Good morning. And welcome to the Occidental Petroleum Corporation Third Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) 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, Denise. Good morning, everyone and thank you for participating in Occidental Petroleum’s third quarter 2014 conference call. On the call with us this morning are Steve Chazen, OXY’s President and Chief Executive Officer; Chris Stavros, Chief Financial Officer; Vicki Hollub, President Oil and Gas in the Americas; Willie Chiang, Executive Vice President of Operations and Sandy Lowe, President of our International Oil and Gas Operations. In just a moment, I will turn the call over to our CFO, Chris Stavros, who will review our financial and operating results for the third quarter and also provide some guidance for the current quarter. Our CEO Steve Chazen, will then provide an update on the progress of our strategic initiatives and outlook for 2015. Vicki Hollub, will then provide an update of our activities in the Permian Basin. Willie Chiang will conclude the call with an update on OXY’s Midstream operation. As a reminder, today’s conference call contains certain projections and other forward-looking statements within the meaning of the 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 the factors that could cause results to differ is available on the Company’s most recent Form 10-K. Our third quarter 2014 earnings press release, the Investor Relations supplemental schedules, and the conference call presentation slides, can be downloaded off of our Web site at www.oxy.com. I’ll now turn the call over to Chris Stavros. Chris, please go ahead.

Thanks, Chris, and good morning everyone. We generated core income of $1.2 billion for the third quarter of 2014 resulting in diluted earnings per share of $1.58, a decrease from both the year ago quarter and the second quarter of 2014. The decline in core earnings was attributable mainly to lower realized oil prices on a worldwide production and the sharp decline in trading performance on a sequential quarterly basis. For the fifth consecutive quarter, we continued our strong domestic oil production growth. We met our guidance and achieved the year-over-year domestic oil production increase of 20,000 BOE per day or about 8%, let by our Permian and California assets. We also repurchased 4.7 million shares of our stock during the quarter and ended the period with 2.9 billion of cash on our balance sheet. Oil and gas core after tax earnings for the third quarter of 2014 were $1.1 billion, $90 million lower than the second quarter of this year and $236 million lower than last year’s third quarter. For the third quarter of 2014, total company oil and gas production volumes averaged 755,000 BOE per day, an increase of 19,000 BOE in daily production from the second quarter and 6,000 BOE per day from the same period a year ago, which excludes production from the Hugoton assets for all periods. Our third quarter 2014 realized oil prices of $94.68 per barrel fell by $5.70 compared to the second quarter realizations of $100.38 a barrel. In the third quarter of 2014 after tax core income for our domestic oil and gas operations was 538 million. On a sequential quarter-over-quarter basis, results at our domestic operations were negatively impacted by lower realized prices across all products. Improved volumes however offset roughly a quarter of the earnings decline caused by lower…

Thank you, Chris. The overall business is operating well, and our increased investment focused in the Permian Resources operation is evidenced by the 24% year-over-year growth in total production. Other long-term investments such as the BridgeTex pipeline and the Al Hosn Gas project should also begin contributing to our results in the current quarter. We continue to make steady progress towards furthering our strategic initiatives outlined a year ago. The spin-off of California Resources is on-track and we expect to distribute approximately 310 million shares to new California Company to OXY shareholders at the end of November. California Resources completed its debt financing earlier this month and distributed approximately 5 billion in cash to us as a tax free dividend on October 9th, the dividend of 1.2 billion of proceeds from the term loan and credit facility will happen concurrent with the spin-off. After the spin-off and for a period of lasting up to 18 months OXY will retain approximately 75 million shares of the California Company. At some point during this period we intend to conduct an exchange offer for the remaining California shares for OXY shares further reducing our own shares outstanding. Over the years OXY has made significant investments in California oil and gas and has built a solid business. With the separation of these assets the California operations will be classified as discontinued. The resulting impact is expect to provide lower unit rates for cash operating costs, DD&A and F&D costs for OXY as well as improved reserve replacement ratios on both on a historical and an ongoing basis. Regarding our interest in the Williston and Piceance Basins given the current product price environment we plan to operate these assets with less capital in order to generate free cash and shift our investment towards our higher…

Thank you, Steve. In last quarter’s call, I discussed our progress toward reaching 120,000 barrels of oil equivalent per day of production in 2016 by achieving the following goals; first, correlating rock and fluid properties to production performance across OXY’s entire Permian acreage position; second, optimizing development strategy and design to unlock full primary development potential; and third, efficiently accelerating full field development and production growth. We made significant progress on these goals in the third quarter, and continue to improve and optimize our stimulation designs for each field and bench. In addition to testing slick water and hybrid fluid systems we are testing and analyzing other key variables such as pumping rate, pad volumes, propane type, propane concentrations, surfactants, cluster count and spacing, clusters per stage and alternate technologies to plug and perforate, our efforts to driving significant improvements in well productivity in our Delaware and Midland Basin assets. In the third quarter, Permian Resources had daily production of 77,000 BOE per day which is a 7% increase from the 72,000 BOE per day that were produced in the second quarter. We produced 43,000 barrels of oil per day for the third quarter. This is a 26% increase from a year ago and an 8% increase from last quarter. During the third quarter, our capital expenditures were $472 million. We operated 24 rigs and drilled 75 wells, including 44 horizontals. We placed 71 wells on production including 36 horizontals. The number of wells drilled and placed on production was adversely impacted by delays attributable to flooding which occurred in September. This impact reduced the number of horizontal wells placed on production by approximately 10. We’ve increased the number of frac spreads in the fourth quarter to address the additional carry in well inventory. And in the fourth quarter, we…

