SEC Filing | Occidental Petroleum Corporation

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oxy-20230930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-9210

_____________________

OCCIDENTAL PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

95-4035997

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

5 Greenway Plaza, Suite 110

Houston,

Texas

77046

(Address of principal executive offices) (Zip Code)

(713) 215-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.20 par value	OXY	New York Stock Exchange
Warrants to Purchase Common Stock, $0.20 par value	OXY WS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

þ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ Accelerated Filer ☐ Non-Accelerated Filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding as of September 30, 2023

Common Stock, $0.20 par value

880,370,837


TABLE OF CONTENTS		PAGE

Part I - Financial Information
Item 1. Financial Statements (unaudited)
	Consolidated Condensed Balance Sheets — September 30, 2023 and December 31, 2022	3
	Consolidated Condensed Statements of Operations — Three and nine months ended September 30, 2023 and 2022	5
	Consolidated Condensed Statements of Comprehensive Income (Loss) — Three and nine months ended September 30, 2023 and 2022	6
	Consolidated Condensed Statements of Cash Flows — Nine months ended September 30, 2023 and 2022	7
	Consolidated Condensed Statements of Equity — Three and nine months ended September 30, 2023 and 2022	8
	Notes to Consolidated Condensed Financial Statements
	Note 1—General	10
	Note 2 —Revenue	11
	Note 3—Inventories	13

	Note 4 —Long-Term Debt	14
	Note 5—Derivatives	16
	Note 6—Income Taxes	18

	Note 7—Environmental Liabilities and Expenditures	19
	Note 8—Lawsuits, Claims, Commitments and Contingencies	21
	Note 9—Earnings per Share and Stockholders' Equity	24
	Note 10—Segments	26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
	Cautionary Statement Regarding Forward-Looking Statements	28
	Current Business Outlook	29
	Consolidated Results of Operations and Items Affecting Comparability	30
	Segment Results of Operations	33
	Income Taxes	36
	Liquidity and Capital Resources	37
	Environmental Liabilities and Expenditures	38
	Lawsuits, Claims, Commitments and Contingencies	38
Item 3. Quantitative and Qualitative Disclosures About Market Risk		38
Item 4. Controls and Procedures		38
Part II - Other Information
Item 1. Legal Proceedings		38
Item 1A. Risk Factors		39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 5. Other Information		39
Item 6. Exhibits		39

ABBREVIATIONS USED WITHIN THIS DOCUMENT


$/Bbl			price per barrel
Anadarko			Anadarko Petroleum Corporation and its consolidated subsidiaries
Andes			Andes Petroleum Ecuador Ltd.
AOC			Administrative Order on Consent
Bcf			billions of cubic feet
Berkshire Hathaway			Berkshire Hathaway Inc
Boe			barrels of oil equivalent
CERCLA			Comprehensive Environmental Response, Compensation, and Liability Act
CO2			carbon dioxide
DASS			Diamond Alkali Superfund Site
District Court			Federal District Court in the State of New Jersey
DSCC			Diamond Shamrock Chemicals Company
DOJ			U.S. Department of Justice
EPA			U.S. Environmental Protection Agency
EPS			earnings per share
LIFO			last-in, first-out
Maxus			Maxus Energy Corporation
Mbbl			thousands of barrels
Mboe			thousands of barrels equivalent
Mboe/d			thousands of barrels equivalent per day
Mcf			thousand cubic feet
MMbbl			millions of barrels
MMcf			millions of cubic feet
NGL			natural gas liquids
NPL			National Priorities List
Occidental			Occidental Petroleum Corporation, a Delaware corporation and one or more entities in which it owns a controlling interest (subsidiaries)
OEPC			Occidental Exploration and Production Company
OPEC			Organization of the Petroleum Exporting Countries
OU			Operable Unit
OU4 UAO			Operable Unit 4 Unilateral Administrative Order
OxyChem			Occidental Chemical Corporation
PVC			polyvinyl chloride
RCF			revolving credit facility
Repsol			Repsol, S.A.
ROD			Record of Decision
Trust			Maxus Liquidating Trust
WES			Western Midstream Partners, LP
WES Operating			Western Midstream Operating, LP
WTI			West Texas Intermediate
YPF			YPF S.A.
Zero Coupons			Zero Coupon senior notes due 2036
2022 Form 10-K			Occidental’s Annual Report on Form 10-K for the year ended December 31, 2022, including any amendments thereto

