permian unconventional production trajectory. You referenced improved confidence in that business in the prepared remarks, but it looks like the guidance today calls for a bit bigger decline over the back half of the year than we would have expected, down 10,000 barrels a day 3Q. Can you talk a little bit more about the declines you're seeing there, how conservative that guidance might be, just how that's shaping up? And then secondly in the Permian also, you talked about year-on-year growth for unconventional in 2017. Can you talk about the spending level necessary relative to your $700 million or so budget this year that would be required to deliver production north of 120,000 barrels a day, as indicated in the slides?

Guy, this is Jody. I appreciate the question. With regard to the decline, it's really a function of the activity set from this last quarter. One of the things I discussed, we moved a rig and drilled a couple of Wichita Albany wells. We drilled a couple of CO2 source wells. So the activity set in this quarter was fairly low for Resources, which is indicative in the forecast for the third quarter. But in the back half of the year, those rigs are back in Resources. We're going to add rigs. And so we will flatten that decline toward the end of the year and then set us up with the right trajectory for production growth into 2017. Guy Allen Baber - Simmons & Company International: Okay, great. And then did you have a spending estimate relative to the $700 million budget this year that would drive north of 120,000 barrels a day of production next year? Vicki A. Hollub - President, Chief Executive Officer & Director: We expect that would probably be in the $1.3 billion to $1.4 billion range. But with the way the teams are still improving efficiencies and the well productivities are getting better, we're not prepared to commit to that completely at this point. Every time we set a target for those guys, they meet or exceed it, so we're not sure that that's the exact number. We'll know better about that by the end of the year as we prepare our final plans and we get a little more information from our Southeast New Mexico developments. Guy Allen Baber - Simmons & Company International: That's very helpful. And then I wanted to ask one on Al Hosn, with obviously very strong performance during the quarter, above nameplate capacity. Can you talk a little bit more about what drove that? Is that type of performance sustainable? And are you already finding ways to sustainably I guess debottleneck that production into next year?

Hey, Guy. This is Sandy Lowe, good question. As we do with other large facilities like this, when everything is stable, we tend to test individual components and processes within the plant. And we've been doing that during the summer, which is the toughest time and the most relevant proving because of the relatively high heat in the area. And we've been able to show our guidance of 60,000 barrels per day equivalent for Oxy's share, and we've been up in the high-60,000 barrels per day with the promise to get into the 70,000 barrels per day just by pushing individual processes pretty hard. The main reason for this is to assess what the expansion would look like and which components we'd need, either total addition or enhancement, or some that just might be able to take higher load. So we think that out of this will come, if you like, a new baseline, which could be 110% or 112%, and then from that – or even a bit higher. And from there we would design an expansion to get up to a good number. It's the sweet spot for the investment profile and the production profile, of course, working with our bigger partner, the Abu Dhabi National Oil Company. So that's where we are with it. I think it will be – the fact that we did this during the summer is probably pretty good for year-round enhanced production. Guy Allen Baber - Simmons & Company International: Thank you very much.

And next we have a question from Roger Read of Wells Fargo.

Thanks, good morning. I guess to jump into the Permian area, I was wondering. With some of the areas you've expanded into, specifically in Southeast New Mexico, and your discussion of additional benches, is part of the rig count increase reflective of any an HBP issue arising here, or is all the acreage fairly well secure and just simply reflects, like you said, the price outlook and budgetary expectations?

Roger, most of our acreage is HBP. We have some drilling clocks, 180-day drilling clocks. But the activity set is driven by the value proposition and the returns from these investments. We have very few remaining lease obligation drilling wells, if any at all.

Okay, thanks. And then I'm not sure if this is for you, Jody, or for Vicki, but the way to think about the drilling efficiencies that you have achieved, if we essentially quadruple from the drilling level we've been or double from the year-end exit rate, the 15 rigs that were mentioned, what would you think of budgetarily or operationally is the right way to think about those efficiencies that can continue to be realized, or do we see the curve bend the other way? And this is not specifically looking at you, but as we add that many rigs, we're going to get some less efficient crews potentially into the field, and I'm just trying to understand on a longer-term basis what that may mean for well costs breakeven, cash flow and all.

I think that's manageable as long as the ramp up from an industry perspective is fairly moderate. What encourages me, at least for us at Oxy, is that we continue to have new ideas coming forward for cost efficiency. We've mentioned before, last year we had this cost stand-down day in Resources alone that generated over 1,400 ideas. We've put in place about half of those, and we're still vetting the other half for opportunities. And again, that crosses OpEx, capital, SG&A. We have some other technology things we're working on, on the drilling side that we think can provide efficiency gains. We know at some point that the price cycle will turn around on services, but I think we're getting well prepared to offset that with efficiency, not just for us but for the suppliers as well. In the areas of integrated planning and logistics, crew utilization, equipment utilization, bundling of services, there are just a number of things that we think can help offset the potential for either efficiency or cost pressure as we move forward. So I think we can hold those rates of return.

Okay. And if I could sneak in one more along those lines of efficiencies, when you think about the additional rigs in the fourth quarter, what's roughly the time from adding that rig, spud date to first oil production? It sounds like you're pretty far ahead on the infrastructure side, so I would think pretty quick tie-ins.

It's fairly quick. It's really more a function is it a single well or is it a multi-well pad where you want to drill all the wells and then complete all the wells, so your time to market for that package is a little bit longer. But again, we're drilling in areas mostly where we've got infrastructure, and so adding wells is fairly quick. There's not a long delay.

Okay, thank you. Vicki A. Hollub - President, Chief Executive Officer & Director: I would add to that that the way they're doing the developments now is they're doing pad drilling. So as Jody mentioned, the pad drilling will result in lumpy production. That's why we're not expecting a production impact from the increased activity levels this year, but we do expect it to show up in early Q1. And that's why we set the program up that way. It was really a part of our plan to start getting ready for 2017 production, so that's when we'll see the incremental from the increased activity.

And the next question is from John Herrlin of Société Générale.

Thanks. With your Permian acreage, what's the chance of you doing swaps? And then my other question is with Colombia. What would the response time be for the water floods once you get going? Vicki A. Hollub - President, Chief Executive Officer & Director: I'll start with Colombia first and then we'll let Jody take the Permian question. In Colombia, what we've done, we entered into – we currently have a water flood going there now that's successful. We got some additional intervals within that same area to develop two other zones. And we've been studying and putting the water flood pilot plans together, so we'll be starting the pilot first. So that's why we're adding the $20 million there to Colombia is to do the pilot so that we can get some information from that before we start into full field development. So the full field development of those water floods will come after we complete the pilot.

And, John, with regard to Permian acreage swaps, that's probably our most active area right now with our land business. And so most operators are wanting to drill longer laterals, 7,500-foot, 10,000-foot. And so acreage swaps, especially where you've got more neighboring acreage, trying to swap Midland for Delaware is a little tougher. But in a general geographic area, we're seeing quite a bit of activity, and we've taken advantage of that so that we can drill longer laterals.

Okay, thanks. Vicki, back to Colombia, again, what response time, a year, six months? Do you have a sense? Vicki A. Hollub - President, Chief Executive Officer & Director: I think we would expect that from the time that we start water injection that it would be within six months to a year.

Okay, thank you.

And this concludes our call today. I will now turn the call back over to Chris Degner.

Thank you, Laura, and thank you, everyone, for participating on our call. Bye.