Good morning and welcome to the Occidental Third Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Neil Backhouse, Director of Investor Relations. Please go ahead.

Thank you, Grant. Good morning, everyone, and thank you for participating in Occidental’s third-quarter 2020 conference call. On the call with us today are Vicki Hollub, President and Chief Executive Officer; Rob Peterson, Senior Vice President and Chief Financial Officer; and Ken Dillon, President, International Oil and Gas Operations. This morning, we will refer to slides available on the Investors section of our website. The presentation includes a cautionary statement on slide 2 regarding forward-looking statements that will be made on the call this morning. I’ll now turn the call over to Vicki. Vicki, please go ahead.

Thank you, Neil, and good morning, everyone. Our accomplishments in the third quarter, including our continued operational excellence, progress in executing divestitures, and successful extension of our debt maturities, have notably improved our financial position and provided us with the running room necessary to strengthen our balance sheet. The cost reduction measures we implemented earlier this year, combined with the early completion of our overhead and operating expense synergies, continued to bear fruit, as evidenced by the almost $1.4 billion of free cash flow generated in the third quarter. The synergies and savings we previously detailed are now embedded in our ongoing operations, and we expect to continue benefiting from our enhanced cost structure going forward. We are equipped to quickly adapt to any future potential commodity crises while being positioned to leverage the benefits of future uplifts. This morning, I’ll provide updates on our divestiture progress, as well as our plans for increased activity as we lay the groundwork to stabilize our production. Rob will cover our financial results and current guidance and runway we have created for de-leveraging. Our third-quarter free cash flow generation was driven by the strong performance of our businesses and diligent attention to margin preservation, continuing to reflect our focus on operational excellence. Our oil and gas operating costs of $6.04 per BOE and domestic operating costs of $5.38 per BOE demonstrate the lasting impact of our cost reduction measures as our domestic operating costs were significantly below our original expectations for this year. All our businesses delivered strong operational performance in the third quarter. We exceeded our production guidance with lower-than-expected operating and capital costs for the quarter. Production from continuing operations of 1.24 million BOE per day exceeded the midpoint of guidance by 12,000 BOE per day, despite an unusual number of named storms, resulting in higher-than-expected production downtime in the Gulf of Mexico. Excluding the incremental impact from the storm, we would have achieved the high end of our production guidance. Our operational outperformance was primarily driven by strong well performance and continued improvements in operability in Permian Resources. While we ran a lower-than-normal development activity set in the third quarter, our teams have continued to advance their understanding of the subsurface and are constantly applying newly acquired knowledge to improve our well and completion designs. In the Texas Delaware, our team broke another Oxy record by bringing our Company’s best Permian well online in the Silvertip area, which is a former Anadarko acreage. This is just one of the latest examples of how we are leveraging the combined strengths of our assets and abilities to better position ourselves for success, as macro conditions improve. In a moment, I’ll touch on our plans to ramp up activity, but I want to take this opportunity to reiterate that we will retain a high degree of flexibility with our capital plans, allowing us to adapt to a changing macro environment. This flexibility, combined with our best-in-class operational results and leadership as a low-cost operator, will continue to be a competitive advantage. With the closing of the mineral and surface acreage in Wyoming, Colorado, and Utah, and reaching an agreement to sell our onshore assets in Colombia, we are on track