California Resources (CRC) 10-Q 3 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 30, 2016shares
Document and Entity Information
Entity Registrant Name	California Resources Corp
Entity Central Index Key	1,609,253
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	41,217,175
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 10	$ 12
Trade receivables, net	202	200
Inventories	61	58
Other current assets	83	168
Total current assets	356	438
PROPERTY, PLANT AND EQUIPMENT	20,905	20,996
Accumulated depreciation, depletion and amortization	(14,952)	(14,684)
Total property, plant and equipment	5,953	6,312
OTHER ASSETS	23	303
TOTAL ASSETS	6,332	7,053
CURRENT LIABILITIES
Current maturities of long-term debt	74	100
Accounts payable	205	257
Accrued liabilities	379	222
Current income taxes		26
Total current liabilities	658	605
LONG-TERM DEBT - PRINCIPAL AMOUNT	5,173	6,043
DEFERRED GAIN AND ISSUANCE COSTS, NET	410	491
OTHER LONG-TERM LIABILITIES	584	830
EQUITY
Preferred stock (20 million shares authorized at $0.01 par value) no shares outstanding at September 30, 2016 and December 31, 2015
Common stock (200 million shares authorized at $0.01 par value) outstanding shares (September 30, 2016 - 41,217,175 and December 31, 2015 - 38,818,048)
Additional paid-in capital	4,841	4,782
Accumulated deficit	(5,327)	(5,683)
Accumulated other comprehensive loss	(7)	(15)
Total equity	(493)	(916)
TOTAL LIABILITIES AND EQUITY	$ 6,332	$ 7,053

Consolidated Condensed Balance3

Consolidated Condensed Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Consolidated Condensed Balance Sheets
Preferred stock, authorized shares	20,000,000	20,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, outstanding shares	0	0
Common stock, authorized shares	200,000,000	200,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, outstanding shares	41,217,175	38,818,048

Consolidated Condensed Statemen

Consolidated Condensed Statements of Operations - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
REVENUES AND OTHER
Oil and natural gas net sales	$ 424	$ 520	$ 1,157	$ 1,687
Net derivative (losses) gains	(14)	68	(157)	50
Other revenue	46	38	95	100
Total revenues and other	456	626	1,095	1,837
COSTS AND OTHER
Production costs	211	246	583	730
General and administrative expenses	58	129	186	290
Depreciation, depletion and amortization	137	253	422	757
Taxes other than on income	37	42	118	150
Exploration expense	3	5	13	29
Interest and debt expense, net	95	82	243	244
Other expenses, net	29	23	45	74
Total costs and other	570	780	1,610	2,274
Net gain on early extinguishment of debt	660		793
INCOME (LOSS) BEFORE INCOME TAXES	546	(154)	278	(437)
Income tax benefit		50	78	165
NET INCOME (LOSS)	$ 546	$ (104)	$ 356	$ (272)
Net income (loss) per share of common stock
Basic (in dollars per share)	$ 13.45	$ (2.72)	$ 8.97	$ (7.10)
Diluted (in dollars per share)	$ 13.06	(2.72)	$ 8.79	(7.10)
Dividends per common share (in dollars per share)		$ 0.01		$ 0.03

Consolidated Condensed Stateme5

Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Condensed Statements of Comprehensive Income
Net income (loss)		$ 546	$ (104)	$ 356	$ (272)
Other comprehensive income (loss) items:
Pension and postretirement losses	[1]		(4)		(7)
Reclassification to income of realized losses on pension and postretirement	[2]	2	6	8	11
Other comprehensive income (loss), net of tax		2	2	8	4
Comprehensive income (loss)		$ 548	$ (102)	$ 364	$ (268)
[1]	No associated tax for the three and nine months ended September 30, 2016. Net of tax of $3 million and $5 million for the three and nine months ended September 30, 2015. See Note 9, Retirement and Postretirement Benefit Plans, for additional information.
[2]	No associated tax for the three and nine months ended September 30, 2016. Net of tax of $(4) million and $(7) million for the three and nine months ended September 30, 2015, respectively. See Note 9, Retirement and Postretirement Benefit Plans, for additional information.

Consolidated Condensed Stateme6

Consolidated Condensed Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Condensed Statements of Comprehensive Income
Pension and postretirement losses, tax	$ 0	$ 3	$ 0	$ 5
Reclassification to income of realized losses on pensions and postretirement, tax	$ 0	$ (4)	$ 0	$ (7)

Consolidated Condensed Stateme7

Consolidated Condensed Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)	$ 356	$ (272)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	422	757
Deferred income tax benefit	(78)	(165)
Net derivative losses (gains)	157	(50)
Proceeds from settled derivatives	86	17
Net gain on early extinguishment of debt	(793)
Deferred gain and issuance costs amortization	(53)
Other non-cash (gains) losses in income, net	53	126
Dry hole expenses		9
Changes in operating assets and liabilities, net	(5)	(10)
Net cash provided by operating activities	145	412
CASH FLOW FROM INVESTING ACTIVITIES
Capital investments	(45)	(323)
Changes in capital investment accruals	(5)	(202)
Asset divestitures	19
Acquisitions and other		(17)
Net cash used by investing activities	(31)	(542)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility	1,761	1,345
Repayments of revolving credit facility	(1,728)	(1,224)
Issuance of term loan	990
Payments on long-term debt	(329)
Debt repurchase and amendment costs	(814)
Issuance of common stock	4	7
Cash dividends paid		(8)
Net cash (used) provided by financing activities	(116)	120
Decrease in cash and cash equivalents	(2)	(10)
Cash and cash equivalents-beginning of period	12	14
Cash and cash equivalents-end of period	$ 10	$ 4

