Occidental Petroleum Corporation (NYSE:OXY) Q4 2022 Earnings Call Transcript

Vicki Hollub: I’ll take the LNG question first as Richard is pondering the other question. The LNG question, one of the things that we’ve always tried to do is make sure that we do things that are within our core competence. And so our core competence is getting the most out of oil & gas reservoirs and handling CO2. So LNG is not something that we would want to be a builder of. And if it’s something that we don’t want to be a builder of or use as a part of our strategy in our oil & gas development and . If it’s not a part of that, that’s not something that we would put our investment dollars in. We’re not going to go too far from what we know how to do the best.

Richard Jackson: Paul, this is Richard. I try to answer your question on the inventory. I mean, as you think about sort of a discount rate against that inventory, obviously, if it’s higher, that would change the numbers a bit, but we are still very strong in that inventory. For example, in the DJ as we think about that program and we look at gas price fluctuations, we look at plus 50% type program returns even at a lower gas price than what we show there. So it will impact things. But I think in terms of the strong returns that we have will exceed sort of our expectations on return on capital. And we continue to manage that inventory to drive really what we develop into those lower breakeven categories. Probably the other thing to say on that, basically, the inventory this year with the wells that we drill are all less than $40 breakeven.

So we’ve been able to high grade ahead of time to make sure that we have sustainability of those returns. And as I mentioned earlier, the wells that we targeted to replenish 100% of our drilled wells this year, we’ll expect to carry that same result.

Operator: And our next question today comes from Roger Read with Wells Fargo.

Roger Read: I’d like to follow up really, I guess, on the Gulf of Mexico, maybe secondarily, on the EOR side. Relative capital discipline or maybe even aggressive capital discipline over the last couple of years for the obvious reasons. Just wonder how you’re comfortable in terms of the outlook for the Gulf and also for EOR, just that whatever your base declines are now, any sort of catch-up capital maybe to maintenance or anything like that, but it sets you up flat in the Gulf and maybe flat to growing in the EOR over the next couple of years. Just what you did to get comfortable with that outlook?

Vicki Hollub: I think just starting to restore the capital to both of those assets have been helpful. And it is things that we never stopped doing was investing and making each of those operations better. And that’s why a little bit of the increase in OpEx is making in the EOR business getting some of the wells that had gone down during the pandemic, putting those wells back online, which increased our well maintenance budget. But those are very inexpensive and high-return barrels. So starting to do that. And we didn’t shut down any kind of maintenance around the infrastructure, no kind of decreases in capital around the maintenance of our equipment. So really, it was more from the standpoint of just getting wells back online for EOR.