UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2017~~2018

¨ 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 (State or other jurisdiction of incorporation or organization)	95-4035997 (I.R.S. Employer Identification No.)

5 Greenway Plaza, Suite 110 Houston, Texas 77046 (Address of principal executive offices)		~~77046~~ ~~(Zip~~ (Zip Code)

(713) 215-7000

(Registrant’s telephone number, including area code)

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 o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes o 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 definition of "accelerated filer", "large accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act):

Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer o

Smaller Reporting Company o Emerging Growth Company o

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. o

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

o 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 at June 30, ~~2017~~2018
	Common stock $.20 par value		~~764,573,083~~764,721,453

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS



				PAGE

Part I	Financial Information

	Item 1.	Financial Statements (unaudited)

		Consolidated Condensed Balance Sheets —
			June 30, ~~2017~~2018, and December 31, ~~2016~~2017	2

		Consolidated Condensed Statements of Operations —
			Three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017	4

		Consolidated Condensed Statements of Comprehensive Income —
			Three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017	5

		Consolidated Condensed Statements of Cash Flows —
			Six months ended June 30, ~~2017~~2018, and ~~2016~~2017	6

		Notes to Consolidated Condensed Financial Statements		7

	Item 2.	Management’s Discussion and Analysis of Financial
			Condition and Results of Operations	1720

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2627

	Item 4.	Controls and Procedures		2627

Part II	Other Information

	Item 1.	Legal Proceedings		2728

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2728

	Item 6.	Exhibits		28

PART I FINANCIAL INFORMATION


Item 1.	Financial Statements (unaudited)

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

JUNE 30, ~~2017,~~2018, AND DECEMBER 31, ~~2016~~2017

(Amounts in millions)


		2017		2016			2018		2017

ASSETS

CURRENT ASSETS

Cash and cash equivalents		$	2,218	$	2,233		$	1,362	$	1,672

Trade receivables, net		3,913		3,989			5,521		4,145

Inventories		920		866			1,347		1,246

Assets held for sale		558		—			1,664		474

Other current assets		466		1,340			1,096		733

Total current assets		8,075		8,428			10,990		8,270



INVESTMENTS IN UNCONSOLIDATED ENTITIES		1,572		1,401			1,551		1,515


PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation, depletion and amortization of $37,330 at June 30, 2017, and $38,956 at December 31, 2016		31,466		32,337
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation, depletion and amortization of $40,782 at June 30, 2018, and $39,072 at December 31, 2017							30,432		31,174

LONG-TERM RECEIVABLES AND OTHER ASSETS, NET		869		943			1,094		1,067

TOTAL ASSETS		$	41,982	$	43,109		$	44,067	$	42,026

The accompanying notes are an integral part of these consolidated condensed financial statements.	The accompanying notes are an integral part of these consolidated condensed financial statements.					The accompanying notes are an integral part of these consolidated condensed financial statements.

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

JUNE 30, ~~2017~~2018, AND DECEMBER 31, ~~2016~~2017

(Amounts in millions except share amounts)


		2017			2016				2018			2017

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt		$	500		$	—			$	—		$	500
Accounts payable		3,825			3,926				5,412			4,408
Accrued liabilities		2,050			2,436				2,521			2,492
Liabilities of assets held for sale		16			—
Liabilities held for sale									145			—
Total current liabilities		6,391			6,362				8,078			7,400

LONG-TERM DEBT, NET		9,324			9,819				10,312			9,328

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred domestic and foreign income taxes		1,059			1,132				738			581
Asset retirement obligations									1,244			1,241
Pension and postretirement obligations									1,010			1,005
Environmental remediation reserves									731			728
Other		4,171			4,299				1,023			1,171
Total deferred credits and other liabilities		5,230			5,431
									4,746			4,726
STOCKHOLDERS' EQUITY
Common stock, at par value (892,647,217 shares at June 30, 2017, and 892,214,604 shares at December 31, 2016)		179			178
Treasury stock (128,074,134 shares at June 30, 2017, and 127,977,306 shares at December 31, 2016)		(9,149		)	(9,143		)
Common stock, at par value (894,243,621 shares at June 30, 2018 and 893,468,707 shares at December 31, 2017)									179			179
Treasury stock (129,562,168 shares at June 30, 2018, and 128,364,195 shares at December 31, 2017)									(9,268		)	(9,168		)
Additional paid-in capital		7,824			7,747				7,967			7,884
Retained earnings		22,435			22,981				22,361			21,935
Accumulated other comprehensive loss		(252		)	(266		)		(308		)	(258		)
Total stockholders’ equity		21,037			21,497				20,931			20,572

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	41,982		$	43,109			$	44,067		$	42,026

The accompanying notes are an integral part of these consolidated condensed financial statements.	The accompanying notes are an integral part of these consolidated condensed financial statements.							The accompanying notes are an integral part of these consolidated condensed financial statements.

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2017~~2018, AND ~~2016~~2017

(Amounts in millions, except per-share amounts)


		Three months ended June 30						Six months ended June 30							Three months ended June 30						Six months ended June 30
		2017			2016			2017			2016				2018			2017			2018			2017

REVENUES AND OTHER INCOME
Net sales		$	3,060		$	2,531		$	6,017		$	4,654			$	4,083		$	3,060		$	7,846		$	6,017
Interest, dividends and other income		31			27			52			47				38			31			67			52
Gain on sale of assets, net		512			—			512			138				10			512			43			512
		3,603			2,558			6,581			4,839				4,131			3,603			7,956			6,581
COSTS AND OTHER DEDUCTIONS
Cost of sales		1,486			1,244			2,912			2,525				1,465			1,486			2,828			2,912
Selling, general and administrative and other operating expenses		352			338			624			610				402			352			709			624
Taxes other than on income		77			74			145			149				115			77			223			145
Depreciation, depletion and amortization		989			1,070			1,931			2,172				947			989			1,868			1,931
Asset impairments and related items		—			—			13			78				12			—			42			13
Exploration expense		8			27			19			36				21			8			36			19
Interest and debt expense, net		86			88			167			148				97			86			194			167
		2,998			2,841			5,811			5,718				3,059			2,998			5,900			5,811

Income (loss) before income taxes and other items		605			(283		)	770			(879		)
Benefit (provision) for domestic and foreign income taxes		(285		)	96			(363		)	299
Income before income taxes and other items															1,072			605			2,056			770
Provision for domestic and foreign income taxes															(302		)	(285		)	(641		)	(363		)
Income from equity investments		187			51			217			84				78			187			141			217
Income (loss) from continuing operations		507			(136		)	624			(496		)
Discontinued operations, net		—			(3		)	—			435
NET INCOME (LOSS)		$	507		$	(139	)	$	624		$	(61	)
NET INCOME															$	848		$	507		$	1,556		$	624

BASIC EARNINGS PER COMMON SHARE															$	1.10		$	0.66		$	2.02		$	0.81
Income (loss) from continuing operations		$	0.66		$	(0.18	)	$	0.81		$	(0.65	)
Discontinued operations, net		—			—			—			0.57
BASIC EARNINGS PER COMMON SHARE		$	0.66		$	(0.18	)	$	0.81		$	(0.08	)

DILUTED EARNINGS PER COMMON SHARE
Income (loss) from continuing operations		$	0.66		$	(0.18	)	$	0.81		$	(0.65	)
Discontinued operations, net		—			—			—			0.57
DILUTED EARNINGS PER COMMON SHARE		$	0.66		$	(0.18	)	$	0.81		$	(0.08	)		$	1.10		$	0.66		$	2.02		$	0.81

DIVIDENDS PER COMMON SHARE		$	0.76		$	0.75		$	1.52		$	1.50			$	0.77		$	0.76		$	1.54		$	1.52

The accompanying notes are an integral part of these consolidated condensed financial statements.	The accompanying notes are an integral part of these consolidated condensed financial statements.													The accompanying notes are an integral part of these consolidated condensed financial statements.

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2017~~2018, AND ~~2016~~2017

(Amounts in millions)


	Three months ended June 30						Six months ended June 30						Three months ended June 30						Six months ended June 30
	2017			2016			2017			2016			2018			2017			2018			2017

Net income (loss)	$	507		$	(139	)	$	624		$	(61	)
Net income													$	848		$	507		$	1,556		$	624
Other comprehensive income (loss) items:
Foreign currency translation gains	—			—			1			1
Foreign currency translation (losses) gains													(1		)	—			—			1
Unrealized gains (losses) on derivatives ^(a)	1			(3		)	6			(13		)	(1		)	1			(4		)	6
Pension and postretirement gains (losses) ^(b)	(1		)	7			8			12			5			(1		)	9			8
Reclassification to income of realized (gains) losses on derivatives^(c)	1			1			(1		)	8
Reclassification of realized (gains) losses on derivatives ^(c)													1			1			3			(1		)
Other comprehensive income, net of tax	1			5			14			8			4			1			8			14
Comprehensive income (loss)	$	508		$	(134	)	$	638		$	(53	)
Comprehensive income													$	852		$	508		$	1,564		$	638


(a)	Net of tax of zero ~~and $1~~ for the three months ended June 30, 2018, and 2017, and ~~2016, respectively,~~$1 and $(3) ~~and $7~~ for the six months ended June 30, ~~2017,~~2018, and ~~2016,~~2017, respectively.


(b)	Net of tax of $1$(2) and ~~$(4)~~$1 for the three months ended June 30, ~~2017~~2018, and ~~2016,~~2017, respectively, and ~~$(4)~~$(3) and ~~$(7)~~$(4) for the six months ended June 30, ~~2017,~~2018, and ~~2016,~~2017, respectively.


(c)	Net of tax of zero for each of the three months ended June 30, 2018, and 2017, and ~~2016, respectively,~~$(1) and $1 ~~and $(4)~~ for the six months ended June 30, ~~2017,~~2018, and ~~2016,~~2017, respectively.

The accompanying notes are an integral part of these consolidated condensed financial statements.

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, ~~2017~~2018, AND ~~2016~~2017

(Amounts in millions)


		2017			2016				2018			2017
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)		$	624		$	(61	)
Adjustments to reconcile income (loss) to net cash provided by operating activities:
Discontinued operations, net		—			(435		)
Net income									$	1,556		$	624
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization of assets		1,931			2,172				1,868			1,931
Deferred income tax provision (benefit)		(24		)	76
Deferred income tax (benefit) provision									171			(24		)
Other noncash charges to income		43			37				96			167
Gain on sale of assets, net		(512		)	(138		)		(43		)	(512		)
Asset impairments and related items		13			78				42			13
Net distributions from equity investments									(20		)	(127		)
Dry hole expenses		7			28				15			7
Changes in operating assets and liabilities, net		(306		)	(511		)		(920		)	(454		)
Other operating, net		729			(304		)		—			729
Operating cash flow from continuing operations		2,505			942
Operating cash flow from discontinued operations		—			876
Net cash provided by operating activities		2,505			1,818				2,765			2,354

CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures		(1,492		)	(1,247		)		(2,319		)	(1,492		)
Change in capital accrual		(35		)	(209		)		(6		)	(35		)
Payments for purchases of assets and businesses		(377		)	(34		)		(242		)	(377		)
Proceeds from sale of assets		609			260
Equity investments and other, net		(67		)	(104		)
Sales of assets, net									330			609
Other investing, net									(49		)	84
Net cash used by investing activities		(1,362		)	(1,334		)		(2,286		)	(1,211		)

CASH FLOW FROM FINANCING ACTIVITIES
Change in restricted cash		—			1,193
Proceeds from long-term debt, net		—			2,718				978			—
Payment of long-term debt, net		—			(2,710		)
Payments of long-term debt									(500		)	—
Proceeds from issuance of common stock		16			29				13			16
Purchases of treasury stock		(6		)	(15		)		(97		)	(6		)
Cash dividends paid		(1,168		)	(1,149		)		(1,185		)	(1,168		)
Net cash provided (used) by financing activities		(1,158		)	66
Other financing, net									2			—
Net cash used by financing activities									(789		)	(1,158		)

Increase (decrease) in cash and cash equivalents		(15		)	550
Decrease in cash and cash equivalents									(310		)	(15		)
Cash and cash equivalents — beginning of period		2,233			3,201				1,672			2,233
Cash and cash equivalents — end of period		$	2,218		$	3,751			$	1,362		$	2,218

The accompanying notes are an integral part of these consolidated condensed financial statements.	The accompanying notes are an integral part of these consolidated condensed financial statements.							The accompanying notes are an integral part of these consolidated condensed financial statements.

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

JUNE 30, ~~2017~~2018

1. General

In these unaudited, consolidated, condensed financial statements, "Occidental" means Occidental Petroleum Corporation, a Delaware corporation (OPC), or OPC and one or more entities in which it owns a controlling interest (subsidiaries). Occidental has made its disclosures in accordance with United States generally accepted accounting principles (GAAP) as they apply to interim reporting, and condensed or omitted, as permitted by the Securities and Exchange Commission’s rules and regulations, certain information and disclosures normally included in consolidated financial statements and the notes. These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in Occidental’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

In the opinion of Occidental’s management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present Occidental’s consolidated financial position as of June 30, ~~2017~~2018, and the consolidated statements of operations, ~~and~~ comprehensive income and cash flows for the three and six months ended June 30, ~~2017,~~2018, and ~~2016, and cash flows for the six months ended~~ ~~June 30,~~ 2017, ~~and~~ ~~2016~~, as applicable. Certain data in the financial statements and notes for prior periods have been reclassified to conform to the current presentation. The income and cash flows for the periods ended June 30, ~~2017~~2018, and ~~2016~~2017, are not necessarily indicative of the income or cash flows to be expected for the full year.

