In their third quarter 2024 earnings report, Occidental Petroleum (Oxy) demonstrated their commitment to enhancing well performance and production efficiency, particularly in the Permian Basin. The company’s strategic focus on advanced drilling techniques, real-time data utilization, and refined well planning has positioned them to deliver strong results, even in challenging market conditions. Let’s dive into what Oxy shared about their latest innovations and the outlook for continued growth.
1. Advanced Drilling Rigs: Plug-and-Play Automation
Occidental has embraced cutting-edge drilling rigs equipped with plug-and-play automation features. These rigs are designed for flexibility, allowing for the seamless integration of new technologies, such as enhanced downhole sensors and automated drilling controls. This adaptability has enabled Oxy to reduce rig downtime and boost efficiency. By standardizing the use of advanced rigs across their operations, Oxy can implement best practices faster, leading to more consistent and reliable well performance.
The focus on automation also supports Occidental’s broader strategy of minimizing operational disruptions. The company highlighted that the use of automated rigs has helped streamline drilling processes, reduce cycle times, and ultimately increase production rates. This investment in advanced rig technology reflects Oxy’s commitment to improving the reliability and cost-effectiveness of their drilling operations.
2. Real-Time Data Utilization: Wired Drillpipe for Enhanced Monitoring
Oxy is leveraging wired drillpipe technology to gather high-frequency, real-time data during drilling operations. This advanced approach provides instant downhole insights, allowing engineers to make immediate adjustments to drilling parameters. The use of real-time data has been a game-changer, helping Oxy address common challenges such as torsional vibration, pipe buckling, and unexpected formation changes.
By accessing detailed downhole information in real-time, Oxy can optimize well trajectories and enhance drilling precision. This technology has proven especially valuable in complex formations like the Delaware Basin, where subtle geological variations can impact well performance. The company’s use of wired drillpipe has improved decision-making capabilities, leading to better well outcomes and reduced operational risks.
3. Enhanced Well Planning: Optimized Designs for Complex Formations
Occidental’s well planning process has undergone significant refinement, focusing on optimizing well designs to suit the unique characteristics of the Permian Basin’s geology. The company reported that these improvements have doubled the footage drilled per day compared to five years ago. By leveraging advanced modeling and simulation tools, Oxy’s engineers can plan wells more effectively, reducing the time spent on-site and minimizing drilling costs.
Oxy’s approach to well planning includes detailed pre-drill assessments and continuous optimization throughout the drilling process. This iterative process has enabled the company to maximize resource recovery while maintaining cost efficiency. The result is a substantial increase in well productivity, with several wells in the Delaware Basin delivering higher-than-expected output.
4. Permian Basin Success: Surpassing Production Expectations
Oxy’s focus on drilling efficiency has been particularly evident in the Permian Basin, where the company achieved an average production of 729,000 barrels of oil equivalent per day (boe/d) in Q3 2024, exceeding guidance by 30,000 boe/d. This performance was driven by strong well productivity, integration of newly acquired CrownRock assets, and effective use of existing infrastructure to enhance project returns.
The successful integration of CrownRock has expanded Oxy’s footprint in the Midland Basin, adding valuable acreage and boosting production capacity. Oxy’s strategic use of optimized drilling and completion techniques has enabled them to unlock additional value from these assets quickly. The company also noted improvements in well uptime and reliability, further supporting their strong production results.
5. Outlook: Continued Efficiency Gains and Growth Potential
Looking ahead, Occidental is optimistic about sustaining their performance improvements and driving growth in the Permian Basin. The company plans to continue focusing on high-quality, low-cost assets, leveraging their technical expertise and advanced technologies to enhance well outcomes. Oxy’s outlook includes sustained production growth, supported by ongoing investments in drilling automation, real-time data analytics, and refined well designs.
Oxy’s strategy of prioritizing efficiency and technological innovation positions them well for future success, even as the industry faces potential headwinds such as fluctuating commodity prices and regulatory challenges. By optimizing their drilling operations and integrating new assets effectively, Oxy aims to maintain a competitive edge and deliver value to shareholders through robust production growth and disciplined capital management.
Conclusion
Occidental’s focus on advanced drilling rigs, real-time data utilization, and enhanced well planning is clearly paying off. Their strong performance in the Permian Basin demonstrates the benefits of embracing innovative technologies and refining operational practices. As Oxy continues to push the boundaries of efficiency and well productivity, they are well-positioned to capitalize on future growth opportunities in one of the most prolific oil-producing regions in the world.
Stay tuned for more updates as Occidental leverages its technological edge to drive success in the Permian and beyond.
