(Reuters) – U.S. oil and gas producer Occidental Petroleum Corp said federal drilling permits are moving forward in the Permian Basin shale field following a federal pause this year, but a longer-term ban could hurt U.S. oil output.
Producers are likely to continue to be able to secure permits on existing federal leases, but Chief Executive Vicki Hollub said on Tuesday she was concerned about the possibility of a federal moratorium on new oil and gas leases going forward. The Biden administration is reviewing the federal oil and gas leasing program.
“That would be bad for our industry. It would be bad for the United States,” Hollub said on an earnings call with analysts. “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.”
Occidental is one of the biggest U.S. shale producers but is setting ambitious climate targets and trying to turn its low-carbon unit into a profitable business.
Though shareholders want to know more, it is “not yet able” to detail the potential financial returns from its low-carbon unit, Hollub said.
Occidental reported a first-quarter loss after market close on Monday that beat Wall Street expectations. But shares traded down 7.4% to $24.67 on Tuesday afternoon.
Despite a better outlook for chemicals and midstream, shares fell due to “the slower pace of reduction in the company’s net debt position,” said Peter McNally, analyst with Third Bridge Group, who added, “The balance sheet has been the critical issue since the acquisition of Anadarko Petroleum in 2019.”
Occidental has struggled to pay down debt amassed in the $38 billion deal. It cut debt by about $3 billion last year but in the first quarter reduced net debt by about $279 million, according to regulatory filings.
(Reporting by Jennifer Hiller; Editing by Chizu Nomiyama and Marguerita Choy)
