Most of the pushback on Credit Suisse's upgrade of Occidental Petroleum Corporation (NYSE:OXY) was in line with its "pre-drill expectations," e.g., the relatively faster growth of pure play Permian names, the dividend policy relative to reinvestment in the rocks to drive faster headline growth than 5-8%. There are those who question the shale inventory – Credit Suisse tries to address this in yesterday's report.
There are those who question OXY’s productivity. In this brief report, Credit Suisse shows some of the recent state data. It paints a picture of OXY showing very strong improvements in the New Mexico Delaware, even outpunching industry leaders like EOG. The NM Delaware could have some of the best returns in the whole of US shale. In the Southern Delaware, there is an improving trend, perhaps with room to go.
In the Midland, the rate of improvement is very strong indeed. After adding in the effort that OXY is making on the cost side through its logistics hubs, Dynamic drilling, dual laterals and other technologies, and adding in the "life of well" experience of OXY and the synergy with the EOR and Chemical business, the Permian Resources should deliver leading capital productivity.
The companies mentioned in this article are subjects of research reports issued recently by investment firms. Their opinions in no way represent those of VoiceObserver.com