The Occidental Petroleum Co.’s first quarter highlights included the first-of-its-kind deployment of a fully electric well service rig in the Permian Basin.
Oxy President-CEO Vicki Hollub reported from Houston that Axis Energy Services and her company deployed the rig.
“Expanding electrification is integral to Oxy’s strategy because it increases operational efficiency, generates cost savings, improves safety and helps reduce our emissions,” Hollub said. “I’m pleased to report a strong start to 2024 driven by our persistent focus on operational execution.
“Our oil and gas business delivered robust production results, essentially offsetting an extended third-party outage, while our Midstream and OxyChem businesses outperformed our first-quarter guidance. I’ll start by discussing our first-quarter performance including highlighting our Delaware Basin appraisal success and its contribution to the Permian Basin’s development runway.
“Operational excellence is fundamental to everything we do at Oxy and our capabilities were evident during the first quarter as our teams generated over $2.4 billion in operating cash flow before working capital.”
Explaining that the third-party outage was in the Eastern Gulf of Mexico, Hollub said it made for “a challenging start to the year,” but Occidental concluded the first quarter by approximating the midpoint of its production guidance and restarting production from the Gulf of Mexico platforms that were affected by the mid-April outage.
“The first quarter benefited from strong new well performance in the Permian Basin and the Rockies, overcoming the impact of winter weather early in the year,” she said. “In the Permian, we exceeded the midpoint of our production guidance due in part to better-than-expected secondary bench performance in the Delaware Basin.”
Hollub said Oxy is driving financial returns for its shareholders by improving its ability to high-grade its near-term inventory and by extending its runway of tier-one locations.
“Our Rockies asset outperformed the high end of our first-quarter production guidance, partly driven by strong new well performance in the DJ Basin, better production uptime and higher than expected outside operating volumes,” she said. “And then internationally we achieved record gross daily production in Oman North driven by new well performance and production uptime.”
Hollub said fit-for-purpose well design enhancements resulted in tangible first-quarter well cost reductions of between $700,000 and $1 million per well compared to the first half of last year.
“Our midstream business significantly outperformed the high end of our guidance for the first quarter,” she said. “Our performance was partly driven by gas marketing optimization across our portfolio where our teams captured value in regional pricing disparities.”
Senior Vice President-Chief Financial Officer Sunil Mathew said Oxy exited the first quarter with nearly $1.3 billion of unrestricted cash.
“We had a negative working capital change, which is typical for the first quarter and is largely due to semi-annual interest payments on our debt, annual property tax payments and payments under our compensation plans,” Mathew said. “During the first quarter we delivered over $700 million of free cash flow before working capital despite third-party outage impacts to portions of our oily high-margin production in the Gulf of Mexico.
“First quarter free cash flow was underpinned by outperformance in our onshore domestic portfolio and our midstream and OxyChem segments. Looking ahead to the second quarter, total company production is expected to increase to a range of 1.23 million to 1.27 million barrels of oil equivalent per day compared to the first-quarter annual low of 1.17 million BOE per day.
“The midpoint of second quarter production guidance will be the highest quarterly production in over three years due mainly to U.S. onshore activity levels, the completion of annual plant maintenance at Dolphin Energy and the return of production in mid-April from the Gulf of Mexico outage.”
