The article discusses Occidental's First Quarter 2024 Earnings Conference Call, where the company's executives, including President and CEO Vicki Hollub, present their strong performance in the first quarter of 2024. This was driven by their focus on operational execution, with their oil and gas business delivering strong production results despite a third-party outage. The company's Midstream and OxyChem businesses also performed well, exceeding first quarter guidance. Hollub also mentions the success of their Delaware appraisal and its impact on Permian's development.

Oxy's operational excellence was evident in the first quarter as they generated over $2.4 billion in operating cash flow. Despite a challenging start due to a third-party outage, the company met their production guidance and restarted production in the Gulf of Mexico. Strong performance in the Permian and Rockies, particularly in the Delaware Basin's secondary benches, contributed to this success. By utilizing proprietary subsurface workflows and fit-for-purpose well design, Oxy has been able to match their record-setting 2023 program average and exceed industry averages. This has resulted in improved financial returns for shareholders and an extended runway of tier one locations. Additionally, the company's use of existing infrastructure has led to capital efficiencies.

In the third paragraph, the company discusses the potential for increased efficiency benefits as secondary benches become a larger part of their development program. They also highlight the strong production performance in their Rockies asset and record production in Oman North. The company attributes these successes to their teams' focus on capital efficiency through innovative well design and supply chain management. They also mention cost reduction progress in the Delaware Basin and their commitment to reducing emissions through the use of electric well service rigs. The midstream business also exceeded expectations, with gas marketing optimization contributing to their strong performance.

The first quarter of the year saw warmer weather and maintenance of third party infrastructure leading to disjointed prices in some regions. However, Oxy's marketing teams were able to leverage their market intelligence and product storage and transportation portfolio to outperform. These opportunities are difficult to predict, but the midstream business provides flow assurance and diversification during commodity price volatility. OxyChem also performed well due to improved demand and operational efficiency. The company remains focused on increasing value for shareholders through cash flow and earnings growth, and updates on specific projects were provided in the last quarterly call. Some OxyChem plant enhancement projects are already complete, but there is still more work to be done, including the battleground project which had a ground-breaking ceremony on April 4th.

The completion of the OxyChem projects and reduction in transportation rates are expected to bring in an additional $725 million in cash flow per year. The increase in distribution from Western Midstream will contribute an additional $240 million per year. Repayment of debt will result in $180 million in annualized cash flow savings. The acquisition of CrownRock is expected to provide potential for equity appreciation and shareholder return. Oxy's low carbon ventures will generate cash flow detached from oil and gas and strengthen overall cash flow resiliency. The construction of the first direct air capture plant is progressing as planned and multiple carbon dioxide removal credit agreements have been made with customers.

Sunil Mathew, Oxy's financial representative, reported on the company's financial results for the first quarter of 2024. They generated an adjusted profit of $0.63 per diluted share and a reported profit of $0.75 per diluted share. The difference between the two was due to a litigation settlement gain and gains from sales, offset by derivative losses. Oxy ended the quarter with $1.3 billion in unrestricted cash and had a negative working capital change. Despite third-party outages affecting production in the Gulf of Mexico, Oxy still delivered over $700 million in free cash flow. For the second quarter, production is expected to increase to 1.23 million to 1.27 million BOE per day, the highest in over three years, due to increased activity in the U.S. onshore and the return of production from the Gulf of Mexico outage.

In the first quarter, the company revised its production guidance for the Gulf of Mexico due to extended outages, but this was offset by outperformance in the Rockies. The company is maintaining its total production guidance for the year, although there may be a slight impact on the annual oil cut. The chemicals business had a strong start to the year and the midstream teams are well positioned to take advantage of gas marketing opportunities. The company's diversified portfolio and operational capabilities provide resiliency in cash flow throughout the commodity cycle. The capital spending in the first quarter was in line with the business plan and is weighted towards the first half of the year. The company will continue to complete wells and reduce inventory in the first half of the year. The acquisition of CrownRock is also mentioned.

The company is working with the FTC to close the CrownRock acquisition in the third quarter of this year. They have also announced a divestiture program to reduce debt and plan to resume their share repurchase program after meeting their debt target. The company's employees are a key factor in their success, and they are working hard to execute their strategy and achieve superior operations.

Richard Jackson, who is part of the Q&A session, answers a question about the company's outlook for the Permian and Rockies regions. He explains that they are pleased with their first quarter results and that they will be increasing production in the second quarter. He also mentions that they will be reducing rigs in the Permian while still achieving an 18,000 barrel per day increase in production for the second half of the year.