2. Asset Acquisitions, Dispositions and Other

On August 8, 2018, Occidental announced the sale of non-core domestic midstream assets. These assets to be sold include the Centurion common carrier oil pipeline and storage system, Southeast New Mexico oil gathering system, and Ingleside Crude Terminal. Following the transaction, Occidental will retain its long-term flow assurance, pipeline takeaway and export capacity through its retained marketing business. A substantial portion of the assets to be sold were classified as assets held for sale on the balance sheet at June 30, 2018. The assets held for sale were comprised primarily of midstream property, plant and equipment.

As of June 30, 2018, the remaining $250 million of assets classified as held for sale primarily relates to non-core proved and unproved Permian acreage.

In ~~June 2017,~~July 2018, Occidental acquired the previously leased power and steam cogeneration facility in Louisiana for $443 million, which will be paid in three installments in 2018.

In March 2018, Occidental divested non-core midstream assets for approximately $150 million, resulting in a pre-tax gain of $43 million.

In March 2018, Occidental issued $1.0 billion of 4.2-percent senior notes due 2048. Occidental received net proceeds of approximately $985 million. Interest on the notes will be payable semi-annually in arrears in March and September of each year, beginning on September 15, 2018. The proceeds were used to refinance the repayment of the $500 million aggregate principal amount of Occidental's 1.5-percent senior notes due in February 2018, with the remainder to be used for general corporate purposes.

In January 2018, Occidental entered into a ~~sales agreement~~new five-year, $3.0 billion revolving credit facility (2018 Credit Facility), replacing the previous credit facility that was scheduled to ~~sell non-strategic acreage~~expire in ~~Andrews~~August 2019. The 2018 Credit Facility has similar terms to the previous credit facility and ~~Martin Counties, Texas, for approximately $0.6 billion. The assets and liabilities related~~does not contain material adverse change clauses or debt ratings triggers that could restrict Occidental's ability to these operations were presented as held for sale at June 30, 2017, and primarily included property, plant and equipment and asset retirement obligations. Concurrently, Occidental entered into a purchase agreement to increase its ownership interests and assume operatorship in CO₂ ~~enhanced oil recovery (EOR) properties located in its Permian EOR business unit for $0.6 billion. These transactions closed in~~borrow under the ~~third quarter of 2017, and are subject to customary price adjustments.~~

In April 2017, Occidental completed the sale of its South Texas operations for net proceeds of $0.5 billion resulting in pre-tax gain of $0.5 billion. The assets and liabilities related to these operations were presented as held for sale at March 31, 2017, and primarily included property, plant and equipment and asset retirement obligations.facility.

3. Accounting and Disclosure Changes

In ~~March 2017,~~February 2018, the Financial Accounting Standards Board (FASB) ~~issued guidance related~~released standards that allow the reclassification from accumulated other comprehensive income to ~~presentation~~retained earnings of ~~net periodic pension cost~~stranded tax effects resulting from changes to U.S. federal tax law from the 2017 Tax Cuts and ~~net periodic postretirement benefit cost. The rules become effective for annual periods beginning after~~Jobs Act enacted in December ~~15,~~ 2017. ~~These rules are not expected to have a material impact to Occidental's financial statements upon adoption.~~Occidental early adopted

this standard in the first quarter of 2018, resulting in the reclassification of $58 million in stranded tax effects from accumulated other comprehensive income to retained earnings.

In ~~2016,~~ the ~~FASB issued rules clarifying several aspects~~first quarter of 2018, Occidental adopted the new revenue recognition standard Topic 606 - Revenue from Contracts with Customers ~~previously issued in May 2014. The guidance is effective for interim~~ and annual reporting periods starting January 1, 2018. Under the new standard, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods and services.related updates (ASC 606). The new standard ~~also~~ requires more detailed disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Occidental ~~plans to adopt~~adopted the standard using the modified retrospective ~~approach and recognize a cumulative effect~~method. The cumulative-effect adjustment to ~~Retained Earnings as~~retained earnings upon adoption was not material. See Note 4 Revenue Recognition.

In March 2017, FASB issued guidance related to presentation of ~~January 1, 2018, the date of adoption, subject to certain additional disclosures. Occidental continues to make progress on evaluating the accounting implications of the standard~~net periodic pension cost and has stratified all revenue streams within each operating segment and has compiled an inventory of all contracts. A representative sample of contracts has been pulled from these significant revenue streams and reviewed in detail against the requirements of the new standard to identify whether such contracts are in scope of the new standard; whether there will be material changesnet periodic postretirement benefit cost. The rules became effective in the ~~timing or amount~~first quarter of revenue recognized; whether processes and controls are in place to evaluate new contracts for revenue recognition and to assemble any additional required disclosures. Occidental has finalized the scoping strategy for review of existing and newly executed contracts and assessed disclosure requirements. Additionally,

Occidental has developed training materials to instruct accounting staff on the new standard and should finalize estimates of potential financial impacts by the end of the third quarter. Based upon work performed through June 30, 2017, Occidental does2018. These rules did not ~~currently anticipate~~have a material impact to ~~earnings as~~Occidental's financial statements upon adoption.

In January 2017, the FASB issued new guidance clarifying the definition of a ~~result~~business under the topic Business Combinations. The rules became effective in the first quarter of ~~adopting~~2018, and did not have a material impact to Occidental's financial statements upon adoption.

In November 2016, FASB issued new guidance related to the ~~new standard~~cash flow classification and ~~is continuing to evaluate the impact of this and other provisions~~presentation of the ~~standard~~changes in restricted cash on ~~its accounting policies, internal controls~~the statement of cash flows. The rules became effective in the first quarter of 2018 and ~~consolidated financial statements and related disclosures.~~must be applied retrospectively. Occidental did not have restricted cash as of June 30, 2018, or December 31, 2017.

In August 2016, the FASB issued new guidance related to the classification of certain cash receipts and payments on the statement of cash flows. The rules were adopted for the first quarter of 2018 and resulted in the retrospective reclassification of $151 million of cash receipts from operating cash flows to investing cash flows for the six months ended June 30, 2017, within the Statement of Cash Flows.

In February 2016, the FASB issued rules which require Occidental to recognize most leases, including operating leases, on the balance sheet. The new rules require lessees to recognize a right-of-use asset and lease liability for all leases with lease terms of more than 12 months. The lease liability represents the discounted obligation to make future minimum lease ~~payments and the~~payments. The corresponding right-of-use asset onincludes the ~~balance sheet for most leases. The guidance retains~~discounted obligation in addition to any upfront payment or cost incurred during contract execution of the ~~current accounting for lessors and does not make significant changes to the recognition, measurement and presentation of expenses and cash flows by a lessee.~~lease. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. Occidental is the lessee under various agreements for real estate, equipment, plants and facilities, aircraft ITand information technology hardware ~~and vehicles~~ that are currently accounted for as operating ~~leases, refer to Note 6,~~ ~~Lease Commitments~~ ~~in Occidental’s Annual Report on Form 10-K for the year ended December 31, 2016.~~leases. As a result, these new rules will increase reported assets and liabilities. Occidental will not ~~early-adopt~~be an early adopter of this standard. Occidental will apply the revised lease rules for ~~our~~its interim and annual reporting periods starting January 1, 2019, using a modified retrospective approach, including several optional practical expedients related to leases that commenced before the effective date. Occidental is currently evaluating the effect of these rules on its financial statements, ~~developing~~ training ~~materials for accounting staff~~employees, working with third-party consultants and ~~reviewing external~~has developed an internal interim software ~~solutions~~solution for the identification, documentation, tracking, and ~~tracking~~accounting of leases in order to create an adoption plan based on Occidental's population of leases under the revised definition of leases. Occidental is currently in the test phase and continues to evaluate existing and new lease contracts for compliance. The quantitative impacts of the new standard are dependent on the leases in force at the time of adoption. As a result, the evaluation of the effect of the new standard will extend over future periods.

4. Revenue Recognition

On January 1, 2018, Occidental adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018, are presented under ASC 606, while prior period amounts have not been adjusted. There was no impact of adopting ASC 606 to the opening balance of retained earnings. There was no impact to the timing or amount of revenue recognized in the six months ended June 30, 2018, as a result of the adoption of ASC 606.

Revenue from customers is recognized when obligations under the terms of a contract with our customer are satisfied; this generally occurs with the delivery of oil, gas, natural gas liquids ("NGL"), chemicals or services such as transportation. Revenue from customers is measured as the amount of consideration Occidental expects to receive in exchange for the delivery of goods or services. Contracts may last from one month to one year or more, and may

have renewal terms that extend indefinitely at the option of either party. Price is typically based on market indexes. Volumes fluctuate due to production and, in certain cases, customer demand and transportation availability. Occidental records revenue net of certain taxes, such as sales taxes, that are assessed by governmental authorities on Occidental's customers. Occidental has elected a practical expedient under ASC 606 and will not disclose revenue recognizable in future periods for unsatisfied performance obligations because the consideration related to those performance obligations is based on volume or market prices, which are variable.

Occidental does not incur significant costs to obtain contracts. Incidental items that are immaterial in the context of the contract are recognized as expense. Sales of hydrocarbons and chemicals to customers are invoiced and settled on a monthly basis. Occidental is not usually subject to obligations for warranties, returns or refunds except in the case of customer incentive payments as discussed for the chemical segment below. Occidental does not typically receive payment in advance of satisfying its obligations under the terms of its sales contracts with customers; therefore, liabilities related to such payment are immaterial to Occidental. As of June 30, 2018, trade receivables, net, of $5.5 billion, represents 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.

Oil and Gas Segment

Revenue is recognized from oil and gas production when it is delivered and control passes to the customer. Revenues from the production of oil and gas properties in which Occidental has an interest with other producers are recognized on the basis of Occidental’s net revenue interest.

Chemical Segment

Revenue from chemical product sales is recognized when control passes to the customer. Certain incentive programs may provide for payments or credits to be made to customers based on the volume of product purchased over a defined period. Customer incentives are estimated and recorded as a reduction to revenue ratably over the contract period. Such estimates are evaluated and revised as warranted. Revenue from exchange contracts is excluded from revenue from customers.

Midstream and Marketing Segment

Pipeline and gas processing revenue is recognized upon the completion of the transportation or processing service. Revenue from power sales is recognized upon delivery. Net marketing margin is included in net sales, but excluded from revenue from customers. Net marketing margin is recognized upon completion of contract terms that are a prerequisite to payment and upon title transfer for physical deliveries. Unless normal sales treatment has been elected, net marketing margin is classified as a derivative, reported on a net basis, recorded at fair value and changes in fair value are reflected in net sales.

The following table shows a reconciliation of revenue from customers to total net sales (in millions):



	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018

Revenue from customers	$	3,831	$	7,556
All other revenues ^(a)	252		290
Total net sales	$	4,083	$	7,846

^(a)Includes net marketing margin and chemical exchange contracts.

The following table presents Occidental's revenue from customers by segment, product, and geographical area. Because the oil and gas segment typically sells its hydrocarbons at the lease or concession area, oil, gas and NGL are assumed to be sold in the area where they are produced. Chemical and midstream revenues are shown by area based on the location of the sale (in millions):



For the three months ended June 30, 2018
Revenue by Product	United States			Middle East		Latin America		Other International		Total

Oil and Gas Segment
Oil	$	1,334		$	718	$	180	$	—	$	2,232
NGL	111			64		—		—		175
Gas	42			73		3		—		118
Other	4			1		1		—		6
Segment Total	$	1,491		$	856	$	184	$	—	$	2,531

Chemical Segment	$	1,102		$	—	$	51	$	17	$	1,170

Midstream Segment
Marketing and Trading	$	2		$	—	$	—	$	—	$	2
Gas Processing	131			104		—		—		235
Pipelines	101			—		—		—		101
Power and Other	19			—		—		—		19
Segment Total	$	253		$	104	$	—	$	—	$	357

Intersegment Eliminations	$	(227	)	$	—	$	—	$	—	$	(227	)

Consolidated	$	2,619		$	960	$	235	$	17	$	3,831



For the six months ended June 30, 2018
Revenue by Product	United States			Middle East		Latin America		Other International		Total

Oil and Gas Segment
Oil	$	2,581		$	1,491	$	350	$	—	$	4,422
NGL	200			115		—		—		315
Gas	94			138		7		—		239
Other	7			1		1		—		9
Segment Total	$	2,882		$	1,745	$	358	$	—	$	4,985

Chemical Segment	$	2,182		$	—	$	103	$	38	$	2,323

Midstream Segment
Marketing and Trading	$	8		$	—	$	—	$	—	$	8
Gas Processing	268			200		—		—		468
Pipelines	195			—		—		—		195
Power and Other	38			—		—		—		38
Segment Total	$	509		$	200	$	—	$	—	$	709

Intersegment Eliminations	$	(461	)	$	—	$	—	$	—	$	(461	)

Consolidated	$	5,112		$	1,945	$	461	$	38	$	7,556

5. Supplemental Cash Flow Information

Occidental paid foreign ~~and state~~ income taxes and domestic state taxes of ~~$375~~$545 million and ~~$288~~$375 million during the six months ended June 30, ~~2017,~~2018, and ~~2016,~~2017, respectively. Occidental received ~~federal income~~domestic tax refunds of ~~$749~~$2 million and ~~$302~~$755 million induring the six months ended June 30, ~~2017~~2018, and ~~2016,~~2017, respectively. Interest paid totaled $182 million and $155 million ~~and $154 million in each of~~during the six months ended June 30, ~~2017,~~2018, and ~~2016,~~2017, respectively.

