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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 20192020
OR
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)
Delaware95-4035997
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
5 Greenway Plaza, Suite 110
Houston,Texas77046
(Address of principal executive offices) (Zip Code)
(713) (713) 215-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.20 par valueOXYNew York Stock Exchange
Warrants to Purchase Common Stock, $0.20 par valueOXY WSNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
þ Yes   Yeso No
   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
þ Yes   Yeso 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. (SeeSee the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act):Act.
Large Accelerated Filerþ    Accelerated Filer        o    Non-Accelerated Filer     o
Smaller Reporting Company        Emerging Growth Company    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes   þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at September 30, 20192020
Common stock $.20Stock $0.20 par value893,317,470931,209,495






OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTSPAGE
Part IFinancial Information
Item 1.
Consolidated Condensed Balance Sheets — September 30, 20192020 and December 31, 20182019
Consolidated Condensed Statements of Operations — Three months and nine months ended September 30, 2019,2020 and 20182019
Consolidated Condensed Statements of Comprehensive Income (Loss) Three months and nine months ended September 30, 2019,2020 and 20182019
Consolidated Condensed Statements of Cash Flows — Nine months ended September 30, 2019,2020 and 20182019
Consolidated Condensed Statements of Equity — Three and nine months ended September 30, 2019,2020 and 20182019
Note 3—DThe Merger
Note 4—Acquisitions, Dispositions and Other Transactions
Item 2.
Item 3.
Item 4.
Part IIOther Information
Item 1.
Item 1A.
Item 2.
Item 5.Other Information
Item 6.


1



PART I    FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Item 1.Consolidated Condensed Balance SheetsFinancial Statements (unaudited)Occidental Petroleum Corporation and Subsidiaries

millionsSeptember 30, 2020December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents$1,896 $3,032 
Restricted cash and restricted cash equivalents51 485 
Trade receivables, net2,083 6,373 
Inventories1,660 1,581 
Other current assets1,445 1,432 
Assets held for sale3,559 3,870 
Total current assets10,694 16,773 
INVESTMENTS IN UNCONSOLIDATED ENTITIES3,125 6,389 
PROPERTY, PLANT AND EQUIPMENT
Oil and gas segment103,954 107,801 
Chemical segment7,254 7,172 
Midstream and marketing segment8,211 8,176 
Corporate1,040 1,118 
Gross property, plant and equipment120,459 124,267 
Accumulated depreciation, depletion and amortization(52,038)(42,037)
Net property, plant and equipment68,421 82,230 
OPERATING LEASE ASSETS1,196 1,411 
LONG-TERM RECEIVABLES AND OTHER ASSETS, NET998 2,527 
TOTAL ASSETS$84,434 $109,330 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
millions September 30, 2019 December 31, 2018
     
ASSETS    
CURRENT ASSETS    
Cash and cash equivalents $4,840
 $3,033
Restricted cash and restricted cash equivalents 454
 
Trade receivables, net 5,854
 4,893
Inventories 1,601
 1,260
Assets held for sale 6,445
 
Other current assets 1,750
 746
Total current assets 20,944
 9,932
     
INVESTMENTS IN UNCONSOLIDATED ENTITIES ($2,261 related to WES) 3,684
 1,680
     
PROPERTY, PLANT AND EQUIPMENT    
Oil and Gas segment 110,668
 58,799
Chemical segment 7,092
 7,001
Marketing and Other Midstream segment 8,133
 8,070
WES Midstream segment 9,635
 
Corporate 1,397
 550
  136,925
 74,420
Accumulated depreciation, depletion, and amortization (46,804) (42,983)
  90,121
 31,437
     
OPERATING LEASE ASSETS 1,078
 
     
LONG-TERM RECEIVABLES AND OTHER ASSETS, NET 1,155
 797
     
INTANGIBLES, NET ($2,380 related to WES) 2,387
 8
     
GOODWILL - WES 6,074
 
     
TOTAL ASSETS $125,443
 $43,854
     
Western Midstream Partners, LP (WES) is a Variable Interest Entity (VIE). See Note 1 - General. The related parenthetical references reflect amounts as of September 30, 2019.
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
2



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)
 millions, except share amounts September 30, 2019 December 31, 2018
      
 LIABILITIES AND EQUITY    
 CURRENT LIABILITIES    
 Current maturities of long-term debt $31
 $116
 Current operating lease liabilities 463
 
 Accounts payable 6,789
 4,885
 Accrued liabilities ($315 related to WES) 5,175
 2,411
 Accrued income taxes 1,036
 
 Liabilities of assets held for sale 2,203
 
 Total current liabilities 15,697
 7,412
      
 LONG-TERM DEBT, NET    
 Long-term debt, net - Occidental 39,946
 10,201
 Long-term debt, net - WES 7,637
 
   47,583
 10,201
      
 DEFERRED CREDITS AND OTHER LIABILITIES    
 Deferred income taxes ($1,167 related to WES) 9,920
 907
 Asset retirement obligations ($319 related to WES) 4,164
 1,424
 Pension and postretirement obligations 1,927
 809
 Environmental remediation reserves 905
 762
 Operating lease liabilities 676
 
 Other 3,566
 1,009
   21,158
 4,911
      
 EQUITY    
 Preferred stock, at $1.00 per share par value (100,000 shares at September 30, 2019) 9,762
 
 Common stock, at $0.20 per share par value (1,043,640,621 shares at September 30, 2019, and 895,115,637 shares at December 31, 2018) 209
 179
 Treasury stock (150,323,151 shares at September 30, 2019, and 145,726,051 shares at December 31, 2018) (10,653) (10,473)
 Additional paid-in capital 14,867
 8,046
 Retained earnings 22,227
 23,750
 Accumulated other comprehensive loss (332) (172)
 Total stockholders' equity 36,080
 21,330
      
 Noncontrolling interests 4,925
 
 Total equity 41,005
 21,330
      
 TOTAL LIABILITIES AND EQUITY $125,443
 $43,854
      
 Western Midstream Partners, LP (WES) is a Variable Interest Entity (VIE). See Note 1 - General. The related parenthetical references reflect amounts as of September 30, 2019.
 
 The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
  Three months ended September 30 Nine months ended September 30
millions, except per-share amounts 2019 2018 2019 2018
         
REVENUES AND OTHER INCOME        
Net sales $5,687
 $5,216
 $14,111
 $13,062
Interest, dividends, and other income 56
 34
 175
 101
Gain on sale of assets, net 128
 926
 150
 969
  5,871
 6,176
 14,436
 14,132
COSTS AND OTHER DEDUCTIONS        
Oil and gas operating expense 962
 680
 2,324
 1,909
Transportation expense 217
 41
 281
 121
Chemical and midstream cost of sales 741
 722
 2,046
 2,128
Purchased commodities 441
 343
 1,237
 456
Selling, general and administrative 242
 151
 545
 423
Other operating expense 363
 280
 861
 717
Taxes other than on income 198
 110
 432
 333
Depreciation, depletion, and amortization 1,706
 1,023
 3,710
 2,891
Asset impairments and other items 325
 214
 325
 256
Anadarko merger-related costs 924
 
 974
 
Exploration expense 63
 24
 134
 60
Interest and debt expense, net 381
 96
 632
 290
  6,563
 3,684
 13,501
 9,584
Income (loss) before income taxes and other items (692) 2,492
 935
 4,548
         
OTHER ITEMS        
Gains (losses) on interest rate swaps and warrants, net (33) 
 (33) 
Income from equity investments 104
 87
 274
 228
  71
 87
 241
 228
         
Income (loss) from continuing operations before income taxes (621) 2,579
 1,176
 4,776
Income tax expense (116) (710) (647) (1,351)
Income (loss) from continuing operations (737) 1,869
 529
 3,425
Discontinued operations, net of tax (15) 
 (15) 
NET INCOME (LOSS) (752) 1,869
 514
 3,425
Less: Net income attributable to noncontrolling interests (42) 
 (42) 
Less: Preferred stock dividends (118) 
 (118) 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS (912) 1,869
 354
 3,425
         
PER COMMON SHARE        
Income (loss) from continuing operations—basic $(1.06) $2.44
 $0.47
 $4.46
Income (loss) from discontinued operations—basic (0.02) 
 (0.02) 
Net income (loss) attributable to common stockholders—basic $(1.08) $2.44
 $0.45
 $4.46
         
Income (loss) from continuing operations—diluted $(1.06) $2.44
 $0.47
 $4.45
Income (loss) from discontinued operations—diluted (0.02) 
 (0.02) 
Net income (loss) attributable to common stockholders—diluted $(1.08) $2.44
 $0.45
 $4.45
         
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
  Three months ended September 30 Nine months ended September 30
millions 2019 2018 2019 2018
         
Net income (loss) $(752) $1,869
 $514
 $3,425
Other comprehensive income (loss) items:        
Losses on derivatives (a)
 (114) (1) (130) (5)
Pension and postretirement (losses) gains (b)
 (34) 144
 (30) 153
Reclassification of losses on derivatives (c)
 
 10
 
 13
Other comprehensive (loss) income, net of tax (148) 153
 (160) 161
Comprehensive income (loss) (900) 2,022
 354
 3,586
Comprehensive income attributable to noncontrolling interests (42) 
 (42) 
Comprehensive income (loss) attributable to preferred and common stockholders $(942) $2,022
 $312
 $3,586

(a)Consolidated Condensed Balance SheetsNet of tax of $32 millionOccidental Petroleum Corporation and 0 for the three months ended September 30, 2019, and 2018, and $36 million and $1 million for the nine months ended September 30, 2019, and 2018, respectively.Subsidiaries
millions, except per-share amountsSeptember 30, 2020December 31, 2019
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt$2,558 $51 
Current operating lease liabilities459 579 
Accounts payable2,682 7,050 
Accrued liabilities3,470 5,447 
Liabilities of assets held for sale1,331 1,718 
Total current liabilities10,500 14,845 
LONG-TERM DEBT, NET
Long-term debt, net35,899 38,537 
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes, net7,508 9,717 
Asset retirement obligations4,135 4,411 
Pension and postretirement obligations1,728 1,823 
Environmental remediation liabilities975 1,035 
Operating lease liabilities786 872 
Other3,043 3,858 
Total deferred credits and other liabilities18,175 21,716 
STOCKHOLDERS' EQUITY
Preferred stock at par value, 100,000 shares at September 30, 2020 and December 31, 20199,762 9,762 
Common stock at par value, 1,079,959,455 shares at September 30, 2020 and 1,044,434,893 shares at December 31, 2019216 209 
Treasury stock, 148,573,859 shares at September 30, 2020 and 150,323,151 shares at December 31, 2019(10,657)(10,653)
Additional paid-in capital16,505 14,955 
Retained earnings4,317 20,180 
Accumulated other comprehensive loss(283)(221)
Total stockholders' equity19,860 34,232 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$84,434 $109,330 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

3


(b)Consolidated Condensed Statements of OperationsNet of tax of $10 millionOccidental Petroleum Corporation and $(40) million for the three months ended September 30, 2019, and 2018, and $8 million and $(43) million for the nine months ended September 30, 2019, and 2018, respectively.Subsidiaries
Three months ended September 30,Nine months ended September 30,
millions, except per-share amounts2020201920202019
REVENUES AND OTHER INCOME
Net sales$4,108 $5,859 $13,649 $14,283 
Interest, dividends and other income21 56 88 175 
(Losses) gains on sale of assets, net(846)128 (824)150 
Total3,283 6,043 12,913 14,608 
COSTS AND OTHER DEDUCTIONS
Oil and gas operating expense656 974 2,356 2,336 
Transportation and gathering expense343 221 1,275 285 
Chemical and midstream cost of sales618 741 1,807 2,046 
Purchased commodities333 441 940 1,237 
Selling, general and administrative expenses166 245 655 548 
Other operating and non-operating expense231 362 542 860 
Taxes other than on income180 244 473 478 
Depreciation, depletion and amortization1,915 1,767 6,343 3,771 
Asset impairments and other charges2,723 325 10,996 325 
Anadarko acquisition-related costs5 924 302 974 
Exploration expense29 63 99 134 
Interest and debt expense, net353 381 1,015 632 
Total7,552 6,688 26,803 13,626 
Income (loss) before income taxes and other items(4,269)(645)(13,890)982 
OTHER ITEMS
Gains (losses) on interest rate swaps and Berkshire warrants, net88 (33)(573)(33)
Income from equity investments123 104 183 274 
Total211 71 (390)241 
Income (loss) from continuing operations before income taxes(4,058)(574)(14,280)1,223 
Income tax benefit (expense)403 (163)1,896 (694)
Income (loss) from continuing operations(3,655)(737)(12,384)529 
Income (loss) from discontinued operations, net of tax80 (15)(1,335)(15)
NET INCOME (LOSS)(3,575)(752)(13,719)514 
Less: Net income attributable to noncontrolling interest0 (42)0 (42)
Less: Preferred stock dividends(203)(118)(644)(118)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS$(3,778)$(912)$(14,363)$354 
PER COMMON SHARE
Income (loss) from continuing operations—basic$(4.16)$(1.06)$(14.26)$0.47 
Income (loss) from discontinued operations—basic$0.09 $(0.02)$(1.46)$(0.02)
Net income (loss) attributable to common stockholders per share—basic$(4.07)$(1.08)$(15.72)$0.45 
Income (loss) from continuing operations—diluted$(4.16)$(1.06)$(14.26)$0.47 
Income (loss) from discontinued operations—diluted$0.09 $(0.02)$(1.46)$(0.02)
Net income (loss) attributable to common stockholders per share—diluted$(4.07)$(1.08)$(15.72)$0.45 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

4


(c)Consolidated Condensed Statements of Comprehensive Income (Loss)Net of tax of $(3) million for the three months ended September 30, 2018,Occidental Petroleum Corporation and $(4) million for the nine months ended September 30, 2018, respectively.Subsidiaries
Three months ended September 30,Nine months ended September 30,
millions2020201920202019
Net income (loss)$(3,575)$(752)$(13,719)$514 
Other comprehensive income (loss) items:
Foreign currency translation losses0 (1)
Losses on derivatives (a)
(1)(114)(3)(130)
Pension and postretirement gains (losses) (b)
28 (34)(63)(30)
Reclassification of gains on derivatives (c)
2 5 
Other comprehensive income (loss), net of tax29 (148)(62)(160)
Comprehensive income (loss)$(3,546)$(900)$(13,781)$354 
Comprehensive income (loss) attributable to noncontrolling interest$0 $(42)$0 $(42)
Comprehensive income (loss) attributable to preferred and common stockholders$(3,546)$(942)$(13,781)$312 
(a) Net of tax of 0 and $32 million for the three months ended September 30, 2020 and 2019, and $1 million and $36 million for the nine months ended September 30, 2020 and 2019, respectively.
(b) Net of tax of $(8) million and $10 million for the three months ended September 30, 2020 and 2019, respectively, and $18 million and $8 million for the nine months ended September 30, 2020 and 2019, respectively.
(c) Net of tax of 0 for each of the three months ended September 30, 2020 and 2019, respectively, and $(1) million and 0 for the nine months ended September 30, 2020 and 2019, 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
  Nine months ended September 30
millions 2019 2018
     
CASH FLOW FROM OPERATING ACTIVITIES    
Net income $514
 $3,425
Adjustments to reconcile net income to net cash provided by
operating activities:
    
Discontinued operations, net 15
 
Depreciation, depletion and amortization of assets 3,710
 2,891
Deferred income tax (benefit) provision (1,050) 550
Other noncash charges to income 578
 74
Gain on sale of assets, net (150) (969)
Asset impairments and other items 325
 256
Undistributed earnings from affiliates (50) (16)
Dry hole expenses 41
 27
Changes in operating assets and liabilities, net 1,506
 (1,069)
Cash provided by operating activities - continuing operations 5,439
 5,169
Cash used by operating activities - discontinued operations (73) 
Net cash provided by operating activities 5,366
 5,169
     
CASH FLOW FROM INVESTING ACTIVITIES    
Capital expenditures (4,184) (3,638)
Change in capital accrual (160) 7
Proceeds from sale of assets and equity investments, net 4,809
 2,745
Purchase of businesses and assets, net (27,926) (726)
Equity investments and other, net (140) (88)
Cash used by investing activities - continuing operations (27,601) (1,700)
Cash used by investing activities - discontinued operations (125) 
Net cash used by investing activities (27,726) (1,700)
     
CASH FLOW FROM FINANCING ACTIVITIES    
Proceeds from long-term debt, net 21,557
 978
Payments of long-term debt (4,949) (500)
Proceeds from WES revolvers 1,240
 
Payment of revolvers - WES (1,000) 
Proceeds from issuance of common and preferred stock 10,010
 17
Purchases of treasury stock (237) (908)
Cash dividends paid to common stockholders (1,766) (1,780)
Distributions to noncontrolling interest (127) 
Other financing, net (35) 6
Cash provided (used) by financing activities - continuing operations 24,693
 (2,187)
Cash used by financing activities - discontinued operations (1) 
Net cash provided by (used) by financing activities 24,692
 (2,187)
     
Increase in cash, cash equivalents, restricted cash and restricted cash equivalents 2,332
 1,282
Cash and cash equivalents — beginning of period 3,033
 1,672
Cash, cash equivalents, restricted cash and restricted cash equivalents
— end of period
 $5,365
 $2,954
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.
5



Consolidated Condensed Statements of Cash FlowsOccidental Petroleum Corporation and Subsidiaries
Nine months ended
September 30,
millions20202019
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)$(13,719)$514 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Discontinued operations, net1,335 15 
Depreciation, depletion and amortization of assets6,343 3,771 
Deferred income tax benefit(2,117)(1,050)
Asset impairments and other items10,915 325 
Losses (gains) on sales of assets, net824 (150)
Other noncash charges to income134 568 
Changes in operating assets and liabilities(1,240)1,480 
Operating cash flow from continuing operations2,475 5,473 
Operating cash flow from discontinued operations, net of taxes76 (107)
Net cash provided by operating activities2,551 5,366 
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures(1,921)(4,187)
Change in capital accrual(725)(128)
Purchase of businesses and assets, net(102)(27,926)
Proceeds from sale of assets, net193 4,809 
Equity investments and other, net188 (140)
Investing cash flow from continuing operations(2,367)(27,572)
Investing cash flow from discontinued operations, net of taxes(31)(154)
Net cash used by investing activities(2,398)(27,726)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of issuance costs4,956 21,557 
Payments of long-term debt(4,615)(4,949)
Proceeds from short-term borrowings and revolvers - WES0 1,240 
Payment of revolvers - WES0 (1,000)
Proceeds from issuance of common and preferred stock126 10,010 
Purchases of treasury stock(4)(237)
Cash dividends paid on common and preferred stock(1,634)(1,766)
Distributions paid to noncontrolling interest0 (127)
Financing portion of net cash paid for derivative instruments(377)11 
Other financing, net(99)(46)
Financing cash flow from continuing operations(1,647)24,693 
Financing cash flow from discontinued operations, net of taxes(6)(1)
Net cash (used) provided by financing activities(1,653)24,692 
(Decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents(1,500)2,332 
Cash, cash equivalents, restricted cash and restricted cash equivalents — beginning of period3,574 3,033 
Cash, cash equivalents, restricted cash and restricted cash equivalents — end of period$2,074 $5,365 
SUPPLEMENTAL NON-CASH ACTIVITIES:
NON-CASH INVESTING ACTIVITIES
Exchange equity investment in WES (see Note 1)$260 $
NON-CASH FINANCING ACTIVITIES
Settlement of long-term debt - WES (see Note 8)$(260)$
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


6


OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

  Total Stockholders' Equity    
millions Common Stock Preferred Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interests Total Equity
Balance at June 30, 2019 $179
 $
 $(10,653) $8,157
 $23,848
 $(184) $
 $21,347
Net income (loss) 
 
 
 
 (794) 
 42
 (752)
Other comprehensive loss, net of tax 
 
 
 
 
 (148) 
 (148)
Dividends on common stock, $0.79 per share 
 
 
 
 (709) 
 
 (709)
Dividends on preferred stock, $1,489 per share 
 
 
 
 (118) 
 
 (118)
Issuance of common stock and other, net 30
 
 
 6,710
 
 
 
 6,740
Issuance of preferred stock, net 
 9,762
 
 
 
 
 
 9,762
Fair value of noncontrolling interest acquired 
 
 
 
 
 
 4,875
 4,875
Noncontrolling interest contributions, net 
 
 
 
 
 
 8
 8
Balance at
September 30, 2019
 $209
 $9,762
 $(10,653) $14,867
 $22,227
 $(332) $4,925
 $41,005


Consolidated Condensed Statements of EquityOccidental Petroleum Corporation and Subsidiaries
Equity Attributable to Common Stock
millions, except per share amountsPreferred StockCommon StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal Equity
Balance at June 30, 2019$$179 $(10,653)$8,157 $23,848 $(184)$$21,347 
Net income (loss)— — — — (794)— 42 (752)
Other comprehensive loss, net of tax— — — — — (148)— (148)
Dividends on common stock, $0.79 per share— — — — (709)— — (709)
Dividends on preferred stock, $1,489 per share— — — — (118)— — (118)
Issuance of common stock and other, net— 30 — 6,710 — — — 6,740 
Issuance of preferred stock, net9,762 — — — — — — 9,762 
Fair value of noncontrolling interest acquired— — — — — — 4,875 4,875 
Noncontrolling interest contributions, net— — — — — — 
Balance at September 30, 2019$9,762 $209 $(10,653)$14,867 $22,227 $(332)$4,925 $41,005 
  Total Stockholders' Equity    
millions Common Stock Preferred Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interests Total Equity
Balance at June 30, 2018 $179
 $
 $(9,268) $7,967
 $22,361
 $(308) $
 $20,931
Net income 
 
 
 
 1,869
 
 
 1,869
Other comprehensive income, net of tax 
 
 
 
 
 153
 
 153
Dividends on common stock, $0.78 per share 
 
 
 
 (595) 
 
 (595)
Issuance of common stock, net 
 
 
 24
 
 
 
 24
Purchases of treasury stock 
 
 (894) 
 
 
 
 (894)
Reclassification of stranded tax effects 
 
 
 
 
 
 
 
Noncontrolling interest 
 
 
 
 
 
 
 
Balance at
September 30, 2018
 $179
 $
 $(10,162) $7,991
 $23,635
 $(155) $
 $21,488


Equity Attributable to Common Stock
millions, except per share amountsPreferred StockCommon StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Equity
Balance at June 30, 2020$9,762 $213 $(10,657)$16,235 $8,105 $(312)$23,346 
Net loss    (3,575) (3,575)
Other comprehensive income, net of tax     29 29 
Dividends on common stock, $0.01 per share    (10) (10)
Dividends on preferred stock, $2,000 per share 3  219 (203) 19 
Issuance of common stock, net   51 0  51 
Balance at September 30, 2020$9,762 $216 $(10,657)$16,505 $4,317 $(283)$19,860 

The accompanying notes are an integral part of these consolidated condensed financial statements.Consolidated Condensed Financial Statements.
7





Consolidated Condensed Statements of EquityOccidental Petroleum Corporation and Subsidiaries
OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
Equity Attributable to Common Stock
millions, except per share amountsPreferred StockCommon StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal Equity
Balance at December 31, 2018$$179 $(10,473)$8,046 $23,750 $(172)$$21,330 
Net income— — — — 472 — 42 514 
Other comprehensive loss, net of tax— — — — — (160)— (160)
Dividends on common stock, $2.35 per share— — — — (1,877)— — (1,877)
Dividends on preferred stock, $1,489 per share— — — — (118)— — (118)
Issuance of common stock, net— 30 — 6,821 — — — 6,851 
Issuance of preferred stock9,762 — — — — — — 9,762 
Purchases of treasury stock— — (180)— — — — (180)
Fair value of noncontrolling interest acquired— — — — — — 4,875 4,875 
Noncontrolling interest contributions, net— — — — — — 
Balance at September 30, 2019$9,762 $209 $(10,653)$14,867 $22,227 $(332)$4,925 $41,005 
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY (Continued)

Equity Attributable to Common Stock
millions, except per share amountsPreferred StockCommon StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Equity
Balance at December 31, 2019$9,762 $209 $(10,653)$14,955 $20,180 $(221)$34,232 
Net loss    (13,719) (13,719)
Other comprehensive loss, net of tax     (62)(62)
Dividends on common stock, $0.81 per share    (737) (737)
Dividends on preferred stock, $6,444 per share 6  438 (644) (200)
Issuance of warrants on common stock   767 (763) 4 
Berkshire warrants   103   103 
Issuance of common stock and other, net 1  242   243 
Purchases of treasury stock  (4)   (4)
Balance at September 30, 2020$9,762 $216 $(10,657)$16,505 $4,317 $(283)$19,860 
  Total Stockholders' Equity    
millions Common Stock Preferred Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interests Total Equity
Balance at
December 31, 2018
 $179
 $
 $(10,473) $8,046
 $23,750
 $(172) $
 $21,330
Net income 
 
 
 
 472
 
 42
 514
Other comprehensive loss, net of tax 
 
 
 
 
 (160) 
 (160)
Dividends on common stock, $2.35 per share 
 
 
 
 (1,877) 
 
 (1,877)
Dividends on preferred stock, $1,489 per share 
 
 
 
 (118) 
 
 (118)
Issuance of common stock, net 30
 
 
 6,821
 
 
 
 6,851
Issuance of preferred stock 
 9,762
 
 
 
 
 
 9,762
Purchases of treasury stock 
 
 (180) 
 
 
 
 (180)
Fair value of noncontrolling interest acquired 
 
 
 
 
 
 4,875
 4,875
Noncontrolling interest contributions, net 
 
 
 
 
 
 8
 8
Balance at
September 30, 2019
 $209
 $9,762
 $(10,653) $14,867
 $22,227
 $(332) $4,925
 $41,005

  Total Stockholders' Equity    
millions Common Stock Preferred Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interests Total Equity
Balance at
December 31, 2017
 $179
 $
 $(9,168) $7,884
 $21,935
 $(258) $
 $20,572
Net income 
 
 
 
 3,425
 
 
 3,425
Other comprehensive income, net of tax 
 
 
 
 
 161
 
 161
Dividends on common stock, $2.32 per share 
 
 
 
 (1,783) 
 
 (1,783)
Issuance of common stock, net 
 
 
 107
 
 
 
 107
Purchases of treasury stock 
 
 (994) 
 
 
 
 (994)
Reclassification of stranded tax effects 
 
 
 
 58
 (58) 
 
Noncontrolling interest 
 
 
 
 
 
 
 
Balance at
September 30, 2018
 $179
 $
 $(10,162) $7,991
 $23,635
 $(155) $
 $21,488

The accompanying notes are an integral part of these consolidated condensed financial statements.Consolidated Condensed Financial Statements.

