Occidental Petroleum:Right Place Wrong Time?
Outsized Permian wells strengthen volume ramp validity; path to CF neutralityremains steep
Increasing lateral lengths (8k ft vs. 5k ft prior) in the Permian resulted in 30day IPrates >4mboe/d in the 2nd Bone Spring, impressive even by Permian standards.The strong results should provide a degree of comfort to sequential 6%/17% total/Permian ramps in 4Q, though at a time when the market seems to be rewardinga more cash conscious approach, we wonder how OXY's structured outspend (~$500mm in 3Q, funded through asset sales) into 2019will be received despiteoffering ~1% premium to peers on dividend yield. HOLD. What we like: NM BoneSpring wells averaging 3.8mboe/d 30day rates, 4Q total volume growth ~3%above consensus, midstream guide +$66mm q/q. What we didn't like: $500mmoutspend in 3Q, 4Q chemical guide below expectations.