Welcome to the Occidental Petroleum Corporation Fourth Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Chris Degner. Mr. Degner, please go ahead.

Thank you, Emily. Good morning, everyone and thank you for participating in Occidental Petroleum's fourth quarter 2014 conference call. On the call with us today 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 Operation. In just a moment I will turn the call over to our CEO, Steve Chazen who will review our achievements in 2014 and provide an outlook for 2015. Our CFO, Chris Stavros will review our financial and operating results for the fourth quarter and also provide guidance for 2015. Then, Willie Chiang will review our 2015 capital plan followed by Vicki Hollub, who will provide an update of our activities in the Permian Basin. 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 factors that could cause results to differ is available on the company's most recent Form 10-K. Our fourth quarter 2014 earnings press release and the investor relations supplemental schedules, our non-GAAP to GAAP reconciliation and the conference call presentation slides can be downloaded off of our website at www.oxy.com. I'll now turn the call over to Steve Chazen. Steve, please go ahead.

Thanks, Chris. I would like to start with some highlights from our accomplishments in the past year. We executed many of our strategic initiatives including the spin-off of California Resources, the sale of our Hugoton gas properties, BridgeTex pipeline and PAGP units. At the end of the year, our cash balance of $7.8 billion exceeded our total debt of $6.8 billion. We grew our domestic oil production by 11,000 barrels a day over 2013 to 181,000 a day. We grew our Permian resources production from 65,000 barrel equivalents a day over 2013 to 75,000 barrels a day this year. The 2004 capital program added 395 million barrels of proved reserves, replacement ratio of 181% before dispositions. Our costs incurred with these reserve additions were about $6.7 billion, resulted in an apparent finding and development cost of under $17 a BOE. We added 363 million barrels of liquid proved reserves, a replacement ratio of 223%, before dispositions. We completed the Al Hosn gas project on budget and on time which started production in early January. I have two comments about the macro environment. The confluence of U.S. supply growth, weaker Asian demand and extreme currency movements have led to significant decline in product prices. Our company is resilient and built to weather price shocks typical to this industry. Obviously, we have the financial resource to continue drilling at the 2004 rate. However, the current service company cost structure is more reflective of a $100 oil price environment, rather than the $50 environment we have today. While service companies have offered modest price reductions, they still do not reflect the current reality. We're focused on reducing our costs which include renegotiating our supplier contracts that are not reflective of weaker oil prices. We expect these efforts to result in a reduction in…

Thanks, Steve and good morning everyone. Oxy completed the spin-off of California resources at the end of November. Accordingly, we have reclassified the financial and operational results for discontinued operations for our core results disclosure. As such, our fourth quarter 2014 core income excludes all the California results and income on a reported basis includes two months of California results. Total year 2014 results on a reported basis include 11 months contribution from the California operations classified as discontinued. We generated core income of $560 million for the fourth quarter 2014 resulting in diluted earnings per share of $0.72, a decrease from both the year ago quarter and the third quarter of 2014. The decline in core earnings was attributable mainly to sharply lower realized oil prices on our worldwide production. Net results for the quarter were a loss of $3.4 billion or $4.41 per diluted share. In accordance with the successful efforts method of accounting which Oxy follows, we review our proved oil and gas properties for indications of impairment whenever events or circumstances indicate that the carrying value of the oil and gas properties may not be adequately recovered, such as when there is a significant drop in the futures price curve. Under the successful efforts method, if an oil and gas property's estimated future net cash flows are not sufficient to recover its carrying amount using the period end's future curve, an impairment charge must be recorded. As of December 31, Oxy recorded property impairments due to the fall in the futures curve for oil as of that date. The 2014 fourth quarter includes after tax, non-core net charges of $4 billion. Approximately $2.7 billion of this was a result of the sharp decline in the year-end WTI price curve that affected our domestic properties. Most notably…