8



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial StatementsOccidental Petroleum Corporation and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019

Note 1 - General

Nature of Operations
NOTE 1 - GENERAL

NATURE OF OPERATIONS
In this report, "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 conducts its operations through various subsidiaries and affiliates. On August 8, 2019, pursuant to the Agreement and Plan of Merger, dated as of May 9, 2019 (the Merger Agreement), among Occidental, Baseball Merger Sub 1, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of Occidental (Merger Subsidiary), and Anadarko Petroleum Corporation (Anadarko), Occidental acquired all of the outstanding shares of Anadarko through a transaction in which Merger Subsidiary merged with and into Anadarko (the Merger), with Anadarko continuing as the surviving entity and as an indirect, wholly owned subsidiary of Occidental. See Note 3 - The Merger.

Occidental's principal businesses consist of 4 reporting segments: Oil and Gas, Chemical, Marketing and Other Midstream, and WES Midstream, which includes the operations of Western Midstream Partners, LP (WES), a publicly traded limited partnership and a consolidated subsidiary of OPC. The Oil and Gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The Chemical segment (OxyChem) mainly manufactures and markets basic chemicals and vinyls. The Marketing and Other Midstream segment purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity, and invests in entities that conduct similar activities. Also within the Marketing and Other Midstream segment is Oxy Low Carbon Ventures (OLCV). OLCV seeks to capitalize on Occidental’s enhanced oil recovery (EOR) leadership by developing carbon capture, utilization and storage projects that source anthropogenic carbon dioxide and promote innovative technologies that drive cost efficiencies and grow Occidental’s business while reducing emissions. The WES Midstream segment owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties. WES is a variable interest entity (VIE) to Occidental.

Principles of Consolidation
The unaudited consolidated financial statements have been prepared in conformity with United States Generally Accepted Accounting Principles (GAAP) and include the accounts of OPC, its subsidiaries, VIEs for which Occidental is the primary beneficiary, and its undivided interests in oil and gas exploration and production ventures. Occidental has made its disclosures in accordance with GAAPUnited States generally accepted accounting principles (GAAP) as they apply to interim reporting, and condensed or omitted, as permitted by the U.S. Securities and Exchange Commission'sCommission’s rules and regulations, certain information and disclosures normally included in consolidated financial statements and notes.the notes thereto. These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in Occidental'sOccidental’s Annual Report on Form 10-K for the year ended December 31, 20182019 (the 20182019 Form 10-K).

The Merger, includingIn the additionopinion of WES Midstream as a new reporting segment, introduced different revenue and expense streams to Occidental's legacy operations. As a result, changes were made toOccidental’s management, the structure of certainaccompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present Occidental’s consolidated financial position as of September 30, 2020 and December 31, 2019, the consolidated condensed statements of operations, comprehensive income, cash flows and stockholders' equity for the three and nine months ended September 30, 2020 and 2019. Certain data in the financial statements and notes and supplementary data to provide clarity andfor prior periods have been reclassified to conform to the current presentation. The income and cash flows for the periods ended September 30, 2020 and 2019 are not necessarily indicative of the income or cash flows to be expected for the full year.

Variable Interest EntitiesTHE ACQUISITION
On August 8, 2019, pursuant to the Agreement and Plan of Merger dated May 9, 2019, Occidental acquired all of the outstanding shares of Anadarko Petroleum Corporation (the Acquisition). The Acquisition added to Occidental's oil and gas portfolio, primarily in the Permian Basin, DJ Basin, Gulf of Mexico and Algeria, and an interest in Western Midstream Partners, L.P. (WES). The Acquisition constituted a business combination. Under the acquisition method of accounting, the acquisition consideration was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values.
Occidental through its ownership ofexpensed $302 million in acquisition-related costs for the general partner interest in WES, has the power to direct the activities that significantly affect the economic performance of WES and the obligation to absorb losses or the right to receive benefits that could be significant to WES; therefore, Occidental is considered the primary beneficiary and consolidates WES and all of its consolidated subsidiaries. WES maintains its own capital structure that is separate from Occidental, consisting of its own debt instruments and publicly traded common units. All intercompany transactions have been eliminated.

The assets of WES and its subsidiaries cannot be used by Occidental for general corporate purposes and are included in and disclosed parenthetically on Occidental's consolidated condensed balance sheets, if material. The carrying amount of liabilitiesnine months ended September 30, 2020, primarily related to WES for which the creditors do not have recourse to Occidental's assets are also included in and disclosed parenthetically on Occidental's Consolidated Condensed Balance Sheets, if material.severance costs.



All outstanding debt for WES at September 30, 2019, including any borrowings under the WES revolving credit facility (WES RCF) and WES Term Loan Facility, is recourse to the general partner of Western Midstream Operating, LP (WES Operating), which in turn has been indemnified in certain circumstances by certain indirect wholly owned subsidiaries of Occidental for such liabilities. See Note 9 - Long-Term Debt.

DISCONTINUED OPERATIONS
WES's sources of liquidity include cash and cash equivalents, cash flows generated from operations, interest income from a note receivable from Anadarko, borrowings under the WES RCF, the issuance of additional partnership units, and debt offerings.

Concurrent with the closing of its May 2008 initial public offering, WES Operating loaned Anadarko $260 million in exchange for a 30-year note bearing interest at a fixed annual rate of 6.50%, payable quarterly. The note receivable and related interest income are eliminated in consolidation.

Noncontrolling Interest
WES is a publicly traded limited partnership with its common units traded on the New York Stock Exchange (NYSE) under the ticker symbol "WES." WES also owns the entire non-economic general partner interest and a 98% limited partner interest in WES Operating, a Delaware limited partnership formed by Anadarko in 2007 to acquire, own, develop and operate midstream assets. In addition, Occidental has a 2% limited partner interest in WES Operating and its ownership is held through the investment in WES.

At September 30, 2019, Occidental’s ownership interest in WES consisted of the entire non-economic general partner interest and a 55.4% limited partner interest. The noncontrolling interest primarily consists of the 44.6% limited partner interest of WES owned by the public.

Discontinued Operations
In connection with the Merger,Acquisition, Occidental agreed to sell toentered into a purchase and sale agreement with TOTAL S.A. (Total) to sell all of the assets, liabilities, businesses, and operations of Anadarko's operations in Algeria, Ghana, Mozambique and South Africa (collectively, the Africa Assets) for $8.8 billion, subject to certain purchase price adjustments. In August 2019, a purchaseAfrica. Total and sale agreement was executed for these Africa Assets. This transaction is conditioned on the receipt of required regulatory approvals, as well as other customary closing conditions. On September 27, 2019, Occidental completed the sale of Anadarko’sthe Mozambique LNGassets in September 2019 and the South Africa assets in January 2020.
In April 2020, subsequent to communications with Algerian government officials, Occidental determined that the sale of the Algeria operations to Total would not be consummated, and the decision was made to continue to operate within Algeria. As a result, as of the second quarter of 2020, Occidental no longer classified the Algeria operations as a held for sale asset in discontinued operations and reclassified prior periods to reflect the Algeria operations as continuing operations, see Note 3 - Divestitures and Other Transactions for the impact on prior periods. In addition, in the second quarter 2020, Occidental recorded a $931 million impairment to remeasure the Algeria oil and gas properties to their fair value, which was lower than the carrying amount as if Depreciation, Depletion and Amortization (DD&A) were recorded from the date of the Acquisition. The fair value of the oil and gas properties was measured based on the income approach, see Note 7 - Fair Value Measurements for a description of inputs and assumptions utilized.
In May 2020, Occidental and Total mutually agreed to execute a waiver of the obligation to purchase and sell the Ghana assets, so that Occidental could begin marketing the sale of the Ghana assets to Total for $4.2 billion.other third parties. Occidental is currently marketing the Ghana assets. The assets and liabilities for Algeria, Ghana and South Africa, areremain presented as held for sale at September 30, 2019.2020. Occidental recorded an after-tax impairment of $1.4 billion in the second quarter 2020 to reflect the held for sale assets at their fair value less costs to sell based on the income approach, refer to Note 7 - Fair Value Measurements. The results of operations of the Africa Assets areGhana continue to be presented as discontinued operations, see Note 43 - Acquisitions, Dispositions,Divestitures and Other Transactions.

Unless otherwise indicated, information presented in the Notes to the Consolidated Condensed Financial Statements relates only to Occidental's continuing operations. Information related to discontinued operations is included in Note 43 - Acquisitions, Dispositions,
9


Divestitures and Other Transactions, and in some instances, where appropriate, is included as a separate disclosure within the individual Notes to the Consolidated Condensed Financial Statements.

Goodwill and Other Intangible Assets
Goodwill resulting from the Merger was assigned to WES Midstream and represents the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed. Goodwill is subject to annual impairment testing. Changes in goodwill may result from, among other things, finalization of preliminary purchase price allocations, impairments, additional acquisitions, or divestitures. See Note 3 - The Merger.

Other intangible assets represent contractual rights obtained in connection with the Merger that had favorable contractual terms relative to market terms as well as customer-related intangible assets, including customer relationships. Other intangible assets are amortized over their estimated useful lives and are assessed for impairment with the associated long-lived asset group whenever impairment indicators are present. See Note 3 - The Merger.



Supplemental Cash Flow InformationSUPPLEMENTAL CASH FLOW INFORMATION
Occidental paid international andU.S. domestic state and foreign income taxes for continuing operations of $751$375 million and $838$827 million during the nine months ended September 30, 2019,2020 and 2018,2019, respectively. Occidental received domestic state tax refunds of $2 million in each of the nine months ended September 30, 2019, and 2018. NaN federal income tax payments were made during the nine months ended September 30, 2019, and 2018. Interest paid totaled $610$223 million and $298$5 million during the nine months ended September 30, 2020 and 2019, respectively, related to continuing operations. Interest paid for continuing operations totaled $1.3 billion and 2018,$611 million during the nine months ended September 30, 2020 and 2019, respectively.

Cash Equivalents and Restricted Cash EquivalentsCASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS
Occidental considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents or restricted cash equivalents. The cash equivalents and restricted cash equivalents balance at September 30, 2019,2020, includes investments in government money market funds in which the carrying value approximates fair value.

The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as reported at the end of the period in the Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2020 and 2019, to the line items within the Consolidated Condensed Balance Sheet at September 30, 2019. There was no restricted cash or restricted cash equivalents at September 30, 2018 or December 31, 2018.respectively.
millions September 30, 2019
Cash and cash equivalents $4,840
Restricted cash and restricted cash equivalents 454
Cash and restricted cash included in assets held for sale 16
Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net 55
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents $5,365


millions20202019
Cash and cash equivalents$1,896 $4,840 
Restricted cash and restricted cash equivalents51 467 
Cash and restricted cash included in assets held for sale113 
Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net14 55 
Cash, cash equivalents, restricted cash and restricted cash equivalents$2,074 $5,365 

Total restricted cash and restricted cash equivalents are primarily associated with a benefits trust for former Anadarko employees that was funded as part of the Merger,Acquisition and a judicially controlled account related to a Brazilian tax dispute. Assets held for sale includes restricted cash for the payments of future hard-minerals royalties conveyed, see Note 3 - Divestitures and Other Transactions.

EQUITY METHOD INVESTMENT-WES
On December 31, 2019, Occidental and WES executed several agreements to allow WES to operate as an independent midstream company. Occidental's loss of control of WES on December 31, 2019, resulted in Occidental recognizing, at fair value, an equity method investment of $5.1 billion based on the closing market price of WES. The amounts presented as non-controlling interest on the Consolidated Condensed Statements of Operations relate to the period prior to Occidental's loss of control. Prior to the loss of control, Occidental consolidated WES as a variable interest entity, for which the non-controlling interest primarily consisted of the 44.6% limited partner interest of WES owned by the public.
In the first quarter 2020, Occidental recorded a loss from an equity investment of $440 million as a result of WES’s write-off of its goodwill.
At the end of the third quarter 2020, Occidental recorded an other-than-temporary impairment of $2.7 billion, as the fair value of Occidental’s investment in WES has remained significantly lower than its book value for the majority of the nine months ended September 30, 2020. Occidental concluded that the difference between the fair value and book value of WES was not temporary, primarily given both the magnitude and the duration that the fair value was below its book value. This other-than-temporary impairment was calculated based on the closing market price of WES as of September 30, 2020. The market value of WES’s publicly traded common units is considered a Level 1 input.
In addition, Occidental recorded a loss of $46 million as a result of a non-cash transaction with WES in which Occidental exchanged approximately 27.9 million of its WES common units to retire a $260 million note payable to WES, see Note 8 - Long-Term Debt. Subsequent to this exchange and WES’s retirement of those common units, Occidental has a 2% non-voting general partner interest, a 51.5% limited partner interest and a judicially-controlled account related2% non-voting limited partner interest in WES Operating, a subsidiary of WES. As of September 30, 2020, on a combined basis, Occidental's total effective economic interest in WES and its subsidiaries is 53.5%. Occidental intends to a Brazilian tax dispute.reduce its limited partner ownership interest in WES to below 50%.

As of September 30, 2020, Occidental’s equity method investment in WES was $1.9 billion, which exceeds Occidental’s pro-rata interest in the net assets of WES by $370 million. This basis difference is primarily associated with
10


WES's property, plant and equipment and equity investments and is subject to amortization over their estimated average lives. Subsequent to the other-than-temporary impairment there is no equity method goodwill associated with WES equity investment.
Subsequent to loss of control, transactions between Occidental and WES were no longer eliminated upon consolidation. Occidental and WES entered into the following related-party transactions for the three and nine months ended September 30, 2020.

millionsThree months ended September 30, 2020Nine months ended September 30, 2020
Sales$46 $165 
Purchases$164 $474 
Transportation, gathering and other fees paid$258 $804 


Note 2 - Accounting and Disclosure Changes

NOTE 2 - ACCOUNTING AND DISCLOSURE CHANGES

In January 2019,2020, Occidental adopted the new lease standard Accounting Standards Codification Topic 842Update (ASU) 2016-13 Financial Instruments - Leases (ASC 842)Credit Losses (Topic 326). The new standard requiresmakes significant changes to the accounting for credit losses on financial assets and disclosures regarding credit losses. For trade receivables, loans and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. This will result in the earlier recognition of credit losses than the current incurred-loss model. The acceleration of the recognition of losses is more material for entities whose receivables and other held-to-maturity debt investments are (1) long dated and (2) with less credit worthy counterparties.
The vast majority of Occidental's receivables are short dated with maturities of less than 60 days with creditworthy counterparties, including refiners, pipelines and resellers. Given Occidental’s continued effort to maintain a strong credit portfolio, there have been no negative indications regarding the collectability of these receivables as of the date of this filing. Therefore, adoption of this standard has no material impact for the quarter. Occidental will continue to recognize most leases, including operating leases, onassess the balance sheet. The new rules require lesseesrisk to recognize a right-of-use asset (ROU) and lease liability for all leases with lease terms of more than 12 months. Occidental adoptedits receivables in the standard using the modified retrospective approach, including adopting several optional practical expedients. See future.



NOTE 3 - DIVESTITURES AND OTHER TRANSACTIONS

Note 3 - The MergerDIVESTITURES

On May 9, 2019,In August 2020, Occidental entered into the Merger Agreement with Anadarko. On August 8, 2019, Anadarko’s stockholders votedan agreement to approve the Mergersell approximately 4.5 million mineral acres and it was made effective the same day.1 million fee surface acres located in Wyoming, Colorado, and Utah for approximately $1.33 billion. The Merger added to Occidental's oil and gas portfolio, primarilytransaction closed in the Permian Basin, DJ Basin and Gulf of Mexico, and a controlling interest in WES.

In exchangeOctober 2020 for each share of Anadarko common stock, Anadarko stockholders received $59.00 innet cash and 0.2934 of a share of Occidental common stock, plus cash in lieu of any fractional share of Occidental common stock that otherwise would have been issued, based on the average price of $46.31 per share of Occidental common stock on the NYSE on August 8, 2019.

In connection with the Merger, Occidental issued $13.0 billion of new senior unsecured notes, $8.8 billion of term loans (the Term Loans) and 100,000 shares of series A preferred stock (the Preferred Stock) with a warrant to purchase 80 million shares of Occidental common stock at an exercise price of $62.50 (the Warrant) for $10 billion. In addition, Occidental increased its existing $3.0 billion revolving credit facility by an additional $2.0 billion in commitments. See Note 9 - Long-term DebtandNote 14 - Stockholders' Equity for additional information.

The Merger constitutes a business combination and was accounted for using the acquisition method of accounting. The following table presents the Merger consideration paid to Anadarko stockholders as a result of the Merger:
millions, except per share amounts  
Total shares of Anadarko common stock eligible for Merger consideration 491.6
Cash consideration (per share of common stock and shares underlying Anadarko stock-based awards eligible for Merger consideration) $59.00
Cash portion of Merger consideration $29,002
   
Total shares of Anadarko common stock and shares underlying Anadarko stock-based awards eligible for Merger consideration 492.0
Exchange ratio (per share of Anadarko common stock) 0.2934
Total shares of Occidental common stock issued to Anadarko stockholders 144
Average share price of Occidental common stock at August 8, 2019 $46.31
Stock portion of Merger consideration $6,684
Total Merger consideration $35,686



The following table sets forth the preliminary allocation of the Merger consideration. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, final appraisals of assets acquired and liabilities assumed, valuation of pre-merger contingencies and final tax returns that provide underlying tax basis of assets acquired and liabilities assumed. Occidental will finalize the purchase price allocation during the 12-month period following the Merger date, during which time the value of the assets and liabilities may be revised as appropriate.
millions As of August 8, 2019
Fair value of assets acquired:  
Current assets $3,590
Anadarko's Africa Assets held for sale 10,746
Investments in unconsolidated entities 2,430
Property, plant and equipment, net - Anadarko 48,771
Property, plant and equipment, net - WES Midstream 9,475
Other assets 797
Intangible assets - WES Midstream 2,400
Amount attributable to assets acquired $78,209
  
Fair value of liabilities assumed: 
Current liabilities $3,677
Liabilities of Anadarko's Africa Assets held for sale 2,329
Long-term debt - Anadarko 12,829
Long-term debt - WES Midstream 7,407
Deferred income taxes 10,040
Asset retirement obligations 2,728
Pension and post retirement obligations 1,125
Non-current derivative liabilities 1,279
Other long-term liabilities 2,308
Amount attributable to liabilities assumed $43,722
   
Net assets $34,487
Less: Fair value of noncontrolling interests in WES Midstream 4,875
Fair value of net assets acquired 29,612
Goodwill - WES Midstream 6,074
Total Merger consideration $35,686


The aggregate purchase price noted above was allocated to the major categories of assets and liabilities acquired based upon their preliminary estimated fair values at the date of the Merger. The valuation of certain assets, including property and intangible assets, are based on preliminary appraisals. The majority of measurements of assets acquired and liabilities assumed, other than debt, are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired properties and equipment is based on both available market data and a cost approach. Oil and natural gas properties were valued using either available market data based on the nature of the properties and the location or an income approach. Intangible assets primarily consist of third-party customer contracts, the fair value of which was determined using an income approach. Deferred income taxes represent the tax effects of differences in the tax basis and merger-date fair values of assets acquired and liabilities assumed. The measurement of debt instruments was based on unadjusted quoted prices in an active market and are primarily Level 1; approximately $6.1 billion of the assumed debt is considered Level 2. The value of derivative instruments was based on observable inputs, primarily forward commodity-price and interest-rate curves and is considered Level 2.



The excess of the purchase price over the preliminary estimated fair value of the net tangible and identifiable intangible assets acquired totaled $6.1 billion in goodwill. Goodwill is attributable to the difference in the WES Midstream market capitalization value at the date of the Merger and the WES Midstream net assets acquired, and primarily represents the intrinsic value of the customer relationship between WES Midstream and Occidental.

With the completion of the Merger, Occidental acquired proved and unproved propertiesproceeds of approximately $18.2$1.0 billion, and $26.0 billion, respectively, primarilyafter satisfying $329 million of liabilities associated with the Permian Basin, DJ Basin, Gulfsale of Mexico and Powder River Basin. The remaining $5.0future royalties. As of September 30, 2020, approximately $1.4 billion is related to land, mineral interests and corporate properties.

Other intangibleof assets, of $2.4 billion primarily relate to customer contractsproperty associated with mineral and fee surface acres, and $338 million of liabilities, assumed through the WES Midstream segment. These contracts are amortized over 25 years. The annual aggregate amortization expenseAcquisition, were classified as held for intangible assets is expected to be $108 million.

From the date of the Merger through September 30, 2019, revenues and netsale. Occidental recorded a loss attributable to common stockholders associated with Anadarko assets totaled $1.5 billion and $400 million, respectively.

The following summarizes the unaudited pro forma condensed financial information of Occidental as if the Merger had occurred on January 1, 2018:
  Three months ended September 30 Nine months ended September 30
millions, except per-share amounts 2019 2018 2019 2018
         
Revenues $7,335
 $8,913
 $22,419
 $23,095
Net income (loss) attributable to common stockholders $(427) $2,060
 $475
 $3,405
Net income (loss) attributable to common stockholders per share—basic $(0.50) $2.27
 $0.51
 $3.74
Net income (loss) attributable to common stockholders per share—diluted $(0.50) $2.26
 $0.50
 $3.73
         


The unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the Merger been completed at January 1, 2018, nor is it necessarily indicative of future operating results of the combined entity. The unaudited pro forma information for 2019 and 2018 is a result of combining the three and nine months statements of operations of Occidental with the pre-merger results from January 1, 2019, and 2018 of Anadarko and includes adjustments for revenues and direct expenses. The pro forma results exclude results from the Africa Assets and the impact of any merger-related costs. The pro forma results include adjustments to DD&A (Depreciation, depletion and amortization) based on the purchase price allocated to property, plant, and equipment and intangibles and the estimated useful lives as well as adjustments to interest expense. The pro forma adjustments include estimates and assumptions based on currently available information. Management believes the estimates and assumptions are reasonable, and the relative effects of the Merger are properly reflected. The unaudited pro forma information does not reflect any cost savings anticipated as a result of the Merger or any merger-related costs.



Anadarko Merger-Related Costs
The following table summarizes the merger-related costs incurred:
millions Three months ended September 30, 2019 Nine months ended September 30, 2019
Employee severance and related cost $459

$459
Licensing fees for critical seismic data 329

354
Bank, legal and consulting fees 136

161
Total $924

$974
     


Employee severance and related cost primarily relates to one-time severance costs and the accelerated vesting of certain Anadarko share-based awards for former Anadarko employees based on the terms of the Merger Agreement and existing change of control provisions within the former Anadarko employment agreements. In addition, employee severance and related cost includes expenses for a voluntary separation program for eligible employees. Occidental initiated this program to align the size and composition of its workforce with its expected future operating and capital plans. Employee notifications related to the voluntary separation program were ongoing at September 30, 2019, with additional expenses associated with the program expected to be incurred throughout the remainder of 2019 and through most of 2020.

The seismic licensing fees relate to relicensing of critical seismic data related to the Gulf of Mexico, Permian Basin and DJ Basin that Anadarko had licensed from third-party vendors. The third-party vendors who own the seismic data require a transfer fee in order for Occidental to use the data.

Occidental Stock-based Incentive Plans
On the date of the Merger, Occidental issued restricted share awards covering 1.7 million shares of common stock in exchange for Anadarko stock-based incentive shares to the former Anadarko employees. These restricted shares vest in periods ranging from one month to 3.5 years and are conditioned solely on the employees' continued service, with a weighted-average grant-date fair value of $47.13 and a weighted-average remaining life of 1.3 years. Under the terms of the Merger Agreement, these restricted share awards would be subject to accelerated vesting based on a qualifying termination event.





