Occidental Petroleum Has One Rig Working In The Permian Basin; It Also Has $40 Billion In Debt
Occidental Petroleum Corp. will have just a single oil rig in the Permian Basin in the second half of the year, illustrating the scale of the shale industry’s pullback and the company’s debt woes. The deal to buy Anadarko Petroleum Corp. last year was supposed to consolidate Occidental’s position as the largest oil producer in the Permian, but instead did the opposite. In May of last year, Occidental was running 12 rigs in the shale region of West Texas and New Mexico, while Anadarko had a further 10, meaning the current plans represent a 95% decline in drilling.
EDIT
Occidental, with its near-$40 billion debt pile, is an extreme example of the retreat, but it’s not alone. Supermajors Exxon Mobil Corp. and Chevron Corp., long expected to pick up the slack from a slowdown from smaller rivals, will probably only have 14 rigs between them by the end of this year, down from about 70 a year ago. U.S. oil production will likely end the year close to 10.1 million barrels a day, about 20% lower than at the start, according to IHS Markit. Production will only increase by 350,000 barrels per day next year, according to the firm’s analysts.
For Occidental, the pullback is particularly humbling. The Anadarko deal was supposed to create a Permian giant to rival the majors, with strong cash flows and enormous growth potential. But the pandemic, combined with the debt, means that Occidental is now shrinking, both in terms of production and market value.
Occidental slashed its capital budget by more than half to $2.5 billion for the year. That’s below the $2.9 billion per year it needs to sustain production going forward. As such, output is declining quickly, with a 13% drop to 1.23 million barrels a day expected in the current quarter and a further 5% in the fourth.
EDIT
https://climatecrocks.com/2020/08/14/fracking-crash-continues/
= new reply since forum marked as read
