Occidental Will Not Challenge Fracking BansOriginally published May 5, 2014 at 3:05 p.m., updated May 5, 2014 at 5:04 p.m.
EDITOR'S NOTE: This story has been changed from the original to clarity that city councils in Los Angeles and Culver City have ordered staff to draw up moratoria on fracking and other drilling procedures, but have not yet passed any ordinances.
Occidental Petroleum Chief Executive Stephen Chazen told analysts Monday that the company’s new California spinoff will not drill in communities that oppose fracking.
Responding to an analyst’s query about the growing number of cities passing moratoria on the controversial procedure, Chazen said the spinoff – to be named California Resources Corp. – has plenty of holdings elsewhere in the state.
“To the extent that towns don’t want us there, we won’t be there,” Chazen said. “We’ve got lots of acreage in California. There are lots of counties and towns that would like us there, want the jobs. Some of these places that don’t want us have very high unemployment rates. And if they don’t want us there, it’s just fine.”
Fracking, or hydraulic fracturing, is the practice of injecting water, sand and trace elements of chemicals such as ethylene glycol (anti-freeze) into the ground to help extract oil and natural gas. Opponents have long claimed these chemicals can contaminate local groundwater supplies and cause respiratory problems for those living nearby. Some have linked fracking to increasing frequency of earthquakes.
City councils in Los Angeles and Culver City have ordered staff to draw up moratoria on fracking and other drilling procedures. Compton is considering a fracking ban; Beverly Hills last week rejected a ban.
In March, Carson passed a 45-day moratorium on fracking as the city was set to consider a massive Occidental drilling project in the northeast corner of the South Bay city. But following pressure from proponents of the project touting jobs and revenue for the city, the City Council last week voted to let the moratorium expire.
Chazen said fracking and the use of acid injection wells should be regulated by the state, “not regulated by every town.”
In other comments, Chazen said the California Resources Corp. spinoff will take place in June, with complete separation from parent Occidental by the fourth quarter. The spinoff will be in the form of a distribution of at least 80 percent of the new company’s stock to existing Occidental shareholders.
Earlier Monday, Occidental reported first quarter net income of $1.39 billion ($1.75 a share) compared with $1.36 billion ($1.68 a share) in the same period a year earlier, a 2.6 percent increase. Revenue rose 3.7 percent to $6.09 billion.
Analysts polled by Thomson Reuters had expected earnings of $1.70 a share on revenue of $6.2 billion.
Occidental shares rose 0.26 percent Monday to close at $94.70.