5.6. Inventories

Finished goods primarily represents crude oil, caustic soda and vinyl products. Inventories as of June 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, consisted of the following (in millions):


	2017			2016			2018			2017

Raw materials	$	79		$	65		$	68		$	66
Materials and supplies	453			446			466			447
Finished goods	429			395			858			776
	961			906			1,392			1,289

Revaluation to LIFO	(41		)	(40		)	(45		)	(43		)
Total	$	920		$	866		$	1,347		$	1,246

6.7. Environmental Liabilities and Expenditures

Occidental’s operations are subject to stringent federal, state, local and foreign laws and regulations related to improving or maintaining environmental quality. The laws that require or address environmental remediation, including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and similar federal, state, local and foreign laws, may apply retroactively and regardless of fault, the legality of the original activities or the current ownership or control of sites. OPC or certain of its subsidiaries participate in or actively monitor a range of remedial activities and government or private proceedings under these laws with respect to alleged past practices at operating, closed and third-party sites. Remedial activities may include one or more of the following: investigation involving sampling, modeling, risk assessment or monitoring; cleanup measures including removal, treatment or

disposal of hazardous substances; or operation and maintenance of remedial systems. These environmental proceedings seek funding or performance of remediation and, in some cases, compensation for alleged property damage, punitive damages, civil penalties, injunctive relief and government oversight costs.

As of June 30, ~~2017,~~2018, Occidental participated in or monitored remedial activities or proceedings at ~~147~~148 sites. The following table presents Occidental’s current and non-current environmental remediation reserves as of June 30, ~~2017. The current portion of $131 million is~~2018, which were included in ~~accrued~~current liabilities ($140 million) and ~~the noncurrent portion of $742 million is included in~~ deferred credits and other liabilities ~~— other.~~- environmental remediation reserves ($731 million). The reserves are grouped as environmental remediation sites listed or proposed for listing by the United States Environmental Protection Agency on the CERCLA National Priorities List (NPL sites) and three categories of non-NPL sites — third-party sites, Occidental-operated sites and closed or non-operated Occidental sites.


	Number of Sites	Reserve Balance (in millions)		Number of Sites	Reserve Balance (in millions)

NPL sites	34	$	460	34	$	454
Third-party sites	67	172		70	173
Occidental-operated sites	17	107		15	105
Closed or non-operated Occidental sites	29	134		29	139
Total	147	$	873	148	$	871

As of June 30, ~~2017,~~2018, Occidental’s environmental reserves exceeded $10 million each at 16 of the ~~147~~148 sites described above, and 8691 of the sites each had reserves of $1 million or less. Based on current estimates, Occidental expects to expend funds corresponding to approximately ~~half~~40 percent of the ~~current~~ environmental reserves at the sites described above over the next three to four years and the balance at these sites over the subsequent 10 or more years.

Occidental believes its estimable amount of reasonably possible additional losses beyond those liabilities recorded for environmental remediation at these sites could range up to $1.1 billion. The status of Occidental's involvement with the sites and related significant assumptions, including those sites indemnified by Maxus Energy Corporation ~~(see further discussion below)~~(Maxus), has not changed materially since December 31, ~~2016.~~ 2017.

Maxus Environmental Sites

When Occidental acquired Diamond Shamrock Chemicals Company (DSCC) in 1986, Maxus, ~~Energy Corporation (Maxus), currently~~ a subsidiary of YPF S.A. (YPF), agreed to indemnify Occidental for a number of environmental sites, including the Diamond Alkali Superfund Site (Site) along a portion of the Passaic River. On June 17, 2016, Maxus and several affiliated companies filed for Chapter 11 bankruptcy in Federal District Court in the State of Delaware. Prior to filing for bankruptcy, Maxus defended and indemnified Occidental in connection with ~~cleanup~~clean-up and other costs associated with the sites subject to the indemnity, including the Site. ~~Occidental is pursuing Maxus’ current and former parent companies, YPF and Repsol, as the alter egos of Maxus, to recover all indemnified costs, which will include costs to be incurred at the Site.~~

In March 2016, the EPA issued a Record of Decision (ROD) specifying remedial actions required for the lower 8.3 miles of the Lower Passaic River. The ROD does not address any potential remedial action for the upper nine miles of the Lower Passaic River or Newark Bay. During the third quarter of 2016, and following Maxus’s bankruptcy filing, Occidental and the EPA entered into an Administrative Order on Consent (AOC) to complete the design of the proposed ~~cleanup~~clean-up plan outlined in the ROD at an estimated cost of $165 million. The EPA announced that it will pursue similar agreements with other potentially responsible parties.

Occidental has accrued a reserve relating to its estimated allocable share of the costs to perform the design and the remediation called for in the AOC and the ROD, as well as for certain other Maxus-indemnified sites. ~~Occidental’s~~Occidental's accrued estimated environmental reserve does not consider any recoveries for indemnified costs. Occidental’s ultimate share of this liability may be higher or lower than the reserved amount, and is subject to final design plans and the resolution of Occidental's allocable share with other potentially responsible parties. Occidental continues to evaluate the costs to be incurred to comply with the AOC, the ROD and to perform remediation at other Maxus-indemnified sites in light of the Maxus bankruptcy and the share of ultimate liability of other potentially responsible parties. In June 2018, Occidental filed a complaint under CERCLA in Federal District Court in the State of New Jersey against numerous potentially responsible parties for reimbursement of amounts incurred or to be incurred to comply with the AOC, the ROD or to perform other remediation activities at the Site.

In June 2017, the court overseeing the Maxus bankruptcy approved a ~~plan~~Plan of Liquidation (Plan) to liquidate Maxus and create a trust to pursue claims against YPF, Repsol and others to satisfy claims by Occidental and other creditors for past and future cleanup and other costs. ~~The~~In July 2017, the court-approved Plan became final and the trust became effective. Among other responsibilities, the trust will pursue claims against YPF, Repsol and others and ~~will~~ distribute assets to ~~Maxus’~~Maxus' creditors in accordance with the trust agreement and ~~reorganization plan.~~

Plan. In June 2018, the trust filed its complaint against YPF and Repsol in Delaware bankruptcy court asserting claims based upon, among other things, fraudulent transfer and alter ego.

7.8. Lawsuits, Claims, Commitments and Contingencies

Legal Matters

Occidental or certain of its subsidiaries are involved, in the normal course of business, in lawsuits, claims and other legal proceedings that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief. Occidental or certain of its subsidiaries also are involved in proceedings under CERCLA and similar federal, state, local and foreign environmental laws. These environmental proceedings seek funding or performance of remediation and, in some cases, compensation for alleged property damage, punitive damages, civil penalties and injunctive relief. Usually Occidental or such subsidiaries are among many companies in these environmental proceedings and have to date been successful in sharing response costs with other financially sound companies. Further, some lawsuits, claims and legal proceedings involve acquired or disposed assets with respect to which a third party or Occidental retains liability or indemnifies the other party for conditions that existed prior to the transaction.

In 2016, Occidental received payments from the Republic of Ecuador of approximately $1.0 billion pursuant to a November 2015 arbitration award for Ecuador’s 2006 expropriation of Occidental's Participation Contract for Block 15. The awarded amount represented a recovery of 60 percent of the value of Block 15. In 2017, Andes Petroleum Ecuador Ltd. (Andes) filed a demand for arbitration, claiming it is entitled to a 40 percent share of the judgment amount obtained by Occidental. Occidental contends that Andes is not entitled to any of the amounts paid under the 2015 arbitration award because Occidental’s recovery was limited to Occidental’s own 60 percent economic interest in the block. Occidental intends to vigorously defend against this claim in arbitration.

In accordance with applicable accounting guidance, Occidental accrues reserves for outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. In Note 6,7, Environmental Liabilities and Expenditures, Occidental has disclosed its reserve balances for environmental remediation matters that satisfy this criteria. Reserve balances for matters, other than environmental remediation, that satisfy this criteria as of June 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, were not material to Occidental’s consolidated ~~condensed~~ balance sheets.

~~Occidental also evaluates the amount of reasonably possible losses that it could incur as a result~~The ultimate outcome and impact of outstanding lawsuits, claims and proceedings ~~and discloses its estimable range of reasonably possible additional losses for sites where it is a participant in environmental remediation.~~on Occidental cannot be predicted. Management believes that ~~other reasonably possible losses for non-environmental~~the resolution of these matters ~~that it could incur~~will not, individually or in ~~excess~~the aggregate, have a material adverse effect on Occidental's consolidated balance sheet. If unfavorable outcomes of ~~reserves accrued on the balance sheet would not be material~~these matters were to ~~its consolidated financial position or~~occur, future results of ~~operations.~~operations or cash flows for any particular quarterly or annual period could be materially adversely affected. Occidental’s estimates are based on information known about the legal matters and its experience in contesting, litigating and settling similar matters. Occidental reassesses the probability and estimability of contingent losses as new information becomes available.

Tax Matters

During the course of its operations, Occidental is subject to audit by tax authorities for varying periods in various federal, state, local and foreign tax jurisdictions. Although taxable years through ~~2009~~2012 for United States federal income tax purposes have been audited by the United States Internal Revenue Service (IRS) pursuant to its Compliance Assurance Program, subsequent taxable years are currently under review. Taxable years from 2002 through the current year remain subject to examination by foreign and state government tax authorities in certain jurisdictions. In certain of these jurisdictions, tax authorities are in various stages of auditing Occidental’s income taxes. During the course of tax audits, disputes have arisen and other disputes may arise as to facts and matters of law. Occidental believes that the resolution of outstanding tax matters would not have a material adverse effect on its consolidated financial position or results of operations.

Indemnities to Third Parties

Occidental, its subsidiaries, or both, have indemnified various parties against specified liabilities those parties might incur in the future in connection with purchases and other transactions that they have entered into with Occidental. These indemnities usually are contingent upon the other party incurring liabilities that reach specified thresholds. As of June 30, ~~2017,~~2018, Occidental is not aware of circumstances that it believes would reasonably be expected to lead to indemnity claims that would result in payments materially in excess of reserves.

8.9. Retirement and ~~Post-retirement~~Postretirement Benefit Plans

The following tables set forth the components of the net periodic benefit costs for Occidental’s defined benefit ~~pension and post-retirement benefit~~ plans for the three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017 (in millions):


Three months ended June 30	2017					2016					2018					2017
Net Periodic Benefit Costs	Pension Benefit			Post-retirement Benefit		Pension Benefit			Post-retirement Benefit		Pension Benefit			Postretirement Benefit		Pension Benefit			Postretirement Benefit

Service cost	$	2		$	5	$	2		$	5	$	2		$	6	$	2		$	5
Interest cost	4			10		4			10		4			9		4			10
Expected return on plan assets	(6		)	—		(6		)	—		(6		)	—		(6		)	—
Recognized actuarial loss	2			4		3			6		1			6		2			4
Settlement loss	—			—		2			—
Total	$	2		$	19	$	5		$	21	$	1		$	21	$	2		$	19


Six months ended June 30	2017					2016					2018					2017
Net Periodic Benefit Costs	Pension Benefit			Post-retirement Benefit		Pension Benefit			Post-retirement Benefit		Pension Benefit			Postretirement Benefit		Pension Benefit			Postretirement Benefit

Service cost	$	4		$	10	$	4		$	10	$	4		$	12	$	4		$	10
Interest cost	8			20		8			20		8			18		8			20
Expected return on plan assets	(12		)	—		(12		)	—		(12		)	—		(12		)	—
Recognized actuarial loss	4			8		6			11		2			10		4			8
Settlement loss	—			—		2			—
Total	$	4		$	38	$	8		$	41	$	2		$	40	$	4		$	38

Occidental contributed approximately $1 million in each of the three months ended June 30, ~~2017,~~2018, and ~~2016, respectively,~~2017, and approximately $2 million in each of the six months ended June 30, ~~2017,~~2018, and ~~2016, respectively,~~2017, to its defined benefit plans.

9.10. Fair Value Measurements

Occidental has categorized its assets and liabilities that are measured at fair value in a three-level fair value hierarchy, based on the inputs to the valuation techniques: Level 1 — using quoted prices in active markets for the assets or liabilities; Level 2 — using observable inputs other than quoted prices for the assets or liabilities; and Level 3 — using unobservable inputs. Transfers between levels, if any, are recognized at the end of each reporting period.

