Occidental production hits four-year high thanks to Permian, Gulf of Mexico output

US producer Occidental Petroleum hit the company's highest quarterly onshore production level in four years amid strong performance in the Permian Basin and in the Gulf of Mexico, company executives said Aug. 8.

Second-quarter total production was 1.26 million barrels of oil equivalent per day, exceeding the mid-point of its guidance by 6,000 boe/d, the company said in a statement.

"We're exceeding our production expectations for onshore new wells across all our basins and are continuing to achieve operational efficiencies as we execute our capital program," CEO Vicki Hollub said during a call with investors.

CrownRock deal

Oxy on Aug. 1 closed its acquisition of Permian producer CrownRock. The integration of the Midland Basin assets will unlock efficiencies through infrastructure sharing, resource utilization and best practices from the organizations, Hollub said.

"We absolutely believe that the CrownRock asset as a combined asset is ... one of the best we've seen," Hollub said. CrownRock will produce about 156,000 boe/d.

Oxy is maintaining its expected production levels for the full year, excluding production from CrownRock, even with the expected divestiture of 15,000 boe/d in the fourth quarter, according to a statement from the company.

Oxy had negotiated an agreement for Colombia's Ecopetrol to buy a 30% working interest of CrownRock, but Colombian President Gustavo Petro did not approve of the deal, Hollub said.

"He's made it very clear to the world that he's anti-oil and gas, anti-fracking and anti-US, and with those three strikes, he pretty much dealt Ecopetrol out of the deal," Hollub said regarding Petro.

"Unfortunately, there are others in the world like Petro, and there are some actually in the United States like Petro, who believe that oil and gas should go away and believe that we shouldn't be an industry anymore," Hollub said. "But the reality is that, as you know, oil and gas is going to be needed for many decades to come," she said.

Direct air capture project

Hollub also touted progress on the company's Stratos project in Texas, which will pull carbon dioxide out of the air and put it in assets in the Midland Basin, including CrownRock, to get more oil out of the ground.

The project is expected to remove and permanently store up to 500,000 metric tons of CO2e/year when it is fully operational. Stratos is expected to be commercially operational in mid-2025, according to Oxy's presentation.

In July, Oxy announced a deal with Microsoft for the sale of 500,000 metric tons of carbon dioxide removal, or CDR, credits over six years from the project.

"Obviously, sales with Microsoft not only will be the largest CDR kind of block sale to date, but really, that counterparty meant a lot to us," said Richard Jackson, president of US onshore resources and carbon management. "We know they're very diligent in the way they think about what the product of a CDR can mean to the business," he said.