Shares of Occidental Petroleum (OXY) were trading lower on volume in Thursday trading, marking the second consecutive session of losses subsequent to the city council of Carson’s unanimous vote in favor of a 45-day moratorium on oil and gas operations and well construction in the South Los Angeles Bay area.
The selling activity reached nearly three times average volume, sending shares for the Los Angeles-based independent oil and gas producer to an intraday low of $91.20 shortly after 12 pm, at which point the stock rebounded modestly, recuperating about $1 heading towards the close.
The past two sessions of selling have clipped about a month and a half of patiently achieved gains for Occidental, after its Feb. 14 announcement that it would be spinning off its California business into a separate entity. Prior to Tuesday’s council vote, shares had been clawing their way steadily back to the stock’s 52-week high of $99.42. From the technical standpoint, the price-action of the past two sessions is worrisome as the stock has moved below its 200-day moving average at high volume, a potential indication of more substantial losses to come.
Carson’s city council is the third in California to push ahead with a ban on hydraulic fracturing, the controversial technology that allows drillers to break through low-permeability shale rock deep beneath the earth’s surface, in order to release deposits of oil, gas, and gas liquids.
The process of fracking is the beating heart of the shale boom in the US, but while states like North Dakota, Texas, and Pennsylvania have been driving the nation’s production to record levels, as well as greater output of oil and gas than any other country, Californians at the local level have resisted strongly.
Occidental’s California operations, slated to be up and running in early 2015, have been estimated to be worth some $19 billion, and would account for about one-fifth of the state's total production. Their focus would be the vast but as yet almost totally untapped Monterey-San Joaquin basin that is purported to contain at least twice the amount of crude found in the Bakken and Permian basins combined. The company was negotiating the development of 200 new wells in Carson prior to the indefinite hold was passed on Tuesday.
Despite the company’s claim that it would not use the hotly contested fracking technology in the Carson area, the joins Los Angeles and Santa Cruz as the third in the state to interrupt new drilling attempts, as residents become increasingly concerned about the potential environmental consequences of the procedure, which are purported to include groundwater contamination, and even earthquakes.
Shares for Occidental had pared losses, but were still 2.34 percent lower by the closing bell to $92.91.