THE SPIN-OFF AND BASIS OF PRESE

THE SPIN-OFF AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
THE SPIN-OFF AND BASIS OF PRESENTATION
THE SPIN-OFF AND BASIS OF PRESENTATION	NOTE 1 THE SPIN-OFF AND BASIS OF PRESENTATION The Separation and Spin-off We are an independent oil and natural gas exploration and production company operating properties exclusively within the State of California. We were incorporated in Delaware as a wholly owned subsidiary of Occidental Petroleum Corporation (Occidental) on April 23, 2014, and remained a wholly owned subsidiary of Occidental until November 30, 2014. Prior to November 30, 2014, all material existing assets, operations and liabilities of Occidental’s California business were consolidated under us. On November 30, 2014, Occidental distributed shares of our common stock on a pro rata basis to Occidental stockholders and we became an independent, publicly traded company (the Spin-off). Occidental initially retained approximately 18.5% of our outstanding shares of common stock, which it distributed to Occidental stockholders on March 24, 2016. Except when the context otherwise requires or where otherwise indicated, all references to ‘‘CRC,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to California Resources Corporation and its subsidiaries. Basis of Presentation In the opinion of our management, the accompanying financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position as of September 30, 2016 and the statements of operations, comprehensive income, and cash flows for the three and nine months ended September 30, 2016 and 2015, as applicable. We have eliminated all of our significant intercompany transactions and accounts. During the third quarter of 2016, we reclassified prior period gains on debt transactions, net of costs, from other (income) expenses, net, to net gain on early extinguishment of debt. Additionally, we reclassified the current portion of deferred taxes of $59 million as of December 31, 2015 from other current assets to other assets, in accordance with the retrospective application of recently issued accounting rules. We have prepared this report pursuant to the rules and regulations of the United States Securities and Exchange Commission applicable to interim financial information, which permit omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information not misleading. This Form 10-Q should be read in conjunction with the consolidated and combined financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015.

ACCOUNTING AND DISCLOSURE CHANG

ACCOUNTING AND DISCLOSURE CHANGES	9 Months Ended
	Sep. 30, 2016
ACCOUNTING AND DISCLOSURE CHANGES
ACCOUNTING AND DISCLOSURE CHANGES	NOTE 2 ACCOUNTING AND DISCLOSURE CHANGES In August 2016, the Financial Accounting Standards Board (FASB) issued rules that modify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. These rules are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, with earlier adoption permitted. We are currently evaluating the impact of these rules on our financial statements. In June 2016, the FASB issued rules that change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value. These rules are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of these rules on our financial statements. In April 2016, the FASB issued rules requiring that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, in March 2016, the FASB issued rules intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. These rules have the same effective date, generally in the first interim period of fiscal year 2018, as the related revenue standard issued in 2014. We are currently evaluating the impact of these rules on our financial statements. In March 2016, the FASB simplified several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. These rules are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We early adopted these rules in the second quarter of 2016 with no material changes reflected in our financial statements. In February 2016, the FASB issued rules requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months and to include qualitative and quantitative disclosures with respect to the amount, timing, and uncertainty of cash flows arising from leases. These rules will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. We are currently evaluating the impact of these rules on our financial statements. In January 2016, the FASB issued rules that modify how entities measure equity investments and present changes in the fair value of financial liabilities. Unless the investments qualify for a practicality exception, the new rules require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). Entities will have to record changes in instrument-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. These new rules become effective for fiscal years beginning after December 15, 2017 with no early adoption permitted. We are currently evaluating the impact of these rules, but we do not expect them to have a significant impact on our financial statements.

OTHER INFORMATION

OTHER INFORMATION	9 Months Ended
	Sep. 30, 2016
OTHER INFORMATION
OTHER INFORMATION	NOTE 3 OTHER INFORMATION Other current assets at September 30, 2016 and December 31, 2015 included amounts due from joint interest partners, net, of approximately $36 million and $42 million and derivative assets from commodities contracts of $25 million and $88 million, respectively. Other assets at December 31, 2015 included deferred tax assets of approximately $258 million (none at September 30, 2016). Accrued liabilities reflected greenhouse gas obligations of $86 million and $6 million at September 30, 2016 and December 31, 2015, respectively; accrued interest of $67 million and $39 million at September 30, 2016 and December 31, 2015 and derivative liabilities from commodities contracts of $64 million at September 30, 2016 (none at December 31, 2015). Other long-term liabilities included asset retirement obligations of $332 million and $343 million at September 30, 2016 and December 31, 2015, respectively. Other revenue largely comprised sales of the portion of electricity generated by our power plant that is sold to third parties, and the related costs are included in other expenses. In the nine months ended September 30, 2016, other expenses also included a $31 million of gain from the sale of non-core assets. Fair Value of Financial Instruments The carrying amounts of cash and other on-balance sheet financial instruments, other than debt, approximate fair value. Supplemental Cash Flow Information We did not make United States federal and state income tax payments during the nine-month periods ended September 30, 2016 and 2015. Interest paid totaled approximately $244 million and $248 million for the nine months ended September 30, 2016 and 2015, respectively. Reverse Stock Split Our stockholders approved a reverse stock split at the Company’s annual stockholders’ meeting on May 4, 2016. Following this approval, our board of directors authorized a reverse split using a ratio of one share of common stock for every ten shares then outstanding. The split occurred on May 31, 2016 with trading on a post-split basis commencing the following day. Share and per share amounts included in this report have been restated to reflect this reverse stock split. The split proportionally decreased the number of authorized shares of common stock from 2.0 billion shares to 200 million shares and preferred stock from 200 million to 20 million shares. The compensation committee of our board approved proportionate adjustments to the number of shares outstanding and available for issuance under our stock-based compensation plans and to the exercise price, grant price or purchase price relating to any award under the plans, using the same reverse split ratio, pursuant to existing authority granted to the committee under the plans.