Thanks Vickie, good morning everyone. I’d like to just take a few minutes to briefly update you on our midstream and marketing strategies in the Permian. It’s particularly important in today’s market environment to maximize realized value for production and our strategy to do so is primarily by ensuring access to markets. Now I spent some time last earnings call on our midstream strategy to show you how we’re trying to develop and secure takeaway capacity in the Permian Basin. I have a Slide 29, that shows our strategy which is really focused on two new key takeaway points. Colorado City which is the origin of the BridgeTex pipeline in Midland South, which is the origin to keep third-party pipelines Long Horn and Cactus. These takeaway points complement our Centurion gathering system by providing us the additional access to multiple markets. Now as you are aware the BridgeTex pipeline commenced service this September and together with a start up of some additional pipelines in the next few months we expect differentials to return to levels that will reflect the marginal cost of transportation. Slide 30, shows the pricing differentials for Midland WTI versus LLS. During takeaway constrain periods you can see the LLS Midland differential widen to $30 a barrel and is averaged approximately $16 a barrel over the past four years. In 2014 the LLS Midland differential has averaged $12 year-to-date and today’s it’s currently roughly $10 a barrel. Our unique upstream and midstream perspective to the Permian basin has enabled us to be a driving force behind the construction of new pipeline infrastructure, as well as takeaway capacity from the Basin. Slide 31, shows how we view the key value components for infrastructure projects such as BridgeTex. As a standalone pipeline investment we look at tariff revenue to…

Thanks Willie. And Denise we’re ready to take questions.

and:

Thank you. We will now begin the question-and-answer session. (Operator Instructions) The first question will come from Evan Calio of Morgan Stanley. Please go ahead.

Good morning guys. My first question is most of your large cap E&P peers are increasingly within cash flow or are more limited by their balance sheets. Given OXY’s under-levered balance sheet versus anybody, other than a super major, would you be willing to outspend cash flow in the downturn? And as a method to right size your balance sheet, or really I guess what’s the writer of targeted capital structure for OXY moving forward? Morgan Stanley: Good morning guys. My first question is most of your large cap E&P peers are increasingly within cash flow or are more limited by their balance sheets. Given OXY’s under-levered balance sheet versus anybody, other than a super major, would you be willing to outspend cash flow in the downturn? And as a method to right size your balance sheet, or really I guess what’s the writer of targeted capital structure for OXY moving forward?

Well, first I would argue, we’re better capitalized in the majors. So, I think they are over leveraged myself, but anyway I think as Chris pointed out we’re going to have a lot of cash at the end of the year from variety of sources mostly from the California business. Some of that of course will be used to reduce our share count, maybe the bulk of that to reduce our share count. We continue to look for opportunities to grow the business in the Permian through investment. So, well, our drilling program or maybe in line with cash flow if we see other opportunities to small property acquisitions or even medium sized ones we’ll use our balance sheet to do those. And those would effectively be an increase in the program in excess of cash flow. So, I think we’ve always had a balance of drilling and acquisitions it’s more shifted clearly to drilling now because we have so much to do. But so I think I don’t think you will see massive changes in our leverage but you will see obviously less equity in our equity count as we buy down a lot of stock. So, I think there’ll always be a balance. If there was a sharp reduction in oil prices created more buying opportunities so we wouldn’t hesitate to increase our leverage to grow the business, so I think that from our perspective this is sort of good times. I sort of know what to do with $75 oil or less, but I have no idea what to do with the $120. So I think this is really good times for us, may not be good times for people who use this as a proxy for oil price, these are stocks or proxy for oil price but as a fundamental business matter see cyclical downturns is where you use the balance sheet to build the business. And I think that’s I am hoping a lot of happy talk now especially from service companies about how this is temporary I don’t know how anybody knows that. If I can predict oil prices I’d be sitting on a beach in Gali and wouldn’t come to work and wouldn’t mess with this production business. So, I think that as a practical matter you got to -- this is a volatile time there may be a recession worldwide I don’t really know I don’t see that. But a little lower oil prices I think could take some of the volumes out of it and gives us some opportunities to head to our business. So our goal is to grow our earnings per share, our reserves per share, cash flow per share through a combination share reduction and hopefully building the business either through drilling or acquisitions, and maybe both.

