Occidental Hits Big Oil in California's Kern County

Last Updated Jul 23, 2009 1:36 AM EDT

Occidental Petroleum Corp. has found what may end up being the largest oil and gas field discovery in California in the past 35 years. Now this may not equal finds in Brazil or Ghana, but the field is still substantial and could hold up to 250 million barrels of oil reserves.

Occidental's chairman and CEO Ray Irani is expected to discuss the discovery in more detail during the company's second-quarter earnings conference call at 11:30 eastern time Thursday.

This discovery is so valuable because aside from the obvious hurrah moment for finding 250 million barrels of gas and oil reserves, there could be much more and retrieving it shouldn't break the bank. Occidental has a 1.1 million net acre position in California and it's possible there are additional reserves outside of the defined area, Irani said.

Occidental has drilled six wells within the outlined area in Kern County located in California's central valley. Occidental, the largest natural gas producer in California, holds an 80 percent interest in the field and could provide a substantial boost to the company's 708 million barrels of oil equivalent of proven reserves in California. San Mateo-Calif.-based Chevron, owns the remaining 20 percentof the field, according to Bloomberg.

And in case there was any doubt Los Angeles-based Occidental was going to explore every nook and cranny for those additional reserves, Irani added "the company plans to drill wells to exploit these opportunities over the next five to 10 years."

Perhaps more importantly, is the relative ease Occidental will be able to extract the oil and gas reserves. The discovery is located on shore and should be cheaper to drill as opposed to some of the bigger finds located in deepwater offshore Brazil, for example.