INVENTORIES

INVENTORIES	9 Months Ended
	Sep. 30, 2016
INVENTORIES
INVENTORIES	NOTE 4 INVENTORIES Inventories as of September 30, 2016 and December 31, 2015, consisted of the following: September 30, 2016 December 31, 2015 (in millions) Materials and supplies $ $ Finished goods Total $ $

DEBT

DEBT	9 Months Ended
	Sep. 30, 2016
DEBT
DEBT	NOTE 5 DEBT Debt as of September 30, 2016 and December 31, 2015, consisted of the following: September 30, 2016 December 31, 2015 (in millions) 2014 First Out Credit Facilities (Secured First Lien) Revolving Credit Facility $ $ Term Loan Facility 2016 Second Out Credit Agreement (Secured First Lien) — Senior Notes (Secured Second Lien) 8% Notes Due 2022 Senior Unsecured Notes 5% Notes Due 2020 5 ½% Notes Due 2021 6% Notes Due 2024 Total Debt - Principal Amount Less Current Maturities of Long-Term Debt Long-Term Debt - Principal Amount $ $ At September 30, 2016, deferred gain and issuance costs were $410 million net, consisting of $507 million of deferred gains offset by $97 million of deferred issuance costs. The December 31, 2015 deferred gain and issuance costs were $491 million net, consisting of $560 million of deferred gains offset by $69 million of deferred issuance costs. Credit Facilities Our first lien, first out credit facility (2014 First Out Credit Facilities) comprises (i) a $671 million senior term loan facility (the Term Loan Facility) and (ii) a $1.4 billion senior revolving loan facility (the Revolving Credit Facility). We are permitted to increase the size of the Revolving Credit Facility by up to $250 million if we obtain additional commitments from new or existing lenders. The facility matures at the earlier of November 2019 and the 182nd day prior to the maturity of our 5% senior unsecured notes due January 15, 2020 (the 2020 notes), to the extent more than $100 million of such notes remain outstanding at such date. As of September 30, 2016, we had $193 million in aggregate principal amount of outstanding 2020 notes. The Revolving Credit Facility includes a sub-limit of $400 million for the issuance of letters of credit. As of February 2016, we amended the 2014 First Out Credit Facilities to change certain of our financial and other covenants. We again amended this agreement in April 2016 to facilitate certain types of deleveraging transactions and in August 2016 to further change certain of our covenants, grant additional collateral to our lenders and permit the incurrence of debt under a new first-lien, second-out term loan credit facility (2016 Second Out Credit Agreement). Borrowings under the 2014 First Out Credit Facility are subject to a borrowing base that was reaffirmed at $2.3 billion as of November 2016. We have granted the lenders under the 2014 First Out Credit Facilities a first-priority lien in a substantial majority of our assets, including our Elk Hills power plant and midstream assets. We also granted a lien in the same assets to the lenders under our 2016 Second Out Credit Agreement and the holders of our senior second lien secured notes due in 2022. As of September 30, 2016 and December 31, 2015, we had outstanding borrowings under our Revolving Credit Facility of $772 million and $739 million, respectively, and outstanding borrowings of $671 million and $1 billion under the Term Loan Facility, respectively. We made scheduled quarterly payments on the Term Loan Facility during the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016, an $11 million prepayment from the proceeds of non-core asset sales in the quarter ended June 30, 2016 and a $250 million prepayment from proceeds of the 2016 Second Out Credit Agreement. Borrowings under the 2014 First Out Credit Facilities bear interest, at our election, at either a LIBOR rate or an alternate base rate (ABR) (equal to the greatest of (i) the administrative agent’s prime rate, (ii) the one-month LIBOR rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), in each case plus an applicable margin. This applicable margin is based, while our total leverage ratio exceeds 3.00:1.00, on our borrowing base utilization and will vary from (a) in the case of LIBOR loans, 2.50% to 3.50% and (b) in the case of ABR loans, 1.50% to 2.50%. The unused portion of the Revolving Credit Facility commitments, as limited by the borrowing base, is subject to a commitment fee equal to 0.50% per annum. We also pay customary fees and expenses under the 2014 First Out Credit Facilities. Interest on ABR loans is payable quarterly in arrears. Interest on LIBOR loans is payable at the end of each LIBOR period, but not less than quarterly. Our financial performance covenants under the 2014 First Out Credit Facilities require that (i) the ratio of our first priority, first out secured debt to trailing four quarter EBITDAX (the First-Lien First-Out Leverage Ratio) not exceed 3.50 to 1.00 at any quarter end through the quarter ending June 30, 2017 and 3.25 to 1.00 for the quarters ending September 30 and December 31, 2017 and (ii) the total interest expense coverage ratio at each quarter end not be less than 1.20 to 1.00 at any quarter end through the quarter ending December 31, 2017. Starting with the end of the first quarter of 2018, the First-Lien First-Out Leverage Ratio may not exceed 2.25 to 1.00 and the total interest expense coverage ratio may not be less than 2.00 to 1.00. The covenants also include a new first-lien asset coverage ratio of 1.20 to 1.00 as of any June 30 and December 31 beginning December 31, 2016, which is consistent with a covenant included in the 2016 Second Out Credit Agreement described below. Our 2014 First Out Credit Facilities require us to apply 100% of the proceeds from asset sales to repay loans outstanding under the 2014 First Out Credit Facilities, except that we are permitted to use up to 40% (or, if our leverage ratio is less than 4:00 to 1:00, 60%) of proceeds from non-borrowing base asset monetizations to repurchase our notes to the extent available at a significant minimum discount to par, as specified in the 2014 First Out Credit Facilities. The 2014 First Out Credit Facilities also permit us to incur up to an additional $50 million of non-credit-facility indebtedness, which may be secured by non-borrowing base assets, subject to compliance with our financial covenants and indentures; the proceeds of which must be applied to repay the Term Loan Facility. We must apply cash on hand in excess of $150 million daily to repay amounts outstanding under our Revolving Credit Facility. Further, we are restricted from (i) paying dividends or making other distributions to common stockholders and (ii) making capital investments in excess of $125 million during 2016 or in excess of $200 million during 2017 with a carryover of unused 2016 amounts. The amount permitted to be invested can be increased dollar-for-dollar at any time after June 30, 2017 by the lesser of (a) $50 million and (b) the positive difference between (i) a measure of our liquidity as of June 30, 2017 and (ii) the sum of $500 million and net cash proceeds obtained from non-borrowing base asset dispositions. Our borrowing base under the 2014 First Out Credit Facilities is redetermined each May 1 and November 1. The borrowing base will be based upon a number of factors, including commodity prices and reserves. Increases in our borrowing base require approval of at least 80% of our revolving lenders, as measured by exposure, while decreases or affirmations require a two-thirds approval. We and the lenders (requiring a request from the lenders holding two-thirds of the revolving commitments and outstanding loans) each may request a special redetermination once in any period between three consecutive scheduled redeterminations. We will be permitted to have collateral released when both (i) our credit ratings are at least Baa3 from Moody’s and BBB- from S&P, in each case with a stable or better outlook, and (ii) certain permitted liens securing other debt are