Production | Second Quarter (2Q) Update | Financial Results | Drilling Activity | Rig Increase | Drilling Program-Rigs Running

Oxy Shifting Focus to Northern Delaware in 2H17 After Adding 57% More Rigs

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   |    Monday,August 07,2017

[Summary: Occidental released its Q2 results where it focused primarily on its long term plans.

Highlights Include:

  • Total average daily production volumes were 601,000 boe for Q2 2017, up just 1% from the 594,000 boe in Q1
  • Increased rig count from 7 at the end of Q1 to 11 at the end of Q2, an increase of about 57%
  • Activity in the next several years will be primarily in the Delaware - shifting rigs to New Mexico
  • Expects to achieve full year guidance of adding 400 locations, with a stretch goal of adding 600

Occidental changed its full year guidance to 597,000-605,000 boe/d from a prior guidance of 595,000-615,000 boe/d. The company raised the low end of the guidance to reflect the new production increase from Permian transactions and lowered the high end due to uncertainties surrounding several events, including OPEC and electrical storms in the Permian. 

In the Permian, Oxy added 255 locations. Additionally, the company utlizied advance subsurface characterization in Barilla Draw which resulted in a company record 3,200 boe/d in the Wolfcamp A.

In the second half of the year, Oxy plans to operate 5 rigs in the Greater Sand Dunes area, 4 rigs in Great Barilla Draw, and 2 in the Midland.

The company is shifting rigs to New Mexico because there are very high returns in the area and the stack pace is better there. Heading into New Mexico, the company is working with mostly clean acreage where it will have a chance to freely develop the land. 

The company also discussed several of its technology solutions. Oxy is currently pushing out its bit trajectory data analytics tool that allows the bit to stay in the zone and allows the operator to build curves more accurately. Staying in the zone longer gives better well results. 

ORIGINAL RELEASE:

  • Raised dividend for the 15th consecutive year
  • Increased cash balance to $2.2 billion with ample additional liquidity available
  • Permian Resources average daily production up 7 percent sequentially from previous quarter to 138,000 BOE
  • Acquired working interests in low decline, low capital intensity EOR production, while monetizing low priority non-strategic acreage
  • Improved cash flow generation in the Chemical and Midstream segments
  • HOUSTON – August 2, 2017 – Occidental Petroleum Corporation (NYSE:OXY) today announced reported net income of $507 million, or $0.66 per diluted share, compared with $117 million, or $0.15 per diluted share, for the first quarter of 2017. Core income for the second quarter of 2017 was $119 million, or $0.15 per diluted share, compared with $117 million, or $0.15 per diluted share, for the first quarter of 2017.

“We continue to make progress on our pathway to breakeven at low oil prices. Reported earnings for all three operating segments were higher than the previous quarter despite lower oil prices. Both the Chemical and Midstream segments exceeded expectations, and Permian Resources had another great quarter with 7 percent production growth over the previous quarter. I am confident in our organization’s ability to continue to exceed expectations toward our cash flow breakeven goal at low oil prices,” said President and Chief Executive Officer Vicki Hollub.

QUARTERLY RESULTS

Oil and Gas

Total average daily production volumes were 601,000 barrels of oil equivalent (BOE) for the second quarter of 2017. Adjusted to exclude South Texas properties sold in April, average daily production volumes from ongoing operations were 594,000 BOE in the second quarter of 2017, compared to 559,000 BOE in the first quarter of 2017. Permian Resources average daily production volumes improved by 9,000 BOE from the prior quarter to 138,000 BOE in the second quarter of 2017 due to increased drilling activity and well productivity in the Delaware Basin. International average daily production improved by 24,000 BOE from the prior quarter as the Al Hosn Gas and Dolphin operations came back online to full capacity after completing planned maintenance in the first quarter of 2017.

Oil and gas pre-tax income for the second quarter of 2017 was $627 million, compared to $220 million for the first quarter of 2017. The second quarter income includes gains from domestic asset sales of $510 million, which include the sale of South Texas properties. Excluding the gains on sales, oil and gas income for the second quarter of 2017 was down compared to the first quarter of 2017 due to lower commodity prices across all products, which was partially offset by higher sales volumes.

For the second quarter of 2017, average WTI and Brent marker prices were $48.29 per barrel and $50.92 per barrel, respectively. Average worldwide realized crude oil prices were $46.55 per barrel for the second quarter of 2017, a decrease of 5 percent compared with the first quarter of 2017. Average worldwide realized NGL prices were $18.90 per barrel in the second quarter of 2017, a decrease of 12 percent compared to the first quarter of 2017. Average domestic realized natural gas prices were $2.23 per MCF in the second quarter of 2017, compared to $2.68 per MCF in the first quarter of 2017.

Chemical

Chemical pre-tax income for the second quarter of 2017 was $230 million. Compared to pre-tax income of $170 million in the first quarter of 2017, the increase in earnings primarily resulted from higher realized caustic soda and vinyls prices, higher equity income from the Ingleside ethylene cracker that commenced operations in February 2017, and higher potassium hydroxide sales volumes due to seasonally improved agricultural demand. These increases were partially offset by higher ethylene costs.

Midstream and Marketing

Midstream pre-tax income for the second quarter of 2017 was $119 million, compared to a loss of $47 million for the first quarter of 2017. The second quarter of 2017 included a non-cash, fair-value gain on the Plains Pipeline equity investment of $94 million. Excluding the gain, the improvement in second quarter of 2017 income, compared to the first quarter of 2017, reflected higher marketing margins due to improved Midland-to-Gulf Coast spreads and increased sales volumes at the Ingleside Crude Terminal and higher foreign pipeline income as the Dolphin Pipeline operations came back online to full capacity after completing planned maintenance in the first quarter of 2017.

About Occidental Petroleum

Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental’s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities. The company’s wholly owned subsidiary OxyChem manufactures and markets basic chemicals and vinyls. Occidental posts or provides links to important information on its website at www.oxy.com.


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