PART I FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)


Consolidated Condensed Balance Sheets			Occidental Petroleum Corporation and Subsidiaries


millions	September 30, 2023		December 31, 2022

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	611	$	984
Trade receivables, net of reserves of $24 in 2023 and $37 in 2022	3,674		4,281
Inventories	1,975		2,059

Other current assets	2,006		1,562
Total current assets	8,266		8,886

INVESTMENTS IN UNCONSOLIDATED ENTITIES	3,320		3,176

PROPERTY, PLANT AND EQUIPMENT
Oil and gas	107,888		104,487
Chemical	8,049		7,808
Midstream and marketing	7,993		7,550
Corporate	1,011		889
Gross property, plant and equipment	124,941		120,734
Accumulated depreciation, depletion and amortization	(66,671)		(62,350)
Net property, plant and equipment	58,270		58,384

OPERATING LEASE ASSETS	854		903

LONG-TERM RECEIVABLES AND OTHER ASSETS, NET	1,117		1,260

TOTAL ASSETS	$	71,827	$	72,609

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Consolidated Condensed Balance Sheets			Occidental Petroleum Corporation and Subsidiaries


millions, except share and per-share amounts	September 30, 2023		December 31, 2022

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt (a)	$	1,224	$	165

Current operating lease liabilities	312		273
Accounts payable	3,908		4,029
Accrued liabilities	3,497		3,290

Total current liabilities	8,941		7,757


LONG-TERM DEBT, NET (b)	18,597		19,670

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes, net	5,666		5,512
Asset retirement obligations	3,636		3,636
Pension and postretirement obligations	910		1,055
Environmental remediation liabilities	860		905
Operating lease liabilities	577		657
Other	3,328		3,332
Total deferred credits and other liabilities	14,977		15,097

STOCKHOLDERS' EQUITY
Preferred stock, at $1.00 per share par value: 2023 — 84,897 shares and 2022 —100,000 shares(c)	8,287		9,762
Common stock, at $0.20 per share par value, authorized shares: 1.5 billion, issued shares: 2023 — 1,105,568,314 shares and 2022 — 1,098,512,626 shares	221		220
Treasury stock: 2023 — 227,866,830 shares and 2022 — 198,653,682 shares	(15,573)		(13,772)
Additional paid-in capital	17,326		17,181
Retained earnings	18,758		16,499
Accumulated other comprehensive income	293		195
Total stockholders' equity	29,312		30,085
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	71,827	$	72,609

(a) Included $169 million and $143 million of current finance lease liabilities as of September 30, 2023 and December 31, 2022, respectively.

(b) Included $593 million and $546 million of finance lease liabilities as of September 30, 2023 and December 31, 2022, respectively.

(c) See Note 9 - Earnings Per Share and Stockholders' Equity in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Consolidated Condensed Statements of Operations			Occidental Petroleum Corporation and Subsidiaries


	Three months ended September 30,				Nine months ended September 30,
millions, except per-share amounts	2023		2022		2023		2022

REVENUES AND OTHER INCOME
Net sales	$	7,158	$	9,390	$	21,085	$	28,415
Interest, dividends and other income	50		37		107		122
Gains on sales of assets, net	192		74		197		232
Total	7,400		9,501		21,389		28,769

COSTS AND OTHER DEDUCTIONS
Oil and gas operating expense	1,189		1,056		3,400		2,925
Transportation and gathering expense	363		378		1,122		1,089
Chemical and midstream cost of sales	682		835		2,218		2,488
Purchased commodities	520		785		1,508		2,627
Selling, general and administrative expenses	258		247		776		687
Other operating and non-operating expense	328		319		646		909
Taxes other than on income	290		427		862		1,188
Depreciation, depletion and amortization	1,712		1,736		5,142		5,107
Asset impairments and other charges	—		—		209		—
Anadarko acquisition-related costs	—		4		—		82
Exploration expense	125		47		329		98
Interest and debt expense, net	230		285		698		770
Total	5,697		6,119		16,910		17,970

Income before income taxes and other items	1,703		3,382		4,479		10,799

OTHER ITEMS
Gains on interest rate swaps, net	—		70		—		332
Income from equity investments and other	106		196		391		586
Total	106		266		391		918

Income before income taxes	1,809		3,648		4,870		11,717
Income tax expense	(434)		(902)		(1,372)		(340)


