By: Scott Carpenter – Forbes – In March 2016 Vicki Hollub, who had just become the CEO of major oil firm Occidental Petroleum, was having dinner with a group of investors as part of an energy conference in New Orleans.
She appeared nervous, or apprehensive, recalled Tyler Hardt, then a mutual fund analyst for the investment firm Artisan Partners, in an email exchange. Many of the other investors were from hedge funds, and the tables were arrayed in a U-shape, as though this were a board meeting and not a dinner.
Hardt, who was sitting next to Hollub, leaned over and told her: “Don’t be afraid of these guys. They are just kids with spreadsheets and they aren’t going to eat you.”
Hollub grinned. No reminder was necessary. She proceeded to describe Occidental’s oilfield operations in the sprawling Permian oil and gas basin in masterful detail.
“She made it extremely clear that she was an experienced operator,” said Hardt.
The anecdote illustrates one of Hollub’s biggest strengths as a chief executive, a perhaps unusual one for a woman in the historically male-dominated industry: her decades of experience inside the exploration and production part of the industry, where she has worked her way from the bottom up. It’s a distinction that not even most of her peers atop the other American oil giants can claim. From ExxonMobil’s Darren Woods to Chevron’s Mike Wirth, they are largely products of the refinery or marketing sides of the business.
“She is the only real oil person” out of all the big CEOs, Hardt says of Hollub.
Hollub graduated from the University of Alabama with a degree in mineral engineering in 1981 and immediately began working on oil rigs in Mississippi. The company she was working for, Cities Service, was acquired the following year by Occidental Petroleum. It has been Hollub’s professional home ever since.
Occidental or “Oxy” dispatched her to run parts of the firm’s sprawling exploration and production business around the world, including Venezuela, Russia, and Ecuador. She eventually was put in charge of managing Occidental’s expansion in the Permian basin, a swath of sand-swept land mostly in west Texas where rigs drill thousands of meters below ground to blast oil and gas from porous shale rock.
It was good timing: advances in shale drilling techniques would soon turn the Permian into the world’s hottest oil production zone and send shock waves through the global industry. Hollub’s expertise in the sector made her a prime candidate for the top job, and she got it in early 2016 when her predecessor Stephen Chazen retired. She became the first woman ever to run a major American oil and gas company.
With her understated personality and technocratic style, Hollub was viewed as a safe pair of hands. Someone with forensic knowledge of the firm’s upstream operations could maintain a clear-eyed view of its future during the turmoil of the 2015-16 oil price crash that was then wreaking havoc. And although a woman, Hollub was seen by Occidental’s board as thoroughly within the industry mold. As the writer, Mimi Swartz observed in a profile of Hollub last month for Texas Monthly: “the two topics that seem to animate her most are football and the nuts and bolts of her profession.”
It wouldn’t take long for that view to change. Only a couple of years into the job, Hollub, with dealmaking bravado that required back-to-back flights to Paris and Omaha, Nebraska, spearheaded the firm’s acquisition of a competitor, Anadarko, for an astounding $38 billion, more than half of Occidental’s market value at the time. Anadarko controlled a wide swath of the Permian, so the move helped cement Occidental’s grip on the basin. But the deal’s big weakness — debt — became a major problem early the following year when the Covid pandemic broke out, crushing oil prices and vaporizing revenue.
Occidental is still working to sell off enough assets to return to more manageable debt levels. Yet the astounding ambition of the deal illustrated how one of Hollub’s less obvious qualities as an oil and gas chief — her willingness to push through major changes — could now help the firm deal with its biggest challenge yet: climate change.
As investor scrutiny of the climate impact of oil and gas rises, Hollub is vying to transform Occidental into a “carbon management” company. By capturing carbon dioxide from the air and selling the service as a product to difficult-to-decarbonize sectors such as aviation, the firm could be earning as much from its low-carbon ventures as from its traditional oil and gas operations within 15 or 20 years, Hollub said in January. It is part of the firm’s strategy to reach net-zero emissions from its own operations by 2040 and from customers’ use of its products, including emissions from burning them, by 2050.
The overhaul involves investing heavily to develop technology inside a subsidiary, Oxy Low Carbon Ventures. Last month a partnership run by Oxy Low Carbon Ventures and a private equity firm awarded a contract to construction firm Worley to design the initial phase of what would be the first-ever commercial-scale direct air capture facility, capable of sequestering one million metric tons of atmospheric CO2 annually. (Direct air capture or DAC differs from conventional carbon capture facilities in that the technology can be deployed anywhere, not just as add-ons to industrial or power facilities.)
The transformative move again distinguishes her from American peers. With open-mindedness and flexibility, Hollub is a decided contrast with “the typical oil guy,” said Alisa Lukash, a senior shale analyst at the consultancy Rystad Energy. Famous oilmen like Harold Hamm were often less interested in applying new technology than leveraging geopolitical connections or aggressively lobbying governments, Lukash said.
Anadarko’s newly acquired shale assets also could provide a boost to the new strategy, by helping create scale for the firm’s plan to use captured CO2 to pump back into the ground to extract more “carbon-neutral” oil. “They have that backbone in place,” said Scott Hanold, a managing director at investment bank RBC Capital Markets.
It became clear in a recent earnings call with analysts that Hollub is already intensely focused on the new goal. Of the nearly 3,000 words Hollub spoke in the Q&A section of the company’s call this month to discuss 2020 fourth quarter results, 84% of them were related to carbon capture and storage, taking the form of long answers to analysts’ questions, according to a transcript. She let others, including chief financial officer Rob Peterson, handle many of the finance-related questions.
Like the shale revolution which Hollub helped preside over, the coming carbon capture overhaul of the firm will at its heart require technical expertise. With her passion for industry’s nitty gritty combined with her big-picture approach to change, Hollub may be better suited for the job than most.