to exceed the $2-plus-billion target that we set for 2020. We have now closed or announced almost $8 billion of asset divestitures, net of taxes, since the close of the Anadarko acquisition. At the time of the acquisition, we established a $10 billion to $15 billion asset divestiture target to be completed within 12 to 24 months after close of the acquisition. Fifteen months later, we are closing in on the lower end of our original target, despite 2020 possibly being the worst market for asset divestitures in the history of our industry. We are targeting an additional $2 billion to $3 billion of asset sales to be announced in 2020, or in the first half of 2021. With the completion of these additional divestitures, we will have met our divestiture targets in less than 24 months from acquisition close. As we’ve said before, we will balance divestiture timing with value realization and will not sacrifice value to close transactions quickly. While we continuously review our portfolio to ensure we have the optimal mix of attributes, including free cash flow generation, capital efficiency, and low decline, meeting our original divestiture target of at least $10 billion will mark the completion of asset sales on a large scale. The proceeds from our expected asset sales will continue to be applied towards debt reduction. These additional asset divestitures will be impactful in reducing debt and strengthening our balance sheet. We do recognize we must go further in reducing debt. Once our large-scale divestiture program is complete, debt reduction will be primarily driven by the utilization of free cash flow to meet debt maturities. Our Permian Resources team delivered another record-setting quarter. As I’ve mentioned, our Texas Delaware team broke an Oxy Permian record in the third quarter, by bringing the Silvertip well online and hitting a peak 24-hour rate of over 9,000 BOE per day. In New Mexico, our team set a new completion pumping time record of over 20 hours per day for a three-well pad, while our Midland Basin team set a new Permian-wide record by drilling over 7,500 feet in a single day. The wells in the Silvertip section, where the record wells were completed, were brought online with an average total well cost that achieved our synergy target for Texas Delaware well cost reduction. These savings were achieved despite the wells being drilled before our full cost reductions were implemented. We expect to continue lowering costs based on our current drilling performance and future savings on hookups. Our other business units are also lowering drilling and completion costs through design optimization, efficiency improvements, and collaboration with our vendors. Operational excellence means more than just consistently delivering strong well results. Safely delivering superior well results along with consistently improving operability while driving down operating costs are the bedrock of our operating philosophy, and that’s what we define as operational excellence. Our operating philosophy is instilled in our teams, continuously striving for improvement. This is evidenced by the impressive progress our DJ Basin team has made in reducing downtime by 78% from the third quarter of 2019 to the third quarter of 2020. And our Midland Basin team’s commitment to continuously lower operating costs, which are now below $5 per BOE. After a modest resumption of activity in the third quarter, we plan to increase activity more meaningfully in the fourth quarter and add two rigs in each of the Texas Delaware, New Mexico, and DJ Basin. We restarted activity with our JV partner, Ecopetrol, in the Midland Basin by running two rigs in the third quarter. And in the Gulf of Mexico, we returned the drillships to work in early October. The return to a more normalized activity set will be achieved within our full-year 2020 capital budget of $2.4 billion to $2.6 billion. Although we drastically reduced activity earlier this year, our proven development expertise remains intact. As we increase activity, we will maximize operating efficiencies to sustain production and maintain our industry-leading capital intensity. I’ll now hand the call over to Rob, who will walk you through our financial results and current guidance and runway to deleveraging.

