Subject: Re: More OXY
"Wow, did they film this things on an airplane? The low droning sound is intense."

Recording sounded perfectly clear to me. Here's the gist of it, and this is the upside that Warren and Charlie see in Occidental in my opinion.

At the annual meeting Warren/Charlie said the following with respect to OXY and the Permian:
https://buffett.cnbc.com/video...
CHARLIE MUNGER: Yeah. It really dies fast, those shale wells. If you like quick death in your oil wells, we have them for you...
WARREN BUFFETT: "And we love the position with Occidental. And we love having Vicki run it.
CHARLIE MUNGER: And there's a lot more oil down there, if anybody can figure out another magic trick. That's all we need is another magic trick."

I believe OXY has found at least one "magic trick" already and that trick is CO2 Enhanced Oil Recovery (EOR)for the Permian shales.

Vicki Hollub makes the following comment in the video I posted:
https://vimeo.com/810645111

(38:15 min)
Question: About Permian and other shale plays having a short life cycle (rapid shale oil well declines).

Vicki Hollub: The Permian is a shorter life cycle, but we intend to make it a longer life cycle. And the way to do that of course is with CO2. If you look at a shale player today...because this is how we look at our assets in the Permian. We've got an inventory of more than ten years (of new well locations) to drill. But what happens beyond that? What do you do if you are a shale player? If you have a five to ten year inventory what comes after the ten years?

And for us what comes after the ten years is CO2 applied to the shale and the conventional (reservoirs). And once you are putting CO2 into the reservoir, then the well decline rates are much different. There is hardly any decline. Our conventional (reservoir) assets decline at about 3-4%. So, we are going to turn our Permian (shale) high decline high return into a low decline but solid return asset over time. When people start thinking the industry goes away in ten years, there are going to be some companies, some assets and some countries that are going to remain to continue beyond that. And that's where we'll be. Because you're going to be able to almost double (oil recovery), not quite ...Our technical people have run pilots putting CO2 in the shale that have indicated we're going to get 8% more out of the shale than we would not have without using the CO2."

Essentially, she's saying that CO2 EOR will allow the company to increase shale reserves by 80%, assuming a 10% recovery factor from a shale well on primary depletion. As far as I know, these potential additional CO2 EOR reserves do not appear on OXY's reserve books yet. Think of what the value of the company would be if you could increase a company's Permian shales reserves by 80% overnight. I'll guarantee that Vicki, Warren and Charlie have run the numbers and that's why they are buying stock aggressively at these share prices.

While CO2 EOR has been applied successfully to conventional (high permeability) reservoirs in the Permian since the early 1970s, it has not been deployed on a large scale to the unconventional shale (lower permeability) reservoirs. The beauty of CO2 EOR is that new wells do not need to be drilled to implement it. Existing wells and infrastructure are used to inject the CO2 and then the well is turned back on line to production after a CO2 soak time. Capital requirements in the CO2 EOR stage of production will be much less and therefor the return on incremental barrels produced will be much higher.
https://www.researchgate.net/f...

From the video Vicki confirms that small scale test pilots have already been run to prove the viability of CO2 EOR for the shale. Implementing small scale pilots is necessary to able to book reserve increases on a large scale across the asset.

An excerpt from an SEC website

"If an improved recovery technique which has not been verified by routine commercial use in the area is to be applied, the hydrocarbon volumes estimated to be recoverable cannot be classified as proved reserves unless the technique has been demonstrated to be technically and economically successful by a pilot project or installed program in that specific rock volume. That demonstration should validate the feasibility study leading to the project."
https://www.sec.gov/divisions/...

Look for OXY's (and other company) shale reserves to increase dramatically over time. Given OXY's existing conventional CO2 infrastructure and expertise, I would expect them to have a distinct advantage.

I would also think OXY (and other companies) with deep pockets will look to acquire assets with the thought of applying CO2 EOR to increase reserves in the future. Many of the small to mid size companies don't have the expertise or the scale to implement it. Wonder if maybe Berkshire could provide capital to fund some of those projects/acquisitions while companies like Blackrock discourage further investment in "dirty" oil and gas.