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What Was OXY’s Management’s Strategy in 1Q16?

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Occidental Petroleum’s 1Q16 operational performance

For 1Q16, Occidental Petroleum (OXY) reported total production of 657 MBoepd (thousand barrels of oil equivalent per day), well above its 1Q16 production guidance range of 620–630 MBoepd.

Occidental Petroleum’s 1Q16 production was ~2% higher than its 1Q15 production of ~645 MBoepd. Sequentially, OXY’s 1Q16 production was ~3% lower than its 4Q15 production. When adjusted for asset dispositions in 1Q16, Occidental Petroleum’s 1Q16 production was actually higher by 59 MBoepd, or ~11%, compared to 1Q15.

Upstream SPDR S&P 500 (SPY) companies Marathon Oil (MRO) and ConocoPhillips (COP) reported ~15%, and ~2% year-over-year falls, respectively, in their 1Q16 production volumes. Non–S&P 500 company EnCana (ECA) also reported a ~20% year-over-year fall in its 1Q16 production.

Diamondback Energy (FANG) reported a ~25% year-over-year rise in its 1Q16 production. The Direxion Daily S&P Oil & Gas Exploration & Production Bull 3x Shares ETF (GUSH) is a leveraged ETF that invests in oil and gas exploration and production companies.

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Occidental Petroleum’s production guidance

For 2Q16, Occidental Petroleum expects total production from its core assets to range from 600–610 MBoepd.

Due to a strong start in 1Q16, Occidental Petroleum has raised its 2016 production growth guidance range to 4%–6% from its previously stated 2%–4%, essentially a 2% rise. With its new growth guidance, Occidental Petroleum’s 2016 production will be in the range of 585–600 MBoepd.

The yearly guidance and comparison given above is from Occidental Petroleum’s core assets and excludes the assets OXY has either already divested or plans to divest in 2016. These assets include Williston and Piceance in the United States and Iraq, Yemen, Bahrain, and Libya in the Middle East and North Africa.

Diamondback Energy is expecting a ~9% rise in its 2016 production. Many other upstream companies such as EnCana, Southwestern Energy (SWN), Chesapeake Energy (CHK), and Marathon Oil are expecting lower production volumes for 2016.

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