Thanks, Vicki. Turning to slide eight. In the third quarter, we announced an adjusted loss of $0.84 and a reported loss of $4.07 per diluted share. The difference between our adjusted and reported results is primarily due to $3.1 billion of after-tax losses, accounting for the fair value declines in the unit price of WES compared to the book value and related to the carrying value of assets divested during the quarter. As mentioned on the last earnings call, charter-related acquisitions are now de minimis. And the third quarter cash payment of approximately $115 million is expected to be the last sizable acquisition-related payment. Our operational excellence, repositioned cost structure, and capital discipline enabled us to generate $1.4 billion of free cash flow before working capital and exit September with $1.9 billion of unrestricted cash on the balance sheet. This represents our highest level of free cash flow in the quarter since 2011 and reflects Oxy’s cash-generating potential, even in a lower commodity price environment. Our overhead costs remained low, and were approximately $400 million in the quarter. We continue to demonstrate our commitment to capital discipline, spending less than $215 million of CapEx in the first quarter, more than 35% below our guidance. As we return to a more normalized development activity set, we do not expect capital levels to remain at this level going forward and are pleased with how dynamic and flexible we can be with our capital spending. Our enhanced liquidity position, the ability to generate cash, and success in leveling our debt maturity profile have resulted in our improved financial position. As a result, our debt maturity profile has been derisked to the point that we made a decision to pay the preferred dividend in cash on October 15th. Our Board of Directors will continue to review the preferred dividend payment method on a quarterly basis. As we continue to manage and review our liquidity and debt maturity profile, we view the non-cash payment options for the preferred dividend at the level we have the option of pulling, but only if necessary on a temporary basis. We want our shareholders to know that our preferred position is to pay the preferred dividend in cash, when possible, to preserve the value of our shareholders’ holdings. Further derisking our cash flow profile, we implemented a natural gas hedging program for 2021. We had a costless collar with a floor of $2.50, hedged 530 million cubic feet per day, representing almost 40% of our domestic gas production. We continue to approach hedging on an opportunistic basis and may consider additional oil and gas hedges for future years. In setting our production guidance for the fourth quarter, we have excluded approximately 33,000 BOEs per day associated with Colombia and will report the assets as a continuing operation until the transaction closes, which we expect later this quarter. We expect fourth-quarter production will be sequentially lower than the third quarter due to the combination of scheduled maintenance, additional weather impacts in the Gulf of Mexico, as well as declining wedge and base production across many of our assets. Although the decline across our asset base has begun to level off, as we restore development activity, at a minimum, we intend to stabilize our 2021 average production at 2020 fourth quarter levels. This will require increasing capital spending in the fourth quarter as we add rigs and frac through our highest return assets. Our current production base case assumption is that we’ll sustain 2021 production at our fourth quarter level of capital spending of approximately $2.9 billion, and we continue to evaluate our options considering the recent commodity price volatility. We expect our overhead and operating costs will remain low in the fourth quarter. Domestic operating costs will marginally increase in support of our continued return to normal operating conditions. Our full-year 2020 domestic operating costs are still expected to be more than 20% lower than our original 2020 guidance on a BOE basis. The process we began in July to smooth out our debt maturity profile provides us with the running room necessary to maximize value from our divestiture program at a pace that reflects current market conditions. To date, we have extended $5 billion maturities due in 2021 to 2023 by five to ten years. We have also resumed our deleveraging efforts, starting with the exchange of a percentage of our WES LP units in return for the retirement of a $260 million note. In early October, we called the August 21 floating rate note and repaid more than $1 billion of the term loan. In summary, including the term loan repayment, we have moved up $5.2 billion of 2021 maturities, $721 million of 2022 maturities, and $52 million of 2023 maturities. This leaves us with $1.1 billion remaining 2021 maturities, of which only $350 million will remain non-callable by early next year as we allocate proceeds from asset sales to retiring debt. Accounting for debt repayments subsequent to September 30th, our debt balance is approximately $1.3 billion lower than it was at the end of the third quarter, and we still expect to receive the proceeds from the Colombia transaction during the fourth quarter. Our liquidity position remains robust, and our financial position profile continues to improve. We recently entered into a new receivable securitization facility that will provide us with approximately $375 million of additional liquidity. Our $5 billion credit facility remains undrawn with no letter of credit outstanding, and we had approximately $1.9 billion unrestricted cash available on September 30th. I am confident we have taken the steps to succeed in this current environment. And I expect our differentiators, combined with our low-carbon strategy, will drive success that’s sustainably long into the future. I will now turn the call back over to Vicki.