NET INCOME	1,375		2,746		3,498		11,377
Less: Preferred stock dividends and redemption premiums	(219)		(200)		(754)		(600)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	1,156	$	2,546	$	2,744	$	10,777

PER COMMON SHARE


Net income attributable to common stockholders—basic	$	1.30	$	2.74	$	3.06	$	11.47



Net income attributable to common stockholders—diluted	$	1.20	$	2.52	$	2.83	$	10.64

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Consolidated Condensed Statements of Comprehensive Income (Loss)			Occidental Petroleum Corporation and Subsidiaries


	Three months ended September 30,				Nine months ended September 30,
millions	2023		2022		2023		2022

Net income	$	1,375	$	2,746	$	3,498	$	11,377
Other comprehensive income (loss) items:
Gains on derivatives (a)	1		1		59		65
Pension and postretirement gains (b)	46		48		39		57
Other	(1)		(1)		—		(1)
Other comprehensive income, net of tax	46		48		98		121
Comprehensive income attributable to preferred and common stockholders	$	1,421	$	2,794	$	3,596	$	11,498

(a) Net of tax expense of zero for the three months ended September 30, 2023 and 2022, and zero and $18 million for the nine months ended September 30, 2023 and 2022, respectively.

(b) Net of tax expense of $12 million and $13 million for the three months ended September 30, 2023 and 2022, respectively, and $10 million and $16 million for the nine months ended September 30, 2023 and 2022, respectively.

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Consolidated Condensed Statements of Cash Flows			Occidental Petroleum Corporation and Subsidiaries


	Nine months ended September 30,
millions	2023		2022

CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	3,498	$	11,377
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization of assets	5,142		5,107
Deferred income tax provision (benefit)	148		(1,765)
Asset impairments and other charges	209		—
Gains on sales of assets, net	(197)		(232)
Noncash charges (benefit) to income and other	343		(461)
Changes in operating assets and liabilities:
Decrease in receivables	609		138
Increase in inventories	(44)		(96)
Increase in other current assets	(367)		(313)
Decrease in accounts payable and accrued liabilities	(583)		(815)
Increase (decrease) in current domestic and foreign income taxes	311		(105)


Net cash provided by operating activities	9,069		12,835

CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures	(4,726)		(2,977)
Change in capital accrual	(48)		2
Purchases of businesses and assets, net	(220)		(466)
Proceeds from sales of assets, net	405		562
Equity investments and other, net	(422)		(95)


Net cash used by investing activities	(5,011)		(2,974)

CASH FLOW FROM FINANCING ACTIVITIES
Draws on receivables securitization facility	900		400
Payment of receivables securitization facility	(900)		(400)
Payments of long-term debt, net	(22)		(8,325)
Proceeds from issuance of common stock	92		291
Redemption of preferred stock	(1,661)		—
Purchases of treasury stock	(1,611)		(2,467)

Cash dividends paid on common and preferred stock	(1,035)		(863)
Financing portion of net cash received for derivative instruments	—		61
Other financing, net	(198)		(82)


Net cash used by financing activities	(4,435)		(11,385)

Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(377)		(1,524)
Cash, cash equivalents, restricted cash and restricted cash equivalents — beginning of period	1,026		2,803
Cash, cash equivalents, restricted cash and restricted cash equivalents — end of period	$	649	$	1,279

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Consolidated Condensed Statements of Equity			Occidental Petroleum Corporation and Subsidiaries


			Equity Attributable to Common Stock
millions, except per-share amounts	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Equity
Balance as of June 30, 2022	$	9,762	$	218	$	(11,391)	$	16,914	$	12,462	$	(135)	$	27,830
Net income	—		—		—		—		2,746		—		2,746
Other comprehensive income, net of tax	—		—		—		—		—		48		48
Dividends on common stock, $0.13 per share	—		—		—		—		(120)		—		(120)
Dividends on preferred stock, $2,000 per share	—		—		—		—		(200)		—		(200)
Shareholder warrants exercised	—		1		—		162		—		—		163
Options exercised	—		—		—		10		—		—		10
Issuance of common stock and other, net of cancellations	—		1		—		43		—		—		44
Purchases of treasury stock	—		—		(1,801)		—		—		—		(1,801)
Balance as of September 30, 2022	$	9,762	$	220	$	(13,192)	$	17,129	$	14,888	$	(87)	$	28,720


