US oil company Occidental Petroleum aims to raise margins and re-establish dividend payments for its shareholders rather than focus on growing its oil production volumes, its chief executive said.
“We don’t see that in 2022 and beyond that we need to grow significantly,” Vicki Hollub told an online panel on Thursday at the Energy Intelligence Forum. “Our focus in the next 10 years will be more to re-establish a dividend and grow that dividend.”
She said the capital allocation will be critical and “every dollar we invest goes to the projects that deliver most value over time”.
“The investors will be watching very closely what we do and how we do it, and we are trying very hard to continue to increase our margins rather than grow our volumes.”
Occidental, listed on the New York Stock Exchange, is one of the top energy companies in the world with oil and gas assets in the US, Middle East, Africa and Latin America. It is also active in Abu Dhabi and Oman.
“Right now our break-evens are less than $40. The lower we can get those break-evens the better we are able to continue to provide value in a low cycle environment,” Ms Hollub said.
The company does not expect US oil production to grow significantly to reach previous peak levels of 13 million barrels per day. It will remain above 12 million barrels per day, she said.
Earlier this year, Saudi Arabia's energy minister Prince Abdulaziz bin Salman also signalled the end of an era for the US shale oil industry and said: "Drill baby drill is gone for ever".
The development is expected to be positive for oil prices, which are currently trading higher on the back of improved demand as global economies recover from the coronavirus pandemic.
Occidental was awarded a $140 million contract to develop an onshore block by Abu Dhabi National Oil Company last year.