Occidental Petroleum plans flat 2024 production, to cut two Permian Basin rigs (NYSE:OXY)

Occidental Petroleum (NYSE:OXY) +0.2% post-market Wednesday after posting better than expected Q4 adjusted earnings and revenues, and saying it will reduce spending on U.S. shale operations as it seeks to improve cash flow to pay down debt.

Q4 production ticked up ~7K boe/day from the year-earlier quarter to 1.234M boe/day, exceeding the midpoint of company guidance by 8K boe/day, but average realized price for oil fell by ~2% Y/Y to $78.85/bbl; Q4 production from the Permian Basin rose 4.1% Y/Y to 588K boe/day.

Occidental (OXY) said it will trim capital spending in shale and exploration by ~$320M this year and idle two rigs in the Permian Basin, citing “efficiency and moderating activity,” while increasing capex in the Gulf of Mexico, chemicals and the enhanced oil recovery business.

The company guided for FY 2024 production of 1.25M boe/day, 1.3% above its output in Q4 2023, with planned capital spending of ~$6.5B, less than the $7B estimated by analysts; the projection does not include ~170K boe/day in expected output coming from the recent acquisition of shale producer CrownRock, which is pending regulatory approvals.

The extra cash flow generated from the slowdown will help pay debt linked to the $10.8B CrownRock acquisition.