Houston-based Occidental Petroleum Corp. (Oxy) executives on Tuesday reported continued operating efficiencies and well production improvements throughout its aggressive development in the Permian Basin.
While bringing in record producing wells in the southeastern New Mexico and West Texas portions of the Permian during 3Q2018, Oxy also established an all-time low cost for production at $7.03/boe. Costs should fall to $6/boe by the end of this year, according to investor relations chief Jeff Alvarez.
CEO Vicki Hollub said all of the domestic and international business units "exceeded key performance targets through production growth."
Total Permian production increased in the quarter by 24,000 boe, or 12%, hitting 225,000 boe overall, a 60% boost year/year.
Alvarez attributed the glowing results to Oxy's ability to excel in its subsurface operations and other phases of the unconventional well design and production process, all while maintaining a flat well count. Hollub reiterated that the rig count would remain flat through next year.
Oxy’s best yet New Mexico well produced a high of 8,900 boe/d, with overall state averages of 6,700 boe/d, while the best Texas well produced 6,500 boe/d, with wells in the state averaging 4,900 boe/d.
Alvarez said "these repeatable record-breaking results are a testament to our subsurface capability.” Oxy has delivered 52% of the top Permian wells during the past 12 months while drilling only 5% of the basin's overall wells during the period, he said.
Alvarez said the impressive production numbers are driven by “subsurface technical excellence,” which offers sustainable returns.
"We continue to see improvements in all areas," Alvarez said. "I think when we look at it from a returns and value creation standpoint, the improvements are going to happen for a very long period of time." Hollub cited Oxy's enhanced oil recovery business as an example.
For 3Q2018, Oxy reported net income of $1.9 billion ($2.44/share), compared with $190 million (25 cents) for the same period a year earlier.