The following tables provide fair value measurement information for such assets and liabilities that are measured on a recurring basis as of June 30, ~~2017,~~2018, and December 31, ~~2016~~2017 (in millions):

Embedded Derivatives Level 1 Level 2 Level 3
Netting and
Collateral

Total Fair
Value
Fair Value Measurements at June 30, 2017:
Liabilities:

Accrued Liabilities $ —
$ 64
$ —
$ —
$ 64
Deferred credits and other liabilities - other $ —
$ 201
$ —
$ —
$ 201

Fair Value Measurements at December 31, 2016:
Liabilities:
Accrued Liabilities $ —
$ 43
$ —
$ —
$ 43
Deferred credits and other liabilities - other $ —
$ 178
$ —
$ —
$ 178



Fair Value Measurements at June 30, 2018:
Embedded derivatives	Level 1		Level 2		Level 3		Netting and Collateral		Total Fair Value

Liabilities:
Accrued liabilities	$	—	$	17	$	—	$	—	$	17
Deferred credits and other liabilities	$	—	$	86	$	—	$	—	$	86

Fair Value Measurements at December 31, 2017:
Embedded derivatives	Level 1		Level 2		Level 3		Netting and Collateral		Total Fair Value

Liabilities:
Accrued liabilities	$	—	$	39	$	—	$	—	$	39
Deferred credits and other liabilities	$	—	$	147	$	—	$	—	$	147

Fair Values — Nonrecurring

During the six months ended June 30, ~~2017,~~2018, Occidental ~~did not have any assets or liabilities measured at fair value on a nonrecurring basis.~~recognized pre-tax impairment charges of $42 million related to non-core Permian acreage and an investment in gas processing facilities. During the year ended December 31, ~~2016,~~2017, Occidental recognized pre-tax impairment charges of ~~$15~~$397 million primarily related to held-for-sale, non-core, proved ~~oil~~ and ~~gas properties.~~unproved Permian acreage.

Other Financial Instruments

The carrying amounts of cash and cash equivalents and other on-balance-sheet financial instruments, other than long-term, fixed-rate debt, approximate fair value. The cost, if any, to terminate Occidental's off-balance-sheet financial instruments is not significant. Occidental estimates the fair value of fixed-rate debt based on the quoted market prices for those instruments or on quoted market yields for similarly rated debt instruments, taking into account such instruments’ maturities. The estimated fair value of Occidental’s debt as of June 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, was ~~$10.2~~$10.4 billion for both periods. The remaining principal payments, less the discount on long-term debt, aggregated approximately $10.4 billion and ~~its carrying value net of unamortized discount and debt issuance costs~~$9.9 billion as of June 30, ~~2017,~~2018, and December 31, ~~2016, was $9.8 billion. The majority of Occidental's debt is classified as Level 1, with $227 million classified as Level 2.~~2017, respectively.

~~10.~~11. Derivatives

Occidental uses a variety of derivative financial instruments and physical contracts, including those designated as ~~cash-flow~~cash flow hedges, to manage its exposure to commodity price fluctuations, transportation commitments and to fix margins on the future sale of stored volumes of oil and natural gas. Where Occidental buys product for its own consumption or sells its production to a defined customer, Occidental elects normal purchases and normal sales exclusions. Occidental usually applies ~~cash-flow~~cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the ~~forecasted~~forecast sales of its natural gas storage volumes, and at times for other strategies to lock in margins. Occidental also enters into derivative financial instruments for speculative or trading purposes; however, the results of any transactions are immaterial to the marketing portfolio.

The financial instruments not designated as hedges will impact Occidental's earnings through mark-to-market until the offsetting future physical commodity is delivered. For GAAP purposes, any physical inventory is carried at ~~the~~ lower of cost or market on the balance sheet. A substantial majority of Occidental's physical derivative contracts are index-based and carry no mark-to-market value in earnings. Net gains and losses associated with derivative instruments not designated as hedging instruments are recognized currently in net sales. Net gains and losses attributable to derivative instruments subject to hedge accounting reside in accumulated other comprehensive income (loss) and are reclassified to earnings as the transactions to which the derivatives relate are recognized in earnings.

Credit Risk

The majority of Occidental's counterparty credit risk is related to the physical delivery of energy commodities to its customers and their inability to meet their settlement commitments. Occidental manages ~~this~~ credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring collateral or other credit risk mitigants, as appropriate. Occidental actively ~~reviews~~evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned ~~credit limits by adjusting credit limits to reflect counterparty risk, if necessary.~~limits. Occidental also enters into future contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk as a significant portion of these transactions settle on a daily margin basis.

Certain of Occidental's over-the-counter derivative instruments contain credit-risk-contingent features, primarily tied to credit ratings for Occidental or its counterparties, which may affect the amount of collateral that each would need to post. Occidental believes that if it had received a one-notch reduction in its credit ratings, it would not have resulted in a material change in its collateral-posting requirements as of June 30, ~~2017,~~2018, and December 31, ~~2016.~~

2017.

Cash-Flow Hedges

Occidental’s marketing operations store natural gas purchased from third parties at Occidental’s leased storage facilities. Derivative instruments are used to fix margins on the future sales of the stored volumes. ~~These agreements continue through 2018.~~ As of June 30, 2018, Occidental did not have any cash-flow hedges. As of December 31, 2017, Occidental had approximately 7 billion cubic feet (Bcf) of natural gas held in storage, and had cash-flow hedges for the forecasted sales to be settled by physical delivery of approximately 6 Bcf of stored natural gas. As of December 31, 2016, Occidental had approximately 7 Bcf of natural gas held in storage, and had cash-flow hedges for the forecastedforecast sales, to be settled by physical delivery, of approximately 7 Bcf of stored natural gas. ~~The amount of cash-flow hedges, including the ineffective portion, was immaterial for the six months ended June 30, 2017, and the year ended December 31, 2016.~~

Derivatives Not Designated as Hedging Instruments

Forward unrealized instruments that are derivatives not designated as hedging instruments are required to be recorded on the income statement and balance sheet at fair value. The fair value represents an unrealized gain or loss between executed sales prices and market prices at the end of the period. The fair value does not reflect the realized or cash value of the instrument. Substantially all of the fair value of Occidental's derivative instruments not designated as hedges are used to manage its exposure to commodity price fluctuations and settle within three months at a weighted average sales price of $70.90 and $2.53 for crude oil and natural gas, respectively at June 30, 2018. The remaining fair value of derivative instruments not designated as hedges was immaterial. The weighted average sales price was $57.38 and $2.73 for crude oil and natural gas, respectively, at December 31, 2017.

The following table summarizes the amounts reported in net sales related to the outstanding commodity ~~derivative instruments~~derivatives not designated as hedging instruments as of June 30, ~~2017,~~2018 and December 31, ~~2016:~~2017.

(in millions, except Long/(Short) volumes) 2017 2016
Gain (loss) on derivatives not designated as hedges
Oil commodity contracts $ 18
$ (5 )
Natural gas commodity contracts $ 1
$ 1

Outstanding net volumes on derivatives not designated as hedges
Oil Commodity Contracts
Volume (MMBL) 106
67
Price Per Bbl $ 48.71
$ 53.86

Natural gas commodity contracts
Volume (Bcf) (35 ) (12 )
Price Per MMBTU $ 2.82
$ 3.19



(in millions, except Long/(Short) volumes)	2018			2017

Unrealized gain (loss) on derivatives not designated as hedges
Crude Oil Commodity Contracts	$	(73	)	$	(47	)
Natural Gas Commodity Contracts	$	—		$	1
Outstanding net volumes on derivatives not designated as hedges
Crude Oil Commodity Contracts
Volume (MMBL)	45			61
Natural Gas Commodity Contracts
Volume (Bcf)	(57		)	(47		)

Fair Value of Derivatives

The following table presents the gross and net fair values of Occidental’s outstanding derivatives as of June 30, ~~2017,~~2018, and December 31, ~~2016~~2017 (in millions):

As of June 30, 2017 Fair Value Measurements Using
Netting ^(b)
Total Fair Value
(in millions) (Commodity Contracts) Level 1 Level 2 Level 3
Assets:
Cash-flow hedges: ^(a)

Other current assets $ —
$ 1
$ —
$ —
$ 1
Long-term receivables and other assets, net $ —
$ —
$ —
$ —
$ —
Derivatives not designated as hedging instruments: ^(a)

Other current assets $ 395
$ 37
$ —
$ (398 ) $ 34
Long-term receivables and other assets, net $ 16
$ 1
$ —
$ (15 ) $ 2
Liabilities:
Cash-flow hedges:^(a)

Accrued liabilities $ —
$ —
$ —
$ —
$ —
Deferred credits and liabilities $ —
$ —
$ —
$ —
$ —
Derivatives not designated as hedging instruments: ^(a)

Accrued liabilities $ 375
$ 36
$ —
$ (398 ) $ 13
Deferred credits and liabilities $ 15
$ 4
$ —
$ (15 ) $ 4



As of June 30, 2018		Fair Value Measurements Using			Netting ^(b)		Total Fair Value
(in millions)	Balance Sheet Location	Level 1	Level 2	Level 3	Netting ^(b)		Total Fair Value

Assets:
Derivatives not designated as hedging instruments ^(a)
Commodity contracts	Other current assets	933	655	—	(1,027	)	561
Commodity contracts	Long-term receivables and other assets, net	40	4	—	(41	)	3
Liabilities:
Derivatives not designated as hedging instruments ^(a)
Commodity contracts	Accrued liabilities	979	682	—	(1,027	)	634
Commodity contracts	Deferred credits and other liabilities	40	3	—	(41	)	2

As of December 31, 2016 Fair Value Measurements Using
Netting ^(b)
Total Fair Value
(in millions) (Commodity Contracts) Level 1 Level 2 Level 3
Assets:
Cash-flow hedges: ^(a)

Other current assets $ —
$ 1
$ —
$ —
$ 1
Long-term receivables and other assets, net $ —
$ —
$ —
$ —
$ —
Derivatives not designated as hedging instruments: ^(a)

Other current assets $ 166
$ 57
$ —
$ (196 ) $ 27
Long-term receivables and other assets, net $ 2
$ 3
$ —
$ (2 ) $ 3
Liabilities:
Cash-flow hedges ^(a)

Accrued liabilities $ —
$ 6
$ —
$ —
$ 6
Deferred credits and liabilities $ —
$ —
$ —
$ —
$ —
Derivatives not designated as hedging instruments: ^(a)

Accrued liabilities $ 172
$ 51
$ —
$ (196 ) $ 27
Deferred credits and liabilities $ 1
$ 6
$ —
$ (2 ) $ 5



As of December 31, 2017		Fair Value Measurements Using			Netting ^(b)		Total Fair Value
(in millions)	Balance Sheet Location	Level 1	Level 2	Level 3	Netting ^(b)		Total Fair Value

Assets:
Cash-flow hedges ^(a)
Commodity contracts	Other current assets	—	3	—	—		3
Derivatives not designated as hedging instruments ^(a)
Commodity contracts	Other current assets	485	227	—	(517	)	195
Commodity contracts	Long-term receivables and other assets, net	1	2	—	(1	)	2
Liabilities:
Derivatives not designated as hedging instruments ^(a)
Commodity contracts	Accrued liabilities	535	222	—	(517	)	240
Commodity contracts	Deferred credits and other liabilities	1	3	—	(1	)	3


(a)	Fair values are presented at gross amounts, including when the derivatives are subject to master netting arrangements and presented on a net basis in the consolidated condensed balance sheets.

(b)

These amounts do not include collateral. As of June 30, ~~2017, collateral received of $23 million has been netted against derivative assets and collateral paid of $2 million has been netted against derivative liabilities. As of December 31, 2016,~~2018, collateral received of $4 million has been netted against derivative assets and collateral paid of ~~$13~~$40 million has been netted against derivative liabilities. As of December 31, 2017, no collateral received has been netted against derivative assets and collateral paid of $54 million has been netted against derivative liabilities. Select clearinghouse and brokers require Occidental to post an initial margin deposit. Collateral deposited by Occidental, mainly for initial margin, of ~~$21~~$73 million and ~~$25~~$53 million as of June 30, ~~2017,~~2018 and December 31, ~~2016,~~2017, respectively, has not been reflected in these derivative fair value tables. This collateral is included in other current assets in the consolidated condensed balance sheets.

~~11.~~

12. Industry Segments

~~NGLs,~~ NGL, natural gas, CO₂ and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities.

Results of industry segments generally exclude income taxes, interest income, interest expense, environmental remediation expenses, unallocated corporate expenses and discontinued operations, but include gains and losses from dispositions of segment and geographic area assets and income from the segments' equity investments. Intersegment sales eliminate upon consolidation and are generally made at prices approximating those that the selling entity would be able to obtain in third-party transactions.