Absolutely well positioned for a down market, maybe a related question but on buybacks you used to have a slide where you built up to 100 million share buyback. And I guess there is two questions, it’s not included today. If there is any change in thought there? And secondly, when you did the 100 million share a potential buyback, it was determined when OXY was $100 a share, it’s $89 today. All things being equal it will be lower following the CRC spin. And at the same time the elements that are funding the buyback are largely flat, right? So I guess is there how do you think about that which is approximately about $1 billion delta or is it looking at your… Morgan Stanley: Absolutely well positioned for a down market, maybe a related question but on buybacks you used to have a slide where you built up to 100 million share buyback. And I guess there is two questions, it’s not included today. If there is any change in thought there? And secondly, when you did the 100 million share a potential buyback, it was determined when OXY was $100 a share, it’s $89 today. All things being equal it will be lower following the CRC spin. And at the same time the elements that are funding the buyback are largely flat, right? So I guess is there how do you think about that which is approximately about $1 billion delta or is it looking at your…

We denominated the stuff in shares because that’s the way we think about it how many shares are we buying back. We’re fairly somewhat disciplined in making sure that we don’t buy shares at prices that are imply, that are excess of our finding and development cost. So I think that’s the way we sort of look at it. We announced the share repurchases as we actually have the cash in hand. It’s not intended as a forecast to what we might ultimately do as more cash comes in hand you should expect the share repurchase authority would rise. So it wasn’t the 60 million shares we’ve added so we got 76 I think roughly left to go. You should view that as sort of the cash in hand number not the ultimate and the ultimate will be dependent on the pace of proceeds from various things. So I think we’re not trying to forecast, when I say this is what we got in our hand now. But it turns out that we have excess money because the price of stock is too low, we’ll adjust the share repurchase to higher numbers.

And do how we consider a time table? Is that for the buyback, given it’s significantly higher than a level historically or is it still just going to be level driven program? Morgan Stanley: And do how we consider a time table? Is that for the buyback, given it’s significantly higher than a level historically or is it still just going to be level driven program?

It’s driven principally by the stock price. So we look for buying opportunities in the market when people become irrational.

Our next question will come from Doug Terreson of ISI. Please go ahead.

Steve I have a couple of questions about the main E&P business. First from a strategic perspective, there has been commentary about divestitures in Oman and other countries and so whether or not you comment on assets individually or the positions in main in general. I want to see if we could get an update on likely strategic outcomes there and/or the environment for monetization and main in general which you have talked about in the past? And then the second question, you guys mentioned that Al Hosn is going to start up on time in the current quarter which is good. And so the second question is whether it is going to come in on budget as well? So two questions. ISI: Steve I have a couple of questions about the main E&P business. First from a strategic perspective, there has been commentary about divestitures in Oman and other countries and so whether or not you comment on assets individually or the positions in main in general. I want to see if we could get an update on likely strategic outcomes there and/or the environment for monetization and main in general which you have talked about in the past? And then the second question, you guys mentioned that Al Hosn is going to start up on time in the current quarter which is good. And so the second question is whether it is going to come in on budget as well? So two questions.

The second, last we’ll have Sandy answer the budget question, but it’s sort of one word answer. But on the overall reduction it’s sort of one at a time but our objective is the same one way or another to get value out of the Middle East business some by selling it and may be some by speeding up the cash out of the asset where it is more difficult. So one way or another we’re basically using the business to downsize the size of that business make it less important on the company. Still an important part but it’s going to be a lot of cash is going to come out of that business one way or another over the next few months. And so I think we’re going along it slower than I would like of course. But to some extent by showing being too anxious sometimes you get a worst result than you might some other way. And so Sandy will answer the question on budget.

The answer is while I am worried yes we’re on budget it’s a well planned project and well tended the start up sequence has been initiated and we expect to have some product sales in the quarter.

Our next question will come from Doug Leggate of Bank of America. Please go ahead.

Steve I also have two questions. I guess my first one is for Vickie. I really wanted to talk about the Permian or ask you about the Permian growth trajectory that you have provided for us. Your run rate since you ramped up the rig count by about 5,000 barrels a day per quarter and I realize it’s very simplistic just to look at the absolute move sequentially. But you are significantly accelerating the rig count and the backlog it looks like, so I am just trying to reconcile a substantially higher activity level with a similar quarterly rate of growth that we -- implied by your projections for the next couple of years. That’s my first question. I have got a follow-up please. Bank of America Merrill Lynch: Steve I also have two questions. I guess my first one is for Vickie. I really wanted to talk about the Permian or ask you about the Permian growth trajectory that you have provided for us. Your run rate since you ramped up the rig count by about 5,000 barrels a day per quarter and I realize it’s very simplistic just to look at the absolute move sequentially. But you are significantly accelerating the rig count and the backlog it looks like, so I am just trying to reconcile a substantially higher activity level with a similar quarterly rate of growth that we -- implied by your projections for the next couple of years. That’s my first question. I have got a follow-up please.