Thanks, Chris. Good morning, everyone. As you now know, our 2015 capital program is expected to be $5.8 billion, a 33% reduction from our 2014 capital program. All business segments will see cuts in capital spending versus the 2014 levels with the exception of chemicals which is in the peak year of spending for the Ingleside ethylene cracker JV project. Despite the lower capital program, we expect to deliver the production growth in 2015, as Steve has said. Now let me expand on the 2015 program of which 80% is in the oil and gas segment and 10% each is in the chemicals and midstream segments. Domestic oil and gas capital will be about $2.5 billion or 43% of our total capital program, a decline of about $1 billion from 2014 levels. Overall spending levels in the Permian will decline slightly and significant reductions will come from Williston and south Texas which are most impacted by the sharp declines in product prices. Vicki Hollub will provide more details on that later in the call. International development capital will be about $2 billion or 33% of our total capital program. Spending levels in the Middle East, North Africa MENA region will decline by approximately $1.4 billion mostly from the Al Hosn gas project completion, Qatar and other mature projects. Exploration capital is expected to decrease significantly from the 2014 levels to roughly $150 million. Our 2014 exploration program was successful in supporting the appraisal and delineation of a strong inventory of drilling locations which is the basis of our development program this year. Chemical segment capital will be about $600 million which includes the Ingleside cracker project that we expect to complete late 2016 and commission in the first quarter of 2017. We expect OxyChem to be free cash flow positive…

Thank you, Willie. Today I will review the highlights of our Permian resources activities in the fourth quarter and then I will provide more details about the 2015 capital programs in our U.S. operations. In the fourth quarter, Permian resources achieved daily production of 84,000 barrels of oil equivalent per day which is a 9% increase from the 77,000 barrels of oil equivalent per day that were produced in the third quarter. With regard to oil, we produced 51,000 barrels of oil per day for the fourth quarter. This is a 42% increase from a year ago and a 19% increase from the previous quarter. During the fourth quarter, our capital expenditures were $791 million. We operated 29 rigs and drilled 85 wells including 56 horizontals. We placed 70 wells on production including 44 horizontals. At year-end, 11 wells were on flow-back and 61 were not yet completed. In the Delaware basin, we operated 14 horizontal drilling rigs and one vertical drilling rig in the fourth quarter. We drilled 47 wells and placed 39 wells on production. In our Barilla Draw area we placed 7 horizontal wells on production in the Wolfcamp A and B benches. These wells achieved an average peak rate of 1500 BOE per day and a 30 day rate of 1,190. We're extremely excited by the results achieved on the Peck state 258 number 6H, where we optimized the landing point and cluster spacing. This well achieved a peak rate of 2400 BOE per day and a 30 day rate of 1760. Additionally, we placed our first two 7500-foot lateral wells, the Buzzard state number 9H and number 10H on production with excellent results. Both were completed in the Wolfcamp A. The Buzzard state number 9H achieved a peak rate of 2020 BOE per day and…

Thank you, Vicki. Now we will open the call up for questions.

[Operator Instructions]. Our first question is from Doug Leggate of Bank of America Merrill Lynch. Please go ahead.

I wonder if I could take two, please. Vicky, this one is profitability for you. I guess just to be absolutely clear in this current oil price environment, not the $55 that you have put in the plan I guess, has the Permian program delivering positive returns? And if you could maybe give some color as to what royalty ownership or what royalty rates you might have in the program for the current year of gas in the Delaware basin.

Yes, Doug, currently our program at today's prices will deliver about 15% to 20% rates of return and the reason for that is, we had an aggressive program, appraisal program in 2014, so we have - we're targeting in 2015 our best benches in our best areas. And we have had really good success recently with improving our completion design. So we expect the returns to be in the 15% to 20% range. And if you will refer back to the chart I included in the presentation in Q3, you will see that if you look at the areas where we're developing, I think I have some numbers there that generally would enable you to get to the net interest.

Okay. Maybe just not to belabor the point, Vicki but what kind of inventory in terms of what the current pace, the wells would achieve, the program would achieve that kind of return of $45 oil, is that like high grading the portfolio or is that a multi-year inventory that you believe to achieve there?

We have high graded the portfolio but we expect to be able to at least at this pace go at least 3 to 5 years with the inventory that we have and if prices continue to improve with respect to the cost structure and I don't mean oil prices, oil prices, I mean if our cost structure continues to improve based on prices, we expect that inventory should increase. So we expect over time to be able to increase the inventory that we have today. But at today's pace, it would be about 3 to 5 years.

My follow-up is I guess and not a lot of other questions with new operations, but Steve, I wonder if I could go back, just to the progress on the asset sales in the Middle East. Any updates you can provide, especially now that Al Hosn is on-stream and given that the [inaudible] contract expires this year, could you help us with how you see maybe things changing in this oil price environment?

Well of course, the countries are saying that the prices will quickly rebound once the evil shale producers stop producing. But I think until that happens, I think it's going to be slow. I mean obviously, the countries are affected by this. I mean they are actually affected more by the decline in oil prices than anybody really. So I suspect that it will be slow. I think Oman will move along all year. We just don't know what is going on in Abu Dhabi at this point.