Note 4 - Acquisitions, Dispositions and Other Transactions

On September 27, 2019, Occidental completed the sale of Anadarko’s Mozambique LNG$431 million. The loss has been presented within (losses) gains on sale of assets, to Total for $4.2 billion, withnet in the Consolidated Condensed Statement of Operations. The net proceeds usedwere utilized to pay down a portion of the 2-year variable rate Term Loans.Loan due 2021 (Term Loan). See Note 8 - Long-Term Debt for further information.
In October 2020, Occidental entered into an agreement to sell its onshore oil and Total continuegas Colombia assets, which have been classified as held for sale within our Consolidated Condensed Balance Sheet as of September 30, 2020. The disposal group carrying value primarily includes approximately $587 million in property, plant and equipment. The transaction is expected to work toward completingclose in the salesfourth quarter 2020. In the third quarter 2020, Occidental recorded a loss of approximately $356 million associated with remeasuring the assets to their fair value, which was lower than their carrying amount. The loss has been presented within (losses) gains on sale of assets, net in the Consolidated Condensed Statement of Operations. The net proceeds will be used to pay down near-term maturities.

11


ALGERIA OPERATIONS - RECLASSIFICATION
The following table presents the amounts previously reported in discontinued operations, net of income taxes, which was reclassified to continuing operations, in the six months ended June 30, 2020, as a result of Occidental's decision to operate in Algeria.

millionsSix months ended June 30, 2020Three and nine months ended September 30, 2019
Revenues and other income
Net sales$319 $172 
Costs and other deductions
Oil and gas lease operating expense44 12 
Transportation expense14 
Taxes other than on income48 46 
Depreciation, depletion and amortization110 61 
Impairment upon reclassification to held for use931 
Other10 
Total costs and other deductions1,157 125 
Income (losses) before income taxes(838)47 
Income tax expense(95)(47)
Net income of Algeria operations, after taxes$(933)$

The following table presents the amounts previously reported in the Consolidated Condensed Balance Sheets as held for sale related to Algeria that were subsequently reclassified as of December 31, 2019:

millionsDecember 31, 2019
Current assets$249 
Property, plant and equipment, net1,761 
Long-term receivables and other assets, net146 
Total Assets$2,156 
Current liabilities$188 
Non-current liabilities104 
Total Liabilities$292 

DISCONTINUED OPERATIONS
In January 2020, Occidental completed the sale of the remainingSouth Africa Assets. Occidental anticipates that the remaining sales will be completed before June 2020. The carrying amount of the remaining Africa Assets will be adjusted in future periods based on changes in fair value.assets to Total. The results of the South Africa Assetsand Ghana assets are presented as discontinued operations in the Consolidated Condensed Statements of Operations and Cash Flows.

The amounts related to the Ghana assets are presented as held for sale on the Consolidated Condensed Balance Sheets as of September 30, 2020 and December 31, 2019, of which approximately $1.4 billion and $3.6 billion are related to property, plant and equipment, net, respectively. Approximately $750 million of the amounts presented in liabilities held for sale are primarily related to deferred income taxes, asset retirement obligations and a finance lease liability.
The following table presents the amounts reportedpresented in discontinued operations, net of income taxes, related tofor the Africa Assets subsequent to the Merger closing date throughnine months ended September 30, 2019:2020, primarily relate to a second quarter after-tax impairment of $1.4 billion recorded to adjust the Ghana assets to their fair value as the sale to Total will no longer be consummated. The amounts presented in discontinued operations, net of taxes, for the three months ended September 30, 2020 primarily relate to oil and gas revenues which have been partially offset by oil and gas operating expenses and other-operating expenses.
12
millions 2019
   
REVENUES AND OTHER INCOME  
Net sales $228
  

COSTS AND OTHER DEDUCTIONS  
Oil and gas operating expense $32
Transportation and marketing expense 4
Taxes other than on income 46
Fair value adjustment on assets held for sale 65
Selling, general and administrative 8
Other 4
  $159
   
Income before income taxes $69
Income tax expense (84)
Discontinued operations, net of tax $(15)
   
 




The following table presents the amounts reported in the Consolidated Condensed Balance Sheets as held for sale related to the Africa Assets and other corporate property.
millions September 30, 2019
   
Cash and cash equivalents $16
Inventories 207
Other current assets 110
Property, plant and equipment, net 5,863
Operating lease assets 29
Long-term receivables and other assets, net 220
Assets held for sale $6,445
   
Current maturities of debt - finance leases 13
Current operating lease liabilities 11
Accounts payable 217
Accrued liabilities 152
Long-term debt, net - finance leases 187
Deferred income taxes 1,281
Asset retirement obligations 142
Other 200
Liabilities of assets held for sale $2,203
   
Net assets held for sale $4,242
   

Sale of Plains Investment
NOTE 4 - REVENUE
On September 23, 2019, Occidental sold its remaining equity investment in Plains All American Pipeline, L.P. and Plains GP Holdings, L.P. (together, Plains) for net proceeds of $646 million, which resulted in a pre-tax gain of $111 million. The proceeds were used to pay down a portion of the Term Loans.

Ecopetrol Joint Venture
On July 31, 2019, Occidental and Ecopetrol entered into definitive agreements to form a joint venture to develop approximately 97,000 net acres of Occidental’s Midland Basin properties in the Permian Basin. Ecopetrol will pay $750 million in cash at closing and $750 million of carried capital in exchange for a 49-percent interest in the new venture. Occidental will own a 51-percent interest and operate the joint venture. During the carry period, Ecopetrol will pay 75-percent of Occidental’s share of capital expenditures, up to $750 million. The joint venture allows Occidental to accelerate its development plans in the Midland Basin, where it currently has minimal activity. Occidental will retain production and cash flow from its existing operations in the Midland Basin. This transaction is expected to close in the fourth quarter of 2019.



Note 5 - Revenue Recognition

Revenue from customers is recognized when obligations under the terms of a contract with our customers are satisfied; this generally occurs with the delivery of oil, natural gas NGL,liquids (NGL), gas, chemicals or services, such as transportation. As of September 30, 2019,2020, trade receivables, net, of $5.9$2.1 billion represent rights to payment, for which Occidental has satisfied its obligations under a contract and its right to payment is conditioned only on the passage of time.

The following table shows a reconciliation of revenue from customers to total net sales:sales for the three and nine months ended September 30, 2020 and 2019:

Three months ended September 30,Nine months ended September 30,
millions2020201920202019
Revenue from customers$4,018 $5,403 $12,576 $12,569 
All other revenues (a)
90 456 1,073 1,714 
Net sales$4,108 $5,859 $13,649 $14,283 
(a) Includes net marketing derivatives, oil collars and calls, and chemical exchange contracts.
  Three months ended September 30 Nine months ended September 30
millions 2019 2018 2019 2018
         
Revenue from customers $5,231
 $4,257
 $12,397
 $11,813
All other revenues (a)
 456
 959
 1,714
 1,249
Net sales $5,687
 $5,216
 $14,111
 $13,062
         
 (a) Includes net marketing derivatives, oil collars and calls, and chemical exchange contracts.

Disaggregation of Revenue from Contracts with CustomersDISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
The following table below presents Occidental's revenue from customers by segment, product and geographical area. The Oiloil and Gasgas segment typically sells its oil, gasNGLs and NGLgas at the lease or concession area. WES Midstream's operations are entirely in the United States. Chemical segment revenues are shown by geographic area based on the location of the sale. Excluding net marketing revenue, Marketingmidstream and Other Midstreammarketing segment revenues are shown by the location of sale:sale.
millions United States Middle East Latin America Other International Eliminations Total
             
Three months ended September 30, 2019            
Oil and Gas            
Oil $2,453
 $683
 $177
 $
 $
 $3,313
NGL 177
 63
 
 
 
 240
Gas 125
 78
 5
 
 
 208
Other (18) 3
 
 
 
 (15)
Segment total $2,737
 $827
 $182
 $
 $
 $3,746
             
Chemical $1,009
 $
 $36
 $16
 $
 $1,061
             
Marketing and Other Midstream            
Gas processing 93
 81
 
 
 
 174
Power and other 198
 
 
 37
 
 235
Segment total $291
 $81
 $
 $37
 $
 $409
             
WES Midstream $383
 $
 $
 $
 $
 $383
             
Eliminations $
 $
 $
 $
 $(368) $(368)
             
Consolidated $4,420
 $908
 $218
 $53
 $(368) $5,231
             


millions United States Middle East Latin America Other International Eliminations Total
             
Three months ended September 30, 2018            
Oil and Gas            
Oil $1,326
 $1,016
 $197
 $
 $
 $2,539
NGL 139
 77
 
 
 
 216
Gas 47
 80
 5
 
 
 132
Other 3
 
 (1) 
 
 2
Segment total $1,515
 $1,173
 $201
 $
 $
 $2,889
             
Chemical $1,112
 $
 $51
 $21
 $
 $1,184
             
Marketing and Other Midstream            
Gas processing 148
 108
 
 
 
 256
Pipelines 115
 
 
 
 
 115
Power and other 38
 
 
 
 
 38
Segment total $301
 $108
 $
 $
 $
 $409
             
Eliminations $
 $
 $
 $
 $(225) $(225)
             
Consolidated $2,928
 $1,281
 $252
 $21
 $(225) $4,257
millions United States Middle East Latin America Other International Eliminations Total
             
Nine months ended September 30, 2019            
Oil and Gas            
Oil $5,105
 $2,266
 $524
 $
 $
 $7,895
NGL 339
 196
 
 
 
 535
Gas 180
 233
 14
 
 
 427
Other (40) (2) 
 
 
 (42)
Segment total $5,584
 $2,693
 $538
 $
 $
 $8,815
             
Chemical $2,937
 $
 $119
 $53
 $
 $3,109
             
Marketing and Other Midstream            
Gas processing 302
 272
 
 
 
 574
Power and other 274
 
 
 37
 
 311
Segment total $576
 $272
 $
 $37
 $
 $885
             
WES Midstream $383
 $
 $
 $
 $
 $383
             
Eliminations $
 $
 $
 $
 $(795) $(795)
             
Consolidated $9,480
 $2,965
 $657
 $90
 $(795) $12,397



millions United States Middle East Latin America Other International Eliminations Total
             
Nine months ended September 30, 2018            
Oil and Gas            
Oil $3,907
 $2,507
 $547
 $
 $
 $6,961
NGL 339
 192
 
 
 
 531
Gas 141
 218
 12
 
 
 371
Other 10
 1
 
 
 
 11
Segment total $4,397
 $2,918
 $559
 $
 $
 $7,874
             
Chemical $3,294
 $
 $154
 $59
 $
 $3,507
             
Marketing and Other Midstream            
Gas processing 416
 308
 
 
 
 724
Pipelines 310
 
 
 
 
 310
Power and other 84
 
 
 
 
 84
Segment total $810
 $308
 $
 $
 $
 $1,118
             
Eliminations $
 $
 $
 $
 $(686) $(686)
             
Consolidated $8,501
 $3,226
 $713
 $59
 $(686) $11,813


millionsUnited StatesMiddle East / AfricaLatin AmericaOther InternationalEliminationsTotal
Three months ended September 30, 2020
Oil and Gas
Oil$1,784 $397 $138 $0 $0 $2,319 
NGL252 53 0 0 0 305 
Gas155 77 3 0 0 235 
Other23 0 0 0 0 23 
Segment total$2,214 $527 $141 $0 $0 $2,882 
Chemical$888 $0 $33 $18 $0 $939 
Midstream and Marketing
Gas processing$89 $73 $0 $0 $0 $162 
Marketing110 0 0 62 0 172 
Power and other45 0 0 0 0 45 
Segment total$244 $73 $0 $62 $0 $379 
Eliminations$0 $0 $0 $0 $(182)$(182)
Consolidated$3,346 $600 $174 $80 $(182)$4,018 
Contract Liabilities
Contract liabilities relate to WES fees and capital reimbursements that are charged to customers for only a portion of the contract term and must be recognized as revenues over the expected period of benefit, fixed and variable fees that are received from customers but revenue recognition is deferred under midstream cost of service contracts, and hard-minerals bonus payments received from customers that must be recognized as revenue over the expected period of benefit.

The following table summarizes current period activity related to contract liabilities from contracts with customers:
millions  
Balance at December 31, 2018 $
Increase due to contract liabilities acquired with Anadarko 154
Increase due to cash received, excluding revenues recognized in the period 9
Decrease due to revenue recognized (13)
Balance at September 30, 2019 $150

13



millionsUnited StatesMiddle East/AfricaLatin AmericaOther InternationalEliminationsTotal
Three months ended September 30, 2019
Oil and Gas
Oil$2,453 $852 $177 $$$3,482 
NGL177 66 243 
Gas125 78 208 
Other(18)(15)
Segment total$2,737 $999 $182 $$$3,918 
Chemical$1,009 $$36 $16 $$1,061 
Midstream and Marketing
Gas processing$93 $81 $$$$174 
Marketing157 37 194 
Power and other41 41 
Segment total$291 $81 $$37 $$409 
WES Midstream (a)
$383 $$$$$383 
Eliminations$$$$$(368)$(368)
Consolidated$4,420 $1,080 $218 $53 $(368)$5,403 
(a) Occidental and WES executed several agreements to allow WES to operate as an independent midstream company     resulting in Occidental's loss of control on December 31, 2019.

millionsUnited StatesMiddle East / AfricaLatin AmericaOther InternationalEliminationsTotal
Nine months ended September 30, 2020
Oil and Gas
Oil$5,705 $1,426 $353 $0 $0 $7,484 
NGL592 158 0 0 0 750 
Gas476 239 12 0 0 727 
Other54 1 0 0 0 55 
Segment total$6,827 $1,824 $365 $0 $0 $9,016 
Chemical$2,591 $0 $101 $47 $0 $2,739 
Midstream and Marketing
Gas processing$261 $215 $0 $0 $0 $476 
Marketing655 0 0 163 0 818 
Power and other70 0 0 0 0 70 
Segment total$986 $215 $0 $163 $0 $1,364 
Eliminations$0 $0 $0 $0 $(543)$(543)
Consolidated$10,404 $2,039 $466 $210 $(543)$12,576 

Transaction Price Allocated
14


millionsUnited StatesMiddle East/AfricaLatin AmericaOther InternationalEliminationsTotal
Nine months ended September 30, 2019
Oil and Gas
Oil$5,105 $2,435 $524 $$$8,064 
NGL339 199 538 
Gas180 233 14 427 
Other(40)(2)(42)
Segment total$5,584 $2,865 $538 $$$8,987 
Chemical$2,937 $$119 $53 $$3,109 
Midstream and Marketing
Gas processing$302 $272 $$$$574 
Marketing162 37 199 
Power and other112 112 
Segment total$576 $272 $$37 $$885 
WES Midstream (a)
$383 $$$$$383 
Eliminations$$$$$(795)$(795)
Consolidated$9,480 $3,137 $657 $90 $(795)$12,569 
(a) Occidental and WES executed several agreements to Remaining Performance Obligationsallow WES to operate as an independent midstream company resulting in Occidental's loss of control on December 31, 2019.

TRANSACTION PRICE ALLOCATED TO REMAINING PERFORMANCE OBLIGATIONS
Revenue expected to be recognized from certain performance obligations that are unsatisfied as of September 30, 2019,2020 is reflected in the table below. Occidental applies the optional exemptions in Topic 606ASU 2014-09 Revenue from Contracts with Customers (Topic 606) and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied performance obligations. As a result, the following table represents a small portion of Occidental's expected future consolidated revenues, as future revenue from the sale of most products and services is dependent on future production or variable customer volume and variable commodity prices for that volume:
millions Oil and Gas WES Midstream Eliminations Total
Remainder of 2019 $26
 $193
 $(127) $92
2020 103
 863
 (589) 377
2021 103
 912
 (645) 370
2022 7
 963
 (703) 267
2023 7
 915
 (690) 232
Thereafter 60
 4,399
 (3,768) 691
Total $306
 $8,245
 $(6,522) $2,029

millions
Remainder of 2020$38 
2021114 
20229 
20239 
20249 
Thereafter85 
Total$264 

Note 6 - Inventories
15



NOTE 5 - INVENTORY

Commodity inventory and finished goods primarily represents crude oil, which is carried at the lower of weighted-average cost or marketnet realizable value, and caustic soda and chlorine, which are valued under the last-in, first-out (LIFO) method. Inventories consisted of the following:
millions September 30, 2019 December 31, 2018
     
Raw materials $67
 $74
Materials and supplies 916
 445
Commodity inventory and finished goods 665
 788
  1,648
 1,307
Revaluation to LIFO (47) (47)
Total $1,601
 $1,260


millionsSeptember 30, 2020December 31, 2019
Raw materials$63 $75 
Materials and supplies885 974 
Finished goods753 572 
1,701 1,621 
Revaluation to LIFO(41)(40)
Total$1,660 $1,581 

Note 7 - Derivative InstrumentsDuring the first half of 2020, Occidental recognized impairments of $54 million and $76 million due to obsolete material and supplies inventory and lower-than-cost or net-realizable value adjustments primarily related to commodity inventories, respectively. Occidental did not recognize any inventory impairments for the three months ended September 30, 2020.
NOTE 6 - DERIVATIVES

Occidental uses a variety of derivative financial instruments and physical contracts to manage its exposure to commodity-pricecommodity price fluctuations, interest rate risks and transportation commitments and to fix margins on the future sale of stored commodity volumes and interest rate risks.volumes. Occidental also enters into derivative financial instruments for trading purposes.

Occidental may elect normal purchases and normal sales exclusions when physically delivered commodities are purchased or sold to a customer. Occidental occasionally applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecasted sales of its natural gas storage volumes, and at times for other strategies, such as to lock rates on forecasted debt issuances. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty.



Derivatives Not Designated as Hedging InstrumentsDERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
As of September 30, 2019, Occidental's2020, Occidental’s derivatives not designated as hedges consist of three-way oil collars and call options, natural gas collars, interest rate swaps and marketing derivatives and the Warrant.

derivatives.
Derivative instruments that are derivatives not designated as hedging instruments are required to be recorded on the statement of operations and balance sheet at fair value. Changes in fair value will impact Occidental'sOccidental’s earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled. The fair value does not reflect the realized or cash value of the instrument.

Three-way Oil Collars and Call OptionsCOLLARS AND CALL OPTIONS
In July 2019, Occidental entered into three-way costless collar derivative instruments for 2020, andalong with additional call options in 2021 to manage its near-term exposure to cash-flowcash flow variability from commodity-priceoil price risks. A three-way collar is a combination of three options: a sold call, a purchased put and a sold put. The sold call establishes the ceiling price that Occidental will receive for the contracted commodity volume for a defined period of time. The purchased put establishes the floor price that Occidental will receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the floor price equals the reference price plus the difference between the purchased put strike price and the sold put strike price for a defined period of time. Occidental entered into the 2021 call options to substantially improve the terms for the ceiling price that Occidental will receive for the contracted commodity volumes in 2020. Occidental received cash of $643 million associated with the oil collars in the nine months ended September 30, 2020.
In September 2020, Occidental entered into two-way collar derivative instruments for 2021 to manage its near-term exposure to cash-flow variability from natural gas commodity price risks. A two-way collar is a combination of two options: a sold call and a purchased put. The sold call establishes the Merger,ceiling price that Occidental also assumed three-way costless collarswill receive for the contracted commodity volume for a defined period of time. The purchased put establishes the floor price that expire throughoutOccidental
16


will receive for the rest of 2019.contracted volumes. Net gains and losses associated with collars and calls are recognized currently in net sales. Hedge accounting was not elected for these contracts.

Occidental had the following collars and calls outstanding at September 30, 2019:2020:
Collars and Calls, not designated as hedges  
2019 Settlement   
Three-way collars (Oil MMBL)  8.0
 Average price per barrel (NYMEX/Brent oil pricing)   
  Ceiling sold price (call)  $72.98
  Floor purchased price (put)  $56.72
  Floor sold price (put)  $46.72
      
2020 Settlement   
Three-way collars (Oil MMBL)  109.8
 Average price per barrel (Brent oil pricing)   
  Ceiling sold price (call)  $74.09
  Floor purchased price (put)  $55.00
  Floor sold price (put)  $45.00
      
2021 Settlement   
Call Options sold (Oil MMBL)  109.5
 Average price per barrel (Brent oil pricing)   
  Ceiling sold price (call)  $74.09


Collars and Calls, not designated as hedges
2020 Settlement - oil
Three-way collars (Oil MMBBL)32.2 
Volume weighted average price per barrel (Brent oil pricing)
Ceiling sold price (call)$74.16 
Floor purchased price (put)$55.00 
Floor sold price (put)$45.00 
2021 Settlement - oil
Call options sold (Oil MMBBL)127.8 
Average price per barrel (Brent oil pricing)
Ceiling sold price (call)$74.16 
2021 Settlement - natural gas
Natural Gas Collars (millions of MMBTU)182.5 
Volume weighted average price per MMBTU (NYMEX)
Ceiling sold price (call)$3.61 
Floor purchased price (put)$2.50 
Occidental Interest Rate Swaps (Excluding WES Midstream)
INTEREST RATE SWAPS
Occidental acquired interest rate swap contracts in the Merger.Acquisition. The contracts lock in a fixed interest rate in exchange for a floating interest rate indexed to three-month London Inter-BankInterBank Offered Rate (LIBOR) throughout the reference period. Net gains and losses associated with interest rate derivative instruments not designated as hedging instruments are recognized currently in lossesgains (losses) on interest rate swaps and warrants, net.



Occidental had the following outstanding interest rate swaps at September 30, 2019:2020:

millions except percentages Mandatory Weighted-Average
millions, except percentagesmillions, except percentagesMandatoryWeighted-Average
Notional Principal AmountNotional Principal Amount Reference Period Termination Date Interest RateNotional Principal AmountReference PeriodTermination DateInterest Rate
$125
 September 2016 - 2046 October 2019 6.782%400 September 2016 - 2046September 20216.348 %
$550
 September 2016 - 2046 September 2020 6.418%350 September 2017 - 2047September 20216.662 %
$125
 September 2016 - 2046 September 2022 6.835%275 September 2016 - 2046September 20226.709 %
$100
 September 2017 - 2047 September 2020 6.891%450 September 2017 - 2047September 20236.445 %
$250
 September 2017 - 2047 September 2021 6.570%
$450
  September 2017 - 2047 September 2023 6.445%

Depending on market conditions, liability-managementliability management actions or other factors, Occidental may enter into offsetting interest rate swap positions or settle or amend certain or all of the currently outstanding interest rate swaps. In the first quarter of 2020, Occidental extended all 2020 mandatory termination dates to 2021 or thereafter.

In addition to the interest rate swaps, Occidental has approximately $1.1 billion of debt referenced to LIBOR that matures after 2021. It is expected that a number of private-sector banks currently reporting information used to set LIBOR will stop doing so after 2021. Occidental is currently evaluating the potential effect to its debt and derivative obligations due to the transition from LIBOR to another benchmark rate. The effect to our LIBOR indexed contracts will depend on the alternative reference rate selected by our counterparties and the contracts' relative values at the time of the transition.
Derivative settlements and collateralization are classified as cash flowsflow from operating activities unless the derivatives contain an other-than-insignificant financing element, in which case the settlements and collateralization are classified as cash flows from financing activities. As a result of prior extensions of reference-period start dates without settlementDue to the liability position of the related interest rate derivative obligations,derivatives at the date of the Acquisition, the interest rate derivatives in Occidental'sOccidental’s portfolio contain an other-than-insignificant financing element, and therefore, any settlements, collateralization or cash payments for amendments related to these extended interest rate derivatives are classified as cash flowsflow from financing activities. Net cash payments related to settlements were $47 million and amendments of$94 million for the
17


three and nine months ended September 30, 2020, respectively. Collateral with respect to interest rate swap agreements were $43was returned (paid) in the amount of $37 million duringand $(283) million for the period from August 8, 2019, throughthree and nine months ended September 30, 2019. Subsequent to September 30, 2019, Occidental settled interest rate swaps that had a mandatory termination date of October 11, 2019, and a notional value of $125 million.2020, respectively.

WES Interest Rate Swaps
In the Merger, Occidental also acquired interest rate swap contracts held by WES. WES exchanged a floating interest rate indexed to the three-month LIBOR for a fixed interest rate. Net gains and losses associated with these interest rate derivative instruments are recognized currently in losses on interest rate swaps and warrants, net. The following interest rate swaps were outstanding at September 30, 2019:
millions except percentages   Mandatory Weighted-Average
Notional Principal Amount Reference Period Termination Date Interest Rate
$375
  December 2019 - 2024 December 2019 2.662%
$375
  December 2019 - 2029 December 2019 2.802%
$375
  December 2019 - 2049 December 2019 2.885%

Depending on market conditions, liability-management actions, or other factors, WES may settle or amend certain or all of the currently outstanding interest rate swaps.
Marketing DerivativesMARKETING DERIVATIVES
Occidental's marketing derivative instruments not designated as hedges are physical and financial forwardfinancial-forward contracts which typically settle within three months. A substantial majority of Occidental's physically settled derivative contracts are index-based and carry no mark-to-market valuation in earnings. These instruments settlesettled at a weighted-averageweighted average contract price of $58.39$41.73 per barrel and $2.22$2.36 per thousand cubic feet (Mcf) for crude oil and natural gas, respectively, at September 30, 2019.2020. The weighted-average contract price was $58.81$60.60 per barrel and $3.18$2.17 per Mcf for crude oil and natural gas, respectively, at December 31, 2018.2019. Net gains and losses associated with marketing derivative instruments not designated as hedging instruments are recognized currently in net sales.

