Occidental Petroleum Corporation (NYSE:OXY) Q1 2018 Earnings Conference Call Transcript
May 09, 2018 • 11:00 am ET
Good morning, and welcome to the Occidental Petroleum Corporation First Quarter 2018 Earnings Conference Call. (Operator Instructions). Please note, this event is being recorded. I would now like to turn the conference over to Richard Jackson, Vice President, Investor Relations. Please go ahead.
Richard A. Jackson
Thank you, Kate. Good morning, everyone, and thank you for participating in Occidental Petroleum's First Quarter 2018 Conference Call. On the call with us today are Vicki Hollub, President and CEO; Cedric Burgher, SVP and CFO; Jody Elliott, President of Domestic Oil and Gas; and BJ Hebert, President of OxyChem. In just a moment, I will turn the call over to Vicki Hollub. (Forward-Looking Cautionary Statements).
I'll now turn the call over to Vicki Hollub. Vicki, please go ahead.
Vicki A. Hollub
Thank you, Richard, and good morning, everyone. Our first quarter key highlights demonstrate the significant progress we made to increase the value of our business while delivering free cash flow and value-based growth. Our low oil price breakeven plan will be achieved in the third quarter, 6 months ahead of our original estimate. This accelerated schedule has been driven in part by better-than-expected performance from Permian Resources, which added 18,000 BOE per day this quarter, and is currently on a trajectory to deliver a 47% year-over-year growth rate. This will be accomplished with only 11 operated rigs.
We're truly doing more with less, as we demonstrated by our increased guidance in all business segments. It is important to note that our breakeven plan not only provides us with the ability to continue value growth in a low-price environment, it delivers significant upside in a higher oil price environment.
Slide 8 illustrates how leveraged our Permian EOR business is to higher oil prices. EOR will generate significant incremental cash flow in the prevailing environment. Similarly, chemicals and midstream have been positioned for long-term value creation, and are capitalizing on today's pricing and marketing spreads to generate substantial improvements in free cash flow versus our breakeven plan. We have increased our full year guidance for these 2 businesses, and they are actually capable of generating over $2 billion of annual free cash flow. As we did last year, we will continue to focus on enhancing our portfolio, increasing the value of our assets and using technology to drive superior operational performance.
On Slide 5, I'd like to point out a few important Permian Resources achievements during the first quarter. First, we continued to bring wells online at basin leading rates and Greater Sand Dunes with an average 30-day IP of 31 BOE per day. We also increased new well performance by nearly 50% in our current Barilla Draw development area. Third, to support our growth in the region, we brought online our logistics and supply hub, Project Aventine. We have already started to see the benefits of our differentiated approach in well cost improvement and reliability of wellsite resources.
Turning to Slide 6. Our value proposition has not changed. It is enhanced. The achievement of our breakeven plan strengthens our ability