Occidental Petroleum Corp. (Oxy) expects to recoup an extra $5 billion this year through outperformance from assets as well as midstream sales, giving it more than $1 billion to add to capital expenditures (capex), in part to be used in the Permian Basin, the Houston-based producer said Thursday.

“With the early completion of our low oil price breakeven plan, outperformance across all three business segments and the expected sale of noncore domestic midstream assets, our priority is to use free cash flow to generate the greatest shareholder return,” CEO Vicki Hollub said during a conference call with analysts.

The Permian projects are “generating full-cycle returns in excess of 75%…And this will require only a modest increase in activity from our original plan, which had expected a ramp down in activity during the second half of this year,” she said.

Permian production ramped up by 80,000 boe/d year/year in 2Q2018 to reach 201,000 b/d for the quarter, a 46% increase from 2Q2017 and 14% higher sequentially. Average production volumes worldwide were 639,000 boe/d in 2Q2018, compared with 609,000 boe/d in 1Q2018.

“We now have a window of opportunity to further improve operational execution, strengthen our cash flow and increase our returns,” Hollub said. “Where others are playing defense, we will play offense by investing a portion of the additional cash back into our business to accelerate returns.”

She said another $200 million would be invested in Oxy’s highest returning organic development projects, which include Permian enhanced oil recovery projects and in some overseas basins.

“There are some significant bottlenecks and barriers to growing production economically in the Permian right now, and Oxy has unique assets and solutions that enable us to overcome the most significant ones,” she said.

Average U.S. realized crude oil prices in 2Q2018 were above $65/bbl, a 7% increase.

Key milestones during 2Q2018 included Oxy’s completion of its break-even plan, reached as all operating units exceeded expectations, and the sale of $2.6 billion in midstream assets.

Among the midstream assets announced for sale are the Centurion common carrier oil pipeline and storage system, Southeast New Mexico oil gathering system, and Ingleside Crude Terminal in South Texas. Oxy would retain its long-term use of those assets through the marketing business tied to the assets, Hollub said.

Oxy reported 2Q2018 net income of $848 million ($1.10/share), compared with $507 million (66 cents) for the same period in 2017.