Our next question is from Paul Sankey of Wolfe Research. Please go ahead.

Steve, talking again back to the CapEx program, it seems that you have used the strip to come up with the 2015 number. I just wondered how much lower would you have to take CapEx if we stay at the smaller $45 environment for let's say another year?

Well for another year, it a little more complicated. The capital spending on the chemicals and the midstream stuff will fall out naturally, going into next year. So the capital would come down any anyway. We have only built in the cost savings that have sort of been achieved at this point. And there is at least another 250 million and maybe another $500 million in savings if - just from the suppliers, if prices continue to be low because we basically we provide index how much we're paying to the oil price. So I don't really know exactly what it would be, but I would guess it would be used - if it's 60, we're covering everything at the end of the year. There is some other stuff that would be reduced and it's probably a little lower than the 60 actually and so if you said okay, it is going to be $10 less, $10 less is a billion dollars. So we would have to reduce the capital by a billion dollars. Most of that we would get from suppliers, but there would be some things that would have to be cut.

And then a follow-up would be, have you considered selling Oxy and have you considered any major acquisitions? Thank you.

Right now, people are cash flow challenged so I suspect selling Oxy is probably not real likely. But I looked at Chevron, it looks like they don’t have any free cash. So anyway, if you look at - we have 690 major acquisitions. It's way too early to be talking about acquisitions. I think there is still a lot of whistling in the grave yard going on. And way too early to consider any kind of acquisitions. Again, we generally are not interested in public acquisitions.

Our next question is from Doug Terreson of Evercore ISI. Please go ahead.

I had a question about divestures as well, there is some commentary in the market about possible divestiture of the Al Hosn project which you guys have just completed and so just wanted to ask you, is that a possibility? Just if you could provide some color on that and again it wasn't your commentary, it was that from others but can you give us an update on the strategic position attractiveness of that position?

Well let's talk about what it is. We have already spent the money. So there is not really much capital going forward. There might be an expansion which is really cheap capital out a year or so, but putting that aside in a crappy oil price environment, probably generate about $300 million of free cash and sort of a decent run, about $600 million of free cash a year. So if you multiply it out by the 25 years that remain roughly, you multiply it, you get Sr. between $7.5 billion and it is $12.5 billion of cash generated over the 25 year period. So from our perspective, for a company that pays a lot of dividends and that sort of thing, having that sort of asset makes good sense to us. If on the other hand, for a variety of reasons, somebody wanted to buy 20%, 30% of it, to free up cash, for something that maybe works better, I guess we're open to that. But you know, only in a - if you just look at intrinsically, for somebody who pays a lot of dividends, you know, I think it's a pretty good asset over time.

And then also, there is a lot of commentary about Oxy's historical proficiency and recovery so I wanted to see how are you thinking about the opportunity in Mexico, potential opportunity, meaning do you consider this to be kind of an area of natural alignment for Oxy? And if you do, how do you think about the opportunity in Mexico?

I mean there's two issues always in foreign activities. One is the quality of the asset being offered. And I think if intrinsically they have some enhanced oil recovery assets on offer. The other part of it what's the financial arrangements. If you look at some of the other places, I won't say where, but look at some of the other places where intrinsically the asset might work at $20 a barrel or something like that, but if you lay the contract over it doesn't really work at today's prices. And I think that’s the issue in Mexico. While the asset may be attractive and you can get a lot of - if you had 100% of it would be something that would work pretty well, but they have taken a pretty aggressive view about the contract terms. I think they took the Chinese menu approach where they pick one from every column and everybody's contract. So I think they got a pretty difficult contract to want to do it and we're not doing it for advertising expense. I think we would rather frankly put the money into the CO2 projects in the United States where we have low royalties and in fact in some cases we owe the royalties than to fool around with some ridiculous contract in hopes it gets better over time.

Our next question is from Leo Mariani of RBC. Please go ahead.

Obviously, a lot of focus here in terms of how you guys can kind of conservatively manage things. Wanted to kind of flip the question around and just get a sense, if we do start to see an oil price recovery in the second half of the year, in 2016, kind of how quickly you can bring rigs back in the Permian and then just additionally, is there any kind of loose price framework we should think about, where if we do get to 70 is that the number where you start adding rigs? Anything you can help in terms of price would be great.

