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

And in the Gulf of Mexico, we’ve taken the opportunity to work on the — not only the surface to ensure that we could increase our run time there with reduced capital and not being as aggressive with drilling wells out there, we were still improving productivity by spending dollars on improving run time and also putting in subsurface pumping equipment to expand the radius of our spars and to also increase productivity and extend our reserve lives out there. So the work that we’ve done in the Gulf of Mexico has really kept us prepared to get back to sustaining levels, both in the Gulf and EOR, without any sort of issues beyond the next year or 2.

Roger Read : Okay. And just as a quick follow-up. Any issues with permitting anywhere on federal lands or in federal waters?

Vicki Hollub: I’m sorry, what was that? Permitting —

Roger Read : Yes, permitting since you’re not so much federal onshore, but federal offshore.

Vicki Hollub: Federal offshore, we’ve had — not had issues permitting thus far. Even when the permitting moratorium came out, we were able to still get things done and get things approved. And so I don’t see the permitting point to be an issue for us offshore at this point.

Operator: And our next question today comes from John Royall with JPMorgan.

John Royall : So just looking at your guidance for domestic OpEx per barrel in 2023. It looks like it’s up about 6.5% from last year. And more in line with the 2H of ’22, which I think Rob said in the prepared comments. Just comparing that with the 15% inflation on the capital side, can you talk about the gap there on why the OpEx inflation rate is so much better than the CapEx inflation rate?

Vicki Hollub: Yes. I’ll just reiterate the comments I made about the and then Richard’s got some information on onshore. But for the Gulf of Mexico, as I was saying, some of the work that we did was just to prove up our ability to increase our run time there. And that in and of itself is going to increase your OpEx a little bit this year and a little bit for next year, but it’s delivering in terms of barrels because, as you’ve seen, the Gulf of Mexico has helped to offset some of the declines from other areas and some of the storms. So we’re better prepared offshore now for higher productivity. Richard, do you have some on the permits?

Richard Jackson: Yes. Maybe just a little bit on onshore OpEx. I mean, one major difference when you look at capital on that 15% and then kind of what we’re seeing in OpEx is OCTG. While we have some exposure to that in our kind of maintenance activities, it’s far less pronounced, and that was the single biggest category really last year for us. So really, OpEx, it’s been a couple of things. We break it down into inflation and then scope and scope would be some of the maintenance activities like Vicki’s describing for the GoM so really 2022 from an OpEx perspective, U.S. onshore, most of it was really WTI or kind of price indexed inflation, things like power, CO2 price which were a little unique there, gas processing, things like that.