The following table summarizes net long/(short) volumes associated with the outstanding marketing commodity derivatives not designated as hedging instruments as of September 30, 2019, and December 31, 2018.instruments.
  2019 2018
     
Crude Oil Commodity Contracts    
Volume (MMBL) 36
 61
Natural Gas Commodity Contracts    
Volume (Bcf) (128) (142)

 September 30, 2020December 31, 2019
Crude Oil Commodity Contracts
Volume (MMBBL)(5)55 
Natural Gas Commodity Contracts
Volume (Bcf)(111)(128)



THE BERKSHIRE WARRANTS


The Warrant
The WarrantWarrants for 80 million shares of Occidental stock, with an initial exercise price of $62.50, were issued with the Preferred Stock in connection with the Merger isfinancing of the Acquisition (the Berkshire Warrants). The Berkshire Warrants are exercisable at the holder's option, in whole or in part, until the first anniversary of the date on which no shares of Preferred Stock remain outstanding, at which pointtime the Warrant expires.Berkshire Warrants expire. The holderholders of the Warrant may requireBerkshire Warrants could have required net cash settlement if certain shareholder and regulatory approvals to issue Occidentalshares of Occidental's common stock areunderlying the Berkshire Warrants were not obtained on a timely basis. The initialobtained. Prior to these approvals, the fair value of the Warrant, $188 million,Berkshire Warrants was measured atremeasured each reporting date with gains and losses being recorded on the dateincome statement.
At Occidental's May 29, 2020 annual shareholders meeting, all remaining approvals were obtained and the Berkshire Warrants can no longer be cash settled. Upon these approvals, the fair value of the MergerBerkshire Warrants was remeasured at May 29, 2020, using the Black ScholesBlack-Scholes option model. The reclassification from liabilities to "Additional paid-in capital" was $103 million.
The following inputs were used in the Black ScholesBlack-Scholes option model;model: the expected life of the Berkshire Warrants, a volatility factor and the exercise price. The expected life is based on the estimated term of the Warrant,Berkshire Warrants, the volatility factor is based on historical volatilities of Occidental common stock, and the call optioninitial exercise price for Occidentalof $62.50.
The Berkshire Warrants contain an anti-dilution provision that adjusts the exercise price and the number of shares of Occidental's common stock at $62.50. The fair valueissuable on exercise upon the occurrence of certain distributions to common shareholders. On June 26, 2020, Occidental's Board of Directors declared a distribution to its common shareholders of warrants to purchase additional shares of common stock, see Note 13 - Earnings Per Share and Stockholders' Equity. This distribution to common shareholders resulted in an anti-dilution adjustment to the Berkshire Warrants, which lowered its exercise price to $59.624 and increased the number of shares of Occidental's common stock issuable on exercise of the Warrant is remeasured each reporting period based on changes in the inputs above.Berkshire Warrants by approximately 3.9 million shares.

Derivatives Designated as Hedging InstrumentsDERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS
Net gains and losses attributable to derivative instruments subject to cash flow hedge accounting reside in accumulated other comprehensive loss and are reclassified to earnings, as the transactions to which the derivatives relate are recognized in earnings.

Cash Flow HedgesCASH 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. As of September 30, 2019, Occidental had approximately 5 billion cubic feet (Bcf) of natural gas held in storage,2020 and hadDecember 31, 2019, cash flow hedges for the forecast sales, to be settled by physical delivery, of approximately 3 Bcf of stored natural gas. As of December 31, 2018, Occidental had approximately 5 Bcf of natural gas held in storage, and had cash flow hedges for the forecasted sales, to be settled by physical delivery, of approximately 4 Bcf of stored natural gas. The fair value of the cash flow hedges associated with stored natural gas was immaterial at September 30, 2019 and December 31, 2018. The ineffective portion recognized through earnings was immaterial for the nine months ended September 30, 2019, and the year ended December 31, 2018.were immaterial.

In June 2019, in anticipation of issuing debt in the third quarter to partially finance the cash portion of the Merger consideration, Occidental entered into a series of U.S. treasury locks which were designated as cash flow hedges. In August 2019, the U.S. treasury locks were unwound with the issuance of the $13.0 billion new senior unsecured notes, and the resulting after-tax accumulated other comprehensive loss of $125 million will be amortized to interest expense over the life of the underlying senior notes.
18




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

millionsmillionsFair Value Measurements Using
Netting (a)
Total Fair Value
Balance Sheet ClassificationsBalance Sheet ClassificationsLevel 1Level 2Level 3
Balance Sheet Classification Fair-Value Measurements Using 
Netting (a)
 Total Fair Value
millions Level 1 Level 2 Level 3 
          
September 30, 2019          
Oil Collars and Calls          
September 30, 2020September 30, 2020
Collars and Call OptionsCollars and Call Options
Other current assets $
 $217
 $
 $(4) $213
Other current assets$0 $269 $0 $0 $269 
Accrued liabilities 
 3
 
 (3) 
Deferred credits and other liabilities - other 
 97
 
 
 97
Deferred credits and other liabilities - other0 (18)0 0 (18)
Marketing Derivatives          Marketing Derivatives
Other current assets 838
 97
 
 (861) 74
Other current assets1,162 37 0 (1,194)5 
Long-term receivables and other assets, net 70
 12
 
 (70) 12
Long-term receivables and other assets, net77 2 0 (77)2 
Accrued liabilities 827
 45
 
 (861) 11
Accrued liabilities(1,180)(49)0 1,194 (35)
Deferred credits and other liabilities - other 71
 1
 
 (70) 2
Deferred credits and other liabilities - other(77)0 0 77 0 
Interest Rate Swaps (excluding WES)          
Other current assets 
 14
 
 
 14
Long-term receivables and other assets, net 
 13
 
 
 13
Interest Rate SwapsInterest Rate Swaps
Accrued liabilities 
 882
 
 
 882
Accrued liabilities0 (1,011)0 0 (1,011)
Deferred credits and other liabilities - other 
 879
 
 
 879
Deferred credits and other liabilities - other0 (894)0 0 (894)
WES Interest Rate Swaps          
Accrued liabilities 
 171
 
 
 171
Warrant          
December 31, 2019December 31, 2019
Collars and Call OptionsCollars and Call Options
Other current assetsOther current assets$$92 $$$92 
Deferred credits and other liabilities - other 
 168
 
 
 168
Deferred credits and other liabilities - other(160)(160)
          
December 31, 2018          
Marketing Derivatives          Marketing Derivatives
Other current assets $2,531
 $110
 $
 $(2,392) $249
Other current assets945 79 (973)51 
Long-term receivables and other assets, net 5
 9
 
 (6) 8
Long-term receivables and other assets, net12 (4)12 
Accrued liabilities 2,357
 101
 
 (2,392) 66
Accrued liabilities(1,008)(44)973 (79)
Deferred credits and other liabilities - other 6
 2
 
 (6) 2
Deferred credits and other liabilities - other(4)(1)(1)
Interest Rate SwapsInterest Rate Swaps
Other current assetsOther current assets
Long-term receivables and other assets, netLong-term receivables and other assets, net
Accrued liabilitiesAccrued liabilities(657)(657)
Deferred credits and other liabilities - otherDeferred credits and other liabilities - other(776)(776)
Berkshire Warrants (b)
Berkshire Warrants (b)
Deferred credits and other liabilities - otherDeferred credits and other liabilities - other(107)(107)
(a)These amounts do not include collateral.
(a)These amounts do not include collateral.
(b)Berkshire Warrants were reclassified to equity on May 29, 2020.

As of September 30, 2020 and December 31, 2019, $359$388 million and $104 million of collateral hashad been netted against derivative liabilities related to interest rate swaps. Occidental had $36 million of initial margin deposited with brokers asswaps, respectively. As of September 30, 2019,2020, Occidental had deposited $15 million of collateral with brokers related to marketing derivatives. As of December 31, 2018, $45 million collateral received has beenderivatives, which is netted against derivative assets, and collateral posted of $1 million has been netted againstwith derivative liabilities. Occidental had $178Initial margin of $65 million of initial marginwas deposited with brokers as of December 31, 2018. Initial margin is included in other current assets in the Consolidated Condensed Balance Sheets and has not been reflected in these derivative fair-value tables.2019, related to marketing derivatives.

19




Gains and Losses on DerivativesGAINS AND LOSSES ON DERIVATIVES
The following table presents the effect of Occidental's derivative instruments on the Consolidated Condensed Statements of Operations:
Income Statement Classification Three months ended September 30 Nine months ended September 30
millions 2019 2018 2019 2018
         
Oil Collars and Calls        
Net sales $75
 $
 $75
 $
Marketing Derivatives        
Net sales 91
 36
 (119) 8
Interest Rate Swaps (Excluding WES)        
Losses on interest rate swaps and warrants, net (45) 
 (45) 
Interest Rate Swaps (WES)        
Losses on interest rate swaps and warrants, net (8) 
 (8) 
Warrants        
Gains on interest rate swaps and warrants, net 20
 
 20
 


millionsThree months ended September 30,Nine months ended September 30,
Income Statement Classification2020201920202019
Collars and Calls
Net sales$110 $75 $1,067 $75 
Marketing Derivatives
Net sales (a)
(18)91 0 (119)
Interest Rate Swaps
Gains (losses) on interest rate swaps and warrants, net88 (53)(577)(53)
Berkshire Warrants
Gains on interest rate swaps and warrants, net (b)
$0 $20 $5 $20 
Credit Risk(a) Includes derivative and non-derivative marketing activity.
(b) Includes losses and gains on Berkshire Warrants prior to the May 29, 2020 reclassification to equity.

CREDIT RISK
Occidental's counterparty credit risk related to the physical delivery of energy commodities results from its customers' potential inability to meet their settlement commitments. Occidental manages 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 evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned 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 party would need to post. The aggregate fair value of derivative instruments with credit-risk-related contingent features for which a net liability position existed at September 30, 20192020, was $1.6 billion (net of $0.3 billion collateral), primarily related to acquired interest-rate swaps, and $68$35 million (net of $1$388 million of collateral), of which $12 million related to marketing activity, and the balance related to interest-rate swaps. The aggregate fair value of derivative instruments with credit-risk-related contingent features for which a net liability position existed at December 31, 2018.2019, was $787 million (net of $169 million of collateral).

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Note 8 - Fair-Value Measurements
NOTE 7 - FAIR VALUE MEASUREMENTS

Occidental has categorized its assets and liabilities that are measured at fair value in a three-level fair-valuefair 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.

Fair Values — RecurringFAIR VALUES - RECURRING
In January 2012, Occidental entered into a long-term contract to purchase COcarbon dioxide (CO2). This contract contains a price adjustment clause that is linked to changes in NYMEX crude oil prices. Occidental determined that the portion of this contract linked to NYMEX oil prices is not clearly and closely related to the host contract, and Occidental therefore bifurcated this embedded pricing feature from its host contract and accounts for it at fair value in the Consolidated Condensed Financial Statements.
The following tables provide fair-valuefair value measurement information for embedded derivatives that are measured on a recurring basis:
millions Fair-Value Measurements Using    
Embedded derivatives Level 1 Level 2 Level 3 Netting and
Collateral
 Total Fair
Value
As of September 30, 2019          
Accrued liabilities $
 $54
 $
 $
 $54
Deferred credits and other liabilities - other 
 73
 
 
 73
       
As of December 31, 2018          
Accrued liabilities $
 $66
 $
 $
 $66
Deferred credits and other liabilities - other 
 116
 
 
 116


Fair-Values — Nonrecurring
millionsFair Value Measurements Using
Embedded derivativesLevel 1Level 2Level 3Netting and
Collateral
Total Fair
Value
As of September 30, 2020
Accrued liabilities$0 $(79)$0 $0 $(79)
Deferred credits and other liabilities - other0 (19)0 0 (19)
As of December 31, 2019
Accrued liabilities$$(40)$$$(40)
Deferred credits and other liabilities - other(49)(49)
During
FAIR VALUES - NONRECURRING - IMPAIRMENTS
In the nine months ended September 30, 2019,second quarter 2020, as a result of the expected prolonged period of lower commodity prices brought on by the COVID-19 pandemic’s impact on oil demand, Occidental measuredtested substantially all of its oil and gas assets for impairment. Occidental recognized total pre-tax impairments to its oil and liabilities at merger-date fair value on a nonrecurring basisgas proved and unproved properties of $8.6 billion, of which $6.4 billion is included in oil and gas segment results and $2.2 billion ($1.4 billion net of tax) related to Ghana is included in discontinued operations.
In the Merger. See Note 3 - The Merger for more detail.

During the three and nine months ended September 30, 2019, Occidental's Oil and Gas segment recognizedsecond quarter 2020, Occidental recorded proved property pre-tax impairment and related chargesimpairments of $285 million related to domestic undeveloped leases that were set to expire in the near term, where Occidental had no plans to pursue exploration activities, and $40 million related to Occidental's mutually agreed early termination of its Qatar Idd El Shargi South Dome (ISSD) contract.

During 2018, Occidental recognized pre-tax impairment and related charges of $416 million$1.2 billion primarily related to Idd El Shargi North Dome (ISND)certain assets for its domestic onshore and ISSDGulf of Mexico assets and $0.9 billion to adjust the Algeria oil and gas proved properties and inventory.to their fair value. The fair value of the proved properties was measured based on the income approach.
Unproved property pre-tax impairments of $4.3 billion were primarily related to domestic onshore unproved acreage. The fair value of this acreage was measured based on a market approach which incorporated a number ofusing an implied acreage valuation derived from domestic onshore market participants excluding the fair value assigned to proved properties.
Income approaches are considered Level 3 fair value estimates and include significant assumptions involving expectations of future cash flows. Theseproduction and timing of production, commodity price assumptions, includedand operating and capital cost estimates, discounted using a 10 percent weighted average cost of future product prices, which Occidentalcapital. Taxes were based on forward price curves,current statutory rates. Future production and timing of production is based on internal reserves estimates ofand internal economic models for a specific oil and gas asset. Internal reserve estimates consist of proved reserves estimatesand unproved reserves, the latter adjusted for uncertainty based on reserve category. Price assumptions were based on a combination of future expected operatingmarket information and published industry resources adjusted for historical differentials. Price assumptions ranged from approximately $40 per barrel of oil in 2020 increasing to approximately $70 per barrel of oil in 2034, with an unweighted arithmetic average price of $59.17 and $62.42 for WTI and Brent indexed assets for the 15 year period, respectively. Natural gas prices ranged from approximately $2.00 per MCF in 2020 to $3.60 per MCF in 2034, with an unweighted arithmetic average price of $3.13 for NYMEX based assets for the 15 year period. Both oil and natural gas commodity prices were held flat after 2034 and were adjusted for location and quality differentials. Operating and capital cost estimates were based on current observable costs and were further escalated 1 percent in every period where commodity prices exceeded $50 per barrel and 2 percent in every period where commodity prices exceeded $60 per barrel. The weighted average cost
21


of capital is calculated based on industry peers and best approximates the cost of capital an external market participant would expect to obtain.
In the first quarter 2020, Occidental's oil and gas segment recognized pre-tax impairment and related charges of $581 million primarily related to both proved and unproved oil and gas properties and a risk-adjusted discount ratelower of 10 percent. These inputscost or net realizable value adjustment for crude inventory. Occidental recorded proved property impairments of $293 million related to certain international assets and the Gulf of Mexico. Occidental recorded unproved property impairments, of approximately $241 million, primarily related to domestic onshore undeveloped leases and offshore Gulf of Mexico where Occidental no longer intends to pursue exploration, appraisal or development activities primarily due to the reduction in near-term capital plans.
If there is a further worsening of the macroeconomic conditions and if such worsened conditions are categorized as Level 3expected to be prolonged, Occidental’s oil and gas properties may be subject to further testing for impairment, which could result in additional non-cash asset impairments, and such impairments could be material to our financial statements.

GOODWILL
As of December 31, 2019, Occidental had $1.2 billion of goodwill related to its ownership in WES, which was included in long-term receivables and other assets, net. Significant declines in the fair-value hierarchy.
Other Financial Instruments
The carrying amountsmarket value of cash and cash equivalents and other on-balance-sheet financial instruments, otherWES’s publicly traded units resulted in management’s determination that, more likely 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-ratethe reporting unit was significantly less than its carrying value and the remaining $1.2 billion in goodwill was fully impaired in the first quarter of 2020. The market value of WES's publicly traded units is considered a Level 1 input.

NOTE 8 - LONG-TERM DEBT

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

millionsSeptember 30, 2020December 31, 2019
Total borrowings at face value$37,511 $37,401 
Adjustments to book value:
Unamortized premium, net765 914 
Debt issuance costs(144)(125)
Long-term finance leases292 347 
Current finance leases33 51 
Total debt and finance leases38,457 38,588 
Less current maturities of long-term debt and financing leases(2,558)(51)
Long-term debt, net$35,899 $38,537 

DEBT ACTIVITY
In March 2020, Occidental amended the sole financial covenant in its revolving credit facility (RCF) and Term Loan by revising the definition of "Total Capitalization" within each agreement to exclude any non-cash write-downs, impairments and related charges occurring after September 30, 2019.
In July and August 2020, Occidental issued several series of notes with maturities from five to ten years and used the proceeds to fund cash tender offers for certain outstanding series of notes to pay down other indebtedness, with maturities from one to three years, and the Term Loan.
In August 2020, Occidental exchanged approximately 27.9 million WES common units to retire a $260 million note payable to WES, resulting in a net loss of $46 million, which includes a $76 million gain on debt extinguished associated with an unamortized premium on the quoted market pricesnote payable to WES. This net loss on exchange has been presented in (losses) gains on sale of assets, net in the Consolidated Condensed Statement of Operations.
22


The following table summarizes Occidental's debt issuances, repurchases, repayments and exchanges for those instruments orthe nine months ended September 30, 2020:

millionsBorrowings at face value
Total borrowings at face value as of December 31, 2019$37,401
Issuance of July 2020 Notes: (a)
8.000% senior notes due 2025500
8.500% senior notes due 2027500
8.875% senior notes due 20301,000
July tender and purchase:
4.100% senior notes due February 2021(943)
Variable rate bonds due February 2021(473)
4.850% senior notes due March 2021(530)
2.600% senior notes due August 2021(51)
Issuance of August 2020 Notes: (b)
5.875% senior notes due 2025900
6.375% senior notes due 2028600
6.625% senior notes due 20301,500
August and September tender and purchase:
4.100% senior Notes due February 2021(139)
Variable rate bonds due August 2021(122)
2.600% senior Notes due August 2021(1,099)
Variable rate bonds due August 2022(448)
2.600% senior Notes due April 2022(171)
2.700% senior Notes due August 2022(102)
2.700% senior Notes due February 2023(52)
August WES exchange:
6.500% note payable to WES due 2038(260)
September Term Loan Repayment:
2-year variable rate Term Loan due 2021(500)
Total borrowings at face value as of September 30, 2020$37,511
(a) Interest on quoted market yieldsthe July notes will be paid semi-annually in arrears on July 15 and January 15 of each year, commencing on January 15, 2021.
(b) Interest on the August notes will be paid semi-annually on March 1 and September 1 of each year, commencing on March 1, 2021.

SUBSEQUENT DEBT ACTIVITY
In October 2020, Occidental fully redeemed the remaining variable rate notes due August 2021 for similarly rated debt instruments, taking into account such instruments’ maturities. $377 million, and Occidental paid $1.0 billion of the Term Loan with proceeds from the sale of mineral and surface acres located in Wyoming, Colorado and Utah. After this payment, $446 million of the Term Loan remained outstanding.

FAIR VALUE OF DEBT
The estimated fair value of Occidental’s debt as of September 30, 2019,2020, was $47.8 billion, which included $7.6 billion in debt related to WES.$31.5 billion. The majority of Occidental's debt is classified as Level 1, with $12.5$1.6 billion classified as Level 2. At December 31, 2018,2019, the estimated fair value of Occidental's debt was $10.3$38.8 billion.



Note 9 - Long-Term Debt

Long-term debt consisted of the following:
millions 
Balance at
September 30, 2019
Occidental  
4.850% senior notes due 2021 $677
2.600% senior notes due 2021 1,500
4.100% senior notes due 2021 1,249
Variable rate bonds due 2021 (3.137% as of September 30, 2019) 500
Variable rate bonds due 2021 (3.437% as of September 30, 2019) 500
2-year variable rate Term Loan due 2021 (3.417% as of September 30, 2019) 3,966
2.700% senior notes due 2022 2,000
3.125% senior notes due 2022 814
2.600% senior notes due 2022 400
Variable rate bonds due 2022 (3.637% as of September 30, 2019) 1,500
2.700% senior notes due 2023 1,191
8.750% medium-term notes due 2023 22
2.900% senior notes due 2024 3,000
6.950% senior notes due 2024 650
3.450% senior notes due 2024 248
3.500% senior notes due 2025 750
5.550% senior notes due 2026 1,100
3.200% senior notes due 2026 1,000
3.400% senior notes due 2026 1,150
7.500% debentures due 2026 112
3.000% senior notes due 2027 750
7.125% debentures due 2027 150
7.000% debentures due 2027 48
6.625% debentures due 2028 14
7.150% debentures due 2028 235
7.200% senior debentures due 2028 82
7.200% debentures due 2029 135
7.950% debentures due 2029 116
8.450% senior debentures due 2029 116
3.500 senior notes due 2029 1,500
Variable rate bonds due 2030 (1.785% as of September 30, 2019) 68
7.500% senior notes due 2031 900
7.875% senior notes due 2031 500
6.450% senior notes due 2036 1,750
Zero Coupon senior notes due 2036 2,271
4.300% senior notes due 2039 750
7.950% senior notes due 2039 325
6.200% senior notes due 2040 750
4.500% senior notes due 2044 625
4.625% senior notes due 2045 750
6.600% senior notes due 2046 1,100
4.400% senior notes due 2046 1,200
4.100% senior notes due 2047 750
4.200% senior notes due 2048 1,000
4.400% senior notes due 2049 750
7.730% debentures due 2096 60
7.500% debentures due 2096 78
7.250% debentures due 2096 49
Total borrowings at face value (a)
 39,151
Adjustments to book value:  
Unamortized premium, net 859
Debt issuance costs (133)
Long-term finance leases 69
Long-term Debt, net - Occidental $39,946
(a) Total borrowings at face value also includes a $310 thousand 7.25% senior note due 2025
23



millions 
Balance at
September 30, 2019
WES  
5.375% senior notes due 2021 $500
4.000% senior notes due 2022 670
3.950% senior notes due 2025 500
4.650% senior notes due 2026 500
4.500% senior notes due 2028 400
4.750% senior notes due 2028 400
5.450% senior notes due 2044 600
5.300% senior notes due 2048 700
5.500% senior notes due 2048 350
WES Term Loan Facility (3.420% as of September 30, 2019) 3,000
WES revolving credit facility (3.340% as of September 30,2019) 160
Total borrowings at face value $7,780
Adjustments to book value:  
Unamortized discount net (135)
Debt issuance costs (8)
Long-term Debt, net - WES $7,637
   
Occidental Consolidated  
Total borrowings at face value $46,931
   
Adjustments to book value:  
Unamortized premium, net 724
Debt issuance costs (141)
Long-term finance leases 69
Total Occidental Consolidated Long-term Debt $47,583

millions 
Balance at
December 31, 2018
Occidental  
9.250% senior debentures due 2019 $116
4.100% senior notes due 2021 1,249
3.125% senior notes due 2022 813
2.600% senior notes due 2022 400
2.700% senior notes due 2023 1,191
8.750% medium-term notes due 2023 22
3.500% senior notes due 2025 750
3.400% senior notes due 2026 1,150
3.000% senior notes due 2027 750
7.200% senior debentures due 2028 82
8.450% senior debentures due 2029 116
4.625% senior notes due 2045 750
4.400% senior notes due 2046 1,200
4.100% senior notes due 2047 750
4.200% senior notes due 2048 1,000
Variable rate bonds due 2030 (1.9% as of December 31, 2018) 68
  10,407
Adjustments to book value:  
Unamortized discount, net (36)
Debt issuance costs (54)
Current maturities (116)
Total Occidental Consolidated Long-term Debt $10,201






Debt Issued
On August 8, 2019, Occidental issued $13.0 billion of new senior unsecured notes, consisting of both floating and fixed rate debt. Occidental also borrowed under the Term Loans, which consist of: (1) a 364-day senior unsecured variable-rate term loan tranche of $4.4 billion and (2) a two-year senior unsecured variable-rate term loan tranche of $4.4 billion. In total, the $21.8 billion in debt issued was used to finance part of the cash portion of the purchase price for the Merger.

