Houston-based Occidental Petroleum Corp.'s (Oxy) plans to double down in the Permian Basin, as evidenced by its $2 billion purchase of additional oil and enhanced oil recovery (EOR) assets, company executives said Tuesday.

Despite reporting more red ink in 3Q2016 on an earnings conference call, Oxy CEO Vicki Hollub and Jody Elliott, president domestic oil and gas, outlined how they expect substantial production growth from nine rigs and the added acreage interests in 2017, leading to overall production growth of 5-8% next year. The Permian will get about $1.2-1.4 billion in capital investment as part of a companywide total of $3.3-3.8 billion for the year.

In outlining plans for four Middle Eastern plays that Oxy has in its global portfolio, Hollub said she has emphasized to the company partners in those overseas areas that "the returns on any new projects must compete with the Permian Basin" for investment capital. In essence, the west Texas-New Mexico play is setting the standard for Oxy's portfolio.

Hollub said as production grows in the Permian in the coming year, Oxy will expect to have access to multiple domestic and foreign markets through newly opened crude export capacity at its Ingleside, TX, facility. "As Permian production grows in coming years, we expect increased demand for access to multiple markets," she said.

The acquisition announced Monday includes $2 billion in producing and non-producing leasehold acreage from private sellers, along with separately securing extensive EOR and carbon dioxide properties and related infrastructure. The additions, Hollub told analysts will "improve the value" of the extensive resources Oxy holds in the Permian.

"All the assets we purchased in both resources and EOR are in fields in which we currently operate or have a working interest," Hollub said. The acreage, which currently produces 7,000 b/d, is mostly contiguous, allowing the drilling of longer laterals.

Elliott said Oxy has reduced its operating costs by 28% and plans to bring on 20 new wells in the fourth quarter. The company also plans to double production growth (120,000 b/d by the end of the year), drill more wells, and double the average length of laterals in 2017 (from 5,200 feet to more than 9,000 feet).

Hollub said she expects "improving oil prices" in 2018 and that is when Oxy likely will "launch into a much more aggressive development in the new areas acquired, and at that point we expect prices to warrant a much higher level of activity."

She and Elliott both emphasized the uniqueness of the latest acquisition with the possibility of access to five different benches in the play. "We've looked at a lot of things in the Permian, but this is the best thing we have seen in awhile that really fits well with our current operations and makes sense from a long-term development standpoint," Hollub said.

Because of technology advances that have improved drilling productivity, Elliott said Oxy expects to grow production substantially with what he called "a fairly modest rig count [six rigs in the resources area and three in EOR]."

In response to a question about Oxy's need for future acquisitions, Hollub said there was not a continuing need, although the company will keep looking. "We don't see the need, unless they are smaller bolt-ons," she said. "Our inventory is huge, and we still have not fully appraised the inventory we have. In the general area of this acquisition in addition to the 59,000 net acres acquired, we have about 100,000 acres. This was a special case."

For 3Q2016, Oxy's overall production was 605,000 boe/d with nearly half (294,000 boe/d) coming from domestic operations, compared to 302,000 boe/d in the 2Q2016 and 300,000 boe/d in 3Q2015.

Financially, Oxy reported a 3Q2016 loss of $241 million (minus 32 cents/share), compared to a loss of $2.6 billion (minus $3.42) for the same period in 2015. The latest results included a one-time net charge of $129 million, so with that factored in, core results reduced the 3Q2016 loss to $112 million (minus 15 cents), compared to core income of $24 million (3 cents) for the same period last year.