Occidental Petroleum Forecasts Permian Production to Rise ~30%
OXY’s 2Q17 Permian production
Occidental Petroleum (OXY) is one of the largest oil producers in the Permian Basin. OXY divides its business into three segments: Permian Resources, Chemical, and Midstream and Marketing.
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In 2Q17, OXY’s average daily production from its Permian Resources operations rose 7% sequentially, due to increased drilling activity and well productivity.
As of 2Q17, OXY had 11 operated rigs in the basin, an increase of four over 1Q17, and brought 26 wells online during the quarter. In 2017, OXY plans to have 11 operated rigs and two net non-operated rigs in the region. It plans to bring ~130 wells online in 2017 and expects production from its Permian resources to exit this year at a growth rate of ~30% (compared with 2016 levels).
2Q17 earnings conference notes
In its 2Q17 earnings conference, OXY achieved its 2017 target of adding 400 locations to its “less than $50 WTI breakeven inventory.” The company noted that it now has ~16 years of inventory, with a less than $50 break-even rate.
According to OXY, its improved capital efficiency and well performance enabled it to add 255 locations. OXY’s management also pointed out that it has evaluated ~15,000 new net acres, which added 100 locations to its less-than-$50-break-even inventory.
According to OXY, this inventory covers about 302,000 net acres. In 2Q17, OXY announced multiple Permian transactions that it believes will increase its operating cash flow by $80 million in 2019—without additional cash outlay.