The Permian Basin remains Occidental Petroleum Corp.’s (Oxy) go-to area for exploration and production, and beginning in 2014 there should be a sharp increase in oil production in California, according to CEO Steve Chazen.

“Once we get through the permitting phase of that activity, you will see more oil volume growth in the 2014 and 2015 time frame,” Chazen told analysts during a conference call to discuss earnings results. Oxy late last year spent $2.6 billion to acquire more leaseholds in the Permian Basin, California and elsewhere.

“We’ve only booked maybe a third, or 40%, of the reserves at best, so we’re pretty far behind relative the booking to spending. So you should expect to see more additions over the next two to three years,” Chazen said. “And it will really go beyond that as the projects mature [in the Permian] and there is more opportunity for gas delivery.”

In the United States Oxy is putting a strong emphasis on its Permian properties, California and its shale holdings in the Bakken and Eagle Ford. “Permian is the largest piece, and every so often we find a piece in California but that gets harder and harder for us, and then some occasionally in the Bakken if you can get the right price, so the strategy and plan on acquisitions don’t really change much,” said the CEO.

“Occasionally we find something in South Texas, if it adds to what we have, but those tend to be pretty small. For oil, production will come from both the Permian and California, and maybe a little out of the Bakken. We’re spending a lot of the money in the Permian, but we’re also spending a fair amount in California, and the California oil production as we head into 2014 will grow sharply as some of these steam floods and other things start to come on.”

The company is taking a conservative approach in ramping up horizontal drilling, in part because of high costs and decline rates.

“If you over-drill high-decline wells, it may excite you for a quarter or so, but it makes the next year more difficult because you are facing high-decline wells,” Chazen said. “Our program is designed to be a sustainable one, not with one big peak write-off.”

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