released. Substantially all of the restrictions imposed by the February 2016 amendment to the 2014 First Out Credit Facilities, other than the requirement for semiannual borrowing base redeterminations, may terminate in the future if we are able to comply with the financial covenants as they existed prior to giving effect to the amendment. The net borrowings under the 2016 Second Out Credit Agreement were used to (i) prepay $250 million of the Term Loan Facility and (ii) reduce our Revolving Credit Facility by $740 million. The proceeds received were net of a $10 million original issue discount. The term loans bear interest at a floating rate per annum equal to 10.375% plus LIBOR, subject to a 1.00% LIBOR floor, determined for the applicable interest period (or ABR rates in certain circumstances). Interest on ABR loans is payable quarterly in arrears. Interest on LIBOR loans is payable at the end of each LIBOR period, but not less than quarterly. The 2016 Second Out Credit Agreement is secured by a security interest in the same collateral used to secure the 2014 First Out Credit Facilities, but, under intercreditor arrangements with our 2014 First Out Credit Facilities lenders, are second in collateral recovery behind such lenders. Prepayment of the 2016 Second Out Credit Agreement is subject to a make-whole premium prior to the third anniversary of closing and a premium to par equal to 50% of coupon between the third anniversary and the fourth anniversary. Following the fourth anniversary, we may redeem at par. The 2016 Second Out Credit Agreement matures on December 31, 2021, but if the aggregate principal amount outstanding of either our 2020 Notes or our 5½% senior unsecured notes due September 15, 2021 (the 2021 Notes) exceeds $100 million 91 days prior to their respective maturity dates, the maturity date of the term loans will accelerate to such prior 91st day. As of September 30, 2016, we had $193 million and $149 million in aggregate principal amount of outstanding 2020 notes and 2021 notes, respectively. The 2016 Second Out Credit Agreement provides for customary covenants and events of default consistent with, or generally less restrictive than, the covenants in our 2014 First Out Credit Facilities, including limitations on additional indebtedness, liens, asset dispositions, investments, restricted payments and other negative covenants, in each case subject to certain limitations and exceptions. Additionally, the 2016 Second Out Credit Agreement requires us to maintain a first-lien asset coverage ratio of 1.20 to 1.00 as of any June 30 and December 31 beginning December 31, 2016, consistent with the 2014 First Out Credit Facilities. All obligations under the 2014 First Out Credit Facilities and the 2016 Second Out Credit Agreement (Credit Facilities) are guaranteed jointly and severally by all of our material wholly owned subsidiaries. The assets and liabilities of subsidiaries not guaranteeing the debt are de minimis. At September 30, 2016, we were in compliance with the financial and other covenants under our Credit Facilities. Senior Notes In October 2014, we issued $5.00 billion in aggregate principal amount of our senior unsecured notes, including $1.00 billion of 2020 notes, $1.75 billion of 2021 notes and $2.25 billion of 6% senior unsecured notes due November 15, 2024 (the 2024 notes and together with the 2020 notes and the 2021 notes, the unsecured notes). The unsecured notes were issued at par and are fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We used the net proceeds from the issuance of the unsecured notes to make a $4.95 billion cash distribution to Occidental in October 2014. In December 2015, we exchanged $534 million, $921 million and $1,358 million in aggregate principal amount of the 2020 notes, the 2021 notes, and the 2024 notes, respectively, for $2.25 billion in aggregate principal amount of newly issued 8% senior secured second lien notes due December 15, 2022 (the 2022 notes). We recorded a deferred gain of approximately $560 million on the debt exchange, which will be amortized using the effective interest rate method over the term of the 2022 notes. Additionally, we incurred approximately $28 million in third-party costs which were fully expensed in 2015. The second 2022 notes are secured on a second-priority basis, subject to the terms of an intercreditor agreement and collateral trust agreement, by a lien on the same collateral used to secure our obligations under our Credit Facilities. During the three months ended March 31, 2016, we repurchased over $100 million in aggregate principal amount of the senior unsecured notes for under $13 million in cash. During the three months ended June 30, 2016, we entered into privately negotiated exchange agreements with a holder of our 6% Senior Notes due 2024 and our 5 ½% Senior Notes due 2021 to exchange a total of approximately 2.1 million shares of our common stock on a post-split basis for notes in the aggregate principal amount of $80 million. In August 2016 we repurchased $197 million, $605 million and $613 million in aggregate principal amount of our 2020 notes, 2021 notes and 2024 notes, respectively, for $750 million, resulting in a $660 million pre-tax gain, net of related expenses. Additionally, we wrote off approximately $12 million of deferred costs related to the repurchased notes. In October 2016, we entered into privately negotiated exchange agreements with certain holders of our 6% Senior Notes due 2024 and 5 1/2% Senior Notes due 2021 to exchange a total of 1.3 million shares of our common stock for notes in the aggregate principal amount of $23 million. We will pay interest semiannually in cash in arrears on January 15 and July 15 for the 2020 notes, on March 15 and September 15 for the 2021 notes, on June 15 and December 15 for the 2022 notes and on May 15 and November 15 for the 2024 notes. The indentures governing the senior unsecured notes and the second lien secured notes each include covenants that, among other things, limit our and our subsidiaries’ ability to incur debt secured by liens. The indentures also restrict our ability to merge or consolidate with, or transfer all or substantially all of our assets to, another entity. These covenants are subject to a number of important qualifications and limitations that are set forth in the indenture. The covenants are not, however, directly linked to measures of our financial performance. In addition, if we experience a “change of control triggering event” (as defined in the indentures) with respect to a series of notes, we will be required, unless we have exercised our right to redeem the notes of such series, to offer to purchase the notes of such series at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest. The indenture governing our second lien secured notes also restricts our ability to sell certain assets and to release collateral from liens securing the second lien secured notes, unless the collateral is released in compliance with our Credit Facilities. Other We estimate the fair value of fixed-rate debt, which is classified as Level 1, based on prices from known market transactions for our instruments. The estimated fair value of our debt at September 30, 2016 and December 31, 2015, including the fair value of the variable rate portion, was approximately $4.3 billion and $3.6 billion, respectively, compared to a carrying value of approximately $5.2 billion and $6.1 billion. A one-eighth percent change in the variable interest rates on the borrowings under our Credit Facilities on September 30, 2016, would result in a $3 million change in annual interest expense. As of September 30, 2016 and December 31, 2015, we had letters of credit in the aggregate amount of approximately $127 million and $70 million (including $122 million and $49 million under the Revolving Credit Facility), respectively, which were issued to support ordinary course marketing, insurance, regulatory and other matters.

