Oxy to Drill 4-6 Exploration Wells in Block 15 by end-2004

US oil company Occidental Petroleum plans to drill 4-6 more exploration wells in Ecuador's Block 15 by end-2004, Oxy president Dale Laurance said in a conference call to discuss third quarter 2003 earnings. Oxy plans to drill 1-2 more wells by the end of this year, and 3-4 wells in 2004, Laurance said, adding that most of Oxy's wells in Ecuador have "greatly exceeded expectations." The new wells will be drilled at newly-discovered structures in the western part of the block, he added. The company covered the block with 3D seismic in 2001-2002, "so now we are just going in and harvesting that data with a long-term drilling program," Laurance said.

Oxy is currently producing about 36,000 barrels a day (b/d) at its Eden Yuturi field in the southeastern part of the block, and plans to ramp up production in the fourth quarter with the start up of the OCP heavy crude pipeline, Laurance said.

Laurance declined to give a peak production figure, but according to previous reports the company aims for 58,000b/d production by end-2003, and 70,000b/d - which is Oxy's take-or-pay capacity on OCP - by 2004. The new OCP pipeline is only about 65% full, meaning there is "quite a bit of room to crank rates up," Laurance said. "Continued exploration success will pay off now because we have a pipeline that's not nearly full," he said.

OCP completed final tests last week and was expected to start commercial operations at about 150,000b/d. It has a capacity of about 450,000b/d. "Nobody is going to run into pipeline limitations for quite a few years to come," Laurance said. Thanks to the completion and testing of OCP, Oxy's 3Q03 Ecuador production increased 108% to 27,000b/d compared to 13,000b/d in the same period last year. Occidental operates the 494,000-acre Block 15 in the Oriente Basin of northeastern Ecuador under a participation contract. Occidental holds a 60% interest with Canadian company Encana holding the remaining 40%.

Colombian production fell 18.4% from 3Q02 to 31,000b/d, meaning that Occidental's overall Latin American production increased 13.7% to 58,000b/d in 3Q03. Globally, Oxy announced net income for 3Q03 of US$446mn (US$1.16 per share), up from US$402mn (US$1.07 per share) for 3Q02, the company announced.

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