While much has changed during this pandemic for our Company and our industry, the quality of our asset base and the skills of our teams will support our success as we move into 2021 and beyond. We’ll continue to apply and build our knowledge, continuously improve our track record of operational excellence. While our development activity has slowed down in recent months, our teams have worked diligently to further advance our development technologies and technical operations to ensure we emerge from this challenge stronger than before. We still have work to do, but the foundation has been laid for us to further improve our balance sheet as we exploit our portfolio of world-class assets. The innovation and ingenuity of our workforce, combined with our differentiated low-carbon strategy, will drive our success and sustainability long into the future. Before we turn to the Q&A section of our call, I’d like to announce that we have set a target to reach net-zero emissions associated with our operations before 2040 and an ambition to achieve net-zero emissions associated with the use of our products by 2050. Through the work of Oxy Low Carbon Ventures, we expect our leadership in developing innovative technologies and services for carbon capture and sequestration will also help others achieve their net-zero goals, extending our impact well beyond our own emissions footprint. More detailed information will be available in our climate report, which we intend to release by the end of the month. I’ll now open the call for your questions.

Our first question will come from Devin McDermott with Morgan Stanley. Please go ahead.

Good morning. Thank you for my question. The first thing I wanted to ask about is the recent strength in your U.S. onshore production, especially in Permian Resources. You mentioned increased uptime as a contributing factor. This has been an opportunity you’ve discussed since the completion of the Anadarko deal. Could you provide more details about your current uptime status in the U.S. onshore portfolio, particularly the differences between legacy Oxy and legacy Anadarko, and how we should view the potential for further improvements in your base production through enhanced uptime?

In our onshore operations, we have found opportunities to increase our uptime by enhancing some of the WES infrastructure through our collaboration with the WES organization. These improvements have focused on the electrical system, enabling us to quickly identify and address issues during frequent storms in the Permian Basin. This helps us limit the number of affected wells and production volume, and ensures we can bring wells back online more swiftly. Additionally, we have optimized our response to wells and facilities going down, focusing on the most critical matters. We've also aimed to ensure that when we access the wells, we do so efficiently. Overall, we believe we have made considerable progress onshore, particularly in the DJ Basin and the legacy Anadarko areas in the Permian. On our side, downtime has not been significant, mostly tied to legacy Anadarko, and our teams have worked diligently to resolve these issues. While I think we've seen most of the improvement, there's always potential for more, and we are working on additional enhancements, including strengthening the electrical systems over time.

Got it, great. That makes sense. And my second question is on the low-carbon strategy and really building on some of your closing remarks, Vicki. And Oxy has been a leader on this front within the U.S. industry I think for a while now. And it’s good to see that even through this downturn you’ve been able to advance some of the low-carbon goals. And in the slide deck, you have some additional detail on the direct air capture plant that you’re planning in the Permian Basin. And I was wondering if you could talk in a little bit more detail about the return profile for these types of investments, given you’re able to offset some of the CO2 that you need within your enhanced oil recovery business, there are cost savings there; the amount of capital spend; and then I guess importantly as well the scalability of this over time that you see within your business.

Thanks for the question, Devin. As you mentioned, we have been a leader in this. We’re very committed to this and excited about it because this for us is a win-win-win. This not only helps us to help the world by reducing CO2 out of the atmosphere, it will help our shareholders too by lowering our cost of enhanced oil recovery in the Permian and in other places as we advance this out. And thirdly, this helps others because we’re going to be able to expand beyond our own operations to give opportunities to those industries that can’t otherwise lower their carbon footprint; they can partner with us to do it. So, what we’ve done is, we formed a subsidiary called 1PointFive. And 1PointFive is a partnership and company formed between Oxy Low Carbon Ventures and Rusheen Capital. We formed that to ensure that we have the best possible way to deploy large-scale direct air capture using carbon engineering technology, but to do it in a way that provides others the opportunity to invest and minimizes the actual dollars that we spend because of what we’ve invested thus far. And what we bring to the table for this kind of project is the floor space. We bring the floor space that’s going to be required for the ultimate sequestration of the CO2, and we bring the infrastructure. Nobody has the infrastructure the size of the infrastructure that we have in the Permian. So, it’s extensive, and it’s going to be key to helping us develop this and to do it at a cost that delivers returns for Oxy, Rusheen, and the other investors who want to come in and be a part of this. So, we’re very, very excited about it. I’ll point out that we’re beginning this in the Permian, where we’ll build the largest direct air capture facility that’s currently anywhere in the world. But our use of this, we expect to go beyond the Permian. We expect to go from the Permian, the Powder River, DJ, and ultimately internationally. So, it’s something that is going to become, we believe, a significant business for Oxy over the next few years. And in 10 to 15 years, we expect that the cash flow and earnings from a business of this type could be similar or more than what we get from the chemicals business. This is something that the world needs without us pushing it; without others doing this, there’s no way that the world could achieve a cap on global warming of 1.5 or 2 degrees. So, it’s something that has to happen, needs to happen. But unless you can make it a business, unless you can make it profitable, it’s likely not to happen. So, our teams have been very strategic with this and innovative in the way they’ve approached it. And certainly, the passage of 45Q was a big step for us to be able to make this happen in a way that will enable us to over time improve the technology, lower the cost and operating efficiency, so that this becomes ultimately profitable without tax incentives, and just like solar and wind have done in the past. So, we are excited about it and expect it to take off. And so, for us, the 2021 investment in terms of capital from Oxy would be minimal.

