Why is it good that oxy is focusing on Permian bay

Occidental Petroleum's focus on the Permian Basin is strategic for several reasons:

1. Abundant Oil Reserves: The Permian Basin is one of the largest and most productive oil fields in the United States, with sufficient reserves to support continued development. Occidental's CEO, Vicki Hollub, has stated that the basin has enough additional oil to develop and will continue to grow in the next few years. This provides a solid foundation for the company's operations and growth prospects.
2. Operational Efficiency and Cost Savings: As one of the largest producers in the Permian Basin, Occidental can leverage its scale to cut costs and improve operational efficiency. This is evident in the company's history of cost management, having reduced capital spending by 49% in 2016 to generate $2.5 billion in operating cash flow.
3. Dividend Yield and Financial Health: Occidental currently offers a high dividend yield of 5%, making it an attractive option for income investors. The company has a history of increasing its dividend for 14 consecutive years, demonstrating financial stability and a commitment to returning value to shareholders.
4. Long-Term Growth Potential: The Permian Basin is expected to see an increase in average production of 13% to 21% in 2017. Occidental's focus on this region positions the company to capitalize on this growth, which could lead to increased profitability and shareholder returns over the long term.
5. Strategic Partnerships and Investments: Occidental's involvement in the Permian Basin is not only about production but also about strategic investments in technologies like carbon capture and storage (CCS), which are seen as a key component of the energy transition. The company has received funding from the U.S. Department of Energy to accelerate the development of Direct Air Capture (DAC) facilities, indicating its commitment to innovative and sustainable oil extraction methods.
6. Debt Management and Balance Sheet Improvement: Occidental's divestment efforts, including the potential sale of assets in the Permian Basin, are part of a broader plan to slash debt. The company's debt stood at $18.5 billion at the end of 2023, and the sale of assets could help reduce this figure, improving the company's financial leverage and strengthening its balance sheet.

In conclusion, Occidental Petroleum's focus on the Permian Basin is a strategic move that leverages the region's abundant oil reserves, operational efficiency, and long-term growth potential, while also demonstrating the company's commitment to financial health, shareholder returns, and sustainable energy practices.