LAWSUITS, CLAIMS, COMMITMENTS A

LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES	NOTE 6 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES We, or certain of our subsidiaries, are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies 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. On April 21, 2016, a purported class action was filed against us in the United States District Court for the Southern District of New York on behalf of all beneficial owners of our unsecured notes from November 12, 2015 to the present. The complaint alleges that our December 2015 debt exchange excluded non-qualified institutional holders in violation of the Trust Indenture Act of 1939 and related law and, thereby, impaired their rights to receive principal and interest payments. The purported class action seeks declaratory relief that the debt exchange and the liens securing the new notes are null and void and that the debt exchange resulted in a default. The plaintiff also seeks monetary damages and attorneys’ fees. The Company plans to vigorously defend against the claims made by the plaintiff. We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Reserves balances at September 30, 2016 and December 31, 2015 were not material to our balance sheets as of such dates. We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters. We believe that reasonably possible losses that we could incur in excess of reserves accrued on our balance sheet would not be material to our consolidated financial position or results of operations. We, our subsidiaries, or both, have indemnified various parties against specific liabilities those parties might incur in the future in connection with the Spin-off, purchases and other transactions that they have entered into with us. These indemnities include indemnities made to Occidental against certain tax-related liabilities that may be incurred by Occidental relating to the Spin-off and liabilities related to operation of our business while it was still owned by Occidental. As of September 30, 2016, we are not aware of material indemnity claims pending or threatened against the Company. We were contacted by the Internal Revenue Service for examination of our U.S. federal income tax return for the one month ended December 2014. Subsequent taxable years and state returns remain subject to examination.

DERIVATIVES

DERIVATIVES	9 Months Ended
	Sep. 30, 2016
DERIVATIVES
DERIVATIVES	NOTE 7 DERIVATIVES General We use a variety of derivative instruments to protect our cash flows, margins and capital investment program from the cyclical nature of commodity prices and to improve our ability to comply with our credit facility covenants in case of further price deterioration. We will continue to be strategic and opportunistic in implementing our hedging program as market conditions permit. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. We apply hedge accounting when transactions meet specified criteria for cash-flow hedge treatment and management elects and documents such treatment. Otherwise, we recognize any fair value gains or losses, over the remaining term of the hedge instrument, in earnings in the current period. As of September 30, 2016, we did not have any derivatives designated as hedges. Unless otherwise indicated, we use the term “hedge” to describe derivative instruments that are designed to achieve our hedging program goals, even though they are not necessarily accounted for as cash flow or fair value hedges. As part of our hedging program, we entered into a number of derivative transactions that resulted in the following Brent-based crude oil and PG&E City Gate-based gas hedge positions as of September 30, 2016: Q4 2016 FY 2017 FY 2018 Crude Oil Calls: Barrels per day Weighted-average price per barrel $ $ $ Puts: Barrels per day — Weighted-average price per barrel $ $ $ — Swaps: Barrels per day — Weighted-average price per barrel $ $ $ — Gas Swaps: Millions British Thermal Units (MMBTU) per day — — Weighted-average price per MMBTU $ $ — $ — Forward Contracts: MMBTU per day — — Weighted-average price per MMBTU $ — $ $ — Certain of our 2017 crude oil swaps grant our counterparty a quarterly option to increase volumes by up to 10,000 barrels per day for that quarter at a weighted-average Brent price of $55.46. Subsequent to September 30, 2016, we acquired additional hedges bringing our total swaps on our 2017 oil production to 20,000 barrels per day with a weighted-average Brent price of $53.98. We also purchased derivative assets that partially reduced our call exposure on our 2017 production to a total of 15,500 barrels per day with a weighted-average Brent ceiling of $54.17. Additionally, we reduced our Q4 2016 natural gas swaps to 3,800 MMBTU per day at a weighted-average price of $3.49 and our 2017 natural gas forward contracts to 4,700 MMBTU per day at a weighted-average price of $3.53. Fair Value of Derivatives Our commodity derivatives are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are all classified as Level 2 in the required fair value hierarchy for the periods presented. The following table presents the fair values (at gross and net) of our outstanding derivatives as of September 30, 2016 and December 31, 2015 (in millions): September 30, 2016 Balance Sheet Gross Gross Net Fair Value Assets Commodity Contracts Other current assets $ $ $ Commodity Contracts Other assets Liabilities Commodity Contracts Accrued liabilities Commodity Contracts Other long-term liabilities Total derivatives $ $ — $ December 31, 2015 Balance Sheet Gross Gross Net Fair Value Assets Commodity Contracts Other current assets $ $ — $ Liabilities Commodity Contracts Accrued liabilities — Total derivatives $ $ — $

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2016
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 8 EARNINGS PER SHARE We compute earnings per share (EPS) using the two-class method required for participating securities. Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders in any period that we issue dividends. Restricted and performance stock awards are considered participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares. The denominator of basic EPS is the sum of the weighted-average number of common shares outstanding during the periods presented and vested stock awards that have not yet been issued as common stock; however, it excludes outstanding shares related to unvested stock awards. The denominator of diluted EPS is based on the basic shares outstanding, adjusted for the effect of unvested stock awards and outstanding option awards, to the extent they are dilutive, and participating securities. The effect of the stock options granted in August 2015 and December 2014 was anti-dilutive for the periods presented. During the nine months ended September 30, 2016, we entered into privately negotiated exchange agreements with a holder of our 6% Senior Notes due 2024 and our 5 ½% Senior Notes due 2021 to exchange a total of approximately 2.1 million shares of our common stock on a post-split basis for notes in the aggregate principal amount of $80 million. In October 2016, we entered into privately negotiated exchange agreements with certain holders of our 6% Senior Notes due 2024 and 5 ½% Senior Notes due 2021 to exchange a total of 1.3 million shares of our common stock for notes in the aggregate principal amount of $23 million. For the three and nine months ended September 30, 2016, we issued approximately 53,000 shares and 237,000 shares, respectively, of common stock in connection with our employee stock purchase plan. The following table presents the calculation of basic and diluted EPS for the three- and nine-month periods ended September 30, 2016 and 2015: Three months ended Nine months ended 2016 2015 2016 2015 (in millions, except per-share amounts) Basic EPS calculation Net income (loss) $ $ $ $ Net income (loss) allocated to participating securities — — — — Net income (loss) available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Basic EPS $ $ $ $ Diluted EPS calculation Net income (loss) $ $ $ $ Net income (loss) allocated to participating securities — — — — Net loss available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Dilutive effect of potentially dilutive securities — — Weighted-average common shares outstanding - diluted Diluted EPS $ $ $ $

