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International Growth Boon For Occidental Petroleum


Occidental Petroleum Corporation has an extensive slate of international upstream projects worth taking a look at.

Several positive updates coming out of Colombia.

The firm is firing on all cylinders in the Middle East as well.

Occidental Petroleum Corporation's (NYSE:OXY) upstream growth trajectory is being propped up by its extensive international asset base. Colombia, Oman, and the UAE are home to powerful growth drivers that are guided to enable Occidental Petroleum Corporation reach the upper part of its 4%-6% core upstream growth forecast this year on the back of solid operational performance. While its Permian division gets a lot of attention, and for good reason, that shouldn't cloud over its strong international portfolio which also has a lot to offer.

Source: Occidental Petroleum Corporation Earnings Presentation


During the first half of 2016, Occidental Petroleum produced a net 36,000 barrels of oil and 8 MMcf/d of natural gas from Latin America. Occidental Petroleum's Colombian operations produce crude, and in Bolivia the firm pumps out natural gas. The vast majority of its Latin American output comes from Colombia, where Occidental's working interests range from 39% to 61%.

In 2013, Occidental produced an average of 27,000 bo/d from Colombia, which grew to 29,000 bo/d in 2014 and 35,000 bo/d in 2015. Its Bolivia natural gas output slipped from 12 MMcf/d in 2013 to 10 MMcf/d in 2015. While there isn't anything in the works to boost its Bolivia output, Occidental has some big plans for Colombia.

Occidental Petroleum is working with Ecopetrol (NYSE:EC) to develop two of Colombia's oldest producing oil & gas fields; the La Cira and Infantas. The Infantas and La Cira fields were discovered back in 1921 and 1923, respectively, and are estimated to have had a combined 3.8 billion barrels of oil originally in place.

A couple of decades after production started up, output from those fields peaked at ~65,000 BOE/d in 1939. Occidental started jointly operating both fields with Ecopetrol after reaching an agreement with the firm back in 2005. Since the partnership deployed enhanced recovery techniques to the area in 2006 via waterfloods, production has grown from ~5,000 BOE/d in 2005 to slightly over 40,000 BOE/d currently.

To keep the momentum going, Occidental and Ecopetrol decided to invest a total of $2 billion over the next ten years to boost the combined output from both fields to 50,000 BOE/d. That development will extract an additional 200 million BOE and keep production flowing for decades to come.

When waterflood operations first began the partnership was targeting just the "C zone" sandstone reservoir in the La Cira and Infantas fields, which pumps hydrocarbons out of the Mugrosa Formation. That was expanded to include the "A & B zones" in 2015 as part of Occidental Petroleum and Ecopetrol's ramp up.

An additional $20 million is being allocated to the region this year as cost savings from its Permian division exceeded expectations, freeing up extra capital. The additional $20 million is going to go towards developing the La Cira and Infantas fields, which Occidental will use to test out a waterflood pilot that...