Production, Efficiencies Improve for Occidental

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

The company said its well efficiencies led to an increase in its global production. Occidental also sold off its chemicals unit.

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Production Above Guidance

Selling off its chemicals unit, Occidental Petroleum said global production was nearly 2% above its mid-point guidance for the fourth quarter, led primarily by input from U.S. shale.

"Our emphasis on operational excellence and cost efficiency drove meaningful production and operating expense outperformance during the fourth quarter," said Chief Executive Officer Vicki Hollub.

In its quarterly earnings report, released on Wednesday, the company said that total fourth quarter global production averaged 1.48 million barrels of oil equivalent per day (BOE/d), about 1.5% above its mid-point guidance. Occidental said production volumes were lifted primarily by the Permian shale basin and reserves in the Rocky Mountain region.

That follows a report from the Federal Reserve Bank of Dallas that found crude oil production in the Permian averaged 6.7 million barrels per day (BBL/d) over the three-month period ending December 31, even with a downturn in drilling-related activity. New wells declined 0.8% and active rigs declined 2.1% from third quarter levels, the bank said.

Supported by the Permian and wells in the Denver-Julesburg basin in Colorado, Occidental said additions and discoveries added 340 million barrels of oil equivalent (BOE) to its reserve portfolio.

Australian energy giant Woodside Energy Group Limited reported earlier this week that its proved reserves also increased by 134.1 million BOE, while proved-plus-probable reserves increased by 141 million BOE, lifted in part by its U.S. assets.

In Texas, Industrial Info finds Occidental is involved in four projects worth a combined investment value of $1.42 billion, with much of that targeting natural gas. As shale basins mature and well pressures change, they start to yield more natural gas because heavier molecules associated with crude oil remain trapped in the sub-surface pores.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project and Plant databases can learn more about Occidental's footprint in Texas--including capacities, investment values and necessary equipment--in a detailed project list.

The U.S. Energy Information Administration (EIA), the statistical arm of the Department of Energy, said it expects Permian crude oil production to increase by 0.3% from 2025 levels to average 6.62 million BBL/d. Natural gas production is expected to increase by 5% to average 29 billion cubic feet per day (Bcf/d) this year.

While reserve estimates improved, the same can't be said for market factors. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was trading at around $66 per barrel early Thursday, supported largely by a geopolitical risk premium stemming from tensions between the U.S. and Iran.

Bruised by Low Oil Prices, but Output Resilient

In its monthly report for February, the EIA said it expected WTI to average $53.42 per barrel for the year. Occidental said it realized a WTI price of $59.14 per barrel during the fourth quarter, which dragged on its financials. Federal estimates put WTI at $59.64 per barrel during the three-month period ending December 31.

If the EIA forecasts are accurate, WTI could be as low as $49 per barrel next year, below the point at which many shale drillers can make a profit.

The company reported a net loss of $68 million for the fourth quarter, compared with a net loss of $297 million in fourth-quarter 2024. Adjusted income attributable to common stockholders was reported to be $315 million for the just-ended quarter. The difference between the net loss and adjusted income in fourth-quarter 2025 was attributed to charges and transaction costs related to the sale of its OxyChem business.

Looking forward, the company said efficiencies and optimization led it to reduce its 2026 capital spending plan by about $550 million from 2025 levels, with its capital guidance for 2026 set between $5.5 billion and $5.9 billion. About 70% of the reduction was tied to cost savings, with the rest attributed to well efficiencies.

By the Numbers

• 1.5% above mid-point guidance for production
• 30% of capital savings came from well efficiency
• $59.14 per barrel WTI realized in Q4

Operators are doing more with less by using multi-bore wells and extended laterals. In the U.S. shale patch, Occidental said those improvements led to "exceptional" well performance.

The company during the fourth quarter also closed on the $9.7 billion sale of its chemical business to Berkshire Hathaway.

"With our enhanced balance sheet following the sale of OxyChem, we remain focused on generating resilient free cash flow and maintaining flexibility in our capital and development programs to support near- and long-term value creation." Hollub added.

Key Takeaways

• Occidental says it's doing more with less.
• The company sold of its chemicals division to Berkshire Hathaway
• Costs savings remains the theme

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).