RETIREMENT AND POSTRETIREMENT B

RETIREMENT AND POSTRETIREMENT BENEFIT PLANS	9 Months Ended
	Sep. 30, 2016
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS	NOTE 9 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans: Three months ended September 30, 2016 2015 Pension Postretirement Pension Postretirement (in millions) Service cost $ — $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — Settlement loss — Total $ $ $ $ Nine months ended September 30, 2016 2015 Pension Postretirement Pension Postretirement (in millions) Service cost $ $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — Settlement loss — Total $ $ $ $ We contributed $1 million to our defined benefit pension plans during the three months ended September 30, 2016; however, no contributions were made during the same period of 2015. We contributed $7 million and $3 million to our defined benefit pension plans during the nine months ended September 30, 2016 and 2015, respectively. We expect to satisfy minimum funding requirements with contributions of $1 million to our defined benefit pension plans during the remainder of 2016. The 2016 and 2015 settlements were associated with early retirements.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2016
INCOME TAXES
INCOME TAXES	NOTE 10 INCOME TAXES For the nine months ended September 30, 2016, we had an income tax benefit of $78 million reflecting a change in the valuation allowance on our deferred tax assets. While we had pre-tax income of $278 million for the period, we had no income tax expense during the first nine months of 2016 because we expect a tax loss for 2016 for which no tax benefit has been recognized.

THE SPIN-OFF AND BASIS OF PRE18

THE SPIN-OFF AND BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2016
THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation In the opinion of our management, the accompanying financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position as of September 30, 2016 and the statements of operations, comprehensive income, and cash flows for the three and nine months ended September 30, 2016 and 2015, as applicable. We have eliminated all of our significant intercompany transactions and accounts. During the third quarter of 2016, we reclassified prior period gains on debt transactions, net of costs, from other (income) expenses, net, to net gain on early extinguishment of debt. Additionally, we reclassified the current portion of deferred taxes of $59 million as of December 31, 2015 from other current assets to other assets, in accordance with the retrospective application of recently issued accounting rules. We have prepared this report pursuant to the rules and regulations of the United States Securities and Exchange Commission applicable to interim financial information, which permit omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information not misleading. This Form 10-Q should be read in conjunction with the consolidated and combined financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015.

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2016
INVENTORIES
Schedule of Inventories	September 30, 2016 December 31, 2015 (in millions) Materials and supplies $ $ Finished goods Total $ $

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2016
DEBT
Schedule of Long-term Debt	September 30, 2016 December 31, 2015 (in millions) 2014 First Out Credit Facilities (Secured First Lien) Revolving Credit Facility $ $ Term Loan Facility 2016 Second Out Credit Agreement (Secured First Lien) — Senior Notes (Secured Second Lien) 8% Notes Due 2022 Senior Unsecured Notes 5% Notes Due 2020 5 ½% Notes Due 2021 6% Notes Due 2024 Total Debt - Principal Amount Less Current Maturities of Long-Term Debt Long-Term Debt - Principal Amount $ $

DERIVATIVES (Tables)

DERIVATIVES (Tables)	9 Months Ended
	Sep. 30, 2016
DERIVATIVES
Schedule of current hedge positions	Q4 2016 FY 2017 FY 2018 Crude Oil Calls: Barrels per day Weighted-average price per barrel $ $ $ Puts: Barrels per day — Weighted-average price per barrel $ $ $ — Swaps: Barrels per day — Weighted-average price per barrel $ $ $ — Gas Swaps: Millions British Thermal Units (MMBTU) per day — — Weighted-average price per MMBTU $ $ — $ — Forward Contracts: MMBTU per day — — Weighted-average price per MMBTU $ — $ $ —
Schedule of (gross and net) fair value of outstanding derivatives	The following table presents the fair values (at gross and net) of our outstanding derivatives as of September 30, 2016 and December 31, 2015 (in millions): September 30, 2016 Balance Sheet Gross Gross Net Fair Value Assets Commodity Contracts Other current assets $ $ $ Commodity Contracts Other assets Liabilities Commodity Contracts Accrued liabilities Commodity Contracts Other long-term liabilities Total derivatives $ $ — $ December 31, 2015 Balance Sheet Gross Gross Net Fair Value Assets Commodity Contracts Other current assets $ $ — $ Liabilities Commodity Contracts Accrued liabilities — Total derivatives $ $ — $

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2016
EARNINGS PER SHARE
Calculation of basic and diluted EPS	Three months ended Nine months ended 2016 2015 2016 2015 (in millions, except per-share amounts) Basic EPS calculation Net income (loss) $ $ $ $ Net income (loss) allocated to participating securities — — — — Net income (loss) available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Basic EPS $ $ $ $ Diluted EPS calculation Net income (loss) $ $ $ $ Net income (loss) allocated to participating securities — — — — Net loss available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Dilutive effect of potentially dilutive securities — — Weighted-average common shares outstanding - diluted Diluted EPS $ $ $ $

RETIREMENT AND POSTRETIREMENT23

RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Tables)	9 Months Ended
	Sep. 30, 2016
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS
Components of the net periodic benefit costs	Three months ended September 30, 2016 2015 Pension Postretirement Pension Postretirement (in millions) Service cost $ — $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — Settlement loss — Total $ $ $ $ Nine months ended September 30, 2016 2015 Pension Postretirement Pension Postretirement (in millions) Service cost $ $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — Settlement loss — Total $ $ $ $