Our next question comes from Jeanine Wai with Barclays. Please go ahead.

Hi. Good morning, everyone. This is Jeanine Wai. Thanks for having me on the call. My first question is for Rob on working capital, and my second question is on the Permian. So, Rob, on the working capital front, we noticed that there is a meaningful draw of about $829 million during the quarter. Can you walk us through some of the moving pieces of that? And how do you see working capital trending in 4Q?

Sure, Jeanine. Thanks for the question. There are really three big pieces that drove the significant working capital draw in the quarter. Number one is a combination of cash interest payments. The majority of our cash interest payments come due in the first and third quarters. So, that was a big piece of it. Another piece was acquisition-related payments that were processed. And then finally, it was just the timing of international crude sales in our marketing business. As we move forward, we do expect the marketing to improve as we reduce inventories towards the end of the year, certainly with a lower amount of cash interest payments associated in the fourth quarter. And we won’t have the associated acquisition-related payments that drove a big piece that will happen in Q3. Directionally, we would expect a significant change in direction on working capital in Q4.

Okay, great. Thank you. That’s very helpful. My follow-up, or my second question, on the Permian. In the prepared remarks, you mentioned retaining flexibility to respond to the macro environment, and you’re getting a nice head start on activity in the Permian and the DJ heading into year-end. So, can you just comment on how you see the production trajectory throughout 2021? Given the time lag, I guess, between complete drilling and completions and getting things online, could the Permian flatten out in Q1 and then return to growth as early as Q2? Thank you.

It’s really hard to tell at this point because our teams are continuing to improve deliverability from the wells. So, a lot of it will depend on when we can actually get the wells on. We’ve got some frac crews already working with us now, so, and we’re setting records actually. So, I’d say currently, it’s going better than expected. But whether we’ll be flat or up in Q1, I think is a little too early for us to tell right now as we resume higher activity levels.

Our next question will come from Paul Cheng with Scotiabank. Please go ahead.

Thank you. Good morning. Vicki, I'm interested in your discussion about the sustaining CapEx of $2.9 billion, and how the actual CapEx may vary based on market conditions. Could you provide some guidance on the potential maximum CapEx if oil prices are significantly higher, as well as the minimum expected if oil prices decline sharply? Additionally, is oil price the sole factor you consider, or are there other elements that will influence your decisions? Rob, related to this, your capital accrued has exceeded $700 million this year in cash usage. How do you foresee this trend for the fourth quarter and, more importantly, in 2021? Specifically, will the net investment be significantly lower than your capital budget?

Yes. Regarding your question about capital, we see $2.9 billion as the upper limit for our sustaining capital in 2021, even if prices exceed our expectations. Our analysis goes beyond just current oil prices; we also consider the factors influencing those prices and their sustainability. For instance, while some expected prices to be significantly higher than $40 at this point, we maintained a different perspective based on our close examination of market fundamentals, inventories, and demand. Hence, we are cautious about tying our plans solely to strip prices or prevailing beliefs about short-term price movements. As we approach 2021, we will adopt a conservative stance. We will propose a capital budget to the Board that balances incoming cash flows. If we can suggest sustaining capital to the Board, we will do so. Conversely, if circumstances require a lower figure, we will address that with the Board. You can consider the $2.9 billion as the maximum. Our flexibility allows us to adjust downwards if needed, similar to our responses in 2020, where we demonstrated significant flexibility. It's generally easier to reduce activity than to rapidly increase it. A priority for us is to let our teams ramp up operations safely and efficiently. The planned approach we have taken has enabled our teams to succeed; they've brought rigs online and maintained the same efficiencies we achieved during the scaling down. Their planning and execution ensure that as they increase activity, they prioritize safety and preserve efficiency, which is rare in our industry. We are very pleased with these outcomes. Ultimately, we aim to stay within our $2.4 to $2.6 billion budget this year while increasing activity, and we will evaluate the possibility of reaching the $2.9 billion cap in 2021.

