Wolfcamp well sets record for Oxy

May 18—Driven by beaucoup production in the Gulf of Mexico, Occidental Petroleum boosted its output by 40,000 barrels of oil per day during the first quarter of the year to achieve its highest quarterly production in the Gulf in over a decade.

President-CEO Vicki Hollub said from Houston that excess cash was primarily allocated toward $750 million of common share repurchases, accounting for over 25 percent of Oxy's $3-billion share repurchase program and triggering the redemption of nearly $650 million of preferred equity.

"This out-performance was partially driven by higher uptime at the Horn Mountain," she said, referring to an oil and gas field off the coast of New Orleans, "and the out-performance following the successful Caesar Tonga subsea system expansion project, which was completed in December.

"Our Permian Basin production benefited from strong new well performance and higher operability in the Texas Delaware."

Hollub reported stronger-than-expected production in the Rocky Mountains stemming from a strong base and new well performance.

"Internationally our businesses performed well," she said. "Most notably, the Al Hosn gas expansion project is ahead of schedule because of the team's ability to integrate expansion work with annual turnarounds. Domestically in our onshore unconventional businesses, we delivered strong well performance and established new operational records in the Rockies and Permian Basin."

The Al Hosn project is a joint venture between Oxy and the Abu Dhabi National Oil Co.

Hollub said Oxy's team in the Rockies drilled the industry's longest DJ Basin well ever at over 25,000 feet in eight days. "This well set a new lateral length record for Oxy at over 18,000 feet," she said.

"In addition, we delivered a single well production record in the DJ basin by utilizing a new well design. In the Permian, our Delaware subsurface teams continue to optimize and unlock inventory as demonstrated by the success of a deeper Wolfcamp horizon with a single well generating a 30-day initial production rate of 6,500 barrels per day and an Oxy record for this interval."

Hollub said her company "is seeing some early signs of tempered inflation.

"Our teams are working toward partially offsetting inflation impact through various operational efficiencies and supply chain competencies," she said. "For example, in the Delaware basin we've optimized frac designs to reduce assets and water utilization for an average savings of around $240,000 per well.

"Our Rockies team has successfully integrated artificial intelligence into our program, helping to maximize base production and reduce operating costs."

Senior Vice President-Chief Financial Officer Rob Peterson said Oxy had redeemed or given notice to redeem $647 million of preferred equity at a cost of $712 million including a 10 percent premium payment of close to $65 million, having generated $1.7 billion of free cash flow before working capital.

"By the end of this week, all $647 million of preferred equity triggered for addition during the first quarter will be fully redeemed," Peterson said. "As of May 9, we have distributed $4.57 per share to common shareholders over the rolling 12-month period."