Debt Assumed as Part of the Merger
In the Merger, Occidental assumed Anadarko and WES debt with an outstanding principal balance of $11.9 billion and $4.6 billion, respectively. In addition, WES had borrowings of $2.9 billion under an RCF and term loan facilities at the Merger date. Debt assumed from Anadarko and WES was recorded at fair value at the Merger date, refer to Note 3 - The Merger. In September 2019, Occidental completed its offers to exchange the Anadarko senior notes and debentures assumed as part of the Merger for notes of a corresponding series issued by Occidental and cash, and related solicitation of consents. Of the approximately $11.9 billion in aggregate principal amount of Anadarko senior notes and debentures offered in the exchange, 97 percent, or approximately $11.5 billion, were tendered and accepted in the exchange offers. The portion not exchanged, approximately $400 million, remains outstanding with the original terms.

Debt Repayment
In September 2019, Occidental paid down $4.8 billion on the Term Loans, primarily using proceeds from the sales of both the Anadarko Mozambique LNG asset and Occidental's equity investment in Plains.

WES Debt
Debt related to WES included $4.6 billion in senior unsecured notes, $3.0 billion under the WES Term Loan Facility due December 2020, and $160 million drawn against the WES RCF at September 30, 2019. The WES Term Loan Facility has a maturity date of December 31, 2020 and requires that net cash proceeds received from future asset sales and debt or equity offerings must be used to repay amounts outstanding under the facility, with a $1.0 billion exclusion for debt offering proceeds. The WES RCF has a maturity date of February 2024 and a borrowing capacity of $2.0 billion. In September 2019, WES borrowed $1.0 billion under the WES Term Loan Facility and used the funds to repay borrowings under the WES RCF.

Revolving Credit Facility
On June 3, 2019, Occidental entered into an amendment to its existing $3.0 billion revolving credit facility (Occidental RCF) pursuant to which, among other things, the commitments under the Occidental RCF were increased to $5.0 billion at the closing of the Merger. Borrowings under the Occidental RCF bear interest at various benchmark rates, including LIBOR, plus a margin based on Occidental's senior debt ratings. The facility has similar terms to other debt agreements and does not contain material adverse change clauses or debt-ratings triggers that could restrict Occidental's ability to borrow, or that would permit lenders to terminate their commitments or accelerate debt repayment. The facility provides for the termination of loan commitments and requires immediate repayment of any outstanding amounts if certain events of default occur. Occidental has not drawn down any amounts under the Occidental RCF.

Zero Coupon Notes Due 2036
The Zero Coupon senior notes due 2036 (Zero Coupons) have an aggregate principal amount due at maturity of approximately $2.3 billion, reflecting an accretion rate of 5.24%. The Zero Coupons can be put to Occidental in October of each year, in whole or in part, for the then-accreted value of the outstanding Zero Coupons. None of the Zero Coupons were put to Occidental in October 2019. The Zero Coupons can next be put to Occidental in October 2020, which, if put in whole, would be $992 million at such date. Occidental has the ability and intent to refinance these obligations using long-term debt should a put be exercised.


Note 10 - Lease Commitments
NOTE 9 - LEASE COMMITMENTS

On January 1, 2019, Occidental adopted ASC 842 using the modified retrospective approach, which provided a method for recording existing leases at adoption and did not require restatement of prior year amounts and disclosures, which continue to be reflected in accordance with ASC 840. Occidental elected certain practical expedients as follows:

Leases that commenced before the effective date carried forward their historical lease classification.
Existing or expired land easements as of December 31, 2018, were not reassessed to determine whether or not they contained a lease.
Leases with a lease term of 12 months or less from lease commencement date are considered short-term leases and not recorded on the Consolidated Condensed Balance Sheet; however, the lease expenditures recognized are captured and reported as incurred.
For asset classes, except long-term drilling rigs, Occidental elected to account for the lease and non-lease components as a single lease component as the non-lease portions were not significant to separate in determining the lease liability. For long-term drilling rig contracts, Occidental bifurcated the lease and non-lease components using relative fair value as a stand-alone selling price between the asset rental and the services obtained.

ASC 842 requires lessees to recognize a ROU asset and lease liability for all long-term leases. A ROU asset represents Occidental’s right to use an underlying asset for the lease term and the associated lease liability represents the discounted obligation of future minimum lease payments. Occidental identifies leases through its accounts payable and contract monitoring process. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The ROU assets include the discounted obligation in addition to any upfront payments or costs incurred during the contract execution of the lease and amortized on a straight-line basis over the course of the lease term. Except for leases with explicitly defined contract terms, Occidental utilizes judgment to assess likelihood of renewals, terminations and purchase options, in order to determine the lease term. Occidental uses the incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate equates to the rate of interest that Occidental would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain leases include variable lease payments which are over and above the minimum lease liability used to derive the ROU asset and lease liability and are based on the underlying asset’s operations. These variable lease costs are reported in the lease cost classification table.

Recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The criteria for distinguishing between finance and operating leases are substantially similar to the criteria under ASC 840. For Occidental operations, adoption of ASC 842 resulted in recording of net lease assets and lease liabilities of $772 million as of January 1, 2019. There was no material impact to net income, cash flows, or stockholders’ equity.

Merger Impact
ASC 805 Business Combinations requires lease-related assets and liabilities acquired to be measured as if the lease were new at the merger date. Occidental measured the Anadarko legacy lease agreements using an updated incremental borrowing rate curve. This resulted in legacy Anadarko assets and liabilities of $498 million and $574 million, respectively, excluding the Africa Assets at the Merger date. These agreements are still under further review for above-or below-market impacts.



The following table reconciles the undiscounted cash flows related to the operating and finance lease liabilities assumed in the Merger and recorded on the Consolidated Condensed Balance Sheet at the Merger date:
millions Operating Leases Finance Leases Total
Remainder of 2019 $90
 $7
 $97
2020 172
 25
 197
2021 64
 15
 79
2022 42
 12
 54
2023 28
 7
 35
Thereafter 136
 42
 178
Total lease payments 532
 108
 640
Less: Interest (44) (22) (66)
Total lease liabilities $488
 $86
 $574


Additionally, Occidental has elected short-term lease treatment for those acquired lease contracts which, at the Merger date, have a remaining lease term of 12 months or less. For the leases acquired through the Merger, Occidental will retain the previous lease classification.

Nature of Leases
Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including offshore and onshore drilling rigs of $186$56 million, compressors of $174$155 million, storage facilities of $297 million, office space of $417 million and other field equipment of $97$58 million, which are recorded gross on the Consolidated Condensed Balance Sheet and in the lease cost disclosures below. Contract expiration terms generally range from two to seveneight years. Further, actual expenditures are netted against joint-interest recoveries on the income statement through the normal joint-interest billing process. Occidental’s leases also include pipelines, rail cars, storage facilities, easements, aircrafts and other real estate of $682$262 million, which typically are not associated with joint-interest recoveries. RealOffice space and other real estate leases have contract expiration terms ranging from 1one to 1613 years.

Occidental’s finance lease agreements include leases for oil and gas exploration and development equipment, as well as real estate offices, compressors and field equipment of approximately $100$325 million.

The following table presents lease balances and their location on the Consolidated Condensed Balance Sheet at September 30, 2020, and December 31, 2019:
millions Balance sheet location 2019
Assets:    
Operating Operating lease assets $1,078
Finance Property, plant and equipment 97
Total lease assets   $1,175
     
Liabilities:    
Current    
Operating Current operating lease liabilities $463
Finance Current maturities of long-term debt 31
Non-current    
Operating Deferred credits and other liabilities - Operating lease liabilities 676
Finance Long-term debt, net - Occidental 69
Total lease liabilities   $1,239


millionsBalance sheet locationSeptember 30, 2020December 31, 2019
Assets:
OperatingOperating lease assets$1,196 $1,411 
FinanceProperty, plant and equipment329 397 
Total lease assets$1,525 $1,808 
Liabilities:
Current
OperatingCurrent operating lease liabilities$459 $579 
FinanceCurrent maturities of long-term debt33 51 
Non-current
OperatingDeferred credits and other liabilities - Operating lease liabilities786 872 
FinanceLong-term debt, net292 347 
Total lease liabilities$1,570 $1,849 



At September 30, 2019,2020, Occidental's leases expire based on the following schedule:

 Operating Finance  OperatingFinance
millions 
Leases (a)
 
Leases (b)
 Totalmillions
Leases (a)
Leases (b)
Total
Remainder of 2019 $119
 $8
 $127
2020 390
 38
 428
Remainder of 2020Remainder of 2020$117 $$124 
2021 197
 15
 212
2021454 35 489 
2022 129
 12
 141
2022182 34 216 
2023 94
 7
 101
2023110 32 142 
2024202489 30 119 
Thereafter 311
 42
 353
Thereafter480 261 741 
Total lease payments 1,240
 122
 1,362
Total lease payments1,432 399 1,831 
Less: Interest (101) (22) (123)Less: Interest(187)(74)(261)
Total lease liabilities $1,139
 $100
 $1,239
Total lease liabilities$1,245 $325 $1,570 
(a) The weighted-average remaining lease term is 5.36.0 years and the weighted-average discount rate is 2.79%4.53%.
(b) The weighted-average remaining lease term is 6.411.8 years and the weighted-average discount rate is 4.92%3.37%.

At December 31, 2018, future undiscounted net minimum fixed lease payments for non-cancellable operating leases, prepared in accordance with accounting standards prior to the adoption of ASC 842, were as follows:
  Operating
millions Leases
2019 $186
2020 147
2021 96
2022 68
2023 49
Thereafter 158
Total minimum lease payments(a)
 $704
24

(a) The amount represents the future undiscounted cash flows at December 31, 2018, excluding any amount associated with the Merger.

The following tables present Occidental's total lease cost and classifications, as well as cash paid for amounts included in the measurement of operating and finance lease liabilities.liabilities:
Lease cost classification(a)
 Three months ended September 30, 2019 Nine months ended September 30, 2019
millions  
Operating lease costs(b)
    
Property, plant and equipment, net $139
 $321
Cost of sales 133
 271
Selling, general and administrative expenses 26
 61
Finance lease cost    
Amortization of ROU assets 5
 11
Interest on lease liabilities 1
 1
  $304
 $665
(a) Amounts reflected are gross before joint-interest recoveries.
(b) Includes short-term lease cost of $139 million and $295 million for the three and nine months ended September 30, 2019, respectively, and variable lease cost of $55 million and $115 million for the three and nine months ended September 30, 2019, respectively.
millions Nine months ended September 30, 2019
Operating cash flows $162
Investing cash flows 83
Financing cash flows 11


millionsThree months ended September 30,Nine months ended September 30,
Lease cost classification (a)
2020201920202019
Operating lease costs (b)
Property, plant and equipment, net$24 $139 $153 $321 
Cost of sales131 135 417 273 
Selling, general and administrative expenses37 26 80 61 
Finance lease cost:
Amortization of ROU assets5 14 11 
Interest on lease liabilities3 9 
Total lease cost$200 $306 $673 $667 
(a) Amounts reflected are gross before joint-interest recoveries.

(b) Includes short-term lease cost of $42 million and $146 million for the three and nine months ended September 30, 2020, respectively, and $139 million and $295 million for the three and nine months ended September 30, 2019, respectively. Includes variable lease cost of $11 million and $73 million for the three and nine months ended September 30, 2020, respectively, and $55 million and $115 million for the three and nine months ended September 30, 2019, respectively.

Nine months ended September 30,
millions20202019
Operating cash flows$401 $164 
Investing cash flows$59 $83 
Financing cash flows$15 $11 

Note 11 - Lawsuits, Claims, Commitments and Contingencies
NOTE 10 - LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

Legal MattersLEGAL 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 the Comprehensive Environmental Response, Compensation and Liability Act (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 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 12 - Environmental Liabilities and Expenditures, Occidental has disclosed its reserve balances for environmental remediation matters that satisfy this criteria. Reserve balances for matters, other than for environmental remediation, that satisfy thisthese criteria as of September 30, 2019,2020, and December 31, 2018,2019, were not material to Occidental’s Consolidated Condensed Balance Sheets.

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. The merits hearing occurred in September 2020 and an arbitration decision is scheduledexpected within the next six months.
25


In August 2019, Sanchez Energy Corporation and certain of its affiliates (Sanchez) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Sanchez is a party to agreements with Anadarko as a result of its 2017 purchase of Anadarko's Eagle Ford Shale assets. Sanchez is attempting to reject some of the agreements related to the purchase of Anadarko’s Eagle Ford Shale assets. If Sanchez is permitted to reject certain of those agreements, then Anadarko may owe deficiency payments to various third parties. The Company intends to defend vigorously any attempt by Sanchez to reject the agreements. The Company expects a ruling on Sanchez's purported contract rejection in the first quarter of 2021.
On May 26, 2020, a putative securities class action captioned City of Sterling Heights General Employees’ Retirement System, et al. v. Occidental Petroleum Corporation, et al., No. 651994/2020 (City of Sterling), was filed in the Supreme Court of the State of New York. The complaint asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended (the Securities Act), based on alleged misstatements in the Securities Act filings, including the registration statement filed in connection with the Anadarko Acquisition and Occidental’s related issuance of common stock and debt securities offerings that took place in August 2019. The lawsuit was filed against Occidental, certain current and former officers and directors and certain underwriters of the debt securities offerings, and seeks damages in an unspecified amount, plus attorneys’ fees and expenses. Two additional putative class actions were filed in the same court (together with City of Sterling, the State Cases) and the State Cases were consolidated into In re Occidental Petroleum Corporation Securities Litigation, No. 651830/2020. OccidentalThe Company intends to vigorously defend against this claimitself in arbitration.

On May 30, 2019, a complaint was filedall respects in the Court of Chancery ofregard to the State of Delaware by purported Occidental stockholders High River Limited Partnership, Icahn Partners Master Fund LP and Icahn Partners LP (the “Icahn Complainants”), captioned High River Ltd. P’ship v. Occidental Petroleum Corp., C.A. No. 2019-0403-JRS, seeking inspection of Occidental’s books and records pursuant to Section 220 of the Delaware General Corporation Law. In the complaint, the Icahn Complainants noted that they had accumulated over $1.6 billion of Occidental Common Stock. On June 14, 2019, Occidental filed an answer to the complaint in the Court of Chancery of the State of Delaware. A trial was held on September 20, 2019, and the parties are awaiting a ruling.

Cases.
The ultimate outcome and impact of outstanding lawsuits, claims and proceedings on Occidental cannot be predicted. Management believes that the resolution of these matters will not, individually or in the aggregate, have a material adverse effect on Occidental's Consolidated Condensed Balance Sheets. If unfavorable outcomes of these matters were to occur, future results of 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 MattersTAX 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. With the Merger, Occidental maintains 2 separate federal consolidated groups. For the legacy Occidental group, taxable years through 20162017 for United StatesU.S. federal income tax purposes have been audited by the United StatesU.S. Internal Revenue Service (IRS) pursuant to its Compliance Assurance Program and subsequent taxable years are currently under review. Taxable years through 2009 have been audited for state income tax purposes. While a single foreign tax jurisdiction is open for 2002 and subsequent years, all otherAll significant audit matters in foreign jurisdictions have been resolved through 2010.



For Anadarko, taxable years through 2016 for United States federal and state income tax purposes have been audited by the IRS and respective state taxing authorities. While the local country audit of a single foreign tax jurisdiction is open for tax years 2011 through 2013, there are no outstanding significant audit matters in foreign jurisdictions. During the course of tax audits, disputes have arisen and other disputes may arise as to facts and matters of law.
For Anadarko, its taxable years through 2016 for U.S. federal and state income tax purposes have been audited by the IRS and respective state taxing authorities. There are outstanding significant audit matters in one foreign jurisdiction. As stated above, during the course of tax audits, disputes have arisen and other disputes may arise as to facts and matters of law. Other than the matter discussed below, Occidental believes that the resolution of these outstanding tax matters would not have a material adverse effect on its consolidated financial position or results of operations.

The tax deduction for the Anadarko received an $881 million tentative refund in 2016 related to its $5.2 billion Tronox Adversary Proceeding (Tronox) settlement payment contributed toin 2015. In September 2018, Anadarko received a statutory notice of deficiency from the IRS disallowing the net operating loss reported oncarryback and rejecting Anadarko’s 2015 federal income tax return thatrefund claim. As a result, Anadarko filed a petition with the U.S. Tax Court to dispute the disallowances in November 2018. The case was subsequently carried backin the IRS appeals process until the second quarter of 2020, however it has since been returned to previous years and resulted in a tentative cash refund of $881 million of prior taxes paid, which was received in 2016.the U.S. Tax Court where Occidental expects to continue pursuing resolution. While Occidental believes it is entitled to this refund, in accordance with ASC 740's740’s guidance on the accounting for uncertain tax positions, as of September 30, 2019,2020, Occidental has recorded no tax benefit on the tentative cash tax refund of prior federal taxes paid of $881 million. As a result, should Occidental not ultimately prevail on the issue, there would be no additional tax expense recorded relative to this position for financial statement purposes other than future interest. However,A liability was recorded in thatdeferred credits and other liabilities-other at December 31, 2019, for the amount to be repaid plus interest in the event Occidental would be requireddoes not prevail.
On March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security Act (hereafter, CARES Act), an economic stimulus package in response to repaythe COVID-19 pandemic. The CARES Act contains several corporate income tax provisions, including provisions allowing for immediate refund of remaining unutilized AMT credits as well as allowing a 5-year carryback of net operating losses generated in tax years 2018, 2019 and 2020. For the nine months ended September 30, 2020, Occidental received approximately $917$195 million ($898 million federalof cash refunds as a result of the aforementioned AMT credit and $19 million in state taxes) plus accrued interestNOL carryback provisions. Occidental does not currently expect the various provisions of approximately $171 million.  the CARES Act to have a material effect on current income tax expense or the realizability of deferred income tax assets. Occidental will continue to monitor additional guidance issued by the U.S. Treasury Department and the Internal Revenue Service.

Indemnities to Third Parties
26


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 September 30, 2019,2020, 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.

Purchase Obligations and Commitments
Occidental, its subsidiaries, or both, have entered into agreements providing for future payments to secure terminal and pipeline capacity, drilling rigs and services, electrical power, steam and certain chemical raw materials. Occidental has certain other commitments under contracts, guarantees and joint ventures, including purchase commitments for goods and services at market-related prices and certain other contingent liabilities.

As of September 30, 2019, there were no material changes to Occidental's legacy purchase obligations since disclosure in the 2018 Form 10-K. In the Merger, Occidental assumed purchase obligations of approximately $5.2 billion, which included approximately $315 million, $1.0 billion, $907 million, $735 million, $589 million and $1.6 billion that will be paid for the remainder of 2019, 2020, 2021, 2022, 2023, and 2024 and thereafter, respectively. These amounts were discounted at 3.88%. These purchase obligations are related to long-term and work-related commitments for drilling wells, obtaining and processing seismic data, and fulfilling rig commitments, as well as various processing, transportation, storage, and purchase agreements to access markets and provide flexibility to sell its oil, natural gas, and NGL in certain areas.

Note 12 - Environmental Liabilities and Expenditures
NOTE 11 - ENVIRONMENTAL LIABILITIES AND EXPENDITURES

Occidental’s operations are subject to stringent federal, state, local and international laws and regulations related to improving or maintaining environmental quality. The laws that require or address environmental remediation, including the CERCLA and similar federal, state, local and international laws, may apply retroactively and regardless of fault, the legality of the original activities or the current ownership or control of sites. OccidentalOPC 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; or operation and maintenance of remedial systems. The 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.


ENVIRONMENTAL REMEDIATION

As of September 30, 2019,2020, Occidental participated in or monitored remedial activities or proceedings at 185174 sites. The following table presents Occidental’s current and non-current environmental remediation reservesliabilities as of September 30, 2019.2020. The current portion, $149$160 million, is included in accrued liabilities and the non-current portion, $905$975 million, in deferred credits and other liabilities -liabilities-environmental remediation liabilities.
Occidental’s environmental remediation reserves. The reservessites are grouped as environmental remediationinto four categories: sites listed or proposed for listing by the United StatesU.S. Environmental Protection Agency (EPA) on the CERCLA National Priorities List (NPL) sites and 3three categories of non-NPL sites — sites—third-party sites, Occidental-operated sites and closed or non-operated Occidental sites. Occidental continues to evaluate environmental liabilities assumed through the Merger with an initial determination that it will participate in or monitor remedial activities or proceedings at 42 sites. The underlying reserve balance for the environmental sites assumed through the Merger will change as more site-specific information and clean-up measures becomes available.
  Number of Sites 
Reserve Balance
(
millions)
     
NPL sites 34
 $452
Third-party sites 66
 223
Occidental-operated sites 14
 110
Closed or non-operated Occidental sites 29
 127
Environmental sites assumed from the Merger 42
 142
Total 185
 $1,054


millions, except number of sitesNumber of SitesRemediation Balance
NPL sites35 $451 
Third-party sites72 284 
Occidental-operated sites17 142 
Closed or non-operated Occidental sites50 258 
Total174 $1,135 

As of September 30, 2019,2020, Occidental’s environmental reservesremediation liabilities exceeded $10 million each at 19 of the 185174 sites described above, and 11298 of the sites had reservesliabilities from zero0 to $1 million each. Based on current estimates, Occidental expects to expend funds corresponding to approximately 4045 percent of the environmental reservesperiod-end remediation balance at the sites described above over the next three to four years and the remaining balance at these sites over the subsequent 10 or more years. Occidental believes its range of reasonably possible additional losses beyond those liabilities recorded for environmental remediation at these sites could be up to $1.2$1.1 billion. Other than the sites assumed through the Merger, theThe status of Occidental's involvement with the sites and related significant assumptions, including those sites indemnified by Maxus Energy Corporation (Maxus), has not changed materially since December 31, 2018.2019.

Maxus Environmental SitesMAXUS ENVIRONMENTAL SITES
When Occidental acquired Diamond Shamrock Chemicals Company (DSCC) in 1986, Maxus, 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 September 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 clean-up and other costs associated with the sites subject to the indemnity, including 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 9 miles of the Lower Passaic River or Newark Bay. During the third quarter of 2016, and following Maxus’s bankruptcy filing,
27


Occidental and the EPA entered into an Administrative Order on Consent (AOC) to complete the design of the proposed 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 remediation called for in the AOC and the ROD as well as for certain other Maxus-indemnified sites. 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 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. 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 distribute assets to Maxus' creditors in accordance with the trust agreement and 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. On February 15,During 2019, the bankruptcy court denied Repsol's and YPF's motions to dismiss the complaint.complaint as well as their motions to move the case away from the bankruptcy court. Discovery remains ongoing at the time of this report.


Note 13 - Retirement and Postretirement Benefit Plans
NOTE 12 - RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

Occidental has various defined benefit pension plans for certain domestic union, non-union hourly and foreign national employees. In addition, Occidental also provides medical and other benefits for certain active, retired and disabled employees and their eligible dependents.

In conjunction with the Merger,Acquisition, Occidental acquired certain Anadarko contributory and non-contributory defined benefit pension plans, which include both qualified and supplemental plans, and plans that provide health care and life insurance benefits for certain retired employees. The Anadarko pension and postretirement obligations were remeasured as of the MergerAcquisition date. The disclosures below exclude the Africa Assets classified as held for saleEffective as of SeptemberJune 30, 2019.

2020, the defined benefit pension plans and certain of the supplemental plans covering active Anadarko employees were frozen.
The remeasurement resulted in an increase to the benefit obligationfollowing table contains a summary of $193 million. Accumulated other comprehensive income balances of $390 million were eliminated in purchase price accounting.

Net periodic benefitOccidental's retirement and postretirement benefits plan costs related to pension benefits included a curtailment gain of $34 million and a $10 million cost of special termination benefits for both the three and nine months ended September 30, 2019. The curtailment gain and cost of special termination benefits for 2019 relate to the separation program initiated in conjunction with the Merger. Excluding these items, net periodic benefit costs related to pension benefits were $15 million and $19 million for the three and nine months ended September 30, 2019, respectively, compared to $2 million2020 and $4 million for the same periods in 2018.2019:

Three months ended September 30,Nine months ended September 30,
millions2020201920202019
Net gains related to settlement, curtailment and special termination benefits (a)
$5 $24 $121 $24 
Net periodic benefit costs related to pension benefits excluding settlement, curtailment and special termination benefits0 (b)15 22 19 
Net periodic benefit costs related to postretirement benefits18 19 56 48 
Contributions to qualified and supplemental plans$30 $$132 $
(a) Net periodic benefit costsgains related to postretirementsettlement, curtailment and special termination benefits were $19 million and $48 million for the three and nine months ended September 30, 2020 and 2019 respectively, comparedprimarily relate to $15 milliona separation program initiated in conjunction with the Acquisition and $55 millionthe freezing of benefit accruals for the same periods in 2018.Anadarko employees.

Occidental contributed approximately $7 million(b) Net periodic benefit costs related to pension benefits excluding settlement, curtailment and $2 million inspecial termination benefits were immaterial for the three months ended September 30, 2019,2020.

The increase in contributions is primarily due to distributions from the Anadarko supplemental plans related to the severance program described above. Occidental is reimbursed for a majority of these contributions from a trust for former Anadarko employees. Occidental is deferring all required contributions to the qualified defined benefit plans as permitted by the CARES Act.

