Firms realign Permian, Midcontinent segments

By OGJ editors
-- Occidental Petroleum Corp. and Apache Corp. separately realigned Permian basin and Midcontinent business units as of 2010.

Oxy combined most of its central US gas production into a single business unit called Midcontinent Gas. The business unit includes Kansas Hugoton field, the Piceance basin, and the bulk of its Permian basin nonassociated gas assets, which had been reported as part of the Permian business unit through 2009.

The change will alter Oxy’s production to 75% gas and 25% liquids for the Midcontinent unit and 89% liquids and 11%, mostly associated gas, for the Permian unit. Oxy made the change to take advantage of common development methods and production optimization opportunities.

Beginning in 2010, Oxy also will begin expensing 100% of the carbon dioxide injected in the Permian basin, whereas in it capitalized about 50% of it or $69 million in 2009. The change simplifies the process of determining the portion that should be capitalized versus expensed as larger portions of the injected gas support current production.

Apache, meanwhile, created a new regional Permian basin business unit based in Midland, Tex. Apache’s Permian area has been part of the Central Region in Tulsa since 2002, but the combined capital program has increased tenfold since then.

Apache plans to operate five rigs to drill 171 net Permian basin development wells in 2010, up from 87 wells in 2009. Apache acquired $187.4 million in Permian basin properties from Marathon Oil Corp. last Apr. 30. Those properties have 200 quality infill oil locations, Apache said.

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