			Equity Attributable to Common Stock
millions, except per-share amounts	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Equity
Balance as of June 30, 2023	$	8,621	$	221	$	(14,958)	$	17,218	$	17,762	$	247	$	29,111
Net income	—		—		—		—		1,375		—		1,375
Other comprehensive income, net of tax	—		—		—		—		—		46		46
Dividends on common stock, $0.18 per share	—		—		—		—		(160)		—		(160)
Dividends on preferred stock, $2,000 per share	—		—		—		—		(177)		—		(177)
Preferred stock redemption - face value	(342)		—		—		—		—		—		(342)
Preferred stock redemption - premium	—		—		—		—		(34)		—		(34)
Preferred stock redemption value in excess of carrying value	8		—		—		—		(8)		—		—
Shareholder warrants exercised	—		—		—		54		—		—		54

Issuance of common stock and other, net of cancellations	—		—		—		54		—		—		54
Purchases of treasury stock	—		—		(615)		—		—		—		(615)
Balance as of September 30, 2023	$	8,287	$	221	$	(15,573)	$	17,326	$	18,758	$	293	$	29,312

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Consolidated Condensed Statements of Equity			Occidental Petroleum Corporation and Subsidiaries


			Equity Attributable to Common Stock
millions, except per-share amounts	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Equity
Balance as of December 31, 2021	$	9,762	$	217	$	(10,673)	$	16,749	$	4,480	$	(208)	$	20,327
Net income	—		—		—		—		11,377		—		11,377
Other comprehensive income, net of tax	—		—		—		—		—		121		121
Dividends on common stock, $0.39 per share	—		—		—		—		(369)		—		(369)
Dividends on preferred stock, $6,000 per share	—		—		—		—		(600)		—		(600)
Shareholder warrants exercised	—		2		—		251		—		—		253
Options exercised	—		—		—		27		—		—		27
Issuance of common stock and other, net of cancellations	—		1		—		102		—		—		103
Purchases of treasury stock	—		—		(2,519)		—		—		—		(2,519)
Balance as of September 30, 2022	$	9,762	$	220	$	(13,192)	$	17,129	$	14,888	$	(87)	$	28,720


			Equity Attributable to Common Stock
millions, except per-share amounts	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Equity
Balance as of December 31, 2022	$	9,762	$	220	$	(13,772)	$	17,181	$	16,499	$	195	$	30,085
Net income	—		—		—		—		3,498		—		3,498
Other comprehensive income, net of tax	—		—		—		—		—		98		98
Dividends on common stock, $0.54 per share	—		—		—		—		(485)		—		(485)
Dividends on preferred stock, $6,000 per share	—		—		—		—		(567)		—		(567)
Preferred stock redemption - face value	(1,511)		—		—		—		—		—		(1,511)
Preferred stock redemption - premium	—		—		—		—		(151)		—		(151)
Preferred stock redemption value in excess of carrying value	36		—		—		—		(36)		—		—
Shareholder warrants exercised	—		—		—		57		—		—		57
Options exercised	—		—		—		13		—		—		13
Issuance of common stock and other, net of cancellations	—		1		—		75		—		—		76
Purchases of treasury stock	—		—		(1,801)		—		—		—		(1,801)
Balance as of September 30, 2023	$	8,287	$	221	$	(15,573)	$	17,326	$	18,758	$	293	$	29,312

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


Notes to Consolidated Condensed Financial Statements			Occidental Petroleum Corporation and Subsidiaries


NOTE 1 - GENERAL

NATURE OF OPERATIONS

Occidental conducts its operations through various subsidiaries and affiliates. Occidental has made its disclosures in accordance with United States generally accepted accounting principles as they apply to interim reporting, and condensed or omitted, as permitted by the U.S. Securities and Exchange Commission’s rules and regulations, certain information and disclosures normally included in Consolidated Financial Statements and the notes thereto. These unaudited Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the 2022 Form 10-K.

In the opinion of Occidental’s management, the accompanying unaudited Consolidated Condensed Financial Statements in this report reflect all adjustments (consisting of normal recurring adjustments) that are necessary to fairly present Occidental’s results of operations and cash flows for the nine months ended September 30, 2023 and 2022 and Occidental’s financial position as of September 30, 2023 and December 31, 2022. The income and cash flows for the periods ended September 30, 2023 and 2022 are not necessarily indicative of the income or cash flows to be expected for the full year.

CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS

Occidental considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents or restricted cash equivalents. The cash equivalents and restricted cash equivalents balances for the periods presented include investments in government money market funds in which the carrying value approximates fair value.

