How Oxy’s CEO weathered the oil bust and came out stronger
An Alabama native and Crimson Tide alumna, Vicki Hollub started her oil and gas career in 1981 working in Mississippi with Cities Service, the company best known for founding the Citgo brand. One year later, Los Angeles-based Occidental Petroleum Corp. bought Cities Service, and Hollub embarked on her long Oxy career that, in 2016, made her the first female chief executive of a major oil company. Hollub has worked with Oxy everywhere from Ecuadorean jungles to Russia, but she’s spent much of her time in Houston, which became Oxy’s headquarters in 2014. Oxy isn’t leaving Houston, but it aims to leave its Greenway Plaza headquarters for a bigger space, possibly in the Energy Corridor complex being abandoned by ConocoPhillips, which is switching to a new Energy Corridor hub.
Hollub took over at Oxy after it moved to Houston and also after it went on a divestment spree, selling pipeline assets and much of its acreage in the Middle East and northern Africa. The company also sold off its U.S. assets in the midcontinent and Rockies regions, as well as South Texas’ Eagle Ford shale and North Dakota’s Williston Basin. Oxy even spun off its California business into the California Resources Corp.
All the while, Oxy was doubling down on West Texas’ Permian Basin, even before the Permian started booming again. Hollub took over during the recent oil bust, but that region is now going gangbusters — and so is much of Oxy’s business.
Q: Does Houston feel like home for Oxy now?
A: We’ve always had a big presence here. We were somewhat always a Houston company. We had this almost disconnected corporate office in LA. But I think the heartthrob of the company has always been in Houston. So when (former CEO) Steve Chazen had the opportunity to move us here, he took the first opportunity he had, and certainly that was a great decision because it connected the corporate part of the company with the main part of the operations.
Q: Why did Oxy perform relatively well during the recent oil bust that lasted from late 2014 into 2017?
A: Right before the downturn started, we had started a portfolio optimization process. So, during the downturn, when you saw other companies selling their assets, they were doing that mainly to gain some cash because they needed cash. What made us stronger is we actually exited 40 percent of our production, but then we were able to make that up by investing in our very highreturn Permian Resources business. So we exited low-margin, low-return businesses — four internationally, three domestically — and then we spun off California. And then we were able to restore that cash flow with investments in our highest-return asset, the Permian business. We never wavered from that commitment, and it made our company stronger. That was incredibly tough to do because we got hit with not only losing 40 percent of our production and associated cash flow, but with declining oil prices happening at the same time. What it did was it made it us very motivated to weather through it and survive it.
Q: Besides the acreage, what’s given Oxy an edge in the Permian?
A: We were able to work on our subsurface characterization so that we believe we’ve now developed a breakthrough in how we develop our Permian shale business. So the productivity of what we’re developing now is much higher than it was before. If you looked at the top 50 wells in the Permian Basin over the past year, 21 of those are our wells. So with the 3D seismic that we have — and we have 10,000 square miles of it — that coupled with our broader data analytics initiative that we started in late 2016, that enabled us to figure out what it really takes to complete the wells in the shale play.
combination of Permian shale coupled with an enhanced oil recovery business in more mature parts of the Permian? (The process involves injecting gas and carbon dioxide into wells to extract additional volumes of oil.)
A: Our enhanced oil recovery business is very low production decline. That gives us a lot of support for our short-cycle, highdecline Permian shale business. Most of the other players in the Permian only have the very high declines from their shale wells.
Q: What is Oxy’s role in the industry with respect to climate change concerns?
A: A big piece of the company’s sustainability is how do you deal with climate change. We are the only company in the United States that has an MRV (monitoring, reporting and verification) plan from the EPA, which means we’re the only company that has a permit to sequester carbon dioxide for our EOR. We believe our niche in this environment is to be the company that can help the United States lower CO2 emissions. We can do that by sequestering CO2 in the Permian, because we’re the largest operator of CO2 enhanced oil recovery all over the world. So the sustainability around climate change gives us the edge in the U.S. to be the leader to help that.
Q: For two years it’s been highlighted that you’re the first female CEO of a major oil company. Do you get sick of those female CEO questions?
A: I certainly don’t mind people asking the question. I think it’s important for people to know that being the first CEO is not the most important thing. The most important thing in our industry has been those many women over the years who have done even more difficult things. There were the first women to go out and work on platforms in the Gulf of Mexico and the first women decades ago to go out and work in the rough, scary North Sea. Those were true trailblazers. Being the first female CEO is not as impressive as what so many achieved going back decades ago.