Vicki, can I just follow up on that? Some of your competitors have decided to shift the CapEx more to the gas well from the oil because of the natural gas outlook. Is that something that you will consider, or do you think that Permian is still your best asset?

Permian remains our top asset along with our other oil properties globally. At this time, we have no plans to invest in natural gas developments in the U.S. While we highly value our gas assets, such as Al Hosn and Dolphin in the Middle East, we do not foresee making new investments in those areas right now. Therefore, our investment focus will primarily be on oil.

And Paul, just to close out on your capital accrual question. Your intuition, I think, in your question is spot on, and so, you can actually see in the capital accrual in the third quarter, which is slightly positive. As activity levels pick up, the capital accrual will reverse itself from what it did when we sharply reduced activity coming out of the first quarter. So, your intuition is correct on that.

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

Thank you. Good morning, Vicki. I’d like to follow up on Paul’s question. There has been a lot of feedback and inquiries regarding your capital of $600 million at midpoint in Q4, especially since you are still experiencing a significant year-over-year decline. I believe this is related to momentum and the timing of your capital expenditures. Can you reassure the market that the $2.9 billion is sustainable for your production levels? This position gives you the most capital-efficient portfolio in the industry by a significant margin. I would like to understand your confidence in this regard.

We have high confidence that we’ll achieve that because we’re looking at the efficiencies that our teams are achieving on the capital efficiency side and also the well deliverability. So, at this point, we do have high confidence that we’ll meet our sustaining production with the $2.9 billion.

So, just for clarification, you’ve got some downtime from the Gulf of Mexico in Q4. So, what is the sustaining oil number that goes along with that?

So, the production volume that we average for Q4 is going to be the number that we try to sustain into 2021. We’ve taken into account the downtime for maintenance.

Right. So, what is that number?

Are we guiding to that number?

No.

No.

Okay. It’s worth a try. Last one for me then. What is the sustaining capital breakeven oil price? It used to be $40 with a $2.8 billion, $2.9 billion dividend. When you net all the synergies and so on together, what do you think your breakeven oil price is today in sustaining capital? And I’ll leave it there. Thanks.

Today, our breakeven capital is significantly lower than $40. The reason it's below $40 is due to our current level of capital expenditures, which is less than what we need for sustaining our operations. Looking ahead to 2021, we anticipate the breakeven price will be in the high-30s before accounting for preferred payments.

Our next question will come from Brian Singer with Goldman Sachs. Please go ahead.

Thank you, and good morning. I wanted to further follow up on the maintenance capital, the $2.9 billion. Is that a maintenance capital solely to keep 2021 production flat at fourth quarter ‘20 levels, or do you see that as sustainable maintenance capital? And do you expect that this will fully replace that reserves, i.e., production replacement would be 100%, or would your reserve life be coming down, even as your production stays flat?

The sustaining capital for 2021 is our focus right now. We'll evaluate 2022 when the time comes, and that will hinge on the efficiencies we establish in 2021 and the success of the program we're developing. We'll provide more details about that as we approach the middle of 2021, especially regarding the 2022 program. Currently, it's both exciting and a bit uncertain as we learn more about the Anadarko assets; for instance, the Silvertip area is producing outstanding results for us. The well there set a record, surpassing Oxy's previous record for the Permian Basin, and now it stands as our own achievement. As we continue to enhance well deliverability, we'll need to assess the implications for our sustaining capital in the future.