The company is front loading its capital and facilities in the first half of the year to prepare for a production increase. The secondary benches are performing well and the base decline has improved. The company is seeing capital efficiency through cost improvements and well design changes. Overall, the company's capital intensity has improved compared to last year.

Vicki Hollub, CEO of Occidental Petroleum, discusses the company's midstream performance and how it is not affected by constraints in moving oil and gas out of the Permian Basin. She explains that the company has capacity and flexibility to trade and move molecules to other markets, which helps mitigate any volatility in the midstream business. This allows the company to take advantage of opportunities and offset any potential impact on their upstream realizations.

Paul Cheng from Scotiabank asks a question about the performance of secondary branches in Delaware and the DJ in the Permian and Rockies. Richard Jackson explains that their approach to optimizing recovery is unique to each area and involves considering subsurface and reservoir factors. He also mentions their success in the Midland Basin and the potential for outperformance in the DJ.

The company has seen great performance in the Rockies region due to their subsurface approach and operational improvements. They have also seen improvements in both early time and long-term performance. They are confident in their ability to achieve up to $6 billion in non-core asset sales, as there is a lot of interest in the market.

The company has announced plans to divest between $4.5 billion and $6 billion, and has received a high level of interest from potential buyers. They are evaluating their portfolio to identify assets that do not fit in their development plan but could be attractive to other companies. Their main criteria for divestment is the strategic fit and potential value of the asset. They are committed to achieving their divestment target within 18 months and using the proceeds to pay off their debt.

Vicki Hollub discusses the current state of the chlorine and caustic soda markets, noting that OxyChem has achieved record earnings in recent years. However, due to inflation in the United States and weak demand in China, prices are currently low. Hollub believes that once inflation stabilizes and demand in India and other countries increases, prices will begin to rise again. She also mentions that OxyChem exports and is impacted by the international market. Overall, she believes that the market is currently at a bottom and expects prices to recover in the next 18 months.

The speaker asks about the $400 million from midstream contract roll offs and how much of it is locked in and the speaker expresses confidence that they will achieve it. The speaker also asks about the 2Q OpEx guide and the speaker is told that it is mostly driven by the impact of the Gulf of Mexico production.

Sunil Mathew and Richard Jackson discuss the improvement in Gulf of Mexico production and the impact of the pipeline outage and planned shutdown on operating costs. They also address Vicki's Permian D&C plans, which include running an average of 21 rigs this year and a sequential ramp down in the second half of the year. They mention the potential for operational efficiencies to impact production plans and the success of cost improvements.

The company is seeing good outcomes from working with service providers and is increasing utilization by 10%. They expect to see savings and increased production in the second half of the year, which will set them up for a more optimized pace in 2025. The company is doing well in both the Delaware and Midland areas, with the cost of the wells being a key factor in economics.

The speaker discusses the impact of drilling and completion costs on the profitability of wells in the Permian Basin. They mention the lower costs associated with shallower drilling and the importance of considering facility costs in the development process. The speaker also mentions the success of secondary bone springs wells and how it could potentially increase the overall inventory count.

The company has been able to replace drilled wells with improvements in inventory, through appraisal activity and production improvement and cost reduction. They aim to have less than $40 break-even inventory and have a target of adding 450 wells with a break-even of less than $50. The bulk of this improvement will come from the third Bone Spring target, with some also coming from New Mexico and shallower Bone Spring. They are also looking at co-developing some of the Bone Springs with the core Wolfcamp.

The speaker discusses the company's focus on optimizing their development plans in the Midland and Delaware regions. They also mention the upcoming acquisition of CrownRock and the potential impact of SB24, a production fee initiative in Colorado.

The speaker believes that the agreement reached in Colorado is beneficial for both the state and investors. They do not see the fee as a burden and believe it will allow for positive actions to be taken, such as reducing environmental impact. The reduction in oil cut this year is mainly due to the Gulf of Mexico shutdown, and there are no other significant changes in the company's portfolio. The speaker also mentions the importance of deleveraging and potential noncore asset sales.

Vicki Hollub clarifies that the company's intention is not to emphasize cash flow returns from divestiture candidates, but rather to make value-based decisions and divest noncore areas. The conference call has ended.

This summary was generated with AI and may contain some inaccuracies.