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NOTE 13 - EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

The following table presents the calculation of basic and 2018, respectively,diluted net income (loss) attributable to common stockholders per share:

Three months ended
September 30,
Nine months ended
September 30,
millions except per-share amounts2020201920202019
Net income (loss) from continuing operations$(3,655)$(737)$(12,384)$529 
Income (loss) from discontinued operations80 (15)(1,335)(15)
Net income (loss)(3,575)(752)(13,719)514 
Less: Net income attributable to noncontrolling interest0 (42)0 (42)
Less: Preferred stock dividends(203)(118)(644)(118)
Net income (loss) attributable to common stock$(3,778)$(912)$(14,363)$354 
Less: Net income allocated to participating securities0 0 (1)
Net income (loss) attributable to common stock, net of participating securities(3,778)(912)(14,363)353 
Weighted average number of basic shares929.3845.7913.9781.1
Net income (loss) attributable to common stockholders per share—basic$(4.07)$(1.08)$(15.72)$0.45 
Net income (loss) attributable to common stock, net of participating securities(3,778)(912)(14,363)353 
Weighted-average number of basic shares929.3 845.7 913.9 781.1 
Dilutive securities0 0 1.1 
Total diluted weighted-average common shares929.3 845.7 913.9 782.2 
Net income (loss) attributable to common stockholders per share—diluted$(4.07)$(1.08)$(15.72)$0.45 

For the three and approximately $8 million and $4 million in the nine months ended September 30, 2019,2020, the Berkshire Warrants, Common Stock Warrants, and 2018, respectively, to its defined benefit plans.

Note 14 - Stockholders' Equity

The following table is a summary of common stock issuances:
shares in thousandsCommon Stock
Balance at December 31, 2018895,116
Issued in the ordinary course2,394
Issued as part of the Merger (a)
146,131
Balance at September 30, 20191,043,641
(a) Includesoptions covering approximately 2200 million shares of Occidental common stock issued to a benefits trust for former Anadarko employees treatedwere excluded from the diluted shares as treasury stock at September 30, 2019.their effect would have been anti-dilutive.

Occidental has authorized 50 million shares of preferred stock with a par value of $1.00 per share. On August 8, 2019, in
29


PREFERRED STOCK
In connection with the Merger,Acquisition, Occidental issued 100,000 shares of a new series A preferred stock (the Preferred Stock), having a face value of $100,000 per share. Dividends on the Preferred Stock will accrue on the face value at a rate per annum of 8 percent, but will be paid only when, as and if declared by Occidental’s Board of Directors. The Board of Directors will assess market conditions and Occidental's financial position on a quarterly basis to determine whether the dividend on the Preferred Stock will be paid in shares of common stock, in cash or a combination of shares of common stock and cash. At any time, when such dividends have not been paid in full, the unpaid amounts will accrue dividends, compounded quarterly, at a rate per annum of 9 percent. Following the payment in full of any accrued but unpaid dividends, the dividend rate will remain at 9 percent per annum. If preferred dividends are not paid in full, Occidental is prohibited from paying dividends on common stock. On October 15, 2019,2020, Occidental paid approximately $149$200 million cash in Preferred Stock dividends. At September 30, 2019, Occidental had 100,000
In March and June 2020, the Board of Directors elected to declare its quarterly dividend on the Preferred Stock in shares of preferredcommon stock. In accordance with the Certificate of Designations, the number of shares issued was calculated based on 90 percent of the average of the volume weighted average price over each of the 10 consecutive trading days following the dividend declaration date. In April and July 2020, Occidental issued approximately 17.3 million and 11.6 million shares, respectively, of common stock issued and outstanding, and NaN were outstanding at December 31, 2018.to the holders of the Preferred Stock.

The following table presents the calculation of basic and diluted net income (loss) attributable to common stockholders per share:
  Three months ended September 30 Nine months ended September 30
millions except per-share amounts 2019 2018 2019 2018
         
Net income (loss) attributable to common stockholders $(912) $1,869
 $354
 $3,425
Less: Net income allocated to participating securities 
 8
 1
 16
Net income (loss), net of participating securities $(912) $1,861
 $353
 $3,409
         
Weighted average number of basic shares 845.7
 761.7
 781.1
 764.3
         
Net income (loss) attributable to common stockholders per share—basic $(1.08) $2.44
 $0.45
 $4.46
         
Net income (loss), net of participating securities $(912) $1,861
 $353
 $3,409
         
Weighted average number of basic shares 845.7
 761.7
 781.1
 764.3
Dilutive securities 
 1.6
 1.1
 1.5
Total diluted weighted-average common shares 845.7
 763.3
 782.2
 765.8
         
Net income (loss) attributable to common stockholders per share—diluted $(1.08) $2.44
 $0.45
 $4.45


COMMON STOCK WARRANTS
Accumulated other comprehensive loss consistedOn June 26, 2020, the Board of Directors declared a distribution of warrants to holders of Occidental common stock, at a rate of 0.125 warrants per share of Occidental common stock (the Common Stock Warrants). Occidental issued approximately 116 million Common Stock Warrants on August 3, 2020, to holders of record of outstanding shares of Occidental’s common stock as of the close of business on July 6, 2020, and pursuant to Occidental’s outstanding equity-based incentive awards in connection with anti-dilution adjustments resulting from such distribution. The Common Stock Warrants have an exercise price of $22.00 per share and will expire on August 3, 2027. The Common Stock Warrants are listed on the New York Stock Exchange and trade under the symbol "OXY WS".
The Common Stock Warrants were measured at fair value on the declaration date using the Black-Scholes option model and were classified as equity in "Additional paid-in capital". The following after-tax amounts:level 2 inputs were used in the Black-Scholes option model: the expected life of the Common Stock Warrants, a volatility factor and the exercise price. The expected life is based on the estimated term of the Common Stock Warrants, the volatility factor is based on historical volatilities of Occidental common stock and the exercise of $22.00 per share of Occidental common stock. As of the declaration date, the fair value of the Common Stock Warrants was determined to be $767 million.
millions Gains and (losses) on derivatives Pension and postretirement benefit plans Foreign currency translation adjustments Total
Balance at December 31, 2018 $5
 $(170) $(7) $(172)
Other comprehensive loss, before reclassifications (130) (30) 
 (160)
Balance at September 30, 2019 $(125) $(200) $(7) $(332)
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NOTE 14 - SEGMENTS

Note 15 - Industry Segments

Occidental conducts its operations through 43 segments: (1) Oiloil and Gas;gas (2) Chemical;chemical and (3) Marketingmidstream and Other Midstream; and (4) WES Midstream. 

marketing. Income taxes, interest income, interest expense, environmental remediation expenses, Anadarko merger-relatedacquisition-related costs and unallocated corporate expenses are included under Corporate and Eliminations. 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 presenttable presents Occidental’s industry segments:
millions 
Oil
and
Gas
 Chemical Marketing and Other Midstream 
WES Midstream (a)
 Corporate and Eliminations Total
Three months ended
September 30, 2019
            
Net sales $3,821
 $1,071
 $780
 $383
 $(368) $5,687
Income (loss) from continuing operations before income taxes $221
 $207
 $266
 $134
 $(1,449)
(b) 
$(621)
Income tax expense 
 
 
 
 (116) (116)
Income (loss) from continuing operations $221
 $207
 $266
 $134
 $(1,565) $(737)
             
Three months ended
September 30, 2018
            
Net sales $2,889
 $1,185
 $1,367
 $
 $(225) $5,216
Income (loss) from continuing operations before income taxes $767
 $321
 $1,698
 $
 $(207) $2,579
Income tax expense 
 
 
 
 (710) (710)
Income (loss) from continuing operations $767
 $321
 $1,698
 $
 $(917) $1,869
             
Nine months ended
September 30, 2019
            
Net sales $8,890
 $3,128
 $2,505
 $383
 $(795) $14,111
Income (loss) from continuing operations before income taxes $1,431
 $680
 $876
 $134
 $(1,945)
(b) 
$1,176
Income tax expense 
 
 
 


 (647) (647)
Income (loss) from continuing operations $1,431
 $680
 $876
 $134
 $(2,592) $529
             
Nine months ended
September 30, 2018
            
Net sales $7,874
 $3,515
 $2,359
 $
 $(686) $13,062
Income (loss) from continuing operations before income taxes $2,297
 $936
 $2,127
 $
 $(584) $4,776
Income tax expense 
 
 
 


 (1,351) (1,351)
Income (loss) from continuing operations $2,297
 $936
 $2,127
 $
 $(1,935) $3,425


millions
Oil and
Gas (a)
Chemical
Midstream and Marketing (b)
Corporate and Eliminations (c)
Total
Three months ended September 30, 2020
Net sales$2,989 $937 $364 $(182)$4,108 
Income (loss) from continuing operations before income taxes$(1,072)$178 $(2,791)$(373)$(4,058)
Income tax benefit (d)
0 0 0 403 403 
Income (loss) from continuing operations$(1,072)$178 $(2,791)$30 $(3,655)
Three months ended September 30, 2019
Net sales$3,993 $1,071 $1,163 $(368)$5,859 
Income (loss) from continuing operations before income taxes$268 $207 $400 $(1,449)$(574)
Income tax expense(163)(163)
Income (loss) from continuing operations$268 $207 $400 $(1,612)$(737)

millions
Oil and
Gas (a)
Chemical
Midstream and Marketing (b)
Corporate and Eliminations (c)
Total
Nine months ended September 30, 2020
Net sales$10,089 $2,745 $1,358 $(543)$13,649 
Income (loss) from continuing operations before income taxes$(8,570)$472 $(4,085)$(2,097)$(14,280)
Income tax benefit (d)
0 0 0 1,896 1,896 
Income (loss) from continuing operations$(8,570)$472 $(4,085)$(201)$(12,384)
Nine months ended September 30, 2019
Net sales$9,062 $3,128 $2,888 $(795)$14,283 
Income (loss) from continuing operations before income taxes$1,478 $680 $1,010 $(1,945)$1,223 
Income tax expense(694)(694)
Income (loss) from continuing operations$1,478 $680 $1,010 $(2,639)$529 
(a) The WES Midstream segment results representIncludes $795 million in net asset sale losses for the period from August 8, 2019, the Merger date, through September 30, 2019.
(b) The three months ended September 30, 2019 includes merger-related costs of $924 million and amortized debt financing fees of $65 million. The nine months ended September 30, 20192020. Additionally, for the nine months ended September 30, 2020, includes merger-related$7.0 billion related to asset impairments and other charges partially offset by a $1.1 billion gain on the oil collars and calls.
(b) Includes $2.7 billion of other-than-temporary impairment of WES equity investment for the three and nine months ended September 30, 2020. Additionally, for the nine months ended September 30, 2020, includes $1.4 billion of impairments related to the write-off of goodwill and a loss from an equity investment related to WES's write-off of its goodwill.
(c) Includes $302 million in expenses related to Anadarko acquisition-related costs of $974and a $577 million and amortized debt financing fees of $122 million.
loss on interest rate swaps for the nine months ended September 30, 2020.
(d) Includes a valuation allowance on tax assets of $37 million for the three and nine months ended September 30, 2020.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

The following discussion should be read together with the Consolidated Condensed Financial Statements and the Notes to Consolidated Condensed Financial Statements, which are included in this report in Part I, Item 1; the information set forth in Risk Factors under Part II, Item 1A; the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements, which are included in Part II, Item 8 of Occidental's Annual Report on Form 10-K for the year ended December 31, 2019 (the 2019 Form 10-K); the information set forth in Risk Factors under Part I, Item 1A of the 2019 Form 10-K; and the information set forth in Risk Factors under Part II, Item 1A of the Forms 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
INDEXPAGE
Cautionary Statement Regarding Forward-Looking Statements
Current Business Outlook
Consolidated Results of Operations
Income Taxes
Liquidity and Capital Resources
Environmental Liabilities and Expenditures
Lawsuits, Claims, Commitments and Contingencies
Recently Adopted Accounting and Disclosure Standards

32


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, and they include, but are not limited to: any projections of earnings, revenue or other financial items or future financial position or sources of financing; any statements of the plans, strategies and objectives of management for future operations or business strategy; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. 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 are generally indicative of 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, modify or withdraw any forward-looking statements as a result of new information, future events or otherwise.

Although Occidental believes that the expectations reflected in any of ourits forward-looking statements are reasonable, actual results may differ from anticipated results, sometimes materially. Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: the extentscope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other third parties in response to which Occidental is ablethe pandemic; Occidental’s indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations; Occidental’s ability to successfully integrate Anadarko Petroleum Corporation (Anadarko), manage expandedmonetize select assets, repay or refinance debt and the impact of changes in Occidental’s credit ratings; assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations, such as the sharp decline in crude oil prices that occurred in the first half of 2020; supply and demand considerations for, and the prices of, Occidental’s products and services; actions by OPEC and non-OPEC oil producing countries; results from operations and competitive conditions; future impairments of our proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings; unexpected changes in costs; availability of capital resources, levels of capital expenditures and contractual obligations; the regulatory approval environment, including Western Midstream Partners, LP (WES), and realize the anticipated benefits of combining Occidental and Anadarko;Occidental's ability to timely obtain or maintain permits or other governmental approvals, including those necessary for drilling and/or development projects; Occidental's ability to successfully complete, the sale of the remaining assets, liabilities, businesses and operations of the Africa assets to Total S.A. (Total); 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; risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs and adverse tax consequences; uncertainties and liabilities associated with acquired and divested properties and businesses; uncertainties about the estimated quantities of oil, natural gas and natural gas liquids reserves; lower-than-expected production from development projects or acquisitions; Occidental’s ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve Occidental’s competitiveness; exploration, drilling and other operational risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver ourOccidental’s oil and natural gas and other processing and transportation considerations; general economic conditions, including slowdowns, domestically or internationally; difficultinternationally, and adverse conditionsvolatility in the domestic and globalsecurities, capital andor credit markets; the impact of potential changes in Occidental's credit ratings; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; governmental actions and political conditions and events; legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes, deepwater and onshore drilling and permitting regulations and environmental regulation (including regulations related to climate change); environmental risks and liability under international, provincial, federal, regional, state, tribal, local and foreign environmental laws and regulations including(including remedial actions;actions); potential liability resulting from pending or future litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attackscyber-attacks or insurgent activity; the creditworthiness and performance of Occidental's counterparties, including financial institutions, operating partners and other parties; failure of risk management; changes in law or regulations;Occidental’s ability to retain and hire key personnel; reorganization or restructuring of Occidental’s operations; changes in state, federal or foreign tax rates; and actions by third parties that are beyond Occidental's control;control. The unprecedented nature of the COVID-19 pandemic and recent market decline may make it more difficult to identify potential risks, give rise to risks that are currently unknown or amplify the ability to generate cash to fund operations and repay indebtedness.

impact of known risks.
Additional information concerning these and other factors can be found in Occidental’s filings with the U.S. Securities and Exchange Commission, including Occidental’s Annual Report on2019 Form 10-K, for the year ended December 31, 2018 (the 2018 Form 10-K), Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

33



CURRENT BUSINESS OUTLOOK

Occidental’s operations, financial condition, cash flows and levels of expenditures are highly dependent on oil prices and, to a lesser extent, natural gas and NGL prices, the Midland-to-Gulf Coast oil spreads and the prices it receives for its chemical products. The Mergerworldwide economy has been severely impacted by the ongoing effects of the COVID-19 pandemic, which began during the first quarter of 2020. In the first quarter, travel restrictions and stay-at-home orders were implemented for much of the world to limit the spread of COVID-19. Though certain restrictions have been lifted oil and gas demand remains below pre-pandemic levels. In March 2020, despite falling oil demand, certain members of the Organization of the Petroleum Exporting Countries and its broader partners (OPEC+) announced their intention to increase crude oil production, and the resulting oversupply led to further declines in oil and gas prices. On April 12, 2020, certain members of OPEC+ agreed to production cuts intended to mitigate the oil supply and demand imbalance to stabilize prices. These production cuts coupled with declining U.S. production helped mitigate the supply and demand imbalance, yet these reductions are not expected to be enough in the near-term to fully offset the decline in demand from the COVID-19 pandemic and prices have not recovered to pre-pandemic levels. We expect that oil prices in the near term will continue to be influenced by the duration and severity of the COVID-19 pandemic and its resulting impact on oil and gas demand, the extent to which countries abide by the OPEC+ production agreement and U.S. production levels.
On August 8,
LIQUIDITY
In response to the dramatic drop in oil prices and the current macroeconomic environment, Occidental has taken significant measures to increase its near and mid-term liquidity and address near-term debt maturities. Specifically, Occidental has:

Reduced its 2020 capital budget to a range of $2.4 to $2.6 billion from $5.2 to $5.4 billion, a midpoint reduction of more than 50%;
Made significant cuts to its 2020 operating and corporate costs that are expected to result in cash savings of over $1.0 billion;
Reduced the quarterly common stock dividend to $0.01 per share from $0.79 per share, effective July 2020, which on an annualized basis, will reduce its dividend outlay by approximately $2.9 billion;
Elected to pay the preferred stock dividend paid in the second and third quarters of 2020 in the form of shares of common stock, in lieu of cash, preserving $400 million of liquidity. Occidental elected to pay the dividend paid in the fourth quarter in cash. The Board of Directors will continue to assess market conditions and Occidental's financial condition on a quarterly basis to determine whether the preferred stock dividend will be paid in shares of stock, in cash or a combination of shares of common stock and cash;
Sold approximately 4.5 million mineral acres and 1 million fee surface acres located in Wyoming, Colorado and Utah in October 2020 for net proceeds of approximately $1.0 billion;
Issued $5.0 billion in senior unsecured notes (the Senior Notes Offerings) in the third quarter of 2020 with maturities ranging from 2025 to 2030 and used the net proceeds from the issuances and the mineral acreage sale to repurchase or repay $5.2 billion of 2021 maturities and $773 million of 2022 through 2023 maturities (collectively, the Tenders and Repayments), through the date of this report;
Exchanged approximately 27.9 million WES common units to retire a $260 million note payable to WES due 2038;
Entered into an agreement to sell its onshore oil and gas Colombia assets for a total sales price of approximately $700 million with the potential for additional consideration if certain production and commodity targets are met. The net proceeds will be used to pay down near-term debt maturities.

In 2019, Occidental acquired allentered into three-way oil collar and call derivative instruments to reduce its exposure to commodity-price risk and increase the predictability of near-term cash flows. As of September 30, 2020, these three-way oil collars covered 350 thousand barrels of oil (MBBL) per day for the remainder of the outstanding shares of Anadarko Petroleum Corporation (Anadarko) through a transaction in which an indirect, wholly owned subsidiary of Occidental merged with and into Anadarko (the Merger). Occidental believes that the Merger will enhance Occidental’s Permian Basin leadership position and bolster its portfolio with additional free cash flow-generating assets; generate significant cost and capital synergies as well as capital spending efficiency; enhance its dividend growth strategy while maintaining balance sheet strength; permit Occidental to apply its proven technology and operational excellence to Anadarko’s asset portfolio; and create a global energy leader with enhanced scale and expertise to lead energy into a lower-carbon future.
In connection with the Merger, Occidental agreed to sell to Total all of Anadarko's assets, liabilities, businesses, and operations for Algeria, Ghana, Mozambique, and South Africa (collectively, the Africa Assets) for $8.8 billion, subject to certain purchase price adjustments. In August 2019, a purchase and sale agreement was executed for these assets. On September 27, 2019, Occidental completed the sale of Anadarko’s Mozambique LNG assets to Total for $4.2 billion. The assets and liabilities for Algeria, Ghana and South Africa, are presented as held for sale atcalendar year. Through September 30, 2019. The results2020, Occidental has received $643 million of operationsproceeds associated with these instruments, and the remaining net fair value of the Africa Assets are presentedthree-way collars and calls was $250 million as discontinued operations.
of September 30, 2020. See Note 36 - The MergerDerivatives, in the Notes to Consolidated Condensed Financial Statements in Part 1I, Item 1 of this Form 10-Q,10-Q.
In September 2020, Occidental entered into two-way collar derivative instruments for 2021 to manage its near-term exposure to cash flow variability from natural gas commodity price risks. Beginning January 1, 2021, these two-way collar derivative instruments will cover 500 thousand MMBTU per day throughout the year and Occidental will receive in cash per MMBTU the difference between the floor purchased put price of $2.50, and the natural gas commodity price on the settlement date. The volume weighted average ceiling price of the two-way collars is $3.61, above which Occidental will pay the difference between $3.61 and the then-current natural gas price. Natural gas commodity prices averaged $1.94 for the third quarter of 2020.
Occidental believes the actions outlined above enhance its liquidity position to fund its operations. Occidental will continue to evaluate the economic environment, as well as the commodity price environment, and may make further
34


adjustments to its levels of expenditures and operating and corporate costs. However, the ultimate impact of the COVID-19 pandemic on Occidental's results of operations, cash flows and financial position are unknown, and those impacts could be material. Additionally, actions taken in response to the current macro-environment may result in the long-term reduction of its capital expenditure and production profile.

DEBT AND INTEREST RATE SWAPS
After the completion of the Tenders and Repayments, Occidental has debt maturities of approximately $1.1 billion in 2021, $4.0 billion in 2022 and $1.2 billion in 2023.
Occidental’s Zero Coupon senior notes due 2036 (Zero Coupons) can be put to Occidental in October of each year, in whole or in part, for the then accreted value of the outstanding Zero Coupons. An immaterial amount was put to Occidental in 2020. The Zero Coupons can next be put to Occidental in October 2021, which, if put in whole, would require a payment of approximately $1.0 billion at such date. Occidental currently has the intent and ability to meet this obligation, including using amounts available under the revolving credit facility (RCF) should the put right be exercised.
In addition, Occidental has interest rate swaps with a fair value of $1.0 billion as of September 30, 2020 that have a mandatory termination date in September 2021. The fair value of these swaps, which is included in accrued liabilities, will continue to fluctuate with changes in interest rates through the mandatory termination date.
As of September 30, 2020, Occidental had approximately $1.9 billion of cash and cash equivalents on hand, and as of the date of this filing, $5.0 billion of borrowing capacity under its existing RCF which matures in 2023. Occidental continues to pursue divestitures of certain assets and intends to use the net proceeds from asset sales and free cash flow to repay its nearer-term debt maturities, but the expected timing and final proceeds from such asset sales are uncertain. Occidental currently expects its cash on hand and funds available under its RCF to be sufficient to meet its debt maturities, operating expenditures and other obligations for the next 12 months from the date of this filing. However, given the inherent uncertainty associated with the duration and severity of the COVID-19 pandemic and its resulting impact on oil demand, Occidental may need to seek additional liquidity sources, refinance debt maturities or both, to fund its operations.

DEBT RATINGS
In connection with the Senior Notes Offerings, Occidental's long-term debt credit ratings were reviewed by the three major rating agencies. As of September 30, 2020, Occidental’s long-term debt was rated BB+ by Standard and Poor’s (S&P), BB by Fitch Ratings (Fitch), and Ba2 by Moody’s Investors Service (Moody’s). Any additional downgrade in credit ratings could impact Occidental's ability to access capital and increase its cost of capital. In addition, given that Occidental’s current debt ratings are non-investment grade, Occidental may be requested, and in some cases required, to provide collateral in the form of cash, letters of credit, surety bonds or other acceptable support as financial assurance of its performance and payment obligations under certain contractual arrangements such as pipeline transportation contracts, oil and gas purchase contracts and certain derivative instruments.
As of the date of this filing, Occidental has provided required financial assurances through a combination of cash, letters of credit and surety bonds made available to us on a bilateral basis and has not issued any letters of credit under the RCF. For additional information, see Risk Factors in Part II1, Item 1A of Occidental’s 2019 Form 10-K and this Form 10-Q10-Q.

IMPACT OF COVID-19 PANDEMIC TO GLOBAL OPERATIONS
Occidental is focused on protecting the health and safety of its employees and contractors during the COVID-19 pandemic. Occidental has implemented workplace restrictions in our offices and work sites for more information. Occidental'shealth and safety reasons. Occidental has not incurred material costs as a result of new protocols and procedures. Occidental continues to monitor national, state and local government directives where we have operations and/or offices. While Occidental has not incurred any significant disruptions to its day-to-day operations as a result of any workplace restrictions related to the COVID-19 pandemic to-date, the extent to which the COVID-19 pandemic adversely affects our business, results of operations includeand financial condition will depend on future developments, which are highly uncertain.


35


POTENTIAL FOR ADDITIONAL FUTURE IMPAIRMENTS
As a result of the resultsexpected prolonged period of Anadarko from August 8, 2019lower commodity prices brought on by the COVID-19 pandemic’s impact on oil demand, Occidental tested substantially all of its oil and gas assets for impairment during the second quarter of 2020. Occidental recognized pre-tax impairment charges of $6.4 billion related to continuing operations and $2.2 billion related to discontinued operations for the three months ended June 30, 2020. No triggering events were identified and no proved or material unproved impairments were taken during the three months ended September 30, 2019.2020. If there is a further worsening of the macroeconomic conditions and if such worsened condition is expected to be prolonged, Occidental’s oil and gas properties may be subject to further testing for impairment, which could result in additional non-cash asset impairments, and such impairments could be material to our financial statements.

