American Oil and Gas Company Occidental Petroleum (NYSE: OXY ) announced this morning that it had found oil in the Gulf of America, formerly known as the Gulf of Mexico. The discovery was made at the Bandit site, about 125 miles south of the Louisiana coast, the company said.
During exploration at Bandit, Occidental observed high-quality, full-to-base oil-bearing Miocene sands. The company owns more than 45% of Bandit and is still examining the results of its discovery to determine next steps.
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Occidental also said there is the possibility of a subsea tie-back, or connection, to nearby Occidental facilities, which would allow the company to leverage underwater pipelines and infrastructure to connect to production platforms located in this new offshore well.
“Occidental is focused on strengthening our Gulf Americas portfolio,” Jeff Simmons, Subsurface Technologies’ senior vice president and chief petrotechnical officer, said in a statement. “We believe this discovery demonstrates the continued importance of the U.S. Gulf as a strategic source of reliable domestic oil supplies that support long-term energy security.”
Besides Occidental, here are two other oil stocks that could benefit from this discovery.
Oil production in the US Gulf accounts for about 15% of US oil production, making it a key strategic area for US oil companies.
In its fourth quarter earnings call, Occidental Petroleum’s management team said it plans to invest in US Gulf projects, particularly mid-cycle projects, which are typically preceded by higher capital investments that produce more reliable cash flow long-term. Occidental Petroleum views mid-cycle projects as a core part of its strategy.
Occidental, however, is only one of the three owners of Bandit Chance. Chevron (NYSE: CVX ) The project owns more than 37%, while Woodside Energy Group (NYSE: WDS )An Australian petroleum company, owns 17.5%.
According to digital news site Chron, the Bandit site, with its “very high-pressure conditions,” is considered one of the deepest wells in the U.S. Gulf to more than 40,000 feet. The project hopes to break the record set by the nearby Ardennes in 2013.
Experts believe that a successful well in the area could produce 230 million barrels of oil equivalent (BOE), far more than the average well produced in the Permian Basin, another major US oil field located in parts of western Texas and southeastern Mexico.
