Occidental Petroleum Corporation (NYSE:OXY) Q2 2020 Earnings Conference Call - Final Transcript
Aug 11, 2020 • 11:00 am ET
increasing utilization of the WES infrastructure.
Domestically, our midstream and marketing business has consistently and reliably delivered our products to market at times when other operators may have curtailed their production. The close integration of our upstream and midstream businesses enabled us to shut-in less production than originally planned. For the second quarter, shut-ins averaged about 29,000 BOE per day, of which approximately half were OPEC+ related. Shut-ins peaked in May at approximately 47,000 BOE per day. We have now brought back online the majority of the domestic production that was shut in for economic reasons with no detrimental impact to well performance across our portfolio.
We accomplished this with total oil and gas operating cost of $5.27 per BOE and domestic operating cost of $4.69 per BOE, significantly exceeding our guidance of $6.25 per BOE. Although a portion of the significant cost reduction relates to a deferral of activity, we expect our repositioned cost base to lower full year operating costs on a BOE basis by over 15% compared to our original 2020 guidance, as we maintain low operating costs in the second half of the year, even with declining production.
Our teams are continuing to deliver exceptional operational results as they deliver better-than-expected production at lower-than-expected costs. This quarter, we achieved our combined overhead synergy and cost-reduction goal by decreasing our overhead cost to below $400 million. On an annualized basis, we have fully realized $1.5 billion of total overhead savings versus our original synergies target of $900 million. We exceeded our original cost synergy targets and delivered these savings in less than a year after the close of the acquisition, a full year ahead of our original two-year plan.
We expect that more than 90% of the additional cost savings will remain permanent in future years. We also reduced our operating cost by $800 million, which is an additional $600 million more than our synergy target of $200 million. We expect more than two-thirds of the additional operating cost savings will be permanent even as we return to normalized activity levels.
Our capital spending was below $400 million in the quarter, demonstrating our agility in adapting to changing circumstances. We are committed to spending within our 2020 full year capital budget of $2.4 billion to $2.6 billion, and intend to moderately increase drilling and completion activities in the third and fourth quarters. We are restarting activity with our JV partner in the Midland Basin, and we'll be running two rigs there by the end of the third quarter. We are pleased to be continuing this development with EcoPetrol, who's an excellent partner for us.
In the DJ Basin, we will begin completing a select group of high-return, drilled-but-uncompleted wells. We will also selectively resume activity across other assets, including completing key development sections in Permian Resources within Greater Sand Dunes and Silvertip during the fourth quarter. In the Gulf of Mexico, we are restarting our drillship that was idled earlier in the year.
As all of our