The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as reported in the Consolidated Condensed Statements of Cash Flows as of September 30, 2023 and 2022:



millions	2023		2022
Cash and cash equivalents	$	611	$	1,233
Restricted cash and restricted cash equivalents included in other current assets	22		31
Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net	16		15
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	649	$	1,279

SUPPLEMENTAL CASH FLOW INFORMATION

The following table represents U.S. federal, domestic, state and international income taxes paid, tax refunds received and interest paid during the nine months ended September 30, 2023 and 2022, respectively:



millions	2023		2022
Income tax payments	$	806	$	1,885
Income tax refunds received	$	12	$	89
Interest paid (a)	$	906	$	1,236

(a) Net of capitalized interest of $69 million and $50 million for the nine months ended September 30, 2023 and 2022, respectively.

WES INVESTMENT

As of September 30, 2023, Occidental owned all of the 2.3% non-voting general partner interest and 48.8% of the limited partner units in WES. On a combined basis, with its 2% non-voting limited partner interest in WES Operating, Occidental's total effective economic interest in WES and its subsidiaries was 51.0%. In September 2023, WES purchased 5.1 million of its limited partner units from Occidental at a price of $25.00 per unit, resulting in a gain on sale of $51 million for Occidental.

IMPAIRMENT

Occidental did not record any impairments for the three months ended September 30, 2023. For the nine months ended September 30, 2023, Occidental recorded a pre-tax impairment of $180 million related to undeveloped acreage in the northern non-core area of the Powder River Basin where Occidental has decided not to pursue future exploration and appraisal activities. Impairment expense for the nine months ended September 30, 2023 also included a $29 million impairment related to an equity method investment in Black Butte Coal Company.

ACQUISITIONS AND DIVESTITURES

In September 2023, Occidental sold certain non-core proved and unproved properties in the Permian Basin for $202 million and recorded a gain on sale of assets of $142 million.

SUBSEQUENT EVENTS

In November 2023, Occidental entered into a joint venture agreement with BlackRock, through a fund managed by its Diversified Infrastructure business, for the development of Occidental’s first large-scale Direct Air Capture plant in Ector County, Texas. The agreement provides $550 million of committed investment from BlackRock's fund.

In August 2023, Occidental entered into an agreement with Carbon Engineering Ltd., its equity method investee, to purchase the remaining 67.83% interest not already owned by Occidental or its affiliates for total cash consideration of approximately $1.1 billion, resulting in Carbon Engineering becoming a wholly owned subsidiary of Occidental. The purchase price will be made in three approximately equal annual payments, with the first payment to be made at closing. This transaction closed on November 3, 2023, and Occidental made the first payment of $355 million. The remaining two payments will be paid on the first and second anniversaries of closing. With this purchase Occidental intends to accelerate technological innovation and cost reductions in Carbon Engineering's direct-air-capture technology. The transaction qualifies as a business combination and will be accounted for using the acquisition method of accounting. Occidental's purchase price allocation is currently in process and as such was incomplete as of the issuance of these unaudited Consolidated Condensed Financial Statements.


NOTE 2 - REVENUE

Revenue from customers is recognized when obligations under the terms of a contract with customers are satisfied; this generally occurs with the delivery of oil, NGL, gas, chemicals or services, such as transportation. As of September 30, 2023, trade receivables, net of $3.7 billion represent rights to payment for which Occidental has satisfied its obligations under a contract and its right to payment is conditioned only on the passage of time.

The following table shows a reconciliation of revenue from customers to total net sales for the three and nine months ended September 30, 2023 and 2022:


	Three months ended September 30,				Nine months ended September 30,
millions	2023		2022		2023		2022

Revenue from customers	$	7,271	$	9,359	$	20,987	$	27,923
All other revenues (a)	(113)		31		98		492
Net sales	$	7,158	$	9,390	$	21,085	$	28,415

(a) Includes net marketing derivatives and chemical exchange contracts.

DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS

The table below presents Occidental's revenue from customers by segment, product and geographical area. The oil and gas segment typically sells its oil, NGL and gas at the lease or concession area. Chemical segment revenues are shown by geographic area based on the location of the sale. Excluding net marketing revenue, midstream and marketing segment revenues are shown by the location of sale:


millions	United States		International		Eliminations		Total

Three months ended September 30, 2023
Oil and gas
Oil	$	3,997	$	742	$	—	$	4,739
NGL	419		91		—		510
Gas	221		87		—		308
Other	37		—		—		37
Segment total	$	4,674	$	920	$	—	$	5,594
Chemical	$	1,234	$	74	$	—	$	1,308




Midstream and marketing	$	563	$	103	$	—	$	666
Eliminations	$	—	$	—	$	(297)	$	(297)
Consolidated	$	6,471	$	1,097	$	(297)	$	7,271

millions	United States		International		Eliminations		Total

Three months ended September 30, 2022
Oil and gas
Oil	$	4,369	$	1,061	$	—	$	5,430
NGL	658		127		—		785
Gas	786		88		—		874
Other	8		1		—		9
Segment total	$	5,821	$	1,277	$	—	$	7,098
Chemical	$	1,572	$	102	$	—	$	1,674




Midstream and marketing	$	859	$	132	$	—	$	991
Eliminations	$	—	$	—	$	(404)	$	(404)
Consolidated	$	8,252	$	1,511	$	(404)	$	9,359


millions	United States		International		Eliminations		Total

Nine months ended September 30, 2023
Oil and gas
Oil	$	11,093	$	2,255	$	—	$	13,348
NGL	1,231		266		—		1,497
Gas	737		246		—		983
Other	31		1		—		32
Segment total	$	13,092	$	2,768	$	—	$	15,860
Chemical	$	3,834	$	250	$	—	$	4,084
Midstream and marketing	$	1,524	$	302	$	—	$	1,826




Eliminations	$	—	$	—	$	(783)	$	(783)
Consolidated	$	18,450	$	3,320	$	(783)	$	20,987


millions	United States		International		Eliminations		Total

Nine months ended September 30, 2022
Oil and gas
Oil	$	13,311	$	2,958	$	—	$	16,269
NGL	2,139		302		—		2,441
Gas	1,916		225		—		2,141
Other	15		3		—		18
Segment total	$	17,381	$	3,488	$	—	$	20,869
Chemical	$	4,984	$	281	$	—	$	5,265
Midstream and marketing	$	2,410	$	478	$	—	$	2,888




Eliminations	$	—	$	—	$	(1,099)	$	(1,099)
Consolidated	$	24,775	$	4,247	$	(1,099)	$	27,923


NOTE 3 - INVENTORIES

Finished goods primarily represent oil, which is carried at the lower of weighted-average cost or net realizable value, and caustic soda and chlorine, which are valued under the LIFO method. As of September 30, 2023 and December 31, 2022, inventories consisted of the following:


millions	September 30, 2023		December 31, 2022

Raw materials	$	85	$	120
Materials and supplies	895		913
Commodity inventory and finished goods	1,116		1,147
	2,096		2,180
Revaluation to LIFO	(121)		(121)
Total	$	1,975	$	2,059


NOTE 4 - LONG-TERM DEBT

As of September 30, 2023 and December 31, 2022, Occidental’s debt consisted of the following:


millions	September 30, 2023		December 31, 2022
8.750% medium-term notes due 2023	$	—	$	22
2.900% senior notes due 2024	654		654
6.950% senior notes due 2024	291		291
3.450% senior notes due 2024	111		111
5.875% senior notes due 2025	606		606
3.500% senior notes due 2025	137		137
5.500% senior notes due 2025	465		465
5.550% senior notes due 2026	870		870
3.200% senior notes due 2026	182		182
3.400% senior notes due 2026	284		284
7.500% debentures due 2026	112		112
8.500% senior notes due 2027	489		489
3.000% senior notes due 2027	216		216
7.125% debentures due 2027	150		150
7.000% debentures due 2027	48		48
6.625% debentures due 2028	14		14
7.150% debentures due 2028	232		232
7.200% senior debentures due 2028	82		82
6.375% senior notes due 2028	578		578
7.200% debentures due 2029	135		135
7.950% debentures due 2029	116		116
8.450% senior notes due 2029	116		116
3.500% senior notes due 2029	286		286
Variable rate bonds due 2030 (5.610% and 5.320% as of September 30, 2023 and December 31, 2022, respectively)	68		68
8.875% senior notes due 2030	1,000		1,000
6.625% senior notes due 2030	1,449		1,449
6.125% senior notes due 2031	1,143		1,143
7.500% senior notes due 2031	900		900
7.875% senior notes due 2031	500		500
6.450% senior notes due 2036	1,727		1,727
Zero Coupon senior notes due 2036	673		673
4.300% senior notes due 2039	247		247
7.950% senior notes due 2039	325		325
6.200% senior notes due 2040	737		737
4.500% senior notes due 2044	191		191
4.625% senior notes due 2045	296		296
6.600% senior notes due 2046	1,117		1,117
4.400% senior notes due 2046	424		424
4.100% senior notes due 2047	258		258
(continued on next page)


