Feb. 14 (UPI) — U.S. oil producer Occidental Petroleum Corp. said its production from one of the premiere shale basins in the country improved, but pre-tax income faltered.
At the end of 2017, the company had proven global reserves of 2.6 billion barrels of oil equivalent, of which 58 percent was oil. Of its total reserves, 60 percent is in the United States.
In the Permian basin, which extends over parts of Texas and into New Mexico, production improved from the third quarter by close to 15 percent due to increased drilling and productivity.
“All of our segments generated significant free cash flow, and we achieved record-breaking well results in our Permian resources business,” President and Chief Executive Officer Vicki Hollub said in a statement.
Pre-tax income for the fourth quarter was $44 million, compared with $220 million in the third quarter. Net income was $497 million, compared with a net loss of $272 million.
In its latest drilling productivity report, EIA found most of the new oil production for March is expected from the Permian and Eagle Ford shale reservoirs in the U.S. south. Permian production is expected to increase by about 2.5 percent from February.
In analysis of U.S. shale oil and gas production gains, Simon Flowers, the chief analyst at consultant group Wood Mackenzie, said the “stars seem aligned” for output in the Lower 48, as improved efficiency and market conditions are helping to establish the United States as the world’s leading producer.
U.S. shale oil and gas operators like Occidental are expected to generate positive cash flow this year, two years earlier than Wood Mackenzie expected. Shale has been more resilient to historically low crude oil prices than expected, but Flowers said discipline will be tested as the market recovers.
“What’s not clear is how companies will respond,” he said. “Will higher prices undermine resolve and the focus shift back to volume?”