Occidental output hurt by Gulf outage, helped by Permian productivity
Occidental Petroleum Corp., Houston, nearly topped its first-quarter production forecast for the Permian basin thanks in part to better-than-expected performance from wells not considered top performers.
Occidental has been touting the company’s well productivity push for several quarters, saying better designs and workflows have enabled upgraded production forecasts, including for “secondary” assets. In the first quarter, that helped Occidental’s Permian basin operations average 567,000 boe/d, near the high end of the 551,000-571,000 boe/d guidance provided in February.
“Our Delaware teams are achieving impressive performance results by applying the same proprietary subsurface workflows that have generated remarkable success in our primary benches,” Hollub said on a May 8 conference call discussing Occidental’s first-quarter earnings of $718 million, down from $983 million early last year. “We are driving financial returns for our shareholders by improving our ability to high-grade our near-term inventory and by extending our runway of tier-one locations.”
First-quarter Permian basin production was down 2% from the prior-year period. Occidental’s total production for the quarter was 1,172,000 boe/d versus 1,220,000 boe/d in early 2023, due in large part to Gulf of Mexico output being nearly cut in half to 90,000 boe/d because of a November spill from a Main Pass Oil Gathering Co. pipeline. Occidental’s Gulf of Mexico platforms restarted production in mid-April.
In the Rockies and other domestic regions, total production averaged 286,000 boe/d, up more than 8% from a year earlier. International production climbed 11% year-over-year to 229,000 boe/d.
Looking to the second quarter, the company expects total production of about 1,252,000 boe/d (give or take 20,000 boe/d), roughly 583,000 boe/d of which will come from the Permian basin. The Rockies and other US assets are forecast to produce about 300,000 boe/d, up from 286,000 boe/d in the first quarter. Gulf of Mexico production is expected to rebound to about 135,000 boe/d, in line with second-quarter 2023.
Capital spending in the first quarter was $1.7 billion and is forecast to come in slighly higher in the current quarter. But chief financial officer Sunil Mathew said capex is still expected to be $6.4-6.6 billion for full year 2024, heavily weighted to the first half with rising output in the second half.
“You’ll see that capital drop and you’ll see the production increase,” Richard Jackson, president of the company’s US onshore resources, said on the conference call. “That should set us up at a much more level-loaded and optimized pace going into 2025.”
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.