Oxy executives brief on Bakken exit

By The Bakken Magazine Staff | December 14, 2015

Occidental Petroleum Corp.’s role in developing the Williston Basin will be nonexistent by year’s end. The globally focused oil and gas producer has agreed to sell its 303,000 net acres of oil producing and unconventional properties in the Williston Basin to Lime Rock Resources, a Houston-based oil and gas developer. Once the sale is complete, Oxy will receive roughly $600 million for its Bakken assets.

Details of the asset sale were discussed briefly by several Oxy executives during a third-quarter investor call. During the hour-plus call, the subject was discussed sparingly. Low oil prices are forcing the Oxy team to shape its business to operate profitably, a process that has pushed the company’s focus to core assets with long-term development options and infrastructure already in place. Regardless of Oxy’s acreage potential in the Bakken, the exploration and production entity is now focused on the Permian Basin, where it is the largest oil producer in the play.

A reduced 2016 budget means Oxy can only invest certain assets. “We just can’t see a situation where we would invest in it [Williston Basin], given what we have in the Permian,” said Steve Chazen, Oxy CEO. The $600 million can be used to run four rigs in 2016, an investment that would yield more Permian-based hydrocarbon production than it would in the Bakken, he added.

Vicki Hollub, executive vice president of oil and gas, offered more color on Oxy’s exit from the Bakken during the call. Curtailed spending in the Bakken resulted in a production decline of roughly 25 percent quarter over quarter when annualized, she said. “We expected the production to continue to decline given our limited capital investments in the basin,” Hollub said.

Chazen said the company felt comfortable with the sale price of the Bakken assets, despite reports from earlier in the year that listed Oxy’s Bakken asset value in the billions.

The Bakken isn’t the only region Oxy will exit or perform an activity reduction in. The company said it will also work to pull back activities from the Middle East and North Africa.