Occidental Petroleum Corp., Houston, outpaced its second-quarter production forecasts by maintaining its pace of 1.22 MMboe/d from early in the year. Executives have as a result lifted full-year forecast to 1.21 MMboe/d, an increase of a little more than 1% from the prior outlook.
In the 3 months ended June 30, three of the four regions of Occidental’s oil business topped their forecasts thanks in large part to efficiency gains. Production in the Permian basin averaged 582,000 boe/d, up slightly from first-quarter 2023 and 4,000 boe/d above the high end of guidance. Well productivity in the Delaware basin is running 11% ahead of 2022 numbers, executives said.
Operations in the Gulf of Mexico similarly outperformed, producing 135,000 boe/d, while Occidental’s Rockies/Other region produced 273,000 boe/d compared with 245,000 boe/d at the midpoint of executives’ guidance. The greater adoption in the Denver-Julesburg basin of well designs and other technologies refined in the Delaware have helped produce a cumulative 79% production increase versus 2022.
“I’m incredibly impressed with what our teams have done,” president and chief executive officer Vicki Hollub said on an Aug. 3 conference call. “We took the time in 2014 to step back and say that we were going to put together a team that could do the kind of work that needs to be done in shale […] The teams continue to surprise me, continue to go beyond what I thought we would ever be able to do.”
Chief financial officer Robert Peterson told analysts that he and Hollub are forecasting third-quarter 2023 total production to be about 3% lower than that of the year's second quarter due to some weather-related contingencies and maintenance work. But plans call for a ramp back to first-half levels during the fourth quarter to make for a “strong exit to the year” and set up Occidental for the first part of 2024, he said.
Occidental plans to push productivity improvements out to operations in the Powder River basin as well, Hollub said. But the company also is retrenching in part in the Powder River by abandoning future exploration and appraisal work in some non-core areas. That decision led executives to record a $164 million after-tax impairment charge.
Occidental reported a second-quarter net profit of $605 million, down from $3.5 billion in the same period of last year, on revenues of $6.7 billion versus nearly $10.7 billion. Operating profits fell to $1.1 billion from $1.6 billion as the company’s average realized oil price fell by a third to $72.70/bbl and its average natural gas price came in at $1.36/Mcf versus $6.25 in the prior-year period.
The company’s chemicals business produced a profit $436 million versus $800 million in second-quarter 2022 while its midstream and marketing division lost $30 million compared with a profit of $264 million the year before.
Shares of Occidental (Ticker: OXY) rose about 1% to $62.21 Aug. 3. Year to date, they are up slightly, growing the company’s market capitalization to more than $55 billion.