I’ll let her answer the question but I think I wouldn’t confuse our expectations with our promises. There is probably a wide difference between them. Go ahead Vickie.

Yes Doug originally we had not planned to reach the exit rate this year with 34 rigs. But we’ve accelerated our development a little bit and as you noticed we’re a little bit behind on some of our wells completed but we’ve added another couple of frac spreads. So, now as of 1 of November we’ll be at 7 to address the well inventory. And with respect to the rigs going forward we still intend to stay somewhat as per the schedule that we had showed in our last presentation. We’re just seeing a little more opportunity here to get a little bit ahead of the game.

So this not working interest issue, I think in terms of subsequent wells from here having a lower working interest maybe you could give us an idea of what after working interest is? Thanks. Bank of America Merrill Lynch: So this not working interest issue, I think in terms of subsequent wells from here having a lower working interest maybe you could give us an idea of what after working interest is? Thanks.

We kind of gave you an indication on the slide in the presentation that for the Midland Basin generally speaking our working interest is close to 92% overall and in the Delaware Basin around 76% generally speaking.

Okay, thanks for that. Steve, my follow-up is really I realized we’re going to have to wait on the capital for the till the end of the year. But just as an order of magnitude I wonder if you could help given all the moving parts with California going BridgeTex and Al Hosn largely done. And what I am really trying to get at is how you think about balancing spending with the dividend as opposed to asset monetizations funding the buyback? How should we think about dividend policy and maybe a broad scale of spending for next year, if you could? Thank you. Bank of America Merrill Lynch: Okay, thanks for that. Steve, my follow-up is really I realized we’re going to have to wait on the capital for the till the end of the year. But just as an order of magnitude I wonder if you could help given all the moving parts with California going BridgeTex and Al Hosn largely done. And what I am really trying to get at is how you think about balancing spending with the dividend as opposed to asset monetizations funding the buyback? How should we think about dividend policy and maybe a broad scale of spending for next year, if you could? Thank you.

It’s hard to do the budget right now because there is a number of moving parts and we have to talk with our partners in the Middle East about the size of the program there. And I just assume that telegraph or thoughts right now. But I think our Permian program certainly for the first half of the year will be what we told people would be. So I don’t expect any real change in that, some of the other stuff maybe tweaked a little bit and some of the other programs. We just don’t know. But as far as the dividends are concerned I think if you go back to the slide we’ve only shown for what I say 10 years but I think Chris who is shaking his head said that it is more, it says after maintenance capital which is making the company safe. The next line is dividends before growth, and so we view our commitment to the shareholders on dividends to be part of our overall commitment. How much exactly you’re going to raise the dividend wise is remains to be seen. And there is obviously a little confusion by with the lower oil prices. But I think -- I don’t think. We’ve raised the dividends I think for a dozen years I don’t think we’re going to break the theme next year. And so I assume the dividends will go up. We’ve got a lot of cash and a lot of projects to fund almost anything we want to do. And so I don’t think anybody should be concerned. And we’re focused on making sure that the drilling program delivers the results it’s supposed to deliver. If it delivers the results it’s supposed to deliver there’ll be plenty of money over the next two…

Great, thanks a lot Steve. Bank of America Merrill Lynch: Great, thanks a lot Steve.

The next question will come from Leo Mariani of RBC. Please go ahead.

I was wondering if you could address a little bit more the comment that you all had made about potentially moderating activity I think the phrase you guys used is if oil prices stay here or move lower and you kind of referred it to the second half of ’15. Is there any kind of more granularity you can give around that? I recognized the budget is not done yet and there is moving parts. I know you have ambitious plans to ramp-up the rig count in the Permian. Is there any scenario you can sort of paint whether or not you stop ramping rigs in the second half of the year? Would you actually drop rigs? Could you maybe just talk to that a little bit? RBC Capital Markets: I was wondering if you could address a little bit more the comment that you all had made about potentially moderating activity I think the phrase you guys used is if oil prices stay here or move lower and you kind of referred it to the second half of ’15. Is there any kind of more granularity you can give around that? I recognized the budget is not done yet and there is moving parts. I know you have ambitious plans to ramp-up the rig count in the Permian. Is there any scenario you can sort of paint whether or not you stop ramping rigs in the second half of the year? Would you actually drop rigs? Could you maybe just talk to that a little bit?

I don’t think we have any plans to drop rigs. The ramp rate is what we would fall with because the business as we continue to drill wells put them on stream generates cash, more cash, than some people are out looking. And so I think we’ll be okay. And we certainly have the financial flexibility to weather that. On a long-term basis we’re fairly optimistic about oil prices over the next year or two I don’t know. But I think on a long-term basis the industry despite what people say the U.S. business is not healthy at $70 oil. And so I think higher oil prices are in the cards overtime.

