Oxy keeps Colombia production plans despite capex cuts

Occidental Petroleum has maintained its 2020 production plans for Colombia despite slashing capital expenditure to mitigate the effects of the coronavirus pandemic. 

The Houston-based firm expects field shut-ins in Oman, Algeria and the US to trim its global second-quarter output by 45,000boe/d in the second quarter, reaching a peak reduction of 75,000boe/d in June.

"One third of that is because of OPEC-plus reductions related to Oman and Algeria and the remainder is domestic and will be economically driven – half in the Permian and the other half in the Rockies," Occidental investor relations VP Jeff Alvarez said in an earnings call. 

The company is expecting Q2 production of 1.34Mboe/d (million barrels of oil equivalent a day) to 1.4Mboe/d, including 286,000-296,000boe/d from its international businesses. 

In February, executives forecast 2020 production of 242,000-250,000boe/d from its international assets. 

Occidental's Latin America portfolio includes the prolific Caño Limón and La Cira-Infantas areas in Colombia as well as natural gas stakes in Bolivia's Tarija, Chuquisaca and Santa Cruz regions.

The company said it produced 34,000boe/d from its Colombian blocks in the first quarter. 

Forecast 2020 capital expenditure has been slashed by more than half since mid-March and now stands at US$2.4bn to US$2.6bn. The guidance for Occidental's international businesses has fallen to US$400mn from US$700mn.

CEO Vicki Hollub said the company maintained hopes of divesting blocks in Algeria and Ghana while leaving open the possibility of future sales elsewhere. 

"There are alternatives [to Algeria and Ghana]," Hollub said in the call. "But that has been put on hold now as we wait for travel restrictions to be lifted. It might not even be outright sales, it could involve JVs. There are lots of options, but not in this environment."

Hollub added the company would wait for a market recovery to "make sure we get maximum value" for its divestments, without revealing which other assets could be sold.