The following tables present Occidental’s industry segments (in millions):


	Oil						Midstream				Corporate							Oil					Midstream			Corporate
	and						and				and							and					and			and
																		Gas			Chemical		Marketing			Eliminations				Total
Three months ended June 30, 2018
Net sales																		$	2,531		$	1,176	$	603		$	(227	)		$	4,083
Pre-tax operating profit (loss)																		$	780		$	317	$	250		$	(197	)	^(a)	$	1,150
Income taxes																		—			—		—			(302		)	^(b)	(302		)
Net income (loss)																		$	780		$	317	$	250		$	(499	)		$	848
	Gas				Chemical		Marketing				Eliminations				Total
Three months ended June 30, 2017
Net sales	$	1,848			$	1,156	$	270			$	(214	)		$	3,060		$	1,848		$	1,156	$	270		$	(214	)		$	3,060
Pre-tax operating profit (loss)	$	627		^(a)	$	230	$	119		^(b)	$	(184	)	^(c)	$	792		$	627	^(c)	$	230	$	119	^(d)	$	(184	)	^(a)	$	792
Income taxes	—				—		—				(285		)	^(d)	(285		)	—			—		—			(285		)	^(b)	(285		)
Net income (loss)	$	627			$	230	$	119			$	(469	)		$	507		$	627		$	230	$	119		$	(469	)		$	507

Three months ended June 30, 2016
Net sales	$	1,625			$	908	$	141			$	(143	)		$	2,531
Pre-tax operating profit (loss)	$	(117	)		$	88	$	(58	)		$	(145	)	^(c)	$	(232	)
Income taxes	—				—		—				96			^(d)	96
Discontinued operations, net	—				—		—				(3		)		(3		)
Net income (loss)	$	(117	)		$	88	$	(58	)		$	(52	)		$	(139	)


	Oil							Midstream				Corporate							Oil					Midstream			Corporate
	and							and				and							and					and			and
																			Gas			Chemical		Marketing			Eliminations				Total
Six months ended June 30, 2018
Net sales																			$	4,985		$	2,330	$	992		$	(461	)		$	7,846
Pre-tax operating profit (loss)																			$	1,530		$	615	$	429		$	(377	)	^(a)	$	2,197
Income taxes																			—			—		—			(641		)	^(b)	(641		)
Net income (loss)																			$	1,530		$	615	$	429		$	(1,018	)		$	1,556
	Gas				Chemical			Marketing				Eliminations				Total
Six months ended June 30, 2017
Net sales	$	3,742			$	2,224		$	481			$	(430	)		$	6,017		$	3,742		$	2,224	$	481		$	(430	)		$	6,017
Pre-tax operating profit (loss)	$	847		^(a)	$	400		$	72		^(b)	$	(332	)	^(c)	$	987		$	847	^(c)	$	400	$	72	^(d)	$	(332	)	^(a)	$	987
Income taxes	—				—			—				(363		)	^(d)	(363		)	—			—		—			(363		)	^(b)	(363		)
Net income (loss)	$	847			$	400		$	72			$	(695	)		$	624		$	847		$	400	$	72		$	(695	)		$	624

Six months ended June 30, 2016
Net sales	$	2,900			$	1,798		$	274			$	(318	)		$	4,654
Pre-tax operating profit (loss)	$	(602	)		$	302	^(e)	$	(153	)		$	(342	)	^(c)	$	(795	)
Income taxes	—				—			—				299			^(d)	299
Discontinued operations, net	—				—			—				435				435
Net income (loss)	$	(602	)		$	302		$	(153	)		$	392			$	(61	)

(a) Includes unallocated net interest expense, administration expense, environmental remediation and other pre-tax items.

(b) Includes all foreign and domestic income taxes from continuing operations.

~~(b)~~(d) Includes a non-cash fair value gain of ~~$88~~$94 million on the Plains equity investment.

~~(c) Includes unallocated net interest expense, administration expense, environmental remediation and other pre-tax items.~~

~~(d) Includes all foreign and domestic income taxes from continuing operations.~~

~~(e) Includes gain on sale of $57 million and $31 million related to the Occidental Tower in Dallas, Texas and a non-core specialty chemicals business, respectively.~~

~~12.~~13. Earnings Per Share

~~Basic EPS~~per share (EPS) was computed by dividing net income attributable to common stock, net of income allocated to participating securities, by the weighted-average number of common shares outstanding during each period, net of treasury shares and including vested but unissued shares and share units. The computation of diluted EPS reflects the additional dilutive effect of stock options and unvested stock awards.

Occidental’s instruments containing rights to nonforfeitable dividends granted in stock-based awards are considered participating securities prior to vesting and, therefore, net income allocated to these participating securities has been deducted from earnings in computing basic and diluted EPS under the two-class method. The following table presents the calculation of basic and diluted EPS for the three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017 (in millions, except per-share amounts):



	Three months ended June 30						Six months ended June 30
	Three months ended June 30						Six months ended June 30
	2018			2017			2018			2017
Basic EPS
Net Income	$	848		$	507		$	1,556		$	624
Less: Net income allocated to participating securities	(5		)	(2		)	(8		)	(2		)
Net Income, net of participating securities	843			505			1,548			622

Weighted average number of basic shares	765.7			764.9			765.7			764.7
Basic EPS	$	1.10		$	0.66		$	2.02		$	0.81
Diluted EPS
Net income, net of participating securities	$	843		$	505		$	1,548		$	622
Weighted average number of basic shares	765.7			764.9			765.7			764.7
Dilutive effect of potentially dilutive securities	1.7			1.0			1.5			0.8
Total diluted weighted average common shares	767.4			765.9			767.2			765.5
Diluted EPS	$	1.10		$	0.66		$	2.02		$	0.81

Three months ended
June 30

Six months ended
June 30

2017 2016 2017 2016
Basic EPS
Income (loss) from continuing operations $ 507
$ (136 ) $ 624
$ (496 )
Discontinued operations, net —
(3 ) —
435

Net income (loss) 507
(139 ) 624
(61 )

Less: Net income allocated to participating securities (2 ) —
(2 ) —

Net income (loss), net of participating securities 505
(139 ) 622
(61 )

Weighted average number of basic shares 764.9
763.6
764.7
763.5

Basic EPS $ 0.66
$ (0.18 ) $ 0.81
$ (0.08 )

Diluted EPS
Net income (loss), net of participating securities $ 505
$ (139 ) $ 622
$ (61 )
Weighted average number of basic shares 764.9
763.6
764.7
763.5

Dilutive effect of potentially dilutive securities 1.0
—
0.8
—

Total diluted weighted average common shares 765.9
763.6
765.5
763.5

Diluted EPS $ 0.66
$ (0.18 ) $ 0.81
$ (0.08 )

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this report, “Occidental” means Occidental Petroleum Corporation (OPC), or OPC and one or more entities in which it owns a controlling interest (subsidiaries). Portions of this report contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. Factors that could cause results to differ include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; uncertainties about the estimated quantities of oil and natural gas reserves; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns domestically or internationally; political conditions and events; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks or insurgent activity; failure of risk management; changes in law or regulations; reorganization or restructuring of Occidental’s operations; or changes in tax rates. Words such as “estimate,” “project,” “predict,” “will,” “would,” “should,” “could,” “may,” “might,” “anticipate,” “plan,” “intend,” “believe,” “expect,” “aim,” “goal,” “target,” “objective,” “likely” or similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Material risks that may affect Occidental’s results of operations and financial position appear in Part I, Item 1A “Risk Factors” of Occidental's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~2016~~2017 Form 10-K).

Consolidated Results of Operations

Occidental reported net income ~~from continuing operations~~ of ~~$507~~$848 million for the second quarter of ~~2017~~2018 on net sales of $4.1 billion, compared to net income of $507 million on net sales of $3.1 billion ~~compared to a net loss from continuing operations of $136 million on net sales of $2.5 billion~~ for the second quarter of ~~2016.~~2017. Diluted earnings per share ~~from continuing operations~~ was $1.10 for the second quarter of 2018 compared to $0.66 for the second quarter of ~~2017, compared to a diluted loss of $0.18 per share for the second quarter of 2016.~~2017.

Occidental reported net income ~~from continuing operations~~of $1.6 billion for the six months ended June 30, 2018, on net sales of $7.8 billion, compared to net income of $624 million ~~for the first six months of 2017~~ on net sales of $6.0 billion compared to a net loss of $496 million on net sales of $4.7 billion for the same period in 2016. Diluted earnings per share from continuing operations was $0.81 per share for the first six months of 2017, compared to a diluted loss per share of $0.65 for the same period of ~~2016. There~~2017. Diluted earnings per share was ~~no income from discontinued operations~~$2.02 for the ~~first~~ six months ~~of 2017,~~ended June 30, 2018, compared ~~with income of $435 million or $0.57 per share~~to $0.81 for the same period of ~~2016.~~2017.

Net income ~~from continuing operations~~increased for the three and six months ended June 30, ~~2017, reflected: from~~2018, when compared to the ~~oil and gas segment, higher commodity prices~~same periods of 2017, across all ~~products,~~segments. Excluding the gain on sale of South Texas operations in the second quarter of 2017, approximately two-thirds of the increase in earnings for the three and six months ended June 30, 2018, compared to the same periods of 2017, was the result of higher crude oil prices, higher domestic volumes, and lower depreciation, depletion and amortization (DD&A) rates in the oil and ~~asset sale gains;~~gas segment. The remaining increase reflected higher marketing margins from improved crude oil spreads in the ~~chemicals segment,~~marketing business as well as higher realized caustic soda prices ~~improved sales volumes on most product lines~~ and ~~additional equity income from the Ingleside ethylene cracker; and from the midstream and marketing segment, higher marketing~~favorable plant margins due to ~~improved Midland to Gulf Coast spreads~~lower ethylene and ~~increased sales volumes at the Ingleside Crude Terminal.~~energy costs.

Selected Statements of Operations Items

Net sales increased for the three and six months ended June 30, ~~2017,~~2018, compared to the same periods in ~~2016, due to~~2017, as a result of higher ~~realized commodity~~crude oil prices ~~for both~~and higher domestic crude oil volumes in the oil and gas segment, higher realized caustic soda prices in the chemical segment and ~~chemical segments.~~higher marketing margins in the midstream and marketing segment. Gain on the sale of assets, net, totaling $512 million for the three and six months ended June 30, 2017, primarily reflected gains on ~~the~~ sale of the South Texas operations. Gain on sale of assets, net, for the six months ended June 30, 2016, primarily reflected the sale of the Piceance Basin operations in Colorado for a gain of $121 million and the Occidental Tower building in Dallas for a gain of $57 million.

~~Compared to the same periods~~Cost of ~~2016, cost of~~ sales decreased for the three and six months ended June 30, 2018, compared to the same periods in 2017, ~~reflected higher~~mainly due to lower raw materials ~~and energy~~ costs in the chemical segment and ~~higher~~changes in the fair value of a long-term contract to purchase ~~injectant costs~~carbon dioxide in the oil and gas ~~segment. Compared~~segment, partially offset by higher third party crude purchases.

The increase in selling, general and administrative and other operating expenses for the three and six months ended June 30, 2018, compared to the same periods in 2017, reflected higher stock compensation costs due to Occidental's higher stock price and higher environmental remediation costs. Taxes other than on income increased for the three and six months ended June 30, 2018, compared to the same periods of ~~2016,~~2017, mainly due to higher production taxes

as a result of higher domestic oil prices. The decrease in DD&A expense for the three and six months ended June 30, 2018, compared to the same periods in 2017, ~~reflected improved~~was mainly due to lower DD&A rates ~~and~~in the ~~sale of~~Permian Resources oil and gas ~~assets.~~

operations.

The ~~increases~~increase in the domestic and foreign income tax ~~provisions~~provision for the three and six months ended June 30, ~~2017,~~2018, compared to the ~~income tax benefits for~~ same periods ~~of 2016, are due to~~in 2017, reflected higher pre-tax operating ~~income in 2017 compared to a pre-tax operating loss in 2016.~~income.

~~Higher income~~Income from equity investments for the three and six months ended June 30, 2017, reflected a non-cash fair value gain on the Plains equity ~~investment and equity income from the Ingleside ethylene cracker, which commenced operations in February 2017.~~investment.

Selected Analysis of Financial Position

See “Liquidity and Capital Resources” for a discussion about the changes in cash and cash ~~equivalents and restricted cash.~~equivalents.

The increase in trade receivables, net, at June 30, 2018, compared to December 31, 2017, was primarily due to higher crude oil prices and volumes. The increase in inventories at June 30, ~~2017,~~2018, compared to December 31, ~~2016,~~2017, reflected ~~higher~~an increase in domestic crude oil ~~storage.~~in transit from the Ingleside Crude Terminal at June 30, 2018. The increase in other current assets at June 30, 2018, compared to December 31, 2017, reflected mark-to-market increases on derivative financial instruments.

Assets and liabilities held for sale primarily represent non-core midstream assets and non-core proved and unproved domestic acreage. The increase in assets held for sale ~~relates to a sales agreement to sell non-strategic acreage in Andrews and Martin Counties, Texas. The decrease in other current assets~~from December 31, 2017, is primarily ~~related to receipt~~the result of the addition of $1.5 billion in non-core upstream and midstream property, plant and equipment, partially offset by the divestiture of non-core Permian and midstream assets with a ~~federal tax refund relating to~~book value of $0.3 billion. Excluding the ~~2016 net operating loss carryback. The decrease~~reclassification of assets held for sale, the increase in property, plant and equipment, net at June 30, 2018, compared to December 31, 2017, is primarily the result of ~~the reclassification~~capital expenditures and property acquisitions of ~~non-strategic acreage in Andrews~~$2.3 billion and ~~Martin Counties, Texas, to assets held for sale, and DD&A,~~$0.2 billion, respectively, which were partially offset by ~~Occidental's capital spending~~DD&A of ~~$1.5 billion~~$1.8 billion.

