Upstream

Moratorium on new oil and gas leases would be bad for the U.S.: Oxy

A moratorium on new oil and gas leases going forward would be bad for the United States, top upstream producer Occidental Petroleum (Oxy) said.

Firstly, federal permits for drilling in the Permian Basin are moving forward after a pause earlier this year, when president Joe Biden took office; however, the possibility of a greater ban, especially for new leases is latent.

Secondly, producers like Oxy will be able to keep securing permits, but just on existing leases. Therefore, Oxy’s CEO, Vicki Hollub expressed her concern about the possibility of a federal moratorium on new oil and gas leases.

Thirdly, as we have reported previously, one of the first changes after the Biden administration, in regards to energy, was to stop new federal drilling permits, and a full review for the whole program on the future.

Moreover, thus Tuesday, during a conference call with analysts, Hollub said. “That would be bad for our industry. It would be bad for the United States. It would put our country in a position where we would likely have an even tougher time increasing production above where the United States is today.”

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Moratorium, added to debt, could hit Oxy

In addition, despite Oxy being one of the greatest oil producers in the U.S., recently launched a Low Carbon Venture; which is poised to give the company as much profit as its oil segment. However, and even though shareholders wanted to know more about that, Hollub said it was too early to discuss that.

On the other hand, Occidental reported a first-quarter loss on Monday. Shares traded down 7.4% to $24.67 on Tuesday afternoon, according to Reuters. According to Peter McNally, analyst with Third Bridge Group, quoted by the agency, Oxy’s shares fell due to “the slower pace of reduction in the company’s net debt position.

He also added. “The balance sheet has been the critical issue since the acquisition of Anadarko Petroleum in 2019.”

Finally, Occidental has struggled to pay its massive debt of around $38 billion after the Anadarko deal. Last year it cut the debt by $3 billion; and further reduced it by about $279 million, according to regulatory filings. Consequently, a moratorium on new leases could mean a substantial hit to its production.

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