California city’s drilling moratorium blocks Occidental’s plan

A unanimous vote from Carson, Calif., to impose a 45-day moratorium on new oil and gas drilling effectively stalls plans by Occidental Petroleum (OXY -3.5%) to develop ~200 new wells in the area.

The city also voted to stop negotiations with OXY over proposed drilling plans until the company completes a planned spinoff of its California business.

Two test wells in the area pulled enough oil from deep underground that OXY believes it can generate 6K bbl/day of oil and 3M cf/day of natural gas when peak production is reached.

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Comments (10)
  • JAKirk
    , contributor
    Comments (2) | Send Message
    Another nail in the coffin of California's economy.
    20 Mar 2014, 01:27 PM Reply Like
  • User 353732
    , contributor
    Comments (5166) | Send Message
    The markdown in OXY's value is a gross over reaction.
    These wells will be drilled; if not this year, then next and by OXY California, whose major competitive advantage will be neither technology nor excellence in E&P but ability to navigate its way through the regulatory swamps and political cesspools of California.


    Of course, most OXY shareholders will sell their shares in the spin off as soon as they can but maybe California public pension funds can become large institutional investors......
    20 Mar 2014, 01:30 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (6225) | Send Message
    Agree with 353732, the wells get drilled eventually. It's possible that OXY Calif will trade at a discount when spun off, due to the regulatory climate in the state. But the oil will sit there in the ground and at some point the profits and jobs available will provide enough political clout to generate approvals.


    The town wanted time to study their legal rights, I guess they question whether they can forbid the development or not, or how good their reasons have to be. In due course I will own some of the spinoff, probably best to put it in the bottom drawer and forget about it for a few years.
    20 Mar 2014, 03:25 PM Reply Like
  • joelkatz
    , contributor
    Comments (570) | Send Message
    Hopefully this will trigger to rush the completion of the spinoff
    20 Mar 2014, 03:39 PM Reply Like
  • Derrick Hand
    , contributor
    Comments (37) | Send Message
    Headline: California to see a continued exodus of businesses from the land of Fruit and Nuts.
    20 Mar 2014, 04:20 PM Reply Like
  • texasredraider
    , contributor
    Comments (68) | Send Message
    Californians & their liberal governments can't get out of their own way. Such hypocrites, not to mention absolutely ignorant with respect to the relative safety of horizontally drilling & fracking the Monterrey Shelf. It would serve the state & various municipalities right to be forced into bankruptcy, since you cannot tax your businesses & citizens into oblivion.
    20 Mar 2014, 04:55 PM Reply Like
  • Jack Lance
    , contributor
    Comments (117) | Send Message
    Why would you suggest that oxy shareholders will sell spinoff shares asap ? If those California assets are valuable now, they will be more valuable when the new company, as JA Kirk said navigates its way through the California obstacle course and develops those resources. I'm holding both long term.


    Any info or guesses as to when the "spinoff" will take place ?
    20 Mar 2014, 06:51 PM Reply Like
  • trinh
    , contributor
    Comments (34) | Send Message
    Jack, my guess prior to this week was going to be Q1 2015, but in light of these developments, I might say earlier. The late April earnings conference call should shed some more light.
    20 Mar 2014, 07:44 PM Reply Like
  • wordwytch
    , contributor
    Comment (1) | Send Message
    Buying opportunity?
    21 Mar 2014, 09:50 AM Reply Like
  • joelkatz
    , contributor
    Comments (570) | Send Message
    Oh ye! Big time!
    21 Mar 2014, 10:11 AM Reply Like
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