The decrease in the ~~first half of 2017.~~

~~Current maturities~~current portion of long-term debt at June 30, 2018, compared to December 31, 2017, reflected the ~~reclassification~~repayment of $500 million of 1.5-percent senior notes ~~due~~that matured in February 2018. The increase in accounts payable at June 30, 2018, ~~out of long-term debt.~~compared to December 31, 2017, mainly reflected higher crude oil prices and third-party purchases. The ~~decrease~~increase in accrued liabilities at June 30, 2018, compared to December 31, 2017, is mainly ~~due~~reflected mark-to-market increases on derivative financial instruments, partially offset by payments related to ~~bonus payments for~~incentive compensation that were paid in the ~~extension of Oman Block 9 and~~ first quarter ~~payments~~ of ~~ad valorem taxes.~~

2018. The ~~decrease~~increase in ~~deferred credits and other liabilities - other~~long-term debt at June 30, 2018, compared to December 31, 2017, ~~is mainly~~reflected the issuance of $1.0 billion of 4.2-percent senior notes due 2048. The increase in deferred domestic and foreign income taxes at June 30, 2018, compared to December 31, 2017, was primarily due to ~~the decrease in asset retirement obligations~~accelerated depreciation for ~~the South Texas assets that were sold in April.~~tax purposes.

Segment Operations

Occidental conducts its operations through three segments: (1) oil and gas; (2) chemical; and (3) midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, ~~NGLs~~NGL and natural gas. The chemical segment mainly manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, ~~NGLs,~~NGL, natural gas, CO₂ and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities.

The following table sets forth the sales and earnings of each operating segment and corporate items for the three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017 (in millions):


	Three months ended June 30						Six months ended June 30						Three months ended June 30						Six months ended June 30
	2017			2016			2017			2016			2018			2017			2018			2017
Net Sales ^(a)
Oil and Gas	$	1,848		$	1,625		$	3,742		$	2,900		$	2,531		$	1,848		$	4,985		$	3,742
Chemical	1,156			908			2,224			1,798			1,176			1,156			2,330			2,224
Midstream and Marketing	270			141			481			274			603			270			992			481
Eliminations	(214		)	(143		)	(430		)	(318		)	(227		)	(214		)	(461		)	(430		)
	$	3,060		$	2,531		$	6,017		$	4,654		$	4,083		$	3,060		$	7,846		$	6,017
Segment Results ^(b)
Oil and Gas	$	627		$	(117	)	$	847		$	(602	)	$	780		$	627		$	1,530		$	847
Chemical	230			88			400			302			317			230			615			400
Midstream and Marketing	119			(58		)	72			(153		)	250			119			429			72
	976			(87		)	1,319			(453		)	1,347			976			2,574			1,319
Unallocated Corporate Items ^(b)
Interest expense, net	(81		)	(84		)	(159		)	(141		)	(91		)	(81		)	(183		)	(159		)
Income tax benefit (provision)	(285		)	96			(363		)	299
Income tax provision													(302		)	(285		)	(641		)	(363		)
Other expense, net	(103		)	(61		)	(173		)	(201		)	(106		)	(103		)	(194		)	(173		)

Income (loss) from continuing operations	507			(136		)	624			(496		)
Discontinued operations, net	—			(3		)	—			435
Net Income (loss)	$	507		$	(139	)	$	624		$	(61	)
Net Income													$	848		$	507		$	1,556		$	624

(a) Intersegment sales eliminate upon consolidation and are generally made at prices approximating those that the selling entity would be able to obtain in third-party transactions.

(b) Refer to “Significant Transactions and Events Affecting Earnings,” “Oil and Gas Segment,” “Chemical Segment,” “Midstream and Marketing Segment” and "Corporate" discussions that follow.

Significant Transactions and Events Affecting Earnings

The following table sets forth significant transactions and events affecting Occidental’s earnings that vary widely and unpredictably in nature, timing and amount for the three and six months ended June 30, ~~2017,~~2018, and ~~2016~~2017 (in millions):


	Three months ended June 30						Six months ended June 30						Three months ended June 30					Six months ended June 30
	2017			2016			2017			2016			2018		2017			2018		2017

Oil and Gas
Asset sales gains and other	$	510		$	—		$	510		$	23
Gain on sale of assets and other													$	—	$	510		$	—	$	510

Chemical
Asset sales gains	$	—		$	—		$	—		$	88
No significant items													$	—	$	—		$	—	$	—

Midstream and Marketing
Non-cash fair value gain on Plains equity investment	$	94		$	—		$	94		$	—		$	—	$	94		$	—	$	94

Corporate
Asset impairments and related items	$	—		$	—		$	—		$	(78	)
Tax effect of pre-tax adjustments ^(a)	(216		)	—			(216		)	33
Discontinued operations, net ^(b)	—			(3		)	—			435
Total Corporate	$	(216	)	$	(3	)	$	(216	)	$	390
Tax effect of pre-tax adjustments													$	—	$	(216	)	$	—	$	(216	)

Total	$	388		$	(3	)	$	388		$	501		$	—	$	388		$	—	$	388

~~(a) The 2016 amount included benefits for the relinquishment of foreign exploration blocks.~~

~~(b) Amounts shown after tax.~~

Worldwide Effective Tax Rate

The following table sets forth the calculation of the worldwide effective tax rate for income from continuing operations for the three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017 (in millions):

Three months ended June 30 Six months ended June 30
2017 2016 2017 2016

Oil and Gas results $ 627
$ (117 ) $ 847
$ (602 )
Chemical results 230
88
400
302

Midstream and Marketing results 119
(58 ) 72
(153 )
Unallocated corporate items (184 ) (145 ) (332 ) (342 )
Pre-tax income (loss) 792

(232 )
987
(795 )

Income tax benefit (provision)
Federal and state (79 ) 234
34
525

Foreign (206 ) (138 ) (397 ) (226 )
Total (285 )
96

(363 ) 299

Income (loss) from continuing operations $ 507

$ (136 )
$ 624
$ (496 )

Worldwide effective tax rate 36 % 41 % 37 % 38 %



	Three months ended June 30						Six months ended June 30
	2018			2017			2018			2017

Oil and Gas	$	780		$	627		$	1,530		$	847
Chemical	317			230			615			400
Midstream and Marketing	250			119			429			72
Unallocated Corporate Items	(197		)	(184		)	(377		)	(332		)
Pre-tax Income	1,150			792			2,197			987

Income tax (provision) benefit
Federal and state	(76		)	(79		)	(171		)	34
Foreign	(226		)	(206		)	(470		)	(397		)
Total	(302		)	(285		)	(641		)	(363		)

Income from continuing operations	$	848		$	507		$	1,556		$	624

Worldwide effective tax rate	26		%	36		%	29		%	37		%

~~Occidental's worldwide effective tax rate of 36 percent~~In 2017, Occidental recorded a provisional estimate for the ~~three months ended~~federal and state income tax associated with the mandatory deemed repatriation, as required under the 2017 Tax Cuts and Jobs Act (Tax Reform), and the resulting impact to the net federal deferred tax liability. As of June 30, ~~2017, is lower than~~2018, additional definitive technical guidance has been provided related to a portion of the ~~comparative period~~provisional estimate made as of ~~2016 primarily~~December 31, 2017. The additional guidance did not result in any change to the provisional estimates recorded as of December 31, 2017. However, the ultimate impact of Tax Reform may differ from Occidental’s estimates due to ~~a decrease~~changes in ~~the effective foreign income tax rate due to the commodity price impact on production sharing agreements.~~

interpretations and assumptions, as well as additional regulatory guidance.

Oil and Gas Segment

~~The following table summarizes the key factors impacting~~Oil and gas segment earnings were $780 million and $1.5 billion for the three and six months ended June 30, ~~2017:~~

Oil and Gas segment results roll-forward Three months ended June 30 Six months ended June 30
2017 2017

Oil and Gas prior year results^(a)
$ (117 ) $ (625 )
Sales price 281
998

Sales volume / mix (56 ) (71 )
Operating expenses (57 ) (109 )
DD&A rate 88
174

Exploration expense 18
16

All others (40 ) (46 )

Oil and Gas current year results $ 117
$ 337

Significant transactions and events
Asset sales gains $ 510
$ 510

Oil and Gas current year segment earnings $ 627
$ 847

~~(a) Excludes Asset sales gains~~2018, respectively, compared with segment earnings of ~~$23~~$627 million and $847 million for the ~~six months ended June 30, 2016.~~

same periods of 2017. The three and six months ended June 30, 2017, included ~~pre-tax gains of~~a $510 million pre-tax gain, primarily ~~related to~~on the sale of South Texas operations. Excluding the ~~gains~~gain on sale, the increase in earnings for the three and six months ended June 30, ~~2017,~~2018, compared to the same periods ~~of 2016, was mainly due to~~in 2017, reflected significantly higher ~~commodity~~oil and NGL prices ~~for all products~~as both average WTI and Brent oil prices increased by over 30 percent, higher domestic volumes and lower DD&A ~~rates.~~

rates, which decreased by approximately 8 percent.

The following tables set forth the total production and sales volumes offor oil, ~~NGLs~~NGL and natural gas per day for the three and six months ended June 30, ~~2017~~,2018, and ~~2016~~.2017. The differences between the production and sales volumes per day are generally due to the timing of shipments at Occidental’s international locations, where the product is loaded onto tankers.

Three months ended June 30 Six months ended June 30
Production Volumes per Day 2017 2016 2017 2016

Oil (MBBL)
United States 195
190
194
193

Middle East 151
168
151
175

Latin America 32
34
30
36

NGLs (MBBL)
United States 53
52
52
54

Middle East 32
30
30
26

Natural Gas (MMCF)
United States 286
357
321
372

Middle East 532
708
487
648

Latin America 7
8
7
8

Total Production Volumes (MBOE) ^(a)
601
653
593
655

Three months ended June 30 Six months ended June 30
Sales Volumes per Day 2017 2016 2017 2016

Oil (MBBL)
United States 195
190
194
193

Middle East 151
172
151
177

Latin America 34
38
30
36

NGLs (MBBL)
United States 53
52
52
54

Middle East 32
29
30
25

Natural Gas (MMCF)
United States 286
357
321
372

Middle East 532
708
487
648

Latin America 7
8
7
8

Total Sales Volumes (MBOE)^(a⁾
603
660
593
656

~~(See footnote following the table below)~~

The following tables set forth the production and sales volumes of ongoing operations for oil, NGLs and natural gas per day for the three and six months ended June 30, 2017 and 2016, excluding operations sold, exited or exiting.


	Three months ended June 30		Six months ended June 30		Three months ended June 30		Six months ended June 30
Production Volumes per Day from Ongoing Operations	2017	2016	2017	2016

Production Volumes per Day					2018	2017	2018	2017
Oil (MBBL)
United States ^(b)	195	187	193	190	240	195	234	193
Middle East ^(c)	151	162	151	162
Middle East					135	151	138	151
Latin America	32	34	30	36	31	32	31	30
NGLs (MBBL)
NGL (MBBL)
United States ^(b)	51	47	49	48	65	51	62	49
Middle East	32	30	30	26	30	32	27	30
Natural Gas (MMCF)
United States ^(b)	254	239	251	230	316	254	305	251
Middle East ^(c)	532	481	487	420
Middle East					506	532	478	487
Latin America	7	8	7	8	6	7	6	7
Total Production Ongoing Operations (MBOE)	594	581	577	571	639	594	624	577
Operations Sold, Exited and Exiting	7	72	16	84
Operations Exited					—	7	—	16
Total Production Volumes (MBOE) ^(a)	601	653	593	655	639	601	624	593

	Three months ended June 30		Six months ended June 30
Sales Volumes per Day from Ongoing Operations	2017	2016	2017	2016

Oil (MBBL)
United States ^(b)	195	187	193	190
Middle East ^(c)	151	166	151	164
Latin America	34	38	30	36
NGLs (MBBL)
United States ^(b)	51	47	49	48
Middle East	32	29	30	25
Natural Gas (MMCF)
United States ^(b)	254	239	251	230
Middle East ^(c)	532	481	487	420
Latin America	7	8	7	8
Total Sales Ongoing Operations (MBOE)	596	588	577	572
Operations Sold, Exited and Exiting	7	72	16	84
Total Sales Volumes (MBOE)^(a⁾	603	660	593	656

~~Note: MBBL represents thousand barrels. MMCF represents million cubic feet.~~



	Three months ended June 30		Six months ended June 30
Sales Volumes per Day	2018	2017	2018	2017
Oil (MBBL)
United States ^(b)	240	195	234	193
Middle East	119	151	130	151
Latin America	30	34	31	30
NGL (MBBL)
United States ^(b)	65	51	62	49
Middle East	30	32	27	30
Natural Gas (MMCF)
United States ^(b)	316	254	305	251
Middle East	506	532	480	487
Latin America	6	7	6	7
Total Sales Ongoing Operations (MBOE)	622	596	616	577
Operations Exited	—	7	—	16
Total Sales Volumes (MBOE)^(a⁾	622	603	616	593

(a) Natural gas volumes have been converted to thousands of barrels (MMBL) of oil equivalent (MBOE) based on energy content of six million cubic feet (MMCF) of gas to one thousand barrels of oil (MBOE). Barrels of oil equivalence does not necessarily result in price equivalence.