Okay, and I guess just in the Permian, could you guys maybe talk to what type of well cost you’re seeing on the Midland side as well as the Delaware side? RBC Capital Markets: Okay, and I guess just in the Permian, could you guys maybe talk to what type of well cost you’re seeing on the Midland side as well as the Delaware side?

Vicki can probably answer that.

Depending on the depth in the Midland Basin we’re seeing well costs better in the $7 million to $7.5 million range for our South Curtis Ranch and some of the areas around that. And the Delaware Basin in Texas we’re seeing well cost in the neighborhood of 8.6 million to 8.7 million and our drilling costs have been improving through some of our efficiency initiatives but it’s really the completion costs that are driving our total well cost right now. What we’ve done recently is increased the size of our frac jobs which is giving us better productivity and what we think will be better ultimate recoveries. So when you’re seeing higher well cost for us it’s because we’re increasing the size of our fracs.

Is there any kind of like approximate lateral length you can sort of put around those well costs at all? RBC Capital Markets: Is there any kind of like approximate lateral length you can sort of put around those well costs at all?

Around the 8.6 to 8.7 that’s generally a lateral length of about 4,500 to 5,000. And in South Curtis Ranch area our lateral length is around 6,100.

In terms of your Bakken and Piceance assets I guess you had it in your slides that you guys plan to limit capital there. Could you talk about longer term plans for those assets? I know you had spoken in the past about some in the Bakken properties and also putting the Piceance assets into a JV for maybe an eventual IPO. And I guess you also talked about additional midstream sales when market conditions warrant. Can you maybe just talk through strategically how you are thinking about those assets? RBC Capital Markets: In terms of your Bakken and Piceance assets I guess you had it in your slides that you guys plan to limit capital there. Could you talk about longer term plans for those assets? I know you had spoken in the past about some in the Bakken properties and also putting the Piceance assets into a JV for maybe an eventual IPO. And I guess you also talked about additional midstream sales when market conditions warrant. Can you maybe just talk through strategically how you are thinking about those assets?

The issue in the Bakken as it simply can’t compete for the returns being earned in the Permian. It’s not that they are bad assets or anything it’s just not competitive in our portfolio. And the Piceance is all gas and gas is tough to compete in this environment. So we’ll look and I don’t see any way to change. I am not bullish about gas prices I don’t see any real way to change the relative competitiveness of North Dakota versus the Permian. We can move oil out of the Permian by pipeline. That’s a much more efficient way to move oil than by train. So I just think that it’s just we’ll not for our portfolio it won’t be able to compete, so ultimately we’ll have to deal with that.

That kind of implies an eventual disposition I would assume at some point? RBC Capital Markets: That kind of implies an eventual disposition I would assume at some point?

Yes sure. Right now it’s a little noisy because it’s probably not the perfect time to be doing that.

The next question will come from Ed Westlake of Credit Suisse. Please go ahead.

An intriguing comment from Steve just on saying cash flows being under estimated, I mean obviously oil price is making a lot of volatility but maybe some color on that. Is that because you think your promise is going to be exceeded by your expectation of volumes? Do you think it’s because cash margins are being underestimated as you shift to drilling in the Permian. Is it Al Hosn or is it all three and something else? Credit Suisse: An intriguing comment from Steve just on saying cash flows being under estimated, I mean obviously oil price is making a lot of volatility but maybe some color on that. Is that because you think your promise is going to be exceeded by your expectation of volumes? Do you think it’s because cash margins are being underestimated as you shift to drilling in the Permian. Is it Al Hosn or is it all three and something else?

Generally I think people have underestimated the cash flow that will come out of the assets they basically take what we did this year and add 2% or something to it than adjust for price. The Al Hosn project will certainly add. There is other things that I think will add, but I think we show you I think, there is a difference without, we look different without California. And we give you some numbers to help you model that. We don’t know what the DD&A rate will be next year because it depends on reserves. But the underlying DD&A rate for example without California, United States is lower. And the same thing with operating costs and other things, so I think there is, people are just sort of taking the old numbers because that’s really all they had. But I think as you look at it, maybe a little more careful modeling with the new numbers might be more helpful for people.

And then a question on the Permian, I mean obviously if you look at the Midland’s, you have outlined Dora Roberts, South Curtis may be and these are sweet spots in the Northern Midland but it’s not a huge amount of acreage but it will be very productive. And then in the Reeves, Barilla Draw area you’ve got this fantastic results again and that’s obviously a larger acreage position. So that drives growth over the next five, maybe six, seven, maybe even longer years. When I look at the rest of the Permian and particularly say if oil prices did have a longer excursion to the downside. How do you think the returns stack up and I am particularly say looking at the New Mexico, Delaware? What’s the sort of breakeven oil price you need for getting an acceptable return to that? Credit Suisse: And then a question on the Permian, I mean obviously if you look at the Midland’s, you have outlined Dora Roberts, South Curtis may be and these are sweet spots in the Northern Midland but it’s not a huge amount of acreage but it will be very productive. And then in the Reeves, Barilla Draw area you’ve got this fantastic results again and that’s obviously a larger acreage position. So that drives growth over the next five, maybe six, seven, maybe even longer years. When I look at the rest of the Permian and particularly say if oil prices did have a longer excursion to the downside. How do you think the returns stack up and I am particularly say looking at the New Mexico, Delaware? What’s the sort of breakeven oil price you need for getting an acceptable return to that?

