OXY USA Transcript -- 2Q14; OXY USA Results In The Permian Lagging Their Competitors; KOG Transcript -- 2Q14

OXY USA

2Q14

 
At Seeking Alpha.

As usual, it's a very long and detail report. Interestingly, a word search of the document revealed no mention of the Bakken in OXY's 2Q14 earnings call transcript, which continues a trend with OXY.

The majority of the transcript appears to deal with the Permian Basin in west Texas, particularly the Delaware.

However, one analyst noted something regular readers are very familiar with: OXY's shale wells seem to "lag" competitors. From the transcript:

Analyst comment/question: Specific to the Permian, my understanding is that when we look at the publicly available information, your well results have been lagging what we would expect for peers in the area. And my understanding is that some kind of reporting issues with you guys. I wonder if you could share something with us.

Company response: Yes, Doug. Some of our reporting issues have been associated with what point in the flow back and production process of the well that we take the test. And some of our teams have been turning in 24-hour completion, initial completion rates to the railroad commission in the State of Texas that are not – when the well is fully cleaned up and not necessarily at its peak.

With that said, I’m going to just be honest with you that in some areas we still are lagging behind our competitors in terms of our initial rates in production. And that’s why we’ve been aggressively here recently trying to try new things with respect of our frac designs to improve our performance.

In the Midland Basin, South Curtis Ranch, we are getting better and we’re testing not only frac designs in terms of fluids and profit volumes rates and things like that. All of which are helping us to improve. But we are – we have discovered that our cluster spacing was not optimal for the initial fracs that we’ve done there.

Regular readers are aware of the IP and production numbers of the OXY USA wells in the Bakken. I track the OXY USA results here.

KOG

2Q14

Seeking Alpha link here. Incredibly short and no Q&A.

Data points:

• approximately 38,300 barrels of oil equivalent representing a 12% increase in average production versus the first quarter of 2014
• currently capturing approximately 70% to 75% of our produced gas and we expect continued improvement in this measure throughout the year as one of our largest midstream partners faces additional compression online later this summer [flaring as much as 30% of their natural gas]
• we expect to meet all gas capturing requirements laid out by the regulatory agencies by year end
• on the drilling side, we continued drilling on our Polar 2.0 Pilot down spacing program that is testing approximately 650 feet space in between wellbores 
• mobilizing our first Unit Corp BOSS rig into the basin (see this post)
• currently operating five drilling rigs and we’ll be back to six in the coming days and should be back up to our seven-rig level by early fourth quarter when we get the second BOSS rig mobilized
• Kodiak: an oily story; crude oil accounted for ~ 93% of our revenues recorded in the period
• reported fully diluted GAAP earnings per share of $0.08 for the quarter ended June 30, 2014 [big miss, by the way]
• average oil price before the effects of hedging of $91.72 per barrel. The average difference in the quarter was about 11.64 as compared to WTI
• cash margins nearing $63 per BOE
• a trend toward higher LOE costs with that average for the first half about $8.40 (?) per boe

Regarding higher LOE costs:

Obviously as production declines on these wells and we continue to incur fixed cost the overall LOE on a per unit basis increases. We’ve also continued to see higher expenses coming out the winter including incremental cost to prepare our operations for future cold temperature operations.

Lastly we have incurred cost, replaced pumping units with down-hole pumps that we believe are more effective. This effort has improved production rates, so we continue to change out additional wells. With all that said, we believe the LOE should moderate and should trend flat to downward as we move through the second half of the year.