(b) Excludes 2 MBBL and 32 MMCF of NGLs and gas for the three months ended June 30, 2017, related to South ~~Texas and 3 MMBL, 5 MBBL, and 118 MMCF of oil, NGLs, and gas for the three months ended June 30, 2016, related to South~~ Texas. Excludes 1 MBBL, 3 MMBL and 70 MMCF of oil, NGLs and gas for the six months ended June 30, 2017, related to South ~~Texas and 3 MBBL, 6 MMBL, and 142 MMCF of oil, NGLs, and gas for the six months ended June 30, 2016, related to South Texas and Piceance.~~Texas.

(c) Excludes 6 MBBL and 227 MMCF of oil and gas for the three months ended June 30, 2016, related to Bahrain. Excludes 13 MBBL and 228 MMCF of oil and gas for the six months ended June 30, 2016, related to Bahrain and Iraq.

Total average daily production volumes were ~~601,000 barrels of oil equivalent (BOE) for the second quarter of 2017 compared to 653,000~~639,000 BOE for the second quarter of 2016. In April 2017, Occidental completed the sale of its non-core South Texas operations. In 2016, Occidental completed the sale of the Piceance Basin operations and exited Bahrain, Iraq, Libya and Yemen. These domestic and international operations produced average daily volumes of 7,0002018 compared to 601,000 BOE ~~and 72,000 BOE in~~for the second ~~quarters~~quarter of ~~2017 and 2016, respectively.~~2017. For the second quarter of ~~2017,~~2018, total company average daily oil and gas production volumes for ongoing operations increased by ~~13,000~~45,000 BOE to ~~594,000~~639,000 BOE from ~~581,000 BOE in the second quarter of 2016. Compared to the second quarter of 2016, domestic average daily production for ongoing operations increased by 15,000 BOE to 289,000 BOE in the second quarter~~

~~of 2017 with Permian Resources increasing by 12,000 BOE. International average daily production for ongoing operations decreased to 305,000~~594,000 BOE in the second quarter of 2017, ~~from 307,000 BOE in the second quarter of 2016. The decrease in international production is~~ primarily ~~attributable to lower oil production in Qatar~~ due to ~~national oil company~~Permian Resources which increased production ~~quotas,~~by 63,000 BOE or over 45 percent as a result of increased drilling and well productivity, partially offset by the production sharing impact of higher ~~production at Al Hosn Gas.~~oil prices related mainly to operations in Oman, Colombia and Qatar.

Total average daily production volumes for the first six months of 2018 and 2017 ~~and 2016~~ were ~~593,000~~624,000 BOE and ~~655,000~~593,000 BOE, respectively. For the first six months of ~~2017 and 2016, non-core operations produced average daily volumes of 16,000 BOE and 84,000 BOE, respectively. For the first six months of 2017,~~2018, total ~~company~~ average daily oil and gas production volumes for ongoing operations increased by ~~6,000~~47,000 BOE to ~~577,000~~624,000 BOE from ~~571,000 BOE for the first six months of 2016. Domestic average daily production for ongoing operations increased by 8,000~~577,000 BOE for the first six months of 2017, ~~as compared~~primarily due to ~~the first six months of 2016, with~~ Permian Resources ~~increasing~~production, which increased by ~~6,000 BOE. International average daily production decreased to 293,000~~56,000 BOE ~~for the first six months~~or over 40 percent, as a result of ~~2017 from 295,000 BOE for the first six months 2016. The decrease in international production reflected lower production in Qatar due to national oil company production quotas~~increased

drilling and ~~lower production in Colombia,~~well productivity, partially offset by the production sharing impact of higher ~~production at Al Hosn Gas.~~oil prices related mainly to operations in Oman, Colombia and Qatar.

The following tables present information about Occidental's average realized prices and index prices for the three and six months ended June 30, ~~2017~~2018, and ~~2016~~2017:


	Three months ended June 30				Six months ended June 30				Three months ended June 30				Six months ended June 30
Average Realized Prices	2017		2016		2017		2016		2018		2017		2018		2017
Oil ($/BBL)
United States	$	44.94	$	41.43	$	46.78	$	35.33	$	61.08	$	44.94	$	61.06	$	46.78
Middle East	$	49.51	$	37.80	$	49.57	$	33.66	$	66.59	$	49.51	$	63.83	$	49.57
Latin America	$	42.60	$	39.26	$	45.12	$	33.72	$	65.66	$	42.60	$	62.38	$	45.12
Total Worldwide	$	46.55	$	39.66	$	47.77	$	34.46	$	63.12	$	46.55	$	62.07	$	47.77
NGLs ($/BBL)
NGL ($/BBL)
United States	$	20.47	$	14.25	$	21.75	$	12.04	$	28.87	$	20.47	$	27.93	$	21.75
Middle East	$	16.31	$	15.21	$	17.35	$	14.38	$	23.58	$	16.31	$	22.79	$	17.35
Total Worldwide	$	18.90	$	14.59	$	20.18	$	12.80	$	27.21	$	18.90	$	26.34	$	20.18
Natural Gas ($/MCF)
United States	$	2.23	$	1.46	$	2.48	$	1.48	$	1.49	$	2.23	$	1.76	$	2.48
Latin America	$	5.18	$	3.36	$	4.96	$	3.76	$	6.07	$	5.18	$	5.87	$	4.96
Total Worldwide	$	1.81	$	1.26	$	1.93	$	1.26	$	1.58	$	1.81	$	1.69	$	1.93


	Three months ended June 30				Six months ended June 30				Three months ended June 30				Six months ended June 30
Average Index Prices	2017		2016		2017		2016		2018		2017		2018		2017
WTI oil ($/BBL)	$	48.29	$	45.59	$	50.10	$	39.52	$	67.88	$	48.29	$	65.37	$	50.10
Brent oil ($/BBL)	$	50.92	$	46.97	$	52.79	$	41.03	$	74.90	$	50.92	$	71.04	$	52.79
NYMEX gas ($/MCF)	$	3.14	$	1.97	$	3.20	$	2.02	$	2.75	$	3.14	$	2.81	$	3.20


Average Realized Prices as Percentage of Average Index Prices	Three months ended June 30				Six months ended June 30				Three months ended June 30				Six months ended June 30
	2017		2016		2017		2016		2018		2017		2018		2017
Worldwide oil as a percentage of average WTI	96	%	87	%	95	%	87	%	93	%	96	%	95	%	95	%
Worldwide oil as a percentage of average Brent	91	%	84	%	90	%	84	%	84	%	91	%	87	%	90	%
Worldwide NGLs as a percentage of average WTI	39	%	32	%	40	%	32	%
Worldwide NGL as a percentage of average WTI									40	%	39	%	40	%	40	%
Domestic natural gas as a percentage of average NYMEX	71	%	74	%	78	%	73	%	54	%	71	%	63	%	78	%

~~Worldwide commodity~~Average WTI and Brent prices increased to $67.88 per barrel and $74.90 per barrel, respectively, for the second quarter of ~~2017 were higher than the second quarter of 2016. The average quarterly WTI and Brent prices increased~~2018, compared to $48.29 per barrel and $50.92 per barrel, respectively, for the second quarter of ~~2017, compared to $45.59 per barrel and $46.97 per barrel, respectively, for the second quarter of 2016.~~2017. Worldwide realized crude oil prices increased by 1736 percent to ~~$46.55~~$63.12 per barrel for the second quarter of ~~2017,~~2018, compared to ~~$39.66~~$46.55 per barrel in the second quarter of ~~2016.~~2017. Worldwide realized NGL prices increased by 3044 percent to $27.21 per barrel in the second quarter of 2018, compared to $18.90 per barrel in the second quarter of ~~2017, compared to $14.59 per barrel in the second quarter of~~

~~2016.~~2017. Domestic realized natural gas prices ~~increased~~decreased by 5333 percent in the second quarter of ~~2017~~2018 to ~~$2.23~~$1.49 per MCF, compared to ~~$1.46~~$2.23 per MCF in the second quarter of ~~2016.~~2017.

~~Worldwide commodity~~Average WTI and Brent prices increased to $65.37 per barrel and $71.04 per barrel, respectively, for the first six months of ~~2017 were higher than~~2018, compared to $50.10 per barrel and $52.79 per barrel, respectively, for the same period of ~~2016.~~2017. Worldwide realized crude oil prices increased by 3930 percent to ~~$47.77~~$62.07 per barrel for the first six months of ~~2017,~~2018, compared to ~~$34.46~~$47.77 per barrel for the same period of ~~2016.~~2017. Worldwide realized NGL prices increased by 5831 percent to ~~$20.18~~$26.34 per barrel for the first six months of ~~2017,~~2018, compared to ~~$12.80~~$20.18 per barrel for the same period of ~~2016.~~2017. Domestic realized natural gas prices ~~increased~~decreased by 6829 percent for the first six months of ~~2017~~2018 to ~~$2.48~~$1.76 per MCF, compared to ~~$1.48~~$2.48 per MCF for the same period of ~~2016.~~

Occidental’s financial results correlate closely to the prices it obtains for its products. Significant declines in commodity prices may result in impairments to reduce the carrying value of Occidental’s oil and gas properties, while also reducing the amount of volumes that can be produced economically and the quantity and present value of proved reserves.2017.

Chemical Segment

~~The following table summarizes the key factors impacting~~Chemical segment earnings for the three months ended June 30, 2018, were $317 million, compared to $230 million for the same period in 2017. Chemical segment earnings for the first six months of 2018 were $615 million, compared to $400 million for the same period of 2017. Compared to the same periods in 2017, the three and six months ended June 30, 2018, reflected significant improvements in realized caustic soda prices slightly offset by decreased chlorovinyl sales volumes, favorable plant margins due to lower ethylene and energy costs, and additional earnings contribution from the December 2017 start-up of the Geismar, Louisiana plant to produce 4CPe, a new raw material used in making next-generation refrigerants.

Midstream and Marketing Segment

Midstream and marketing earnings were $250 million for the three months ended June 30, 2018, compared with earnings of $119 million for the same period of 2017. Midstream and marketing earnings were $429 million for the first six months of 2018, compared with earnings of $72 million for the same period in 2017. The six months ended June 30, 2018, included a pre-tax gain of $43 million for the sale of interests in a gas plant. The three and six months ended June 30, 2017, included a non-cash fair value gain on the Plains equity investment of $94 million. The increase in earnings in midstream and marketing segment for the three and six months ended June 30, ~~2017:~~

Chemical segment results roll-forward Three months ended June 30 Six months ended June 30
2017 2017

Chemical prior year results^(a)
$ 88
$ 214

Sales price 137
263

Sales volume / mix 54
80

Operations / manufacturing (90 ) (191 )
All others^(b)
41
34

Chemical current year segment earnings $ 230
$ 400

~~(a) Excludes gain on sale of the Occidental Tower in Dallas and a non-core specialty chemicals business of $88 million for the six months ended June 30, 2016.~~

~~(b) Includes equity income from the Ingleside joint venture ethylene cracker.~~

~~The higher earnings for the three and six months ended June 30, 2017, compared to the same periods in 2016,~~2018 reflected higher realized pricing for caustic soda, improved vinyls margins, and higher sales volumes across most product lines and equity income from the joint venture ethylene cracker in Ingleside, Texas, partially offset by higher natural gas costs.

~~Midstream and Marketing Segment~~

~~The following table summarizes the key factors impacting segment earnings for the three and six months ended June 30, 2017:~~

Midstream and Marketing segment results roll-forward Three months ended June 30 Six months ended June 30
2017 2017

Midstream and Marketing prior year results $ (58 ) $ (153 )
Marketing 62
86

Gas plants (5 ) 8

Pipelines 22
35

Power generation (1 ) (1 )
All others 5
3

Midstream and Marketing current year results $ 25
$ (22 )
Significant transactions and events
Non-cash fair value gain on Plains equity investment $ 94
$ 94

Midstream and Marketing current year segment earnings $ 119
$ 72

~~The higher results reflected higher crude oil~~ marketing margins due to the improved ~~Midland~~crude oil spreads.

On August 8, 2018, Occidental announced the sale of non-core domestic midstream assets. These assets to ~~Gulf Coast spreads~~be sold include the Centurion common carrier oil pipeline and ~~income from the~~storage system, Southeast New Mexico oil gathering system, and Ingleside Crude Terminal. Following the transaction, Occidental will retain its long-term flow assurance, pipeline takeaway and export capacity through its retained marketing business. A substantial portion of the assets to be sold were classified as assets held for sale on the balance sheet at June 30, 2018. The assets held for sale were comprised primarily of midstream property, plant and equipment.

Liquidity and Capital Resources

At June 30, ~~2017,~~2018, Occidental had ~~$2.2~~$1.4 billion in ~~cash.~~cash and cash equivalents. Income and cash flows are largely dependent on the oil and gas segment's realized prices, sales volumes and operating costs. With a continued focus on capital efficiency and operational efficiency, Occidental expects to fund its liquidity needs, including future dividend payments, through cash on hand, cash generated from operations, monetization of non-core assets or investments, future borrowings, and, if necessary, ~~through future borrowings or~~ proceeds from other forms of capital issuance.