Great, thanks. And then, my follow-up is about a three-part question with regards to the new carbon ventures. The first is, and I think you compared earlier in the call the potential contribution to what the petrochemical business is delivering now. And I wondered whether that makes the petrochemical business less strategic or a greater candidate for asset sale. You mentioned the direct air capture. Is that the main technology that you were looking to deploy, or are you considering others? And then, what is the extent of further cost reduction, scale, and the timing for when you think that a plant like the one that you’re planning here to start investing in 2022 can be returns-enhancing in the absence of government incentives, which makes sense that that’s a key goal?

I’ll start by addressing OxyChem. No, this initiative would not replace OxyChem. We have no intention of divesting OxyChem because it is very complementary to our efforts in Oxy low-carbon ventures. In fact, some employees from OxyChem are involved in the development of this direct air capture technology. This direct air capture facility relies heavily on PVC, which OxyChem produces or supplies products to manufacture. Additionally, potassium hydroxide is a key chemical used in the direct air capture process, and we are the…

Largest in the country.

We are the second largest producer of potassium hydroxide in the world, and there is significant potential for synergies that we intend to leverage. We anticipate even greater synergies in the future for OxyChem. Regarding cost reduction, we have been addressing multiple questions. One of the key inquiries focused on the feasibility of technologies and the timeline for achieving profitability without government assistance. I am encouraged by the collaboration between Oxy oil and gas and OxyChem teams working on this facility. Ken is leading our major projects team, which previously partnered with ADNOC to construct the largest ultra-sour gas processing plant globally, built in a desert. We managed this project without any issues at all, and it has a capacity of 1 Bcf per day, which has since been expanded by 30% with a modest investment of around $10 million. This is quite remarkable. Merging our expertise with OxyChem’s deep understanding of the process, along with carbon engineering innovation, will drive our efforts forward. While we still need to determine the exact cost of the first plant, I am confident that our optimization will yield results quickly. I believe the pace of enhancement for our direct air capture facility will outstrip what we have observed in solar and wind technologies. Therefore, the capital investment from Oxy for 2021 is expected to be minimal.

Our next question comes from Phil Gresh with JP Morgan. Please go ahead.

Hi. Yes. Good morning. First question, Vicki, you had mentioned not having additional major asset sales beyond the $2 billion to $3 billion that you’re talking about, looking out to early 2021. I guess, we should presume then that something like chemicals probably would be off the table at this point in time. And just more broadly, once you achieve those asset sales and with the cash flow that you expect to generate in the fourth quarter in 2021, where do you think your leverage will be relative to where you want to ultimately get it to?

I believe achieving our goals will require more than the divestitures we have planned for this year and next, as well as cash flow from the fourth quarter of 2021. I am optimistic that prices will improve significantly in 2022, which will help us align our cash flow with our debt maturities and allow us to pay off some maturities early where possible. Our main focus will be on reducing our leverage. We'll have to assess the state of prices and cash flow at that time. For the time being, at least through early 2022, our cash flow priorities will remain consistent: first, we will prioritize maintaining our base facilities, and second, we will focus on reducing debt. Thus, debt reduction will be our second priority for the foreseeable future.

Okay. And then second question, maybe I’ll just glue two together real quick. One was a clarification on your high-30s WTI breakeven to cover sustaining CapEx. You made a comment about midstream and chemicals. Is it fair to assume that perhaps you’re using fourth-quarter run rate for both of those businesses as the assumption there? And then, my second actual question would be just your production mix in the quarter in the Permian or DJ. Was a bit gassier here, lower oil mix in general? So, anything you could provide there as to the driver of that and how you expect that to play out? Thanks.

I expect the gas oil ratio to stabilize with our ongoing development program. The slight increase in gas is partly because we weren't adding new production, and during this period, our wedge production was significantly lower than normal. We don't anticipate this will be a lasting issue for us. Regarding our expectations for OxyChem and Midstream, we haven't provided guidance yet. However, we remain optimistic about the outlook for the chemicals business next year, depending on the COVID situation. Currently, we're not offering any guidance, but we do believe there will be progress; we just aren't sure about the timing. When that occurs, we expect the chemicals business to recover well from this situation.