I get to take a longer view I guess, because it is a smaller proportion of my age. So if I look back two-three years ago what we thought about the Permian basin and what we thought internally for Delaware what other people were saying. And I look at programs have been proposed now, doesn’t even look like the same company. And I think as we have progressed we continue to find new things that we didn’t think of before, that we’ll act considerably I think the business, ultimately if oil prices stayed low or whatever you want to call the current price or at this level or lower for a extended period of time. Margins historically have adjusted by the reduction in service costs. I mean you are not going to get an environment where oil prices stay at say $75 or whatever you think for four to five years and service costs are going to be the same, it just doesn’t going to work. And so part of the gain sharing and loss sharing will be from both parties. So all the money isn’t going to just go in the service company coffers and we’re going to work for free and I don’t, not just we but everybody. So I think in the end it will calibrate and then we’ll generate acceptable returns. We think there is a lot of economic oil at $75, economic meaning we are in 15%, 16%, 17% returns. Though I think there is a lot of economic oil at $50 no I don’t and somewhere in that range but it also depends on service cost and so -- but if oil prices go back to 100 or whatever again service costs will rebound with that. So I just think that this thing will take work itself out over one or two year period. And I am, I hate to say it this way, but if I look forward to a little stress and some of the crazy stuff that sort of goes away for a while and that gives sort of rational people an opportunity.

And then a final question just on the 2015 production outlook that’s very helpful, 8% to 10% and you can see obviously the great contribution of Al Hosn which probably still have a bit of tail into contribution maybe even ’16 as well at least I mean and obviously reducing activity in the mid-con. Do you think the Permian and it seems to in the well results and the activity level. Do you think the Permian can provide an offset to keep that production growth sort of at a similar pace in 2016 or does it just naturally slow as Al Hosn comes down? Credit Suisse: And then a final question just on the 2015 production outlook that’s very helpful, 8% to 10% and you can see obviously the great contribution of Al Hosn which probably still have a bit of tail into contribution maybe even ’16 as well at least I mean and obviously reducing activity in the mid-con. Do you think the Permian and it seems to in the well results and the activity level. Do you think the Permian can provide an offset to keep that production growth sort of at a similar pace in 2016 or does it just naturally slow as Al Hosn comes down?

Well, Al Hosn will be eventually flat yes but I think at Al Hosn I think it’s possible that over in the next few years the plant is larger than it needs to be for the deliverable gas. And so and the country continues to need gas there and the result resolve in liquids of course. So I think overtime there will be an expansion probably and separately up to the government. And so there will be Al Hosn is not through so I think as we look at ’17 and ’18 and ’19, we’ll see more growth out of Al Hosn some point level off that’s true. But I think it will probably continue to grow. Because once you spent the base money the incremental capital will have really good returns I think. So I think that will do better. I think the Permian Resource business has the potential to cover to continue to grow and maybe grow better going forward as we work through some of the historical issues. So I think we’ve got more acreage and more will prove up and the Barilla Draw didn’t really exist a year ago I mean it landed but the concept didn’t exist. And so I think there is a lot of good concepts out there some will work and some won’t. And some are I think over promoted by some but it’s hard to imagine that 100,000 acres you’re going to have 4 billion barrels of reserves. But I think rational expectations are good for the base and I think Permian Basin is the best basin in the United States and will be for the next 20 or 25 years.

Thanks very much. Credit Suisse: Thanks very much.

The next question will come from Jeffrey Campbell of Tuohy Brothers Investment Research. Please go ahead.

Good morning. First question I want to ask it refers to Slide 27, the SCR 3526H Spraberry well. Is the early shallow decline consistent with your expectations? And does this early positive results have any influence over your Spraberry appraisal plans going forward? Tuohy Brothers Investment Research: Good morning. First question I want to ask it refers to Slide 27, the SCR 3526H Spraberry well. Is the early shallow decline consistent with your expectations? And does this early positive results have any influence over your Spraberry appraisal plans going forward?

We’re still evaluating the South Curtis Ranch 3526 and the shallow decline on that is so far good news for us. But we still want to see a little more production data from that to determine what’s causing that.

