OXY Occidental Petroleum Corporation

By Lynn Cook 

Occidental Petroleum Corp. is bailing out of its oil fields in the Bakken Shale in North Dakota, saying Wednesday that its operations there were losing money at current oil prices and showed little hope of becoming profitable.

The company is among the first to turn its back on what had been one of the fastest-growing oil fields in the U.S. before oil prices plunged last year.

Occidental said it will net $600 million by selling its Bakken acreage to an undisclosed buyer and will turn its attention to the Permian Basin in West Texas.

"With this $600 million we could run four to five rigs in the Permian for a year and generate more production than we would get out of the Bakken," said Steve Chazen, the company's chief executive. "We just don't see how it competes for capital in any reasonable price scenario," he told investors and analysts Wednesday on a conference call to discuss earnings.

The Houston-based company announced a $2.61 billion loss for the third quarter, compared with profits of $1.21 billion in the same period of 2014. Total revenue fell 36% to $3.12 billion.

The company's shares rose 5% to $73.74 by midday Wednesday but remain down almost 13% in the last 12 months.

Overall oil output in the Bakken has surged by a million barrels of oil a day since 2007, peaking last June at about 1.25 million barrels a day, according to federal data, and has since fallen by about 45,000 barrels a day.

Occidental hasn't been one of the biggest operators in the Bakken, which is dominated by companies including Continental Resources Inc., Hess Corp. and Whiting Petroleum Corp. But Occidental is among the biggest to abandon the field since U.S. crude prices began falling in June of 2014 from more than $100 a barrel to about $46 today. Two companies in bankruptcy protection, Samson Resources Corp. and American Eagle Energy Corp., have said in filings that they plan to sell their Bakken holdings.

The Bakken has a reputation in the energy industry of being an expensive place to operate, and it is still plagued by a lack of pipelines to move oil to refineries on the East and West coasts.

Occidental's Bakken output fell 19% in the quarter compared with last year, to 17,000 barrels of oil a day. Its production in West Texas oil increased 72% to 74,000 barrels a day during the quarter; its world-wide oil and gas output rose 16% to 689,000 barrels a day.

The company said it would also consider selling off oil fields in the Middle East and North Africa that aren't core to its operations. It cut capital spending by $300 million in the quarter, to $1.2 billion compared with $1.5 billion in the second quarter.

The latest quarter's results included about $3.4 billion in asset-impairment charges related mostly to lower energy prices, the company said. In the third quarter, Occidental said it got an average of $47.78 for a barrel of crude, down 12% compared with the second quarter and almost 50% below the price it got in the third quarter of 2014.

Chelsey Dulaney contributed to this article.

Write to Lynn Cook at lynn.cook@wsj.com

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(END) Dow Jones Newswires

October 28, 2015 14:57 ET (18:57 GMT)

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