Houston-based Occidental Petroleum Corp. (Oxy) reported record 4Q2018 and full-year results on Wednesday, with the Permian Basin topping the charts.
Oxy production climbed to 700,000 boe/d on average in the fourth quarter, versus 621,000 boe/d in 4Q2017. U.S. output reached 400,000 boe/d-plus, with Permian Resources output climbing 57% to 250,000 boe/d. In 4Q2017, Oxy’s total domestic production averaged 319,000 boe/d. For the year, total production averaged 658,000 boe/d, compared with 2017’s 602,000 boe/d.
"Permian cash operating costs were the lowest this decade, driven by the long-term high-return investments that we're making, such as in facilities and infrastructure," CEO Vicki Hollub said during a quarterly earnings call.
This year Oxy is lowering its capital expenditures by 10% to $4.5 billion, but it still is projecting production growth of 9-11%, including 30%-plus annual production growth in the Permian Resources unit. It also expects to have 12 operated rigs in the Permian with two nonoperated rigs.
During the question-and-answer session, an analyst asked if Oxy was trying to "outpace" the supermajors in the Permian. Hollub said, "we're not trying to outpace the majors; we're trying to outperform them, and I think we're clearly doing that in the Permian at this time."
Houston-based Oxy, the CEO claimed, is "doing a lot more" than the supermajors with rigs it employs, "with almost double the rigs that we have." The company is now "perfectly positioned" in the Permian with adequate takeaway capacity, export capacity and all the infrastructure it needs.
Vice President Jeff Alvarez, who oversees investor relations, reiterated that advances in data analytics are one of the keys to Oxy’s success, resulting in superior well and development performance.
Alvarez said Oxy expects production over the next five years in the Permian unit alone -- not including enhanced oil recovery -- to reach 600,000 b/d.
Net income in 4Q2018 was $706 million (93 cents/share), compared with $497 million (41 cents) for the same period in 2017. For the full-year 2018, net income was $4.1 billion ($5.01/share), compared with $1.3 billion (89 cents) in 2017.