Our next question will come from Roger Read with Wells Fargo. Please go ahead.

Yes. Hello. Good morning. I guess, I kind of wanted to follow-up on Phil’s question there on thinking about the deleveraging and specifically the chart on page 15. And you’ve done a good job so far of taking the dates out, extending maturities and so forth. And I was just curious, as you look at the ‘22 debt that’s there, should we expect you to start attacking that in ‘21 in terms of some opportunities to extend the maturities there and not simply face a $4 billion wall of debt on top of some of the smaller maturities left in ‘21?

Yes, Roger, that’s a great question. We will definitely maintain a careful strategy for managing our debt, balancing the timing of divestitures with the proceeds from our balance sheet. It’s very possible that we will enter the market again at some point and start addressing those in a manner similar to the $5 billion we raised in the third quarter. We are being deliberate about our market access, ensuring it’s opportunistic for the Company, while also planning ahead so we can maximize the value of our divestitures. We’ve effectively positioned ourselves to approach these divestitures without being constrained by a tight timeline. We will give ourselves the flexibility needed to achieve the best returns on those divestitures as they happen. So, we will definitely not wait until the last minute to manage the 2022 maturities.

Okay. I appreciate that. Follow-up question, Gulf of Mexico, since that’s I think your largest federal holdings exposure. I know you’re not in the exploration mode out there, I don’t think hardly anyone is. But I was just curious, as you look at drilling permits in hand, how a potential change in administration, like what’s your visibility for drilling wells in ‘21 and say ‘22 relative to permit availability?

Our belief regarding the regulatory environment is that it is not likely to be a top priority for the new administration as they implement their plans. There will be more pressing issues for President Biden to address first. Therefore, we do not anticipate any immediate effects on Gulf of Mexico permitting or onshore activities. This situation allows us time to engage with his staff, and we have maintained strong relationships with the EPA and the BLM. Our goal is to contribute to the solutions they will need to meet the demands of their constituents, which I believe will involve more regulations and a focus on permitting, safety, and environmental impact. This presents an opportunity for collaboration. Our company has honed this skill, having worked in challenging environments around the world, where collaboration, patience, and persistence were essential to reach reasonable outcomes for both the company and the locations where we operated. We plan to apply the same approach here. We have a lot of respect for the people at the BLM, who have been supportive during our developments both offshore and onshore in the U.S. Their expertise will remain valuable, and we will take an assertive stance in how we engage with them.

What I would add is that, in addition to the relationships we've built over our 100 years as a company with different federal administrations, we are in a strong position from a pure holding standpoint, even with a different approach. We are the largest leaseholder in the Gulf of Mexico. Regarding onshore, we have 1.6 million acres on federal land, including onshore with the APC Delaware assets, none of which we purchased on federal lands. Our largest onshore exposure is in the Powder River Basin, where we have minimal activity. In New Mexico, we already have over 200 permits in hand and a couple of hundred more in progress. Thus, we have a considerable drilling inventory in New Mexico.

One thing I’d like to add is operational excellence really helps when you’re seeking permits, so you want to have discussions with the government in any country in the world. And this year, our Gulf of Mexico operations teams really carried out exceptional work in the most active storm season on record. We’ve improved safety results while managing COVID and demanning and remanning the platforms multiple times. And again, like Vicki said earlier, domestically, the process engineers have managed to improve uptime in one installation by 12%. And that should lead to about $40 million worth of cash flow next year, having spent almost nothing to do it. So, a really top-class achievement. And the last thing I’d like to mention is the supply chain teams, which have helped to significantly reduce spread rates using alliances, which we think are win-wins for us and the contractors going forward.

This will conclude our question-and-answer session, in the interest of time. I would like to turn the conference back over to Vicki Hollub for any closing remarks.

I just want to say thanks to all of you for joining our call today. We appreciate it. And have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.