President, Chief Executive Officer and Director at Occidental Petroleum
Thank you, Jeff, and good afternoon, everyone. Our strong operational and financial performance continued in the third quarter. Consistent with prior quarters this year, we generated a record level of free cash flow before working capital, which we apply towards reducing debt and strengthening our balance sheet. Operationally, our business has excelled driving our robust financial performance. OxyChem had its strongest quarter in over 30 years in our Permian, Rockies, Gulf of Mexico and Oman teams, set new operational records and efficiency benchmarks. As was the case last quarter, our cost structure and capital intensity leadership served as catalysts for our strong financial results and provided a solid foundation for free cash flow generation. Our Gulf of Mexico and OxyChem operations were impacted during this quarter by Hurricane Ida. Our primary focus was the safety and well-being of our employees and contractors, and we were relieved to hear that our people remained safe during the storm. We are working closely with those that were impacted, and I could not have been more pleased with how our teams overcame the challenging events triggered by the storm. The Gulf of Mexico and OxyChem operations that were affected by Ida are back online with no lasting impacts. I'd also like to pass along our best wishes to our coworkers in Oman's capital of Muscat and to all the people of Oman as they recover from the devastation recently caused by Cyclone Shaheen. This morning, I'll cover our third quarter operational performance and divestiture progress, Rob will cover our financial results and balance sheet improvement as well as our fourth quarter guidance. Our guidance for the fourth quarter and full year includes an increase in production and an improvement to earnings guidance for Midstream and OxyChem. The commodity price environment continued to be supportive in the third quarter as our focus remained on generating free cash flow and maximizing margins. This is the third consecutive quarter that our operational success and capital intensity leadership have produced a record level of free cash flow.
In fact, our third quarter free cash flow was the highest it's been since at least the turn of the century. As you know, that time frame included several periods of significantly higher oil prices. Total production for the quarter reached the high end of our guidance, which is a noteworthy accomplishment considering the extended downtime in the Gulf of Mexico. Hurricane Ida's impact on third quarter production and the costs associated with safely shutting in production, evacuating and then restarting the platforms and ongoing projects resulted in higher-than-expected domestic operating costs for the quarter. Our fourth quarter domestic operating cost guidance reflects normalized conditions and is relatively in line with our previous expectations for the year. On our last earnings call, we highlighted OxyChem's many strengths and consistent free cash flow generation. OxyChem's third quarter earnings were the strongest since 1990 and are a great example of what the business is capable of delivering. While Hurricane Ida disrupted third quarter operations, the impact to OxyChem's Louisiana-based facilities was temporary. The storm reduced production capacity in the period when market inventories were already fairly tight by historical standards. OxyChem continued to benefit from supportive PVC and caustic pricing resulting in a stronger-than-anticipated earnings. Our Midstream and marketing business benefited from the timing of export sales during a rising crude price environment and a healthy market for the sulfur produced at Al Hosn. The marketing team was able to capitalize on natural gas price volatility during the quarter by directing gas towards transportation solutions, yielding the high spreads. In summary, our team was once again able to utilize existing contracts and their expertise to maximize margins by delivering product to the markets that needed it the most. We continue to make notable progress in reducing debt and strengthening our balance sheet.
We exited the third quarter with approximately $2.1 billion of unrestricted cash following the repayment of $4.3 billion of debt and the settlement of $750 million of notional interest rate swaps. We are pleased to have delivered such a sizable reduction in debt in a single quarter. In a healthy commodity price environment, we expect to continue reducing debt in future quarters as we delever and take the necessary steps to move towards returning additional capital to shareholders. Our oil and gas teams continued to demonstrate a consistent drive for efficiency as we never tire of setting new operational records or generating record levels of free cash flow. I continue to be impressed by how our global teams are able to deliver outstanding results. And I want to highlight several of the examples of operational excellence in the third quarter. I'll start in the Permian, where we drilled our first 15,000-foot lateral wells in the Midland Basin and did so with impressive results. One of the first wells was delivered in less than 10 days from spud to rig release. In the Delaware Basin, year-to-date, we're drilling 16% faster than we were just a year ago. The efficiency gains that our teams are recording extend well beyond the Permian. Our Rockies teams set a new Oxy daily drilling record in the DJ Basin with over 9,700 feet drilled in 24 hours. In the Gulf of Mexico, we set a new cycle time drilling record, and our hosting platform achieved a size production in 10 years. In Oman, we set new multiple drilling records and completions efficiency records as our teams continued to leverage new technologies and drilling techniques to improve performance. Another significant milestone reached by our international business was Dolphin, delivering its tenth Tcf of natural gas in the third quarter. The impressive efficiency gains we have highlighted on the last few earnings calls are translating into tangible financial results.
Our innovative approach to drilling and completion techniques, coupled with supply chain optimization, will enable us to deliver higher production than initially planned this year. And I want to point out, we're accomplishing this all while maintaining our commitment to capital discipline. We continuously seek new ways to work with our partners to lower cost in a socially and environmentally responsible way, and we're pleased to have been able to do that in the third quarter. Through our partnership with a leading midstream company, we increased by about 30% the capacity of the water recycling plant that supports our Midland Basin, South Curtis Ranch development. This expansion has enabled us to recycle and utilize higher volumes of water from the plant. In addition to lowering costs, we have not disposed of any water at the South Curtis Ranch development since August. Across our U.S. onshore assets, our transition to using dual fuel frac fleets and drilling rigs has saved over six million gallons of diesel year-to-date, lowering cost and reducing emissions. And Colorado's new permitting process became effective at the beginning of this year, we worked closely with regulators to adapt to the new process and requirements. As members of the communities where we operate, our goal is to serve as a resource and educate stakeholders on Oxy's approach to responsible development. Our inclusive approach has been helpful in securing DJ permits. In September, we were pleased to see the process move forward for Oxy with the approval of additional permits in Weld County.
Our engagement with and support from communities remains strong, as does our commitment to responsible development as we work to secure additional permits. The momentum that our oil and gas business has generated throughout 2021 has helped position us for a strong start in 2022. We recently completed our large-scale divestiture program with the sale of our Ghana assets for $750 million. As many of you know, we have been working closely with our partners in Ghana to complete this divestiture and have successfully closed the transactions with both buyers. For the Ghana divestiture, we have completed our goal of divesting $2 billion to $3 billion post Colombia, marking the end of our large-scale ongoing divestiture program. We have now divested approximately $10 billion of assets since August of 2019, and including the debt that was repaid in the third quarter, we have repaid approximately $14 billion of debt. As we maintain our focus on shareholder value, we'll continue to seek opportunities to optimize our portfolio. We will continue to complete acreage trades or bolt-on acquisitions if they create value for our shareholders.
I'll now hand the call over to Rob, who will walk you through our financial results for the third quarter and guidance for the fourth quarter.