The Houston-based oil and gas company Occidental Petroleum Corp. (OXY) met and even
exceeded its production forecast for the first quarter of 2023 because of improved well efficiency
and robust performance from new locations.
Occidental’s average output in the first quarter of this year was 1.22 MMboe/d, 0.3% higher than
the midpoint of guidance given earlier. The company’s performance in every region exceeded
projections. There was an increase from the February forecast midpoint of 565,000 boe/d to an
average of 579,000 boe/d in the Permian basin. There was also an increase from the February
forecast midpoint of 257,000 boe/d to an average of 264,000 boe/d in operations in the Rockies
and other US onshore regions.
We continue to see strong financial results because of the great operational performance of our
people,” CEO Vicki Hollub stated. The CEO said, “We are well positioned to build on the
successful first quarter.”
On revenues of approximately $7.3 billion, Occidental had a net profit of nearly $1.3 billion
(before paying out its preferred stock dividend). The company’s oil price realization of around $74
compared to approximately $92 a year previously primarily accounted for the decline in earnings
from $4.9 billion in early 2022.
The operator raised its overall annual production prediction to 1.195 MMboe/d, an increase of just
over 1%. That’s 3.1% more than Occidental produced in all of 2022 but about 3% less than in the
last quarter of the year.
The business cited increased efficiency in the Permian basin and the Rockies and the highest
production from the Gulf of Mexico in nearly a decade as major factors in the upward revision.
Hollub assured investors and analysts on a conference call that Occidental’s wells are not losing
performance, citing the company’s recent record-setting achievements in lateral length (25,499 feet)
in the Denver-Julesburg basin and continuous pumping time (around 6 hours improved to around
28 hours).
Occidental’s development activity would increase this quarter, as promised by officials roughly
three months ago. The company completed 53 wells in the Permian basin during the first quarter of
2023, but that figure is likely to rise to between 100 and 110 throughout the remaining three
quarters of the year.
Occidental executives have stated they are still committed to returning capital to shareholders
through share repurchases, even if the company has raised its production outlook. Hollub
predicted that if commodities prices fell significantly, his team would cut back on production and
emphasize buybacks more.
In the final hour of normal trading on May 10, Occidental shares (Ticker: OXY) were down more
than 3 percent to around $56.90. The corporation’s market cap has decreased by nearly 20% during
the past 5 months to around $51 billion.