Great, thank you. And just as a broader question, just looking at your plan as it’s unfolded in Permian over the last several quarters. It doesn’t really appear to encompass essential basin platform where some peers have drilled some noteworthy horizontal wells. I was wondering if you have any horizontal exploration potential in that area. Tuohy Brothers Investment Research: Great, thank you. And just as a broader question, just looking at your plan as it’s unfolded in Permian over the last several quarters. It doesn’t really appear to encompass essential basin platform where some peers have drilled some noteworthy horizontal wells. I was wondering if you have any horizontal exploration potential in that area.

We feel like we have a lot of potential on the Central Basin Platform and that’s just one of the areas that we have yet to get to. We’re working on a fairly structured plan to, with respect to our exploration, our appraisal and our development programs. And so what we showed you on the slide that has the breakout of the zones that are currently under appraisal and currently under development that list does not include what we’re doing from an exploration standpoint. So, our exploration group is one of their key areas to focus on over the next couple of years will be the Central Basin Platform where we do have significant acreage and we think there is a lot of potential there, so it just hasn’t gotten in the queue yet but it’s something that we’re optimistic about.

Our next question will come from Roger Reid of Wells Fargo. Please go ahead.

A quick question on the OpEx side a couple of years ago you started an OpEx reduction effort obviously it was successful. This time around talking about OpEx and then last night on the call with CRC they talked about higher gas prices. I was wondering ex-California if you could walk us through what sort of the OpEx issues are here and how m of that is due maybe to just temporary gas price increases and how much of it is a function of maybe changes in what you’re doing in the Permian resources area. Wells Fargo Securities: A quick question on the OpEx side a couple of years ago you started an OpEx reduction effort obviously it was successful. This time around talking about OpEx and then last night on the call with CRC they talked about higher gas prices. I was wondering ex-California if you could walk us through what sort of the OpEx issues are here and how m of that is due maybe to just temporary gas price increases and how much of it is a function of maybe changes in what you’re doing in the Permian resources area.

Just as you look at OpEx I think there is two, there is the cost of energy which is buried in that OpEx because we use a lot of electricity to run pumps and such. And so some of that’s in the energy and some of it is in basically driven by the EOR business which uses, where the gas the CO2 is tied to oil price. And these little more CO2 we expense that, looks or shows up as an operating cost. And some of it is we increased the work over activity principally in the EOR business. So when you look at our numbers for operating costs in the United States the driver the overwhelming driver is the EOR business which is basically a low capital business but a little higher operating cost business than say the resources business which is a high capital business and a low operating cost business. So what you see is as we put more CO2 in the ground as we try to repair the wells, you get more operating costs and we try to optimize that and what we look it is the base the underlying operating cost, not so much what we’re doing from quarter-to-quarter, we can’t do anything about CO2 prices or anything like that. So I think it’s a mix of things but the driver for operating costs for the OXY excluding California is the EOR business which is a large business and its principle expenses are not capital but are our operating costs. So it just looks a little different than you might be used to.

So with California soon to be gone… Wells Fargo Securities: So with California soon to be gone…

We actually show you somewhere, Chris?

We gave you a pro forma slide table in the IR schedules that shows pro forma without California and the Hugoton for cash operating cost, DD&A and some other metrics and also production. So you sort of can go back and model it off of that and you’ll see what happened over that period of time.

And then the other question I had was along the lines of catching up on the well completions and the addition of the frac spreads in West Texas. Any chance for upside performance in terms of production there relative to the guidance or is that all fully incorporated in the numbers? Wells Fargo Securities: And then the other question I had was along the lines of catching up on the well completions and the addition of the frac spreads in West Texas. Any chance for upside performance in terms of production there relative to the guidance or is that all fully incorporated in the numbers?

That is incorporated in our projections for production, so we do expect to catch up and we’ve accounted for that.

What he’s asking, is have we been conservative in the number or not?

I would say that that based on the performance we’ve seen thus far, I’d say that’s a conservative number actually, it’s an achievable number.

And our final question will come from Paul Sankey of Wolfe Research. Please go ahead.

Couple of high level strategic questions, firstly do you think you have been behind technically in the Permian? Do you think you can get ahead and do you think any kind of technical advantage is sustainable in U.S. unconventional given the commoditization of the activity? Wolfe Research: Couple of high level strategic questions, firstly do you think you have been behind technically in the Permian? Do you think you can get ahead and do you think any kind of technical advantage is sustainable in U.S. unconventional given the commoditization of the activity?

We’ll start with, yes we were behind. I think somewhat earlier I said if I look at what the presentation is internally were two years ago. Look at the quality and the detail the current presentations for next year’s program doesn’t even look like the same company. So I think we have made a lot of progress. We’re blessed with good acreage which compensates for whatever to some extent. So I don’t think there is much. I always believe that it’s the acreage or the reservoir that overwhelms overtime technology spreads quickly. So I don’t think there is no secret sauce that lasts very long. So I think as a practical matter we -- I think we’re where we need to be in technology, there is always going to be improvements whether you have relative improvements against other people I don’t know. But overtime the technology spreads very quickly. And so because we see lots of wells, so it’s not really something that’s hidden from us. So I think we’re where we need to be from a skill set at this point we were behind so no argument about that. But we are fortunate that we have an exceptional acres position which in the end the reservoirs matter.

