Houston-based Occidental Petroleum Corp. said its third quarter production, including combined output from Anadarko Petroleum Corp., is expected to average 1.310-1.369 million boe/d, versus initial guidance of 1.062-1.102 million boe/d.

The gains in production appear to be driven by lower-than-expected downtime from Anadarko’s legacy operations in the Denver-Julesburg Basin, as well as solid performance from Occidental’s Permian Resources unit.

In the Form 8-K filing with the Securities and Exchange Commission filed on Tuesday, the super independent said preliminary quarterly results were adjusted for the merger closing in early August. With the takeover of Anadarko completed, legacy assets in Algeria, Ghana, Mozambique and South Africa are to be reported in final quarterly results as discontinued operations.

Realized natural gas prices for U.S. onshore operations averaged $1.20/Mcf in 3Q2019, while onshore oil prices were about $54.00/bbl. The realized natural gas liquids price for the Lower 48 was $13.90/bbl.

Domestic transportation costs are expected to be $3.00/boe in the quarter. Oil collars, interest rate derivatives and warrants are expected to have a combined positive mark-to-market adjustment of $10-20 million.

The reported income for the quarter is expected to be impacted by pre-tax charges related to the merger, with transaction costs, debt financing and severance costs estimated at $950 million. Occidental also expects to record a one-time write off for unproved property of $285 million related to U.S. leases that expire in the near term, where it no longer plans to pursue exploration activities.

Third quarter results are scheduled to be issued on Nov. 4.

In response to the preliminary results, Tudor, Pickering, Holt & Co. (TPH) said questions remain on Occidental’s plans going forward. Analysts wonder if the 2020 budget will “be appropriate for the current commodity price environment and allow cash flow to cover capital expenditures plus dividends.”

The sale of Anadarko’s legacy midstream unit, Western Gas Partners LP, is “seemingly tabled for the near term,” said the TPH team, which means Occidental may need to monetize other assets “to work down elevated leverage…We remain sidelined on the name.”