millions (continued)	2023		2022
4.200% senior notes due 2048	304		304
4.400% senior notes due 2049	280		280
7.730% debentures due 2096	58		58
7.500% debentures due 2096	60		60
7.250% debentures due 2096	5		5
Total borrowings at face value	$	17,936	$	17,958

The following table summarizes Occidental's outstanding debt, including finance lease liabilities:


millions	September 30, 2023		December 31, 2022
Total borrowings at face value	$	17,936	$	17,958
Adjustments to book value:
Unamortized premium, net	1,187		1,261
Debt issuance costs	(64)		(73)
Net book value of debt	$	19,059	$	19,146
Long-term finance leases	593		546
Current finance leases	169		143
Total debt and finance leases	$	19,821	$	19,835
Less: current maturities of financing leases	(169)		(143)
Less: current maturities of long-term debt	(1,055)		(22)
Long-term debt, net	$	18,597	$	19,670

DEBT ACTIVITY

In the first quarter of 2023, Occidental used cash on hand to repay $22 million of its 8.750% medium-term notes upon maturity. Occidental has no remaining debt maturities in 2023.

FAIR VALUE OF DEBT

The estimated fair value of Occidental’s debt as of September 30, 2023 and December 31, 2022, substantially all of which was classified as Level 1, was approximately $17.2 billion and $17.6 billion, respectively.


NOTE 5 - DERIVATIVES

OBJECTIVE AND STRATEGY

Occidental uses a variety of derivative financial instruments and physical contracts to manage its exposure to commodity price fluctuations and transportation commitments and to fix margins on the future sale of stored commodity volumes. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. Occidental may occasionally use a variety of derivative financial instruments to manage its exposure to foreign currency fluctuations and interest rate risks. Occidental also enters into derivative financial instruments for trading purposes.

Occidental may elect normal purchases and normal sales exclusions when physically delivered commodities are purchased or sold to a customer. Occidental occasionally applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecasted sales of its natural gas storage volumes, and at times for other strategies, such as to lock in rates on debt issuances. The value of cash flow hedges is insignificant for all periods presented. As of September 30, 2023, Occidental’s marketing derivatives are not designated as hedges. Occidental retired all remaining outstanding interest rate swaps in the twelve months ended December 31, 2022.

MARKETING DERIVATIVES

Occidental's marketing derivative instruments are short-duration physical and financial forward contracts. As of September 30, 2023, the weighted-average settlement price of these forward contracts was $83.94 per barrel and $2.99 per Mcf for crude oil and natural gas, respectively. The weighted-average settlement price was $81.37 per barrel and $7.89 per Mcf for crude oil and natural gas, respectively, as of December 31, 2022. Derivative instruments that are not designated as hedging instruments are required to be recorded on the balance sheet at fair value. Changes in fair value will impact Occidental’s earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled. Net gains and losses associated with marketing derivative instruments are recognized currently in net sales.

The following table summarizes net short volumes associated with the outstanding marketing commodity derivatives as of:


long (short)	September 30, 2023	December 31, 2022
Oil commodity contracts
Volume (MMbbl)	(43)	(33)
Natural gas commodity contracts
Volume (Bcf)	(93)	(112)

FAIR VALUE OF DERIVATIVES

The following tables present the fair values of Occidental’s outstanding derivatives. Fair values are presented at gross amounts below, including when the derivatives are subject to netting arrangements, and are presented on a net basis in the Consolidated Condensed Balance Sheets:


millions	Fair Value Measurements Using						Netting (a)		Total Fair Value
Balance Sheet Classifications	Level 1		Level 2		Level 3
September 30, 2023
Marketing Derivatives
Other current assets	$	2,317	$	76	$	—	$	(2,359)	$	34
Long-term receivables and other assets, net	81		1		—		(77)		5
Accrued liabilities	(2,447)		(65)		—		2,359		(153)
Deferred credits and other liabilities - other	(77)		—		—		77		—






December 31, 2022
Marketing Derivatives
Other current assets	$	920	$	127	$	—	$	(980)