Occidental targets small 2024 production increase

Feb. 16, 2024
Plans call for a two-rig reduction in the Permian basin and more investment in divisions that will add growth later this decade.

Occidental Petroleum Corp., Houston, plans to grow total production this year to 1.22-1.28 MMboe/d, the midpoint of which would mark a 2.2% increase from 2023’s average.

Permian basin production, which surged nearly 14% last year, is forecast to essentially stay flat in 2024—executives plan to cut two rigs there—while the company’s assets in the Rockies region will provide some growth. Capital spending this year will shift somewhat from shale and exploration projects to longer-term investments that will set Occidental up for production growth late this decade.

In the last 3 months of 2023, Occidental’s total production was 1.23 MMboe/d, with 588,000 boe/d of that coming from the Permian basin and 285,000 boe/d from the Rockies and other US basins. The company’s international operations produced 234,000 boe/d. Executives said production for first-quarter 2024 will take a step down and mark 2024’s low point: Total output is expected to be around 1.175 MMboe/d before beginning to climb in the spring.

Investment balance

Occidental spent $5.75 billion on energy and chemicals capital projects in 2023. That number is forecast to tick up this year to $5.85-6 billion (carbon capture and direct air capture projects are set to get another $600 million in funding) but its mix will shift slightly. Investments in unconventional projects and exploration will fall by about $320 million from 2023 while work on mid-cycle investments—Permian basin enhanced oil recovery, midstream assets, the Gulf of Mexico, and OxyChem—will get $480 million more than last year.

Speaking to analysts on a conference call, president and chief executive officer Vicki Hollub and the executive team said investment priorities this year are to better balance the company’s portfolio and enable consistent dividend payment growth.

While the planned acquisition of CrownRock will increase exposure to shale, more capital will be devoted to other parts of the business for balance (OGJ Online, Dec. 11, 2023). Hollub said the company is now targeting a second-half 2024 deal closing due to Federal Trade Commission (FTC) requests, which also postpones planned non-core asset sales to reduce debt as well as potential buyback program changes. 

Among the investments to balance the portofolio will be work in the Rockies, where plans call for Occidental’s inventory of drilled but uncompleted (DUC) wells to fall to about 35 from the mid-60s, allowing for that will let executives pull back half a rig from that basin.

Occidental’s net profit in the fourth quarter was $1.2 billion, down from nearly $2 billion in late 2022 when product prices were higher. Operating income was $1.4 billion versus $2.2 billion and total revenues fell to $7.5 billion from more than $8.3 billion.

Shares of Occidental (Ticker: OXY) rose nearly 5% to $60.11 after its earnings report and conference call. They are, however, still down slightly from 6 months ago and the company’s market capitalization is now about $53 billion.