I guess the argument there would be that you were in early relatively speaking and paid less but it bubbled, the early entry allowed you to get a better acreage? Is there any other proof by the way that you have better acreage? I mean how can we show that? Wolfe Research: I guess the argument there would be that you were in early relatively speaking and paid less but it bubbled, the early entry allowed you to get a better acreage? Is there any other proof by the way that you have better acreage? I mean how can we show that?

Maybe, Vicki can tell you about that.

I’d like to build on Steve’s comments with respect to your first question initially. Technically we have teams here with OXY that I think to compete or beat any other teams in the Permian Basin at this time. From a success standpoint in the unconventional plays one of the critical things is to understand what the reservoir is and what the reservoir is telling you. We don’t believe that these plays should be called statistical plays. We think that you’ve really got to understand what the reservoir is. And based on what the reservoir is you design your completions and your frac jobs. And I think right now we’re probably one if not the only company, one of the few companies that’s actually taken a horizontal core. And along with our vertical cores, our 3D seismic, our micro seismic and all the additional work that we’re doing around reservoir characterization I think nobody in the basin is any further along than we are with respect to that. But I think with that said the industry as a whole still has a lot to learn. We’re all very early in the development of these unconventional plays in the Permian. So, I still think that we’re going to continue to learn technology will continue to advance. And I think that as it does I expect overtime for cost to come down on at least from the drilling standpoint and possibly from the completion standpoint. We’ve got some plans in place over the next six months to do some things. I think that that could have a significant impact on our productivity and ultimate recoveries. But it’s just a matter of working those costs to make sure that they are economical for what we want to do. And as I said technology overtime the cost comes down and so I think we’ll be able to do some things that that will certainly help some of the areas that previously have not been as good as our Delaware Basin area. So there is -- I am sorry now I have forgotten your second question.

No, I was just saying if there is some way that we would be able to show easily that your acreage is superior to someone else’s? Wolfe Research: No, I was just saying if there is some way that we would be able to show easily that your acreage is superior to someone else’s?

Well, we’ve got so much of it that some of it’s going to be better and some not. I mean if you compare it to some guy that has got 100,000 acres nets his whole position and who knows. But I think if you look at the overall result and you say we started from a standing start two years ago. And we’ll pass 80,000 at the end of this quarter. And we’ll pass 100,000 at the end of -- by the end of next year for sure. So I just look at from a standing start two years ago we’ll be one of the biggest producers in this unconventional in no time. But our whole business historically had been an EOR business. So it’s whatever you want to think but I think there is always somebody who has got 40,000 acres that is real good. But the question is can you have 2 million acres, that is real good. And I think we got enough 40,000 acre pieces that we could compete with anybody. If we took one of our 40,000 acre pieces or 100,000 acre pieces and people were saying what a wonderful company it is, it is just good as the snake company or whatever it’s called.

I have a couple of quick ones Steve the investment in Midstream simultaneous with the sell down of the GP of Plains All-American I assume that means that you wouldn’t be continuing to want to own those assets long-term. And further to that does the deliberate naming of Permian Resources rings a bell with California Resources. I wondered if that was a potential spin candidate and I’ll leave it there? Thank you. Wolfe Research: I have a couple of quick ones Steve the investment in Midstream simultaneous with the sell down of the GP of Plains All-American I assume that means that you wouldn’t be continuing to want to own those assets long-term. And further to that does the deliberate naming of Permian Resources rings a bell with California Resources. I wondered if that was a potential spin candidate and I’ll leave it there? Thank you.

On the Midstream I mean our goal is to I think Willie pointed out. Our goal is to make sure that we get the best possible price for our product and we’re not disadvantaged we’ve gone through several years of disadvantage. If we can do that without spending capital and build pipelines we’re happy to do that by committing for space and reaping the advantages of owning space. And so I think you should view it as a -- its purpose is basically to make sure we get good prices for oil. And if we could monetize take back some of that capital someway and put it somewhere else with new higher returns and we’re definitely going to do that. As far as the name is concerned that’s sort of an accident I wouldn’t know all that well about the California Resources name. But I think that I don’t think you should view it as a spinoff candidate at this point. It needs right now the cash flow from the rest of the business to accelerate its drilling. And it’s unlike California, California is actually it’s a good business. It’s just -- but it’s sort of mature phase where you saw financing. The resource business needs cash to grow. And it’s just not the right time to even think about something like that.

Thank you very much. Wolfe Research: Thank you very much.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Chris Degner for his closing remarks.

Yes, thank you everyone and please give us a call if you have any follow-up questions. Have a good day.