Consolidated ResultsPROVED RESERVES
Occidental's proved reserves are estimated using the unweighted arithmetic average of Operationsthe first-day-of-the-month price for each month within the applicable year. The average first-day-of-the-month prices used to compute proved reserves at December 31, 2019, were $55.69 per barrel for WTI, $63.03 per barrel for Brent and $2.58 per MMBtu for Henry Hub. The average first-day-of-the-month prices for the first eleven months of 2020 were $39.12 per barrel for WTI, $43.04 per barrel for Brent, and $1.90 per MMBtu for Henry Hub. Based on these average commodity prices, Occidental expects negative price-related reserve revisions at year-end 2020, the magnitude of which could be significant. In addition, as Occidental lowers its projected capital spending, this could result in a material amount of proved undeveloped reserves no longer being supportable within five years of the original year in which the reserves were initially booked, and thus no longer meeting the criteria to be classified as proved. Occidental had proved undeveloped reserves of 905 MMBOE at December 31, 2019.


CONSOLIDATED RESULTS OF OPERATIONS

Occidental reported a loss from continuing operations of $737 million for the third quarter of 2019 on net sales of $5.7 billion, compared to income from continuing operations of $1.9 billion on net sales of $5.2$3.7 billion for the third quarter of 2018.2020 on net sales of $4.1 billion, compared to a loss from continuing operations of $737 million on net sales of $5.9 billion for the third quarter of 2019. Diluted earnings from continuing operations per share was a loss of $4.16 for the third quarter of 2020 compared to a loss of $1.06 for the third quarter of 2019 compared to earnings of $2.44 for the third quarter of 2018.

2019.
Occidental reported incomea loss from continuing operations of $529 million$12.4 billion for the nine months ended September 30, 20192020, on net sales of $14.1$13.6 billion, compared to income from continuing operations of $3.4 billion$529 million on net sales of $13.1$14.3 billion for the nine months ended September 30, 2018.2019. Diluted earnings from continuing operations per share was a loss of $14.26 for the nine months ended September 30, 2020 compared to earnings per share of $0.47 for the nine months ended September 30, 2019, compared to $4.45 for the nine months ended September 30, 2018.

2019.
Excluding the impact of Anadarko merger-related costs, asset impairments, assetlosses on sale, gains on the oil collars and equity investment sales gains,calls, net losses on the interest rate swaps and acquisition-related costs, the decrease in income from continuing operations for the three and nine months ended September 30, 2019,2020, compared to the same periods in 2018,2019, is primarily related to lower crude oil prices lower realized caustic soda prices and lower marketing margins due to the tightening of the Midland-to-Magellan East Houston terminal (MEH) differential. The nine months ended September 30, 2020 also reflected higher interest expense due to the increase in debt issued to partially fund the Acquisition, as well as the debt assumed through the Acquisition, the effects of which were partially offset by higher crude oil, NGLs, and natural gas production volumes acquired with the Merger and from legacy Occidental operations in the Permian Basin.Acquisition.

Selected Statements of Operations ItemsSELECTED STATEMENTS OF OPERATIONS ITEMS
Net sales increaseddecreased for the three and nine months ended September 30, 2020 compared to the same periods in 2019, primarily as a result of lower crude oil, NGL and natural gas prices, lower marketing margins due to the tightening of the Midland to MEH differentials, and lower sales volumes in the chemical segments. Additionally contributing to the decrease in net sales for the nine months ended September 30, 2020, we experienced lower realized caustic soda prices. These decreases were partially offset by higher crude oil, NGLs and natural gas production volumes from assets acquired through the Acquisition.
Losses on sales of assets, net for the three and nine months ended September 30, 2020, is primarily comprised of $431 million in losses associated with mineral and surface acres located in Wyoming, Colorado and Utah, and $356 million in losses related to onshore oil and gas Colombia assets.
36


Oil and gas operating expense decreased for the three months ended September 30, 2020, compared to the same period in 2018,2019, primarily due to decreases in maintenance, workover and support costs and purchased injectant costs as a result of measures to reduce operating costs. Transportation and gathering expense increased for the three months ended September 30, 2020, compared to the same period in 2019, primarily due to higher domestic crude oiltransportation costs due to full quarter of volumes fromacquired with the assets acquired through the Merger and from legacy Permian Resources operations. Increases in net sales were partially offset by lower crude oil prices and lower realized caustic soda pricesAcquisition in the Chemical segment.

third quarter of 2020. Oil and gas operating expense and transportation and gathering expense increased for the nine months ended September 30, 2020, compared to the same period of 2019, primarily due to higher transportation expenses and surface operations and maintenance costs due to increased production as a result of the Acquisition. The cost of purchased commodities decreased for the three and nine months ended September 30, 2020, compared to the same periods in 2019, due to lower crude oil prices on third-party crude purchases related to the midstream and marketing segment. The decrease in taxes other than on income for the three months ended September 30, 2020, compared to the same period in 2019, reflected lower production taxes, which are generally tied to revenues. The decrease in selling, general and administrative expense for the three months ended September 30, 2020, compared to the same period in 2019, along with the decrease in other operating and non-operating expense for the three and nine months ended September 30, 2020, compared to the same periods in 2019, reflected 2020 cost reduction initiatives to reduce overhead costs and net gains related to the settlement, curtailment and special termination benefits on pension plans acquired in the Acquisition. The increase in selling, general and administrative expense for the nine months ended September 30, 2020, compared to the same period in 2019, reflected higher costs acquired in the Acquisition. DD&A expense increased for the three and nine months ended September 30, 2019,2020, compared to the same periods in 2018, primarily due to higher production costs for surface operations and maintenance due to increased production as a result of the Merger. Purchased commodities increased for the three and nine months ended September 30, 2019, compared to the same periods in 2018, due to higher third-party crude purchases related to the Marketing and Other Midstream segment. DD&A (depreciation, depletion and amortization) expense increased for the three and nine months ended September 30, 2019, compared to the same periods in 2018, was primarily due to depreciation associated with assets acquired through the Merger.

Acquisition. Asset impairments and other charges for the three months ended September 30, 2020, included the $2.7 billion other-than-temporary impairment on the WES equity investment due to the magnitude and the duration that the fair value was below its book value. Asset impairments and other charges for the nine months ended September 30, 2020 also included $7.0 billion in pre-tax impairments on oil and gas proved and unproved properties and a $1.2 billion impairment of goodwill attributable to Occidental's ownership in WES, as well as other impairments to both proved and unproved oil and gas properties and lower of cost or net realizable value adjustments for crude inventory.
Interest and debt expense, net, increased for the three and nine months ended September 30, 2019,2020, compared to the same periodsperiod in 2018,2019, due to the increase in debt issued to partially fund the Merger,Acquisition, as well as the debt assumed through the Merger.

Acquisition.
The decrease in the provision for income taxes from continuing operations for the three and nine months ended September 30, 20192020, compared to the same periods in 20182019 reflects lower pre-tax income, which is partially offset by an increase in taxthe impairment of certain international assets as a result of transaction-related costswell as the equity method goodwill associated with the WES investment, for which Occidental receivedthe company receives no tax benefit. The difference between the 13 percent effective tax rate for the nine months ended September 30, 2020, and the 21 percent U.S. federal statutory tax rate is similarly primarily driven by the impairment of certain international assets and the WES goodwill.

37



SEGMENT RESULTS OF OPERATIONS AND ITEMS AFFECTING COMPARABILITY
Segment Operations
SEGMENT RESULTS OF OPERATIONS
Occidental conducts its operations through fourOccidental’s principal businesses consist of three reporting segments: (1) Oiloil and Gas; (2) Chemical; (3) Marketinggas, chemical, and Other Midstream;midstream and (4) WES Midstream.marketing. The Oiloil and Gasgas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The Chemicalchemical segment (OxyChem) mainly manufactures and markets basic chemicals and vinyls. The Marketingmidstream and Other Midstreammarketing segment purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, COcarbon dioxide (CO2) and power. Additionally, the MarketingIt also trades around its assets, including transportation and Other Midstream segmentstorage capacity, and invests in entities that conduct similar activities. The WESactivities such as Western Midstream segment owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties.Partners, L.P. (WES).

The following table sets forth the sales and earnings of each operating segment and corporate items for the three and nine months ended September 30, 2019,2020 and 2018:2019:

Three months ended September 30,Nine months ended September 30,
millions2020201920202019
Net sales (a)
Oil and Gas$2,989 $3,993 $10,089 $9,062 
Chemical937 1,071 2,745 3,128 
Midstream and Marketing364 1,163 1,358 2,888 
Eliminations(182)(368)(543)(795)
Total4,108 5,859 13,649 14,283 
Income (loss) from continuing operations
Oil and Gas (b)
(1,072)268 (8,570)1,478 
Chemical178 207 472 680 
Midstream and Marketing (c)
(2,791)400 (4,085)1,010 
Total(3,685)875 (12,183)3,168 
Unallocated corporate items
Interest expense, net(353)(360)(1,015)(586)
Income tax benefit (expense) (d)
403 (163)1,896 (694)
Other items, net (e)
(20)(1,089)(1,082)(1,359)
Income (loss) from continuing operations$(3,655)$(737)$(12,384)$529 
  Three months ended September 30 Nine months ended September 30
millions 2019 2018 2019 2018
Net sales (a)
        
Oil and Gas $3,821
 $2,889
 $8,890
 $7,874
Chemical 1,071
 1,185
 3,128
 3,515
Marketing and Other Midstream 780
 1,367
 2,505
 2,359
WES Midstream (b)
 383
 
 383
 
Eliminations (368) (225) (795) (686)
  $5,687
 $5,216
 $14,111
 $13,062
Income from continuing operations        
Oil and Gas $221
 $767
 $1,431
 $2,297
Chemical 207
 321
 680
 936
Marketing and Other Midstream 266
 1,698
 876
 2,127
WES Midstream (b)
 134
 
 134
 
  $828

$2,786
 $3,121
 $5,360
Unallocated corporate items        
Interest expense, net (360) (92) (586) (275)
Income tax expense (116) (710) (647) (1,351)
Other items, net (c)
 (1,089) (115) (1,359) (309)
Income (loss) from continuing operations $(737) $1,869
 $529
 $3,425
(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) The WES Midstream segment results representIncludes $795 million in net asset sale losses for the period from August 8, 2019, the Merger date, through September 30, 2019.
(c) The three months ended September 30, 2019 includes merger-related costs of $924 million and amortized debt financing fees of $65 million. The nine months ended September 30, 20192020. Additionally, for the nine months ended September 30, 2020, includes merger-related$7.0 billion related to asset impairments and other charges partially offset by a $1.1 billion gain on the oil collars and calls.
(c) Includes $2.7 billion of other-than-temporary impairment of the WES equity investment for the three and nine months ended September 30, 2020. Additionally, for the nine months ended September 30, 2020, includes $1.4 billion of impairments related to the write-off of goodwill and a loss from an equity investment related to WES's write-off of its goodwill.
(d) Includes a valuation allowance on tax assets of $37 million for the three and nine months ended September 30, 2020.
(e) Includes $302 million in expenses related to Anadarko acquisition-related costs of $974and a $577 million and amortized debt financing fees of $122 million.loss on interest rate swaps for the nine months ended September 30, 2020.



38



Items Affecting ComparabilityITEMS AFFECTING COMPARABILITY
The following table sets forth items affecting the comparability of Occidental's earnings that either arose in connection with the MergerAcquisition or vary widely and unpredictably in nature, timing, and amountamount:

Three months ended September 30,Nine months ended September 30,
millions2020201920202019
Oil and Gas
Asset impairments - domestic$(21)$(285)$(5,817)$(285)
Asset impairments - international (40)(1,195)(40)
Asset sales losses, net - domestic(439)— (425)— 
Asset sales losses, net - international(356)— (356)— 
Rig termination and other - domestic(23)— (61)— 
Rig termination and other - international(4)— (10)— 
Oil collars gains110 75 1,067 75 
Total Oil and Gas(733)(250)(6,797)(250)
Midstream and Marketing
Goodwill and other asset impairment(2,729)— (4,194)— 
Asset and equity investment sales gains (losses)(46)111 (46)111 
Total Midstream and Marketing(2,775)111 (4,240)111 
Corporate
Anadarko acquisition-related costs(5)(924)(302)(974)
Acquisition-related pension and curtailment gains 20 114 20 
Bridge loan financing fees (65) (122)
Gains (losses) on interest rate swap88 (53)(577)(53)
Gains on Berkshire Warrants 20 5 20 
Total Corporate83 (1,002)(760)(1,109)
Valuation allowance on tax assets(37)— (37)— 
Tax effect of items affecting comparability387 151 1,668 164 
Loss from continuing operations(3,075)(990)(10,166)(1,084)
Discontinued operations, net taxes80 (15)(1,335)(15)
Total$(2,995)$(1,005)$(11,501)$(1,099)

39


OIL AND GAS SEGMENT
Oil and gas segment losses were $1.1 billion and $8.6 billion for the three and nine months ended September 30, 2019, and 2018:
  Three months ended September 30 Nine months ended September 30
millions 2019 2018 2019 2018
         
         
Oil and Gas        
Asset impairments - domestic $(285)
$

$(285)
$
Asset impairments - international (40)
(196)
(40)
(196)
Oil collars gains 75



75


Total oil and gas $(250)
$(196)
$(250)
$(196)
  










Marketing and Other Midstream 










Asset and equity investment sales gains $111

$902

$111

$902
  










Corporate 










Anadarko merger-related costs $(924)
$

$(974)
$
Bridge loan financing fees (65)


(122)

Merger-related pension and other termination benefits 20



20


Gains (losses) on interest rate swaps and warrants, net (33)


(33)

Total Corporate $(1,002)
$

$(1,109)
$
  










Tax effect of items affecting comparability 151

(197)
164

(197)
Income from continuing operations (990) 509
 (1,084) 509
Discontinued operations (15) 
 (15) 
Total $(1,005)
$509

$(1,099)
$509

Worldwide Effective Tax Rate
The following table sets forth the calculation of the worldwide effective tax rate:
  Three months ended September 30 Nine months ended September 30
millions, except percentages 2019 2018 2019 2018
         
Income (loss) from continuing operations before income taxes $(621) $2,579
 $1,176
 $4,776
Income tax (expense) benefit        
Federal and state 181
 (362) 69
 (533)
Foreign (297) (348) (716) (818)
Total income tax expense (116)
(710) (647) (1,351)
Income (loss) from continuing operations $(737) $1,869
 $529
 $3,425
Worldwide effective tax rate (19)% 28% 55% 28%

The decrease in the provision for income taxes for the three and nine months ended September 30, 2019 compared to the same periods in 2018, reflects lower pre-tax income, which is offset by an increase in tax as a result of merger-related costs for which Occidental received no tax benefit.




Oil and Gas Segment
Oil and Gas segment earnings were $221 million and $1.4 billion for the three and nine months ended September 30, 2019,2020, respectively, compared with segment earnings of $767$268 million and $2.3$1.5 billion, respectively, for the same periods in 2019. Excluding the impact of 2018. Theasset impairments and other charges, losses on sale and gains on the oil collars and calls, the decrease in earnings primarily reflected lower realized crude oil NGL and natural gas prices,prices. This decrease was partially offset by higher crude oil, NGL and natural gas sales volumes mostly due to added production from the Merger and increased production inAcquisition for the legacy Occidental Permian Resources business unit.

nine months ended September 30, 2020.
The following table sets forth the total sales volumes per day for oil NGL, and NGLs in thousands of barrels (MBBL) or millions of cubic feet per day for natural gas:gas (MMCF):

 Three months ended September 30 Nine months ended September 30
 2019 2018 2019 2018Three months ended September 30,Nine months ended September 30,
        2020201920202019
Sales Volumes per Day        Sales Volumes per Day
Oil (MBBL)        Oil (MBBL)
United States 486
 256
 351
 241
United States508 486 591 351 
Middle East 120
 154
 133
 138
Middle East / AfricaMiddle East / Africa108 117 125 97 
Latin America 35
 31
 33
 31
Latin America36 35 34 33 
NGL (MBBL)        NGL (MBBL)
United States 168
 73
 112
 65
United States212 168 224 112 
Middle East 33
 34
 33
 30
Middle East / AfricaMiddle East / Africa36 34 37 34 
Natural Gas (MMCF)        Natural Gas (MMCF)
United States 1,085
 332
 633
 315
United States1,439 1,085 1,609 633 
Middle East 550
 552
 540
 504
Middle East520 550 537 540 
Latin America 8
 6
 7
 6
Latin America7 7 
Total Continuing Operations Volumes (MBOE) (a)
 1,116
 696
 859
 643
Total Continuing Operations Volumes (MBOE) (a)
1,228 1,114 1,370 824 
Discontinued Operations - Africa 41
 
 14
 
Discontinued & Exited OperationsDiscontinued & Exited Operations28 43 28 49 
Total Sales Volumes (MBOE) (a)
 1,157
 696
 873
 643
Total Sales Volumes (MBOE) (a)
1,256 1,157 1,398 873 
(a) Natural gas volumes have been converted to BOEbarrels of oil equivalent (BOE) based on energy content of six MCF of gas to one barrel of oil. Barrels of oil equivalent does not necessarily result in price equivalence.

Average daily sales volumes from continuing operations were 1,116 MBOE for the
third quarter of 2019, compared to 696 MBOE for the third quarter of 2018.
The increase in average daily sales volumes from continuing operations of 420 MBOE is primarily due to 377 MBOE in acquired production from the Merger including 163 MBOE in DJ Basin, 90 MBOE in the Gulf114 thousands of Mexico, and 90 MBOE in the Delaware Basin as well as an increasebarrels of 75 MBOE, or 33 percent, in the legacy Occidental Permian Resources business unit as a result of increased drilling and well productivity.

Average daily sales volumes from continuing operationsoil equivalent (MBOED) for the first ninethree months of 2019 were 859 MBOEended September 30, 2020, compared to 643 MBOE for the same period in 2018.2019, reflected a full quarter of production associated with the assets acquired from the Acquisition partially offset by declines in Permian Resources and Permian EOR due to capital reductions. The increase in average daily sales volumes from continuing operations for the nine months ended September 30, 2020, compared to the same period in 2019, of 216 MBOE is primarily 546 MBOED reflected a full nine months of production associated with the assets acquired from the Acquisition partially offset by declines in Permian Resources and Permian EOR due to capital reductions.
40

127 MBOE in acquired production from the Merger including 55 MBOE in DJ Basin, 30 MBOE in the Gulf of Mexico and 30 MBOE in the Delaware Basin as well as an increase of 83 MBOE, or 41 percent, in the legacy Occidental Permian Resources business unit from increased drilling and well productivity, and Al Hosn, which increased by 11 MBOE, or 16 percent, due to the expansion of capacity and improved plant performance.




The following table presents information about Occidental's average realized prices and index prices:

Three months ended September 30,Nine months ended September 30,
2020201920202019
Average Realized Prices
Oil ($/BBL)
United States$38.22$54.90$35.27$53.27
Middle East / Africa$39.88$61.74$41.51$62.66
Latin America$41.26$54.98$38.20$58.00
Total Worldwide$38.67$56.43$36.44$56.10
NGL ($/BBL)
United States$14.62$13.91$11.19$15.20
Middle East / Africa$16.24$20.41$15.79$21.38
Total Worldwide$14.85$15.02$11.84$16.64
Natural Gas ($/MCF)
United States$1.18$1.25$1.09$1.05
Latin America$4.16$7.05$5.76$7.14
Total Worldwide$1.31$1.38$1.24$1.33
Average Index Prices
WTI oil ($/BBL)$40.93$56.45$38.32$57.06
Brent oil ($/BBL)$43.37$62.01$42.53$64.74
NYMEX gas ($/MCF)$1.94$2.27$1.92$2.72
Average Realized Prices as Percentage of Average Index Prices
Worldwide oil as a percentage of average WTI94 %100 %95 %98 %
Worldwide oil as a percentage of average Brent89 %91 %86 %87 %
Worldwide NGL as a percentage of average WTI36 %27 %31 %29 %
Domestic natural gas as a percentage of average NYMEX61 %55 %57 %39 %

  Three months ended September 30 Nine months ended September 30
  2019 2018 2019 2018
         
Average Realized Prices        
Oil ($/BBL)        
United States $54.90
 $56.36
 $53.27
 $59.38
Middle East $62.17
 $71.71
 $62.86
 $66.80
Latin America $54.98
 $69.94
 $58.00
 $64.90
Total Worldwide $56.26
 $62.67
 $56.02
 $62.29
NGL ($/BBL)        
United States $13.91
 $31.82
 $15.20
 $29.38
Middle East $20.22
 $24.66
 $21.33
 $23.50
Total Worldwide $14.96
 $29.55
 $16.62
 $27.54
Natural Gas ($/MCF)        
United States $1.25
 $1.58
 $1.05
 $1.70
Latin America $7.05
 $6.74
 $7.14
 $6.16
Total Worldwide $1.38
 $1.62
 $1.33
 $1.67
         
Average Index Prices        
WTI oil ($/BBL) $56.45
 $69.50
 $57.06
 $66.75
Brent oil ($/BBL) $62.01
 $75.97
 $64.74
 $72.68
NYMEX gas ($/MCF) $2.27
 $2.88
 $2.72
 $2.83
         
Average Realized Prices as Percentage of Average Index Prices        
Worldwide oil as a percentage of average WTI 100% 90% 98% 93%
Worldwide oil as a percentage of average Brent 91% 82% 87% 86%
Worldwide NGL as a percentage of average WTI 27% 43% 29% 41%
Domestic natural gas as a percentage of average NYMEX 55% 55% 39% 60%


Chemical SegmentCHEMICAL SEGMENT
Chemical segment earnings for the three months ended September 30, 2019, and 2018 were $207 million and $321 million, respectively. Compared to the third quarter of 2018, the third quarter of 2019 reflected a decline in realized caustic soda prices along with weaker vinyl margins, slightly offset by stronger export caustic soda demand. Chemical segment earnings for the nine months ended September 30, 2019, and 2018, were $680 million and $936 million, respectively. Compared to the same period in 2018, the nine months ended September 30, 2019, reflected lower realized caustic soda prices partially offset by favorable feedstock costs. The nine months earnings also reflected fees received under a pipeline easement agreement that was executed during the first quarter of 2019.

Marketing and Other Midstream Segment
Marketing and Other Midstream segment earnings were $266 million for the three months ended September 30, 2019, compared with earnings of $1.7 billion for the same period of 2018. Marketing and Other Midstream earnings were $876 million for the nine months ended September 30, 2019, compared with earnings of $2.1 billion for the same period of 2018. Earnings for the three and nine months ended September 30, 2018 included2020 were $178 million and $472 million, respectively, compared to $207 million and $680 million, respectively, for the same periods in 2019. Compared to the same periods in 2019, the three and nine months ended September 30, 2020 reflected lower realized caustic soda prices and overall lower sales volumes as a $902result of the COVID-19 pandemic, partially offset by lower natural gas costs and lower plant spending.

MIDSTREAM AND MARKETING SEGMENT
Midstream and marketing segment loss for the three and nine months ended September 30, 2020, was $2.8 billion and $4.1 billion, respectively, compared with earnings of $400 million gain fromand $1.0 billion, respectively, for the sale of non-core domestic midstream assets.same periods in 2019. Excluding this gain on sale,the asset impairments and related charges, the decrease in earnings was attributablemidstream and marketing results, compared to the same periods in 2019, primarily reflects lower marketing margins duefrom the tightening of the Midland to decreased crude oil price spreads, lower NGL prices impacting gas processingMEH differentials and lower pipeline income due tofollowing the sale of non-core domestic midstream assetsthe Plains equity investment in the third quarter of 2018.



WES Midstream Segment
WES Midstream segment earnings from the Merger date to2019. The nine months ended September 30, 2020, compared to the same period in 2019, was $134also reflected lower sulfur prices impacting Al Hosn Gas and increased fees related to minimum commitments associated with the assets acquired in the Acquisition.
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INCOME TAXES

The following table sets forth the calculation of the worldwide effective tax rate for income from continuing operations:

Three months ended September 30,Nine months ended September 30,
millions, except percentages2020201920202019
Income (loss) from continuing operations before income taxes$(4,058)$(574)$(14,280)$1,223
Income tax (expense) benefit
Federal and state5111812,17869
Foreign(108)(344)(282)(763)
Total income tax (expense) benefit403(163)1,896(694)
Income (loss) from continuing operations$(3,655)$(737)$(12,384)$529
Worldwide effective tax rate10%(28)%13%57%

The difference between the 10 percent effective tax rate for income from continuing operations for the three months ended September 30, 2020, and the 21 percent U.S. federal statutory tax rate is primarily driven by the other-than-temporary impairment of the equity method goodwill associated with the WES investment and the loss recorded to remeasure the held for sale Colombian oil and gas assets for which Occidental receives no tax benefit. The difference between the 13 percent effective tax rate for income from continuing operations for the nine months ended September 30, 2020, and the U.S. federal statutory tax rate is primarily driven by the impairment of the WES goodwill and certain international assets, for which the company receives no tax benefit.
On March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security Act (hereafter, CARES Act), an economic stimulus package in response to the COVID-19 pandemic. The CARES Act contains several corporate income tax provisions, including provisions allowing for immediate refund of remaining unutilized AMT credits as well as allowing a 5-year carryback of net operating losses generated in tax years 2018, 2019 and 2020. For the nine months ended September 30, 2020, Occidental received approximately $195 million of cash refunds as a result of the aforementioned AMT credit and NOL carryback provisions. Occidental does not currently expect the various provisions of the CARES Act to have a material effect on current income attributabletax expense or the realizability of deferred income tax assets. Occidental will continue to noncontrolling interests was $42 million.monitor additional guidance issued by the U.S. Treasury Department and the Internal Revenue Service.


