July 22 (Bloomberg) -- Occidental Petroleum Corp., the biggest oil producer in Texas, said its discovery of a natural- gas and oil field in California holding the equivalent of as much as 250 million barrels of crude may be the state’s biggest in 35 years.
The field in Kern County is 80 percent-owned by Occidental, the Los Angeles-based company said today in a statement. The find has the potential to boost Occidental’s California reserves by 28 percent.
Chief Executive Officer Ray Irani said in an interview last month that the company plans to drill 20 exploratory wells this year in California to tap prospects near Long Beach and in other parts of the state that may hold hundreds of millions of barrels of crude.
“We believe this to be the largest new oil and gas discovery made in California in more than 35 years,” Irani said in today’s statement.
Occidental rose 95 cents, or 1.4 percent, to $70.94 at 4:55 p.m. in after-hours trading. The stock has risen 18 percent this year, outperforming its largest U.S. rivals, Exxon Mobil Corp., Chevron Corp. and ConocoPhillips, which have declined.
Reserves Boost
Occidental estimated the field holds the equivalent of 150 million to 250 million barrels of crude, based on results of six wells drilled in the formation. At the high end of that range, the company’s 80 percent stake would swell its California reserves to the equivalent of 908 million barrels of oil.
More work is required to define the extent of the field, Occidental said. About two-thirds of the hydrocarbons are in the form of natural gas. Kern County, home to the city of Bakersfield, has been a petroleum-producing region since the 1860s, when tar was mined to make kerosene and asphalt, according to the San Joaquin Geological Society.
California is the third-biggest oil-producing U.S. state, behind Texas and Alaska, Energy Department figures showed. California held 3.3 billion barrels of proved reserves at the end of 2007, or about 15 percent of the nation’s total.
Land Grab
Occidental began acquiring leaseholds on privately held California land five years ago with a view to tapping reserves that were overlooked or dismissed by rival companies three decades ago, Irani said in the June 24 interview. Those leases encompass 1.1 million acres, an area three times the size of New York City.
New methods for reading seismic data and other technological advances have allowed the company’s engineers to detect petroleum, Chief Financial Officer Stephen Chazen said during the same interview.
Occidental’s California drilling program is targeting fields with oil and natural-gas reserves equivalent to at least 150 million barrels of crude each, Chazen said last month. That would be about one-third the size of Chevron’s deepwater Tahiti field in the Gulf of Mexico, which began production in May.
Irani, 74, raised production and reserves in each of the past three years. Exxon Mobil, Chevron and ConocoPhillips all had declines in two or more of those years.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
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