Occidental Petroleum Corp., Houston, reiterated its 2024 guidance following a second quarter in which the operator reported its highest production number in 4 years. The stable production forecast includes expected production from CrownRock LP’s recently acquired Midland Basin operations, which will offset the upcoming loss of barrels from a planned divestiture of the Delaware Basin.
Occidental produced an average of nearly 1,258,000 boe/d in the three months ended June 30, up from 1,172,000 boe/d in the first quarter and slightly above the midpoint of the forecast CEO Vicki Hollub and her team gave to the market in the spring. U.S. oil production was 553,000 b/d, up 13% from the first quarter of this year (when a pipeline outage in the Gulf of Mexico limited production) and 6% from a year ago.
Like many other U.S. exploration and development companies, efficiency gains have boosted Occidental’s numbers. Hollub told analysts and investors in an Aug. 8 conference call that the company has booked cost savings from unconventional drilling of about 10% through 2024.
“These savings were achieved through reduced non-productive time, higher frac utilization, operational efficiency improvements and asset optimizations,” said Hollub. “We expect further acceleration in time to market in the second half of the year.”
Occidental’s net income was $992 million in the second quarter, compared to $605 million in the same period in 2023. The company’s oil and gas assets generated segment revenue of nearly $1.2 billion and its midstream and marketing business made up for a loss from the previous year, but profit from its chemicals business fell to $227 million from $337 million, largely due to economic weakness in China.
For the third quarter, executives forecast total production of 1,370,000-1,410,000 boe/d, a range that still includes the Barilla Draw assets in the Delaware Basin that are to be sold to Permian Resources (OGJ Online, July 29, 2024). Occidental’s full-year guidance remains at 1,290,000-1,340,000 boe/d.
The Permian Resources sale won’t be Occidental’s last in the near future: When Hollub announced the CrownRock transaction last year, he committed to divesting $4.5 billion to $6 billion worth of assets by mid-2026. Recently completed and announced deals will raise $970 million, but Hollub and his team are in no hurry to divest.
“We have said before that we are receiving a lot of offers. But it is clear that some think this is a fire sale, but it is not,” said Hollub. “We are very confident that we can achieve our debt reduction goals.”
Shares of Occidental (ticker: OXY) rose following the release of its Aug. 8 earnings report, closing at $58.41 on Aug. 9, about 1% higher than the previous Friday. Shares have remained essentially flat over the past 6 months, putting the company’s market cap at about $53.5 billion.
