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Understanding Occidental Petroleum’s Production Volumes

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Occidental Petroleum’s production in 3Q15

In 3Q15, Occidental Petroleum Corporation’s (OXY) production was 689,000 BOE (barrel of oil equivalent) per day, which is higher by almost 16% when compared with its 595,000 BOE per day in 3Q14. This YoY (year-over-year) production growth of 94,000 BOE per day was mainly driven by Occidental’s strong horizontal drilling program in the Permian Basin, where YoY production increased by almost 51% to 116,000 BOE per day.

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Occidental Petroleum’s production trend

As seen in the above chart, Occidental Petroleum’s total production volume is showing a steady increase since last seven quarters. Occidental’s total production is growing at an average rate of 3.5% quarter-over-quarter. In 3Q15, the company’s total production was higher by 31,000 BOE per day, or ~5% quarter-over-quarter, which is above its trend average of ~3.5%.

Occidental Petroleum’s production guidance

For 2015, Occidental Petroleum expects worldwide total production to average between 660,000 to 670,000 BOE per day. The company is expecting its 2015 growth to come mainly from the Permian Basin, which is its main focus area.

Due to efficiency gains and drilling higher EUR (estimated ultimate recovery) wells in the Permian Basin, Occidental Petroleum now expects to deliver forecasted growth using fewer rigs and lesser total online well count of 48, compared to total online well count of 54 in 3Q15.

Occidental Petroleum’s biggest competitors

Other major oil producers also active in the Permian Basin—and companies that are expecting strong growth from the same area—include Pioneer Natural Resources (PXD) and EOG Resources (EOG). Cimarex Energy (XEC) is also active in the unconventional resource space across the US. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies.

In the next part of this series, we’ll look into Occidental Petroleum’s production mix and realized prices in 3Q15.

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