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Western Oil (NYSE:OSSI) +0.2% post-market Wednesday after posting better-than-expected fourth-quarter adjusted earnings and revenue and saying it will reduce spending on U.S. shale operations in an effort to improve cash flow to repay debt.
Fourth quarter production increased by approximately 7,000 boe/d compared to the prior-year quarter at 1.234 mmboe/d, exceeding the midpoint of company guidance of 8 thousand boe/d, but the average realized price for oil fell approximately 2% y/y to 78.85 dollars per barrel; Fourth-quarter Permian Basin production increased 4.1% y/y to 588,000 boe/d.
Occidental (OXY) said it will reduce shale and exploration capital spending by about $320 million this year and idle two rigs in the Permian Basin, citing “efficiency and activity moderation,” while increasing spending of capital in the Gulf of Mexico, in chemicals and in enhanced oil recovery activities.
The company forecast production of 1.25 million boe/d for fiscal 2024, 1.3% above fourth-quarter 2023 production, with planned capital spending of approximately 6 $.5 billion, lower than the $7 billion analysts estimated; the projection does not include approximately 170,000 boe/d of expected production from the recent acquisition of shale producer CrownRock, which is awaiting regulatory approvals.
The additional cash flow generated by the slowdown will help pay down debt tied to CrownRock’s $10.8 billion acquisition.