I think the answer to your question is there's a lot of rigs around in the Permian and there's more available every day. So I don't think bringing rigs back is going to be a problem. I think the program has to be somewhat disciplined and so we will be cautious in adding rigs, because oil prices may rebound, may go back down again. I'm more concerned really about the demand issues in the world than I am how much the U.S. business is producing. But I think if you look at it and said - clearly, if we hit the $60, the program will be the way we’ve described it. As you get to $70 and maybe a little more aggressive and as you get north of $70, I think we would be somewhat more aggressive. But I really think that, if you look at - if you were able to see the layers, inside the company, we've got it all matrix, if we can actually figure what makes sense at whatever price you want and so our program going forward would reflect that expectation, but right now, our expectation is conservative, I would guess.

All right. Maybe could you just talk a little bit about the importance of returns on the drilling program, plus kind of versus desire to stay cash flow positive or cash flow neutral when you include dividends. Obviously you focused on getting back to this cash flow neutrality, exiting the year at 60. So as we think about a recovery case in 2016, how much are you focused on making sure you don't outspend versus hey if the returns are good at 70 we're willing to outspend. Can you talk to that?

You got to be pretty certain about your returns before you outspend. No offense to any oil engineers, but they tend to be a little more optimistic than the actual outcome. And so the corporate management will be fairly conservative about things. So we need some margin of error. A lot of damage has being done in the business, I think people underestimate the amount of damage being done, when this cycle when this current down cycle is complete whether it's a year or two years, everybody's balance sheet is going to be not quite as good as when they started. We're starting at a good spot, but I think even the large companies will have more debt-laden balance sheets and not really much to show for it. So I think you just got to be pretty careful in this environment about what you are doing. No one really, even though the price may recover in the back half of the year, I'm still concerned about world demand for oil, although I'm heartened to see that in the United States at least the lower gasoline prices have created more people riding around in big cars. So we're doing all right. We're rides around the corner.

And I guess just lastly, in terms of M&A, I just wanted to kind of clarify some of the comments, you certainly talked about sort of a challenging market, you know for acquisitions at this point in time, it sounds like bid/ask spreads having a reset but they are also here in the prepared comments that you had made an acquisition in the fourth quarter of 2014 of 120,000 acres in the Permian of around for $1.3 billion. Can you give us more color on what you picked up there and what you think about it?

It was early in the quarter, probably a little early in the acquisition I think, the acquisition cycle. We got we think a price that works in this environment. It's good acreage. And we picked up a modest amount of production. So the goal of the acquisition program in the Permian is to add to our current position, so we can drill more efficiently and it's not really to get more acreage. We have got plenty of acres. I mean the question really is can we fill in our play, what we currently own and allow us to drill more efficiently without moving the rigs so much. So this sort of acquisition was designed with that intent that we could - that would allow us to be more efficient. Without efficiency gains, I think acquisitions are not very interesting.

Our next question is from Jeffrey Campbell of Tuohy Brothers Investment Research. Please go ahead.

First, just a couple of quick Vicki questions. I noticed that the Delaware basin second spring had been re-rated from appraisal to development from last quarter to this one. Is that the zone that you’re focusing on in New Mexico?

Yes, it is. We're only going to drill second Bone Springs wells in New Mexico in 2015.

It sounded like the reduced vertical drilling is tied to less appraisal work. Can you identify which appraisal zones are likely to be most affected by the reduced 2015 CapEx?

It would really be the zones, the benches that are away from our current development areas. So for example we appraised the benches at South Curtis Ranch and several in the Barilla Draw area, so what we're really going to try to do now is focus on the development in those areas. And our appraisal program is so far ahead, we still know a lot about some of our other areas. We just wanted to get to manufacturing mode so that we can improve our cost efficiency. So we're still - we're pretty much way ahead with our appraisal program right now. The thing that we want to do next is to continue to improve on our completion efficiency.

And Steve, this is the last question, you have spoken some about concerns on demand. Can you outline where you look for signs of improvement? Particularly as we all can expect that U.S. oil production is going to increase as oil prices begin some kind of recovery?

Well, you know, I think if I look at U.S. oil production, it will probably increase in the first and second quarter and maybe the rate of increase in the third quarter will fall off and maybe it will be some decline in the fourth quarter. You know, the main consumer of oil today is China. Any recovery in Europe would be helpful, but it's not a driver and so it's China and maybe India. Also the Middle East has been a large consumer of oil recently and the current environment is - it's just hard to say whether that growth will continue or not. And I think the world economy, I think, that’s the big question mark going forward. If we get demand growth, lower oil prices stimulate demand, this current situation will be over fairly quickly. If we don't, this could drag on quite a while.

