It won’t happen this year, but starting in 2014 there should be a sharp increase in oil production in California, according to Occidental Petroleum Corp. (Oxy) CEO Steve Chazen, speaking last Thursday on a year-end quarterly earnings conference call.
“Once we get through the permitting phase of that activity, you will see more oil volume growth in the 2014 and 2015 time frame,” said Chazen, responding to questions about Occidental’s $2.6 billion in oil/natural gas acquisitions in the Permian Basin, California and elsewhere mostly in the last quarter of 2012.
Chazen noted that Oxy is very early in the booking of the added reserves because most of them were acquired so late last year. “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.”
Among its domestic plays, production runs along the same variation with the biggest emphasis being the Permian, followed by California, the Bakken and South Texas, Chazen said. “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.
“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.”
In response to questions from analysts, Chazen and Bill Albrecht, Oxy’s Americas oil/gas head, indicated that company was taking a conservative approach toward ramping up horizontal drilling, noting high costs and decline rates among other factors.
“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.”
Â©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |