Surprise, Occidental Petroleum’s Foreign Division Is Very Profitable – Occidental Petroleum Corporation (NYSE:OXY)

Occidental Petroleum Corporation (NYSE:OXY) has a large international upstream presence that has been able to keep pumping at a profit during the downturn. Last year, Occidental’s foreign upstream assets generated a profit of $965 million while its domestic upstream unit posted a large loss of $1.552 billion. Here’s a look at Occidental Petroleum Corporation’s most profitable upstream unit.

Source: Occidental Petroleum Corporation

Overview

Occidental’s ongoing international production streams jumped from 183,000 BOE/d net in 2014 to 268,000 BOE/d net last year. Keep in mind this only factors in the assets Occidental has retained over the past few years, so output from its stakes in Iraq’s Zubair oilfield and Bahrain’s offshore Bahrain oilfield aren’t included.

More recently, Occidental Petroleum agreed to sell its 7% interest in Libya’s Nafoura oilfield to OMV in a deal that was finalized late last year. This is part of Occidental’s strategy to own only a handful of core Middle Eastern properties in stable countries that offer plenty of upside, and under agreements where the firm gets a decent cut of the profits (unlike at the Zubair venture where the cut per barrel was very low).

Oman, the UAE, Qatar, and Colombia make up Occidental’s core international footprint. The firm also produces a small 8 MMcf/d of gas net, or 1,000 BOE/d, out of Bolivia.

Last year, net to Occidental it produced 33,000 barrels of oil per day out of Colombia, 64,000 BOE/d from the UAE through the Al Hosn project (190 MMcf/d of dry gas, 20,000 bpd of NGLs, 12,000 bo/d), 96,000 BOE/d net out of Oman (77,000 bo/d, 115 MMcf/d), and 108,000 BOE/d from Qatar (72,000 bo/d, 8,000 bpd of NGLs, 166 MMcf/d).

Qatar update

Occidental’s Qatari production is split in part between its 100% stake in the country’s offshore Idd El Shargi North Dome, ISND, and Idd El Shargi South Dome, ISSD, fields and its 92.5% stake in Block 12 that houses the Al Rayyan oilfield. It’s worth noting that Occidental’s production contract for Block 12 expires at the end of May of 2017, and won’t be renewed. Production net to Occidental out of Block 12 is insignificant.

The terms for ISND and ISSD expire in 2019 and 2022, respectively, and it wasn’t mentioned on Occidental’s 10-K if those contracts will/can be extended. Production has grown by over 400% from the El Shargi fields since Occidental took over operations in 1994, aided by horizontal drilling, waterflooding, and investments in artificial lift systems. At the end of 2016, those two stakes were producing 95,000 BOE/d gross.

Another big investment Occidental has in Qatar is its 24.5% stake in the PSA (production sharing agreement) covering the nation’s massive North Field through mid-2032, with a five year extension, and the associated 24.5% stake Occidental has in Dolphin Energy Limited. The North Field is thought to hold 900 trillion cubic feet of recoverable gas weighted reserves.

The Dolphin Gas Project involves developing Qatar’s portion of…

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