THE SPIN-OFF AND BASIS OF PRE24

THE SPIN-OFF AND BASIS OF PRESENTATION (Details) - USD ($) $ in Millions	Dec. 31, 2015	Nov. 30, 2014
Recently issued accounting rules | Other current assets
Separation and Spin Off Transactions
Current portion of deferred taxes	$ (59)
Recently issued accounting rules | Other assets
Separation and Spin Off Transactions
Current portion of deferred taxes	$ 59
Spinoff - CRC | Occidental Petroleum And Subsidiaries
Separation and Spin Off Transactions
Percentage of outstanding shares of common stock initially retained by Occidental		18.50%

OTHER INFORMATION (Details)

OTHER INFORMATION (Details) shares in Millions, $ in Millions	May 31, 2016shares	Sep. 30, 2016USD ($)shares	Sep. 30, 2015USD ($)	May 30, 2016shares	Dec. 31, 2015USD ($)shares
Interest paid		$ 244	$ 248
Reverse stock split ratio	10
Common stock, authorized shares | shares	200	200			200
Preferred stock, authorized shares | shares	20	20			20
Pre reverse stock split
Common stock, authorized shares | shares				2,000
Preferred stock, authorized shares | shares				200
Other expenses
Gains from the sale of non-core assets		$ 31
Other current assets
Amount due from joint interest partners		36			$ 42
Derivative assets from commodities contracts		25			88
Other assets
Deferred tax assets		0			258
Accrued liabilities
Greenhouse gas obligations		86			6
Accrued interest		67			39
Derivative liabilities from commodities contracts		64			0
Other long-term liabilities
Asset retirement obligation		$ 332			$ 343

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
INVENTORIES
Materials and supplies	$ 57	$ 55
Finished goods	4	3
Total	$ 61	$ 58

DEBT - Schedule of long-term de

DEBT - Schedule of long-term debt (Details) - USD ($) $ in Millions	Oct. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Oct. 31, 2014
Debt
Total Debt - Principal Amount		$ 5,247		$ 6,143
Less Current Maturities of Long-Term Debt		(74)		(100)
Long-Term Debt - Principal Amount		5,173		6,043
Deferred gain and issuance costs, net		410		491
Deferred gains		507		560
Deferred issuance costs		97		69
2016 Second Out Credit Agreement (Secured First Lien)
Debt
Total Debt - Principal Amount		1,000
Senior Notes (Secured Second Lien) | 8% Notes Due 2022
Debt
Total Debt - Principal Amount		$ 2,250		$ 2,250
Debt instrument interest rate stated percentage		8.00%		8.00%
Senior Unsecured Notes | 5% Notes Due 2020
Debt
Total Debt - Principal Amount		$ 193		$ 433
Debt instrument interest rate stated percentage		5.00%		5.00%
Senior Unsecured Notes | 5.5% Notes Due 2021
Debt
Total Debt - Principal Amount		$ 149		$ 829
Debt instrument interest rate stated percentage	5.50%	5.50%	5.50%	5.50%
Senior Unsecured Notes | 6% Notes Due 2024
Debt
Total Debt - Principal Amount		$ 212		$ 892
Debt instrument interest rate stated percentage	6.00%	6.00%	6.00%	6.00%	6.00%
Revolving credit facility | 2014 First Out Credit Facilities (Secured First Lien)
Debt
Total Debt - Principal Amount		$ 772		$ 739
Term loan facility | 2014 First Out Credit Facilities (Secured First Lien)
Debt
Total Debt - Principal Amount		$ 671		$ 1,000

