Occidental raises 2015 output guidance by 40pc

OREANDA-NEWS. Occidental Petroleum raised its output guidance for the rest of the year by about 40pc, joining a small but growing group of independent producers showing an improved outlook amid higher prices and declining costs.

First quarter results and a more optimistic outlook for the remainder of the year are leading the producer to target output growth of between 60,000 and 80,000 b/d of oil equivalent (boe/d) over last year's rate of 591,000 boe/d, it said in a statement. That is 20,000 boe/d higher than its previous guidance for the year. Occidental also expects to generate enough cash to cover dividends and capital expenditure (capex) by the fourth quarter, assuming \$60/bl crude.

The change in outlook makes Occidental the most aggressive among large US independent oil and gas producers to bet on a recovery. Most others including EOG Resources are more cautious, holding to their existing guidance and flagging a possible upward revision only if the improvement in prices remain sustained at current levels.

Oil has risen nearly 35pc from the lows touched for the year in March, drawing support from the sharp pullback in drilling activities in the US and growing unrest in the Middle East.

The company's total average oil and gas output increased by 72,000 boe/d, or 13pc, to 645,000 boe/d from 573,000 boe/d a year earlier, excluding its Hugoton operations. US output rose by 24,000 boe/d to 326,000 boe/d in the first quarter, with the majority of the increase coming from oil, which grew by 25,000 b/d to 198,000 b/d, driven largely from the Permian acreage in Texas.

Permian output increased to 98,000 boe/d from 67,000 boe/d a year earlier, but output fell in the midcontinent and other areas to 83,000 boe/d from 90,000 boe/d.

Occidental earned \$43.66/bl for US crude versus \$92.56/bl a year earlier, and \$17.32/bl versus \$42.06/bl for natural gas liquids (NGLs). It earned \$2.49/mcf for the quarter versus \$4.39/mcf a year earlier. In Latin American the company earned \$47.70/bl for crude compared with \$98.53/bl a year earlier and \$53.98/bl from the Middle East and North Africa versus \$104.65/bl a year earlier.

Total worldwide earnings for crude was \$48.50/bl in the first quarter compared with \$98.14/bl a year earlier. NGLs earnings were \$17.96/bl versus \$41.70/bl last year and natural gas was \$1.66/mcf versus \$2.90/mcf.