Occidental Petroleum (NYSE: OXY) has showcased a strategic shift in its 2025 operational and financial approach, emphasizing efficiency and disciplined capital management. The company’s Q1 2025 results reflect this transition, marked by reduced capital expenditures, optimized drilling activities, and significant debt reduction.
Capital Guidance Reduction
In Q1 2025, Occidental reduced its full-year capital expenditure guidance by $200 million and domestic operating costs by $150 million. This decision stems from continued operational efficiency gains and schedule optimization in the Permian Basin and Gulf of America. CEO Vicki Hollub stated:
“In the first quarter, our teams’ sustained focus on operational excellence unlocked additional efficiencies and supported the delivery of resilient free cash flow.”
She further emphasized the company’s financial strategy:
“We continue to rapidly advance towards our debt reduction goals, and we believe our deep, diverse portfolio of high-quality assets positions … .”
Quarterly Drilling Activity
Analyzing drilling activities, Q1 2025 witnessed 166 drilling records, a slight decrease from 173 in Q1 2024. This reduction aligns with Occidental’s strategy to enhance efficiency and reduce costs without compromising production targets.
Rig Count and Efficiency
Occidental’s focus on efficiency is evident in its drilling operations. The company reported a 17% improvement in drilling duration per well compared to 2024, leading to an 18% reduction in drilling costs. These improvements have enabled Occidental to operate with two fewer rigs while maintaining its production outlook.
Top 10 Contractor and Rig Activity
An analysis of contractor and rig activity for Q1 2024 and Q1 2025 reveals the top performers based on total activity:
Contractor and Rig Q1 2024 Count Q1 2025 Count Total Activity Precision 562 11 12 23 Precision 564 9 10 19 Citadel 5 12 4 16 Citadel 1 9 6 15 AKITA 524 9 6 15
This data underscores the consistent performance of key contractors and their contribution to Occidental’s drilling operations.
State Activity Comparison: Q1 2024 vs. Q1 2025
A state-wise comparison of drilling activities between Q1 2024 and Q1 2025 is as follows:
State Q1 2024 Count Q1 2025 Count Total Activity Texas 115 107 222 New Mexico (NM) 28 29 57 Colorado (CO) 23 23 46 Wyoming (WY) 5 6 11 Gulf of Mexico (FO GULF) 2 1 3
Texas remains the dominant state in terms of drilling activity, reflecting its strategic importance in Occidental’s operations.
Emphasis on Efficiency
Occidental’s commitment to efficiency is further highlighted by its drilling operations in the Delaware Basin. The company achieved a 15% improvement in drilling duration per well and an 11% reduction in average well costs compared to 2024. These gains are attributed to stable scheduling, enhanced well designs, and reduced non-productive time.
Additionally, the integration of CrownRock assets has provided opportunities to lower well costs by over $1 million per well across the remaining Midland Basin program through drilling and completion savings.
In summary, Occidental Petroleum’s Q1 2025 performance reflects a strategic emphasis on operational efficiency, disciplined capital allocation, and debt reduction, positioning the company for sustained success in a dynamic energy market.