Our next question is from [inaudible] of Jefferies. Please go ahead.

I wanted to ask the question about the importance of operational momentum in the Permian Basin and really where I am coming from here is you are generating very acceptable returns at current prices, but that could potentially be significantly higher rates of return assuming a recovery in the oil price. So given that you are more or less flat on horizontal drilling activity, what stops you from let's say having the rig count in the first half of the year and then moving up to a much higher count in the back half of the year?

It's basically the contractual position we have. We have contracted for some rigs that basically come off at mid-year. And by the time you drill - I mean think about the timing. Let's say you actually drill a well in the first quarter. It's the third quarter before it actually produces, you know, you actually get the revenue, so the stuff in the first quarter will basically be a third and fourth quarter production for us. But I think we have some contracts that need to roll off and that's really controlling the timing more than anything right now.

Okay. So there is nothing related to utilization of the work force and efficiencies that could be elastic, but if you did have a shutdown or anything of it--

It's always inefficient - if just always stop in the middle it's always going to be a problem. It's got to be a phase-down, but it's contractual and a notion that may be there will be some recovery in the back half of the year and you need to drill the wells sort in this first and second quarter to have production in the back half of the year. We're pretty cautious about the whole thing. You just can't send things to zero, it's just an impractical thing to do right now. We're doing the best we can to manage through it and I think we will be all right.

Okay. And if I could ask one more, completely unrelated topic, you mentioned that the restricted cash was used to pay the dividend in the 4Q, should we think in a low price environment restricted cash essentially funding the dividend and how does that affect then the pace of share repurchases? You said that the 71 million, you still ultimately expect to buy in on the share repurchase program, but would that be a five-year period or are you thinking more like a two-year period?

We will start with - I wouldn't get wrapped around the axle on this restricted cash stuff. Cash is reasonably fungible and all we’re doing is showing you the account paying down. It's not really - rather than keep more restricted, we just say the dividend comes out of that bank account. So it has to come from somewhere. We don't really know about the pace. We're price sensitive. You know, I point out that really the domestic program last year had an F&D, if you cut through all of the BS of $13, $14 and we expect to bring that down some more. So we're running a pretty profitable program. Maybe not at $25 oil but certainly in the 50s. So as far as the pace of the share repurchase, the stocks are volatile and when there is negative volatility, I guess volatility is always used negatively, but nobody ever talks about upside volatility, but down side volatility which I'm sure will come at some point in this, that's almost a step up and buy a lot of shares rather than just treat it as a constant flow. So I don't really know. We set aside a fair amount of money for that this year, but if prices are more attractive, we will spend more. I don't really have a budget in the usual sense of the word.

And would you want to comment on what you would find an attractive price to?

No I wouldn't want to.

Okay, I figured that. Thanks very much.

Our next question is from Brian Singer of Goldman Sachs. Please go ahead.

I wanted to follow up on a couple of the earlier questions. First, you mentioned that you would have flexibility to increase activity if you can get another $250 million in savings. Can you just talk more to what that scenario looks like? Would that mean your portfolio would achieve attractive returns at $60 Brent and you would ramp back up in the areas that you are currently ramping down, i.e., you would recommit to MidCon or would you just ultimately look to focus more on the incrementally--

It would be all Permian. The MidCon is, well, putting aside South Dakota, is basically gas. So the Brent price is sort of irrelevant. And it really can't compete for dollars for quite a while against the Permian. North Dakota has this huge differential to price right now. So that's really what's discouraging us up there. So I think you should plan that in the $60 environment or $65 environment, whatever you are thinking that we would spend more in the Permian. The savings, $250 million, we could add about 3 rigs on an annual basis to cover that. So it was running about 100 million a year or so, it would probably run a little less now. So that is a way to think about how much more we would do. But we got a fair inventory and as prices move up, the inventory obviously expands.

And then back to the Permian acquisition in looking at that 100,000 acre deal you mentioned the strength was the efficiency that it has with existing positions. Based on the placement of your existing acreage within the Permian can you just talk to the scope for how many more fill-in acres would be optimal for you with your acreage positions and whether you see those opportunities becoming available?