Liquidity and Capital Resources
LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2019,2020, Occidental had $4.8approximately $1.9 billion in cash and cash equivalents, and $0.5 billion$65 million in restricted cash and restricted cash equivalents which was primarily associated with a benefits trustand $113 million of cash and cash equivalents included in assets held for former Anadarko employees that was funded as partsale. Refer to the Current Business Outlook section of the Merger. Restricted cash within the benefits trust will be made availableManagement’s Discussion and Analysis for actions Occidental has taken to Occidental as payments are made to former Anadarko employees. In the third quarter of 2019, Occidental initiated a voluntary severance program to align the size and composition of its workforce with its expected future operating and capital plans. Additional expenses associated with the program are expected to be incurred throughout the remainder of 2019 and through most of 2020. With a continued focus on capital and operational efficiencies, Occidental expects to fundimprove its liquidity needs, including future dividend payments, through cash on hand, cash generated from operations, monetization of non-core assets or investments and, if necessary, proceeds from other forms of capital issuance.

position in the current business environment.
Operating cash flow from continuing operations was $5.4approximately $2.5 billion for the first nine months of 2019,2020, compared to $5.2approximately $5.5 billion for the same period of 2018.2019. The increasedecrease in operating cash flow from continuing operations mainly reflectedis primarily due to lower crude oil prices, higher production, which wasinterest expense and payments for Acquisition-related costs, partially offset by lowerhigher crude oil, pricesNGL and Merger-related costs.

natural gas production volumes and cash from the oil collars and calls.
Occidental’s net cash used by investing activities from continuing operations was $27.6approximately $2.4 billion for the first nine months of 2019,2020, compared to $1.7approximately $27.6 billion for the same period of 2018.2019. Capital expenditures for the first nine months of 2020 and 2019 were approximately $1.9 billion and $4.2 billion respectively, of which $3.8 billionsubstantially all was for the Oiloil and Gas segment, comparedgas segment. The decrease in capital expenditures is a result of management's decision to $3.6 billion forimprove near-term liquidity in response to lower oil prices resulting from the firstCOVID-19 pandemic. For the nine months of 2018, of which $3.2 billion was forended September 30, 2019, the Oil and Gas segment. The primary use of cash for investing activities was the cash portion of the MergerAcquisition consideration, net of the cash acquired in the Merger.Acquisition. Proceeds from the sale of assets and equity investments, net, included the sale of Anadarko's Mozambique LNG assets, as well as proceeds from the sale of Occidental's Plains All American Pipeline equity investment.

Occidental’s net cash providedused by financing activities from continuing operations was $24.7approximately $1.6 billion for the first nine months of 2019,2020, compared to $2.2approximately $24.7 billion cash usedprovided for the same period of 2018.2019. Cash used by financing activities for the first nine months of 2020 reflected the payment of dividends of $1.6 billion. Cash
42


provided by financing activities for the first nine months of 2019 mainly reflected the issuance of long-term debt of $21.6 billion and preferred shares of $10.0 billion to consummate the Merger.Acquisition. These proceeds were partially offset by the partial repayment of the term loansdebt and the payment$1.8 billion of dividends. The nine months ended September 30, 2019, and 2018, each included dividend payments of $1.8 billion.

payments.
As of September 30, 2019,2020, and as of the date of this filing, Occidental was in compliance with all covenants ofin its financing agreementsagreements. Occidental currently expects its cash on hand and had capacityfunds available under its RCF to be sufficient to meet its near-term debt maturities, operating expenditures and other obligations for the paymentnext 12 months from the date of cash dividendsthis filing. However, given the inherent uncertainty associated with the duration and other distributionsseverity of the COVID-19 pandemic and its resulting impact on oil demand, Occidental may need to seek additional liquidity sources, refinance debt maturities, or acquisitionsboth, to fund its operations.
For more information regarding upcoming debt maturities, liquidity-improvement initiatives and the impact of Occidental stock.the COVID-19 pandemic and challenging oil and gas demand environment on Occidental’s liquidity and capital resources, see the Current Business Outlook section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Environmental Liabilities and Expenditures
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 as an integral part of its business planning process.

The laws that require or address environmental remediation, including CERCLA and similar federal, state, local and international laws, may apply retroactively and regardless of fault, the legality of the original activities or the current ownership or control of sites. OccidentalOPC 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;disposal; or operation and maintenance of remedial systems. TheseThe 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 toSee Note 1211 - Environmental Liabilities and Expenditures, in the Notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q and to the Environmental Liabilities and Expenditures section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 20182019 Form 10-K for additional information regarding Occidental’s environmental liabilities and expenditures.



LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES
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 September 30, 2019, and December 31, 2018, were not material to Occidental's Consolidated Condensed Balance Sheets. See Note 1110 - Lawsuits, Claims, Commitments and Contingencies, in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for further information.

Recently Adopted Accounting and Disclosure Changes
RECENTLY ADOPTED ACCOUNTING AND DISCLOSURE STANDARDS

See Note 2 - Accounting and Disclosure Changes, in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.

43



Item 3.Quantitative and Qualitative Disclosures About Market Risk

Occidental's primary market risks are attributable to fluctuations in commodity prices and interest rates. These risks can affect revenues and cash flows, and Occidental's risk-management policies provide for the use of derivative instruments to manage these risks. The types of commodity derivative instruments used by Occidental include futures, swaps, options and fixed-price physical-delivery contracts. The volume of commodity derivatives entered into by Occidental is governed by risk-management policies and may vary from year to year. Both exchange and over-the-counter traded derivative instruments may be subject to margin-deposit requirements, and Occidental may be required from time to time to deposit cash or provide letters of credit with exchange brokers or counterparties to satisfy these margin requirements. For additional information relating to Occidental's derivative and financial instruments, see Note 7—Derivative Instruments6-Derivatives in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.

Commodity Price Risk
COMMODITY PRICE RISK

Occidental's most significant market risk relates to prices for oil, natural gas and NGL.NGLs. Management expects energy prices to remain unpredictable and potentially volatile. As energy prices decline or rise significantly, revenues and cash flows are likewise affected. In addition, a non-cash write-down of Occidental's oil and gas properties or goodwill may be required if commodity prices experience further declines or persist at current levels.
As a significant decline.

result of the expected prolonged period of lower commodity prices brought on by the COVID-19 pandemic’s impact on oil demand, Occidental tested substantially all of its oil and gas assets for impairment during the second quarter of 2020 and recognized pre-tax impairments of approximately $8.6 billion related to both proved and unproved oil and gas properties. If the macroeconomic conditions that exist as of the date of this Form 10-Q continue or worsen for a prolonged period, our operations and financial condition may be materially and adversely affected, and our oil and gas properties may be subject to further testing for impairment. This could result in additional non-cash asset impairments, and such impairments could be material to our financial statements.
Derivative Instruments Held for Non-Trading Purposes
DERIVATIVE INSTRUMENTS HELD FOR NON-TRADING PURPOSES

As of September 30, 2019,2020, Occidental had derivative instruments in place to reduce the price risk associated with future crude oil production of 300 thousand barrels350 MBBL per day. As of September 30, 2019,2020, these derivative instruments were at a $95$250 million net derivative asset position.

The following table shows a sensitivity analysis based on both a 5 percent and 10 percent change in Brent crude oil prices and their effects on the net derivative asset position of $250 million at September 30, 2020:

millions except percentages
Percent change in commodity pricesNet derivative assetChange to fair value from
September 30, 2020 position
+ 5%$206 $(44)
- 5%$279 $29 
+ 10%$145 $(105)
- 10%$297 $47 

As of September 30, 2020, Occidental had derivative instruments in place to reduce the price risk associated with future natural gas production of 500 thousand MMBTU per day. As of September 30, 2020, these derivative instruments were immaterial. The following table shows a sensitivity analysis based on both a five-percent and ten-percent change in commodityNYMEX Henry Hub natural gas prices and their effecteffects on the net derivative asset position of $95$1 million at September 30, 2019:2020:

44


millions (except for percentages) 
millions except percentagesmillions except percentages
Percent change in commodity prices Resulting Net Fair Value position-asset (liability) Change to Fair Value from September 30, 2019 positionPercent change in commodity pricesNet derivative asset (liability)Change to fair value from
September 30, 2020 position
+ 5% $(91) $(186)+ 5%$(15)$(16)
- 5% $261 $166- 5%$16 $15 
+ 10% $(300) $(395)+ 10%$(31)$(32)
-10% $410 $315
- 10%- 10%$32 $31 


INTEREST RATE RISK

Interest Rate Risk
Occidental acquired interest rate swap contracts in the Merger.Acquisition. Occidental pays a fixed interest rate and receives a floating interest rate indexed to three-month London Inter-BankInterBank Offered Rate (LIBOR). The swaps have an initial term of 30 years with mandatory termination dates in September 20202021 through 2023 and a total notional amount of $1.6$1.5 billion as of September 30, 2019. In October 2019, $125 million of notional interest rate swaps were terminated.2020. As of September 30, 2019,2020, Occidental had a net liability of $1.4approximately $1.6 billion based on the fair value of the swaps of negative $1.7$1.9 billion netted against $359$388 million in posted cash collateral. A 25-basis point decrease in implied LIBOR rates over the term of the swaps would result in an additional liability of approximately $130$101 million on these swaps.

As of September 30, 2019,2020, Occidental had $6.5variable rate debt with a notional value of $3.0 billion of variable-rate debt outstanding, excluding WES.outstanding. A 25-basis point increase in LIBOR interest rates would increase gross interest expense approximately $16$7 million per year.

As of September 30, 2019,2020, Occidental had $32.6fixed rate debt with a fair value of $28.7 billion of fixed-rate debt outstanding, excluding WES.outstanding. A 25-basis point change in Treasury rates would change the fair value of the fixed-ratefixed rate debt approximately $680$475 million.

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 the effectiveness 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 September 30, 2019.

2020.
Except as described below, 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 threenine months ended September 30, 2019,2020, that has materially affected, or is reasonably likely to materially affect, Occidental's internal control over financial reporting.

In the third quarterJanuary 2020, Occidental implemented an Enterprise Resource Planning (ERP) system for certain of 2019, Occidental started the processits legacy U.S. businesses. As a result of integrating Anadarko into its operations and internal control processes, resulting in some of Anadarko’s historical internal controls being superseded by Occidental’s internal controls. Management will continue to integrate Anadarko's historicalthis implementation, certain internal controls over financial reporting have been automated, modified or implemented to address the new environment associated with Occidental'sthe implementation of this type of system. While Occidental believes that this new system will strengthen the internal controls over financial reporting. This integration may leadcontrol system, there are inherent risks in implementing any new system, and Occidental will continue to evaluate these control changes in Occidental's or Anadarko’s historicalas part of its assessment of internal controlscontrol over financial reporting in future fiscal periods. Occidental is also in the process of implementing a new Enterprise Resource Planning (ERP) system. Occidental intends to integrate Anadarko’s internal control processes into Occidental’s internal control processes in conjunction with implementation of the ERP system. Management expects the integration process to be completed during 2021.throughout 2020.

45




Part II Other Information
PART II    OTHER INFORMATION
Item 1.Legal Proceedings

On July 17, 2019, an Occidental subsidiary received a draft consent agreement and final order from the U.S. Environmental Protection Agency (EPA) regarding alleged violations under the Clean Air Act (CAA) and various sections of the EPA’s Chemical Accident Prevention Provisions at the Convent, Louisiana facility. EPA’s order includes allegations associated with process reviews, procedures and recordkeeping. EPA’s draft settlement proposal includes a civil penalty of $185,545. Occidental is currently negotiating a resolution of this matter with EPA.

On September 13, 2019, an Occidental subsidiary received a draft consent agreement and final order from EPA regarding alleged violations under the CAA and various sections of the EPA’s Chemical Accident Prevention Provisions at the Geismar, Louisiana facility. EPA’s order includes allegations associated with operating procedures, inspections, contractor reviews, medical protocols in the emergency response plan, administrative updates and four historical on-site incidents. EPA’s draft settlement proposal includes a civil penalty of $931,990. Occidental is currently negotiating a resolution of this matter with EPA.

For information regarding legal proceedings, see Note - 11,10 Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Condensed Financial Statements, in Part I, Item 1 of this Form 10-Q.


Item 1A. Risk Factors

Other than as set forth below, there have been no material changes to the disclosure presented in the 20182019 Form 10-K under Part I. Item 1A and the disclosure presented in the Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 under Part II. Item 1A.

The COVID-19 pandemic has adversely affected our business, and the ultimate effect on our operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

The COVID-19 pandemic has adversely affected the global economy, disrupted global supply chains and created significant volatility in the financial markets. In addition, the pandemic has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities. As a result, there has been a significant reduction in demand for and prices of crude oil, natural gas and NGL. If the reduced demand for and prices of crude oil, natural gas and NGL continue for a prolonged period, our operations, financial condition, cash flows, level of expenditures and the quantity of estimated proved reserves that may be attributed to our properties may be materially and adversely affected. Our operations also may be adversely affected if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic. We have implemented workplace restrictions in our offices and work sites for health and safety reasons, and continue to monitor national, state and local government directives where we have operations and/or offices. Further, our business plan, including our financing and liquidity plan, includes, among other things, planned divestitures. If general economic conditions or conditions in the energy industry persist at current levels for an extended period of time, we may not be able to complete these transactions on favorable terms, in a timely manner or at all. The extent to which the COVID-19 pandemic adversely affects our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic. The COVID-19 pandemic may also materially adversely affect our operating and financial results in a manner that is not currently known to us or that we do not currently consider to present significant risks to our operations. To the extent the COVID-19 pandemic may continue to adversely affect our business, operations, financial condition and operating results, it may also have the effect of heightening the other risks described in the 2019 Form 10-K under Part I Item IA and the Forms 10-Q for the quarters ended March 31, 2020 and June 30, 2020 under Part II Item 1A.

The diversion
Governmental actions and political instability may affect Occidental’s results of resources and management’s attentionoperations.

Occidental’s businesses are subject to the integrationactions and decisions of Anadarko could adversely affect day-to-day business.many federal, state, local and foreign governments and political interests. As a result, Occidental faces risks of:

The integrationØ New or amended laws and regulations, or new or different applications or interpretations of Anadarko places aexisting laws and regulations, including those related to drilling, manufacturing or production processes (including well stimulation techniques such as hydraulic fracturing and acidization), pipelines, labor and employment, taxes, royalty rates, permitted production rates, entitlements, import, export and use of raw materials, equipment or products, use or increased use of land, water and other natural resources, safety, the manufacturing of chemicals, asset integrity management, the marketing or export of commodities, security and environmental protection, all of which may restrict or prohibit activities of Occidental or its contractors, increase Occidental’s costs or reduce demand for Occidental’s products. In addition, violation of certain governmental laws and regulations may result in strict, joint and several liability and the imposition of significant burden on Occidental’s managementcivil and internal resources. The diversioncriminal fines and penalties;
Ø Refusal of, management’s attention away from day-to-day business concerns and any difficulties encounteredor delay in, the transitionextension or grant of exploration, development or production contracts; and integration process could adversely affect financial results.

Ø Development delays and cost overruns due to approval delays for, or denial of, drilling, construction, environmental and other regulatory approvals, permits and authorizations.
Occidental may not
As an example of state governmental actions, the Colorado Oil and Gas Conservation Commission (COGCC) has proposed new regulations that, if approved, will impose, as of January 2021, siting requirements or “setbacks” on
46


proposed oil and gas drilling locations based on the distance of a proposed well pad to occupied structures. Pursuant to the proposed regulations, well pads cannot be able to integrate Anadarko successfully, and manylocated within 500 feet of an occupied structure without the consent of the anticipated benefits of combining Anadarko and Occidental may not be realized.

Occidental acquired Anadarko with the expectation that the Merger will result in various benefits, including, among other things, operating efficiencies. Achieving those anticipated benefits is subject to a number of uncertainties, including whether Occidental can integrate the business of Anadarko in an efficient and effective manner, and Occidental cannot assure you that those benefits will be realized as quickly as expected or at all. If Occidental does not achieve those benefits, costs could increase, expected net income could decrease, and future business, financial condition, operating results, and prospects could suffer.

The integration process could take longer than anticipated and involve unanticipated costs. Disruptions of each company’s ongoing businesses, processes, and systems or inconsistencies in standards, controls, procedures, practices, policies, and compensation arrangements could adversely affect the combined company. Occidental may also have difficulty addressing differences in corporate cultures and management philosophies, and in harmonizing other systems and business practices. Although Occidental expects that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integrationproperty owner. As part of the two businesses,permitting process, the COGCC will overconsider a series of siting requirements for all drilling locations located between 500 feet and 2,000 feet of an occupied structure. Alternatively, the operator may seek a waiver from each owner and tenant within the designated distance. We are currently evaluating the impact of these proposed regulations to our business. At this time, offset the substantial incremental transaction and Merger-related costs, Occidental maywe do not achieve this net benefitanticipate near-term changes to our development program in the near term, or at all.



Future results will be negatively impacted if Occidental does not effectively manage its expanded operations.

With completion of the Merger, the size of Occidental’s business has increased significantly. Occidental’s continued success depends, in part, upon its ability to manage this expanded business, which poses substantial challenges for management, including challenges related to the management and monitoring of new operations and associatedDJ Basin based on these regulations; we may, however, experience increased costs and complexity. Occidental cannot assure you that it will be successfulto comply with such requirements or that it will realize the expected operating efficiencies, cost savings, and other benefits from the combination currently anticipated.

Occidental has incurred a substantial amount of indebtedness and other payment obligationsdelays or curtailment in connection with the financing of the Merger and may be unable to service and repay such indebtedness.

Occidental funded the cash portion of the Merger consideration by incurring $21.8 billion of third-party indebtedness and issuing shares of series A preferred stock and a warrant to acquire common stock pursuant to the Berkshire Hathaway Inc. investment. In addition, Occidental assumed approximately $11.9 billion aggregate principal amount of Anadarko’s outstanding long-term debt, excluding finance lease liabilities, as well as approximately $7.3 billion aggregate principal amount of WES Midstream’s outstanding short- and long-term debt in the Merger. Occidental cannot guarantee that it will be able to generate sufficient cash flow to service and repay this indebtednesspermitting, impacting our exploration, development, or to pay the dividends requiredproduction activities. Such delays, curtailments, limitations, or prohibitions, if determined to be paid on the series A preferred stock, or that it will be able to refinance such indebtedness on favorable terms, or at all. The failure to so repay or refinance such indebtedness, or to pay dividends on such series A preferred stock,significant, could have a material adverse effect on Occidental’s business, financial condition,our future cash flows and results of operations cash flows and/or share price. If Occidental is unable to service such indebtedness and fund its operations, Occidental may be forced to reduce or delay capital expenditures, seek additional capital, sell assets or refinance Occidental’s indebtedness. Any such action may not be successful and Occidental may be unable to service such indebtedness and its operations, which could have a material adverse effect on Occidental’s business, financial condition, results of operations, cash flows and/or share price.

Occidental may not be able to complete the sale to Total S.A. of the assets, liabilities, businesses and operations of Anadarko in Algeria, Ghana and South Africa or complete its planned divestitures of certain assets on favorable terms or at all.

The Total transaction is conditioned on the receipt of required regulatory approvals as well as other customary closing conditions. Occidental may not be able to complete the Total transaction or obtain the proceeds that could be realized from it, and those cash proceeds may not be adequate to meet any debt service obligations then due. In addition, although Occidental intends to complete $10 billion to $15 billion of divestitures of certain assets within 24 months after completion of the Merger (including the Total transaction), Occidental may not be able to complete its planned divestitures on favorable terms or at all. Any difficulties with respect to the completion of the Total transaction or other planned divestitures could have a material adverse effect on Occidental’s business, financial condition, results of operations, cash flows and/or stock price. See Note 4 - Acquisitions, Dispositions, and Other, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q for more information about the Total transaction.



Occidental’s operations and financial results could be significantly negatively impacted by its offshore operations.

Occidental is vulnerable to risks associated with our offshore operations that could negatively impact our operationsreportable quantities of proved undeveloped oil and financial results. Occidental conducts offshore operations in the Gulf of Mexico, Ghana and other countries. Occidental's operations and financial results could be significantly impacted by conditions in some of these areas and are also vulnerable to certain unique risks associated with operating offshore, including those relating to the following:

• hurricanes and other adverse weather conditions
• geological complexities and water depths associated with such operations
• limited number of partners available to participate in projects
• oilfield service costs and availability
• compliance with environmental, safety, and other laws and regulations
• terrorist attacks or piracy
• remediation and other costs and regulatory changes resulting from oil spills or releases of hazardous materials
• failure of equipment or facilities
• response capabilities for personnel, equipment, or environmental incidents

gas reserves.
In addition, Occidental conducts somehas and may continue to experience adverse consequences, such as risk of loss or production limitations, because certain of its explorationinternational operations are located in deep waters (greater than 1,000 feet) where operations, support services,countries affected by political instability, nationalizations, corruption, armed conflict, terrorism, insurgency, civil unrest, security problems, labor unrest, OPEC production restrictions, equipment import restrictions and decommissioning activities are more difficultsanctions. Exposure to such risks may increase if a greater percentage of Occidental’s future oil and costly than in shallower waters. The deep waters in the Gulf of Mexico, as well asgas production or revenue comes from international deepwater locations, lack the physical and oilfield service infrastructure present in shallower waters. As a result, deepwater operations may require significant time between a discovery and the time that Occidental can market its production, thereby increasing the risk involved with these operations.
sources.



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


On August 8, 2019, in connection withJune 26, 2020, the Merger, Occidental issuedBoard of Directors declared a distribution to Berkshire Hathaway Inc. and certainholders of its subsidiaries 100,000common stock of warrants to purchase shares of series A preferredOccidental’s common stock, (the Preferred Stock) withat a warrant to purchase 80 million sharesrate of 0.125 warrants per share of Occidental common stock at(the “Common Stock Warrants”). Occidental issued approximately 114 million Common Stock Warrants on August 3, 2020, to holders of record of outstanding shares of Occidental’s common stock as of the close of business on July 6, 2020. Occidental issued approximately 1.5 million additional Common Stock Warrants pursuant to Occidental’s outstanding equity-based incentive awards in connection with anti-dilution adjustments resulting from the distribution on August 31, 2020. The Common Stock Warrants have an exercise price of $62.50 (the Warrant) for $10 billion.$22.00 per share and will expire on August 3, 2027. The PreferredCommon Stock Warrants are listed on the New York Stock Exchange and the Warrant have not been registeredtrade under the Securities Act of 1933, as amended, and were issued and sold in a private placement pursuant to Section 4(a)(2) thereof. See Note 3 - The MergerNote 7 - Derivative Instruments, and Note 14 - Stockholders’ Equity, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q for more information.symbol "OXY WS".

Share Repurchase Activities
Occidental'sOccidental’s share repurchase activities for the nine months ended September 30, 2019,2020, were as follows:

PeriodTotal
Number
of Shares Purchased
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
First Quarter 2020— 
Second Quarter 2020157,808 (a)
Third Quarter 2020— 
Total 2020157,808 $24.40 — 44,206,787 (b)
(a) Represents purchases from the trustee of Occidental's defined contribution savings plan that are not part of publicly announced plans or programs.
(b) Represents the total number of shares remaining at September 30, 2020, 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.

Item 5. Other Information

On November 4, 2020, the Executive Compensation Committee of the Board of Directors of Occidental approved a change to the base salary of Robert L. Peterson, Senior Vice President and Chief Financial Officer, to $650,000, effective as of January 1, 2021.
47
Period 
Total Number
of Shares Purchased (a)
 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 (b)
         
First Quarter 2019 2,690,000
 $66.94
 2,690,000
  
Second Quarter 2019 
 $
 
  
Third Quarter 2019 
 $
 
  
Total 2,690,000
 $66.94
 2,690,000
 44,206,787


Item 6. Exhibits

(a)There were no purchases from the trustee of Occidental's defined contribution savings plan in the third quarter.
(b)Represents the total number of shares remaining at September 30, 2019, 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.

Item 6.    Exhibits4.1
2.1
3.1
4.1
4.2
4.34.2
4.44.3
4.54.4
4.64.5


4.710.1#
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19


4.2010.2#
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35


4.3610.3#
4.3710.4#
4.3810.5
4.39
4.40
4.41
4.42
10.1
10.210.6#*
10.3#
10.4#*
10.5#*
10.6#
10.7#*
10.8#*
10.910.7#*#*
31.1*
31.2*
32.1**
101.INS*Inline XBRL Instance Document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.


101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

# Indicates a management contract or compensatory plan or arrangement.
* Filed herewith.
** Furnished herewith.
^ Exhibits and schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. Occidental Petroleum Corporation agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.
48




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


November 4, 20199, 2020/s/ Christopher O. Champion
Christopher O. Champion
Vice President, Chief Accounting Officer and Controller
Controller

55
49