India and China currently have high energy demands due to the growth of their economies, and gas from this region will find quick buyers as a result. The production of the LNG facility will not finish until 2018, however; as a result, this asset sale will reduce its cash requirement burden.
The company’s U.S. onshore assets in the Wattenberg field will propel future production growth. Production in the first quarter was around 113,000 barrels of oil equivalent (BOE) per day, showing growth of around 39% year over year. Production from these assets will continue to grow rate of around 30% in the coming year. Technology like horizontal drilling contributes to this growth. Horizontal drilling is used to drill sideways rather than conventional vertical drilling into the ground. This helps the company to reach oil deposits by drilling a shorter distance as compared to vertical drilling.
Reshuffling the operations for good
The California operation of Occidental Petroleum Corporation (NYSE:OXY) is a growth driver for the company. This operation will generate a free cash flow of $1 billion this year which the company will use to drill new wells. The company plans to drill around 125 wells next year and around 250 wells in 2015. The increasing production of oil is important for the U.S. as it helps to control the price of its oil imports from the OPEC nations. Occidental Petroleum Corporation (NYSE:OXY) has the benefit of increasing its oil production using the vast reserves of its California operations. With the help of rising California production, its total U.S. production will rise from 496 MBOE per day this year to 549 MBOE per day next year.
The company plans to separate its operation in the Middle East and North Africa (MENA) region from its U.S. operation. This plan for separation is due to the U.S. assets of the company being more productive and carrying less political risk than the assets in the MENA. The more productive U.S. assets require for more spending to increase productivity. This will enable it to increase production volume and maximize its assets. According to analysts, this separation could increase the company’s market value by $47 billion.
Conclusion
All three companies are reviewing their existing assets and restructuring them according to their growth potential. Apache Corporation (NYSE:APA) is selling GoM assets, which will improve its free cash flow. It is focusing on increasing production from U.S. onshore assets. Anadarko Petroleum Corporation (NYSE:APC) is selling its stake in the Mozambique fields to fund the development of a LNG terminal. Occidental Petroleum Corporation (NYSE:OXY) is organizing its business geographically to unlock the true value of its assets.
I recommend a buy on all the three stocks.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool owns shares of Apache. Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Don’t Miss Out on These Three Oil Exploration and Production Companies originally appeared on Fool.com is written by Madhukar Dubey.
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