We don't know about opportunities because some people may have debt and they probably don't want to sell it for less than their debt. We just don't have any way of pacing that at this point. We don't really know. If we found more in the Barilla Draw, that would be really interesting and there is acreage around there that’s held by others. And some a little bit in the Midland basin, but that is what we have. I don't know whether it's 300,000 acres or 200,000, it's not millions of acres.

Our next question is from Ryan Todd of Deutsche Bank. Please go ahead.

Maybe a couple more follow-up questions on the Permian. Can talk a little bit what you're seeing from a well performance point of view in 2015 and 2016 production targets [inaudible] despite CapEx cuts, is this the efficiency gains? Better well performance? Combination of both?

It is. We haven't changed our 2016 target yet, because we're still anticipating that. If prices were to go up, we would have the flexibility to add rigs. We may have to adjust that a little bit toward the end of this year if prices remain where they are, but one of the things we're encouraged is we certainly are seeing better performance particularly in the Barilla Draw area and particularly with the last well that I mentioned in the call today. We're seeing not only opportunities to improve our landing point within the benches but our completion efficiencies are improving and so we're really encouraged with what we're seeing there and what we're see from the Spraberry in the Midland basin.

And then maybe on cost at this point, the 2015 budget, your approval budget costs in the Permian in 2015, what is it relative to 2014 costs and is it that mostly efficiency gains or do you have anything for price deflation or is that additional upside?

We priced about 250 million for cost reductions that we pretty much achieved. And we expect to get some more, but we certainly do price that in already and efficiency gains are built in. Efficiency gains really come from focusing on a few places rather than going all over creation. That's really what causes it and we built that in.

So I guess in additional $250 million that you had highlighted on the slide, there is certainly potential down side from a price deflation point of view but efficiency gains at least mark-to-market from where you guys are right now, I guess.

I guess that's right.

Our next question is from Evan Calio of Morgan Stanley. Please go ahead.

A few quick follow-ups for me. First on the buyback I presume most of the buyback in 4Q was executed after or in December after the spin?

Yes.

And the second, I know that you're price sensitive and/or I would say price aware, so do you see the flexibility to use your currency for adding assets, if your view it were to be expensive relative?

We have never - I think I used stock once in the last 20 years and regretted it ever since. So maybe I have been doing this too long. So too good of a memory about bad outcomes. If you are going to use your stock, you really have to make sure that whatever you are doing is significantly accretive. Cash, at least cash, you are you only paying 3% or whatever it is interest, but if you're using stock, we're paying almost 4% in dividends by putting even putting that aside, we don't want to dilute the quality of your portfolio with some whacky deal. And so if you are going to gamble on wackiness, you probably ought to gamble with cash rather than stock.

So maybe a follow-up on the Permian acquisition that you made in the quarter, any color in terms of location, well inventory--

It's a Midland basin acquisition. And there is a - I mean just a matter of price. When you talk about locations, you also got to factor in price. I think going in, I thought it was about 2700 locations.

Okay. And will you expect activity there in 2015 or will that be part of your focus area?

Yes, we do.

Is that due to economics or because it is non-HBP?

It is economics principally. There is some non-HBP. We will probably use a vertical rig there to keep some of the acreage.

Our last question is from Matt Portillo of TPH. Please go ahead.

Just a quick follow-up question in regards to your Permian rig count and spending program. I believe you mentioned you're running roughly 29 rigs coming into the first quarter. Was curious if you could give us a little bit of color on the cadence of kind of that rig drop as you move through the year, to average the 19 rigs in 2015? And then I have a follow-up question with regards to your overall capital program.

Currently, we're going to average also 29 rigs in Q1 and then toward the end of Q1, we start to ramp down and by Q3, the beginning of Q3 we will be at 15 rigs. And at 15 through the rest of the year.

And then in regards to your corporate capital program, you mentioned the first quarter will be a bit heavier in terms of CapEx versus the--

You can see that in the rig count. It just flows out of the rig count.

Right. And I guess just to maybe try to get a little bit of color around how we should think about the magnitude of the change on cap ex, is there any color you can provide as we think about kind of the exit capital program you have talked about in the fourth quarter of 2015, how you would kind of think about the magnitude of the change over the year?

I would say directionally, we're starting off at about a 1.8 billion in Q1 and ramping down to about a 1.2 billion rough numbers.

This concludes our question and answer session. I would like to turn the conference back over to Chris Stavros for any closing remarks.

Thank you, Emily and thanks everyone for participating today. Bye.