Net cash provided by operating activities was ~~$2.5 billion and $1.8~~$2.8 billion for the six months ended June 30, ~~2017,~~2018, compared to $2.4 billion for the same period of 2017. Cash flows were positively impacted by higher oil prices and ~~2016, respectively. Cash flows~~domestic volumes in the first six months of ~~2017 were positively impacted by improved commodity prices~~2018 as compared to the same period in both the oil and gas and chemicals segments, and federal income tax refunds of $749 million. Operating cash flows in 2016 benefited from $882 million for the Ecuador settlement and $302 million of federal income tax refunds.2017. The impact of the chemical and the midstream and marketing segments on overall cash flows is typically less significant than the impact of the oil and gas segment because ~~the chemical and midstream and marketing~~these segments are ~~significantly~~ smaller.

Occidental’s net cash used by investing activities was ~~$1.4~~$2.3 billion for the first six months of ~~2017,~~2018, compared to ~~$1.3~~$1.2 billion for the same period of ~~2016.~~2017. Capital expenditures for the first six months of ~~2017~~2018 were $2.3 billion of which $2.1 billion was for the oil and gas segment, compared to $1.5 billion for the first six months of 2017 of which $1.2 billion was for the oil and gas segment. ~~Capital expenditures were $1.2 billion for the~~The first six months of ~~2016,~~2018 also reflected $0.3 billion of which $0.9 billion was for the oil and gas segment. In the first six months of 2017, Occidental increased its capital expenditures compared to the prior year period primarily as a result of increased Permian Basin drilling activity. The change in capital accrual for both periods reflected amounts paid in the first half of the current year related to capital expenditures incurred and accrued in the fourth quarter of the preceding year. Proceedscash received from the sale of assets and $0.2 billion of ~~$609 million primarily reflected~~cash paid for the ~~sale~~purchase of ~~Occidental's South Texas operations. Asset acquisitions of $377 million mainly reflected domestic acquisitions and the Oman Block 9 bonus payment.~~assets.

Occidental’s net cash used by financing activities was $0.8 billion for the six months of 2018, compared to net cash used by financing activities of $1.2 billion for the same period of 2017. Cash used by financing activities for the first six months of ~~2017, compared to cash provided by financing activities of $66 million for the same period of 2016. Cash used by financing activities in the first six months of 2017 primarily~~2018 reflected the payment of ~~dividends. In the first six months of 2016, restricted cash of~~ $1.2 billion ~~was used to pay~~of dividends, ~~and repay debt. In the first six months 2016, Occidental issued $2.75~~payment of $0.5 billion of 1.5-percent senior notes ~~repaid $700 million~~that were due February of ~~2.5-percent~~2018 and proceeds from the issuance of $1.0 billion of 4.2-percent senior notes due ~~February 2016 and $750 million of 4.125-percent senior notes due June 2016, and completed the early redemption of $1.25 billion of 1.75-percent senior notes due February 2017.~~2048.

As of June 30, ~~2017,~~2018, Occidental was in compliance with all covenants of its financing agreements and had substantial capacity for additional unsecured borrowings, the payment of cash dividends and other distributions on, or acquisitions of, Occidental stock.

Environmental Liabilities and Expenditures

Occidental’s operations are subject to stringent federal, state, local and foreign laws and regulations related to improving or maintaining environmental quality. Occidental’s environmental compliance costs have generally increased over time and are expected to rise in the future. Occidental factors environmental expenditures for its operations into its business planning process as an integral part of producing quality products responsive to market demand.

The laws that require or address environmental remediation, including CERCLA and similar federal, state, local and foreign laws, may apply retroactively and regardless of fault, the legality of the original activities or the current ownership or control of sites. OPC or certain of its subsidiaries participate in or actively monitor a range of remedial activities and government or private proceedings under these laws with respect to alleged past practices at operating, closed and third-party sites. Remedial activities may include one or more of the following: investigation involving sampling, modeling, risk assessment or monitoring; cleanup measures including removal, treatment or disposal of hazardous substances; or operation and maintenance of remedial systems. These environmental proceedings seek funding or performance of remediation and, in some cases, compensation for alleged property damage, punitive damages, civil penalties, injunctive relief and government oversight costs.

Refer to Note 6, 7,Environmental Liabilities and Expenditures, in the Notes to the Consolidated Condensed Financial Statementsin Part I Item 1 of this Form 10-Q and to theEnvironmental Liabilities and Expenditures section ofManagement’s Discussion and Analysis of Financial Condition and Results of ~~Operation~~Operations s in the ~~2016~~2017 Form 10-K for additional information regarding Occidental’s environmental expenditures.

Lawsuits, Claims, Commitments and Contingencies

Occidental accrues reserves for outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Occidental has disclosed its reserve balances for environmental remediation matters and its estimated range of reasonably possible additional losses for such matters. Reserve balances for other matters as of June 30, ~~2017~~2018, and December 31, ~~2016~~2017, were not material to Occidental's consolidated ~~condensed~~ balance sheets. Occidental also evaluates the amount of reasonably possible losses that it could incur as a result of the matters mentioned above. Occidental has disclosed its range of reasonably possible additional losses for sites where it is a participant in environmental remediation. Occidental believes that other reasonably possible losses which it could incur in excess of reserves accrued on the balance sheet would not be material to its consolidated financial position or results of operations. For further information, see Note 7,8, Lawsuits, Claims, Commitments and Contingencies, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q.

Recently Adopted Accounting and Disclosure Changes

See Note 3, Accounting and Disclosure Changes, in the Notes to Consolidated Condensed Financial Statementsin Part I Item 1 of this Form 10-Q.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

For the three and six months ended June 30, ~~2017~~2018, there were no material changes in the information required to be provided under Item 305 of Regulation S-K included under Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", in the ~~2016~~2017 Form 10-K.

Item 4.Controls and Procedures

Occidental's President and Chief Executive Officer and its Senior Vice President and Chief Financial Officer supervised and participated in Occidental's evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, Occidental's President and Chief Executive Officer and Senior Vice President and Chief Financial Officer concluded that Occidental's disclosure controls and procedures were effective as of June 30, ~~2017~~2018.

There has been no change in Occidental's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the first six months of ~~2017~~2018 that has materially affected, or is reasonably likely to materially affect, Occidental's internal control over financial reporting.

PART II OTHER INFORMATION

Item 1.Legal Proceedings

For information regarding ~~other~~ legal proceedings, see Note 7, 8, Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Condensed Financial Statements, in Part I Item 1 of this Form 10-Q, and Part I Item 3, “Legal Proceedings” in the ~~2016~~2017 Form 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Activities

Occidental's share repurchase activities for the six months ended June 30, ~~2017~~,2018, were as follows:

Period
Total Number
of Shares Purchased
Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs ^(a)

First Quarter 2017 —
$ —
—

April 1 - 30, 2017 —
$ —
—

May 1 - 31, 2017 —
$ —
—

June 1 - 30, 2017 96,828
^(b)
$ 60.77
—

Second Quarter 2017 96,828
60.77
—

Total 96,828
$ 60.77
—
63,756,544



Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs ^(a)

First Quarter 2018	—		$	—	—
April 1 - 30, 2018	—		$	—	—
May 1 - 31, 2018	616,463	(b)	$	83.43	380,000
June 1 - 30, 2018	581,510	(b)	$	83.48	492,000
Second Quarter 2018	1,197,973		$	83.46	872,000
Total	1,197,973		$	83.46	872,000	62,884,544


(a)	Represents the total number of shares remaining at June 30, ~~2017,~~2018, under Occidental's share repurchase program of 185 million shares. The program was initially announced in 2005. The program does not obligate Occidental to acquire any specific number of shares and may be discontinued at any time.


(b)	Includes purchases from the trustee of Occidental's defined contribution savings plan that are not part of publicly announced plans or programs.

Item 6. Exhibits



10.1*	Form of 2016 Occidental Petroleum Corporation 2015 Long-Term Incentive Plan Common Stock Unit Award for Non-Employee Directors (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of Occidental for the quarterly period ended June 30, 2016, File No. 1-9210).

10.2*	Form of 2016 Occidental Petroleum Corporation 2015 Long-Term Incentive Plan Common Stock Award for Non-Employee Directors (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q of Occidental for the quarterly period ended June 30, 2016, File No. 1-9210).

~~10.3~~	~~Separation Agreement, effective June 27, 2017.~~

~~10.4~~12	~~Sign-on agreement with Chief Financial Officer.~~

12	Statement regarding the computation of total enterprise ratios of earnings to fixed charges for the ~~three~~six months ended June 30, ~~2017,~~2018, and ~~2016,~~2017, and for each of the five years in the period ended December 31, ~~2016.~~2017.

31.1	Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema Document.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

* Incorporated herein by reference

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	OCCIDENTAL PETROLEUM CORPORATION



~~DATE:~~ DATE	August ~~2, 2017~~8, 2018	/s/ Jennifer M. Kirk
		Jennifer M. Kirk
		Vice President, Controller and
		Principal Accounting Officer

~~EXHIBIT INDEX~~

~~EXHIBITS~~



10.1*	Form of 2016 Occidental Petroleum Corporation 2015 Long-Term Incentive Plan Common Stock Unit Award for Non-Employee Directors (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q of Occidental for the quarterly period ended June 30, 2016, File No. 1-9210).

10.2*	Form of 2016 Occidental Petroleum Corporation 2015 Long-Term Incentive Plan Common Stock Award for Non-Employee Directors (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q of Occidental for the quarterly period ended June 30, 2016, File No. 1-9210).

~~10.3~~	~~Separation Agreement, effective June 27, 2017.~~

~~10.4~~	~~Sign-on agreement with Chief Financial Officer.~~

12	Statement regarding the computation of total enterprise ratios of earnings to fixed charges for the three months ended June 30, 2017, and 2016, and for each of the five years in the period ended December 31, 2016.

~~31.1~~	~~Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~	~~Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~	~~Certifications of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~	~~XBRL Instance Document.~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document.~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document.~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document.~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document.~~

* Incorporated herein by reference

3029



As of June 30, 2017		Fair Value Measurements Using						Netting ^(b)			Total Fair Value
(in millions)	(Commodity Contracts)	Level 1		Level 2		Level 3		Netting ^(b)			Total Fair Value
Assets:
Cash-flow hedges: ^(a)
Other current assets		$	—	$	1	$	—	$	—		$	1
Long-term receivables and other assets, net		$	—	$	—	$	—	$	—		$	—
Derivatives not designated as hedging instruments: ^(a)
Other current assets		$	395	$	37	$	—	$	(398	)	$	34
Long-term receivables and other assets, net		$	16	$	1	$	—	$	(15	)	$	2
Liabilities:
Cash-flow hedges:^(a)
Accrued liabilities		$	—	$	—	$	—	$	—		$	—
Deferred credits and liabilities		$	—	$	—	$	—	$	—		$	—
Derivatives not designated as hedging instruments: ^(a)
Accrued liabilities		$	375	$	36	$	—	$	(398	)	$	13
Deferred credits and liabilities		$	15	$	4	$	—	$	(15	)	$	4



As of December 31, 2016		Fair Value Measurements Using						Netting ^(b)			Total Fair Value
(in millions)	(Commodity Contracts)	Level 1		Level 2		Level 3		Netting ^(b)			Total Fair Value
Assets:
Cash-flow hedges: ^(a)
Other current assets		$	—	$	1	$	—	$	—		$	1
Long-term receivables and other assets, net		$	—	$	—	$	—	$	—		$	—
Derivatives not designated as hedging instruments: ^(a)
Other current assets		$	166	$	57	$	—	$	(196	)	$	27
Long-term receivables and other assets, net		$	2	$	3	$	—	$	(2	)	$	3
Liabilities:
Cash-flow hedges ^(a)
Accrued liabilities		$	—	$	6	$	—	$	—		$	6
Deferred credits and liabilities		$	—	$	—	$	—	$	—		$	—
Derivatives not designated as hedging instruments: ^(a)
Accrued liabilities		$	172	$	51	$	—	$	(196	)	$	27
Deferred credits and liabilities		$	1	$	6	$	—	$	(2	)	$	5



	Three months ended June 30						Six months ended June 30
	Three months ended June 30						Six months ended June 30
	2017			2016			2017			2016
Basic EPS
Income (loss) from continuing operations	$	507		$	(136	)	$	624		$	(496	)
Discontinued operations, net	—			(3		)	—			435
Net income (loss)	507			(139		)	624			(61		)

Less: Net income allocated to participating securities	(2		)	—			(2		)	—
Net income (loss), net of participating securities	505			(139		)	622			(61		)

Weighted average number of basic shares	764.9			763.6			764.7			763.5
Basic EPS	$	0.66		$	(0.18	)	$	0.81		$	(0.08	)

Diluted EPS
Net income (loss), net of participating securities	$	505		$	(139	)	$	622		$	(61	)
Weighted average number of basic shares	764.9			763.6			764.7			763.5
Dilutive effect of potentially dilutive securities	1.0			—			0.8			—
Total diluted weighted average common shares	765.9			763.6			765.5			763.5
Diluted EPS	$	0.66		$	(0.18	)	$	0.81		$	(0.08	)



Chemical segment results roll-forward	Three months ended June 30			Six months ended June 30
	2017			2017

Chemical prior year results^(a)	$	88		$	214
Sales price	137			263
Sales volume / mix	54			80
Operations / manufacturing	(90		)	(191		)
All others^(b)	41			34
Chemical current year segment earnings	$	230		$	400