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Tuesday, January 8, 2013

For Investors Only: OXY USA "Surges" On News It Has Cut Drilling Costs

Link for today's story. The headline says OXY has detailed the results of their cost-cutting efforts. The article is not particularly detailed. OXY is rising from $80 to $82/share today, presumably on this news. Most other oil companies are down slightly today, although KOG is bucking the trend, and is up a bit.

Here was an earlier Reuters story on cost of drilling in the Bakken, which noted, that back in October, 2012, drilling costs may have peaked in the Bakken.

By the way, when I googled "oxy usa cutting drilling costs Bakken," without the punctuation, of course, this was the first link. Hoo-ah!

Also, at the latter link is the data point that suggested to me that OXY USA  might release its acreage in Burke County; from the link:
Question (taken out of context):

You've added acreage in the Bakken. You've got a huge acreage position in California. Presumably, it doesn't make sense to just sit on these assets. Asset sales, joint ventures, bringing in others to drill this stuff, is that part of the plan? Or practically speaking, what does it really mean to cut CapEx when you've been building up these big acreage positions over the years?
Answer (taken out of context):
So I view it as sort of a deferral mechanism, rather than just sort of cutting it. But if they can't -- if they can't generate the returns in some of the assets, we might farm some out to people who might operate more efficiently.
If OXY has cut drilling costs, this should be true of others in the Bakken, also. 

2 comments:

  1. thanks bruce for continuing education to oxy stories just read sec filing ofcost cutting mr chavez highlighted california and permian along with omar but did not even aknowledge the bakken oxy has got to be totally clueless to the potential of the acreage they hold in southern part of field

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    Replies
    1. Thank you for your kind comments. It's been a learning experience for me, too. I have learned a lot from "my" readers. Thank you for taking time to comment.

      It will be interesting to see how California plays out. The geology is just part of the story. The politics will be the huge obstacle. They should do well in the Permian.

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