Occidental Petroleum Corp. (Oxy) CEO Stephen Chazen indicated Tuesday that spinning off the company's estimated $16 billion oil and natural gas operations in California is a likely offshoot of new strategic plans to sell off some domestic and foreign assets to expand existing U.S. holdings.
Chazen made the comments during a third quarter conference call on Tuesday in response to analysts' questions on the ultimate fate of the California exploration business (see Shale Daily, Oct. 29).
Spinning off the assets "is the simplest thing to do; everything else requires a lot of brain power," said Chazen, who thinks separating the unit would help make the domestic exploration and production business more "entrepreneurial" and at the same time, "enhance the viability and attractiveness" of the remaining Oxy operations.
However, there are questions as to whether Oxy shareholders would support the separation of the company’s California operations.
"We really haven’t decided what the options are. Generally, simpler is better. Increased complexity is probably not something I am for at this point," Chazen said. "There are only two simple things to do...Everything else requires lots of brain power and we're perhaps short of that right now."
Chazen and Vicki Hollub, executive vice president for U.S. oil and gas operations, emphasized that they think permitting problems are being resolved in California. The new state hydraulic fracturing rules (SB 4) is expected to put stress to some degree on both operators and the state’s Department of Oil, Gas and Geothermal Resources (DOGGR) staff implementing the new law's monitoring/reporting requirements (see Shale Daily, Sept. 23) .
"I think DOGGR has been working diligently to see that there is more transparency around the permitting process," Hollub said. "They have been processing permitting applications as quickly as they can, but granted it still takes awhile because of their [shortage of] personnel. Recently we have been trying to anticipate the application details in SB 4 to make sure we stay ahead of the requirements of that new law.
"It will require more transparency, but it will also require more monitoring and reporting for operators. We're hoping the requirements are not so stringent that they overload the DOGGR staff."