DEBT - Credit Facilities (Detai

DEBT - Credit Facilities (Details) shares in Millions, $ in Millions	1 Months Ended				3 Months Ended		6 Months Ended	9 Months Ended	12 Months Ended
	Oct. 31, 2016USD ($)shares	Aug. 31, 2016USD ($)	Dec. 31, 2015USD ($)	Oct. 31, 2014USD ($)	Sep. 30, 2016USD ($)item	Jun. 30, 2016USD ($)shares	Dec. 31, 2017USD ($)	Sep. 30, 2016USD ($)item	Dec. 31, 2017USD ($)	Dec. 31, 2016USD ($)	Nov. 01, 2016USD ($)	Mar. 31, 2016USD ($)
Debt
Outstanding borrowings			$ 6,143		$ 5,247			$ 5,247
Financial performance covenants
Pre-tax gain on repurchase of debt					$ 660			$ 793
2014 First Out Credit Facilities (Secured First Lien)
Debt
Maximum borrowing capacity											$ 2,300
Percent of commitment required to decrease or affirm the borrowing base					67.00%			67.00%
Number of consecutive redeterminations | item					3			3
Financial performance covenants
Percent of proceeds from asset monetization which must be used to repay loans outstanding under the 2014 First Out Credit Facilities								100.00%
Maximum percent of proceeds from non-borrowing base asset sales that may be used to repurchase notes								40.00%
Percentage of proceeds from non-borrowing base asset sales used to repurchase debt if leverage ratio is less than 4:00 to 1:00								60.00%
Debt agreement covenant Maximum additional borrowings that may be incurred outside of the credit facilities agreement								$ 50
Amount of cash on hand above which amounts owed under the Revolving Credit Facility must be repaid								150
Maximum additional non-Credit Facility indebtedness								$ 50
2014 First Out Credit Facilities (Secured First Lien) | One-Month LIBOR
Debt
Interest rate added to variable rate basis (as a percent)								1.00%
2014 First Out Credit Facilities (Secured First Lien) | Federal fund rate
Debt
Interest rate added to variable rate basis (as a percent)								0.50%
2014 First Out Credit Facilities (Secured First Lien) | Quarters ending through June 30, 2017
Financial performance covenants
First -Lien First-Out Leverage Ratio					3.50			3.50
2014 First Out Credit Facilities (Secured First Lien) | Quarters ending through September 30, 2017
Financial performance covenants
First -Lien First-Out Leverage Ratio					3.25			3.25
2014 First Out Credit Facilities (Secured First Lien) | Quarters ending through December 31, 2017
Financial performance covenants
First -Lien First-Out Leverage Ratio					3.25			3.25
Minimum interest expense coverage ratio					1.20			1.20
2014 First Out Credit Facilities (Secured First Lien) | Quarters ending after first quarter of 2018
Financial performance covenants
First -Lien First-Out Leverage Ratio					2.25			2.25
Minimum interest expense coverage ratio					2			2
2014 First Out Credit Facilities (Secured First Lien) | Any June 30 and December 31 beginning after December 2016
Financial performance covenants
First-lien asset coverage ratio					1.20			1.20
2014 First Out Credit Facilities (Secured First Lien) | Scenario, Forecast
Financial performance covenants
Maximum capital investment restriction									$ 200	$ 125
Maximum dollar-for-dollar increase in additional capital investment amount							$ 50
A portion of the minimum amount in determining the investment limitation							$ 500
2016 Second Out Credit Agreement (Secured First Lien)
Debt
Outstanding borrowings					$ 1,000			$ 1,000
Original issue discount					$ 10			$ 10
Percentage of premium to par value of coupon for make-whole premium								50.00%
2016 Second Out Credit Agreement (Secured First Lien) | Any June 30 and December 31 beginning after December 2016
Financial performance covenants
First-lien asset coverage ratio					1.20			1.20
2016 Second Out Credit Agreement (Secured First Lien) | 5% senior unsecured notes due January 15, 2020 (the 2020 Notes) and 5.50% senior unsecured notes due September 15, 2021 (the 2021 Notes)
Debt
Outstanding amount that triggers accelerated payment					$ 100			$ 100
Financial performance covenants
Period before maturity of 2016 Second Out Credit Agreement when 2014 First Out Credit Facilities matures								91 days
Senior Notes (Secured Second Lien) | 8% Notes Due 2022
Debt
Interest rate (as a percent)			8.00%		8.00%			8.00%
Outstanding borrowings			$ 2,250		$ 2,250			$ 2,250
Financial performance covenants
Aggregate principal amount issued			2,250
Senior Unsecured Notes
Debt
Principal amount of debt reduction through payment or repurchase												$ 100
Repurchase value of the principal amounts of $197 2020 notes, $605 2021 notes and $613 2024 notes		$ 750										$ 13
Financial performance covenants
Aggregate principal amount issued				$ 5,000
Net proceeds from private placement				4,950
Cash distribution to Occidental in October 2014				4,950
Gain from retirement of debt recorded as deferred gain			560
Debt issuance costs			$ 28
Pre-tax gain on repurchase of debt		660
Write-off of deferred costs		12
Percentage of principal amount at which senior notes can be redeemed								101.00%
Senior Unsecured Notes | 5% Notes Due 2020
Debt
Interest rate (as a percent)			5.00%		5.00%			5.00%
Threshold amount of remaining outstanding balance of debt above which prepayment on the 2016 Second Out Credit Agreement accelerates					$ 100			$ 100
Outstanding borrowings			$ 433		$ 193			$ 193
Principal amount of debt reduction through payment or repurchase		197	$ 534
Financial performance covenants
Aggregate principal amount issued				1,000
Senior Unsecured Notes | 5.5% Notes Due 2021
Debt
Interest rate (as a percent)	5.50%		5.50%		5.50%	5.50%		5.50%
Outstanding borrowings			$ 829		$ 149			$ 149
Principal amount of debt reduction through payment or repurchase		605	$ 921
Financial performance covenants
Aggregate principal amount issued				$ 1,750
Senior Unsecured Notes | 6% Notes Due 2024
Debt
Interest rate (as a percent)	6.00%		6.00%	6.00%	6.00%	6.00%		6.00%
Outstanding borrowings			$ 892		$ 212			$ 212
Principal amount of debt reduction through payment or repurchase		$ 613	1,358
Financial performance covenants
Aggregate principal amount issued				$ 2,250
Minimum | 2014 First Out Credit Facilities (Secured First Lien)
Debt
Approval percentage measured by total exposure of lenders for approval of increases in borrowing base					80.00%			80.00%
Financial performance covenants
Total leverage ratio								3
Minimum | 2014 First Out Credit Facilities (Secured First Lien) | LIBOR loans
Debt
Interest rate added to variable rate basis (as a percent)								2.50%
Minimum | 2014 First Out Credit Facilities (Secured First Lien) | Alternate Base Rate loans
Debt
Interest rate added to variable rate basis (as a percent)								1.50%
Maximum | 2014 First Out Credit Facilities (Secured First Lien) | LIBOR loans
Debt
Interest rate added to variable rate basis (as a percent)								3.50%
Maximum | 2014 First Out Credit Facilities (Secured First Lien) | Alternate Base Rate loans
Debt
Interest rate added to variable rate basis (as a percent)								2.50%
Term loan facility | 2014 First Out Credit Facilities (Secured First Lien)
Debt
Maximum borrowing capacity					$ 671			$ 671
Outstanding borrowings			1,000		671			671
Prepayment from proceeds of non-core asset sale						$ 11
Principal amount of debt reduction through payment or repurchase					250			$ 250
Term loan facility | 2016 Second Out Credit Agreement (Secured First Lien) | LIBOR loans
Debt
Interest rate added to variable rate basis (as a percent)								10.375%
Floor rate (as a percent)								1.00%
Revolving credit facility | 2014 First Out Credit Facilities (Secured First Lien)
Debt
Maximum borrowing capacity					1,400			$ 1,400
Increase to maximum borrowing capacity with lender approval								250
Outstanding borrowings			$ 739		772			772
Principal amount of debt reduction through payment or repurchase					740			$ 740
Commitment fees on unused portion of the Revolving Credit Facility								0.50%
Letter of Credit | 2014 First Out Credit Facilities (Secured First Lien)
Debt
Maximum borrowing capacity					$ 400			$ 400
June 30 2016 debt for equity exchange
Financial performance covenants
Number of shares issued | shares						2.1
June 30 2016 debt for equity exchange | Senior Unsecured Notes | 5.50% Notes Due 2021 and 6.00% Notes Due 2024
Financial performance covenants
Original debt exchanged						$ 80
October 2016 debt exchange for equity
Financial performance covenants
Number of shares issued for converted debt | shares	1.3
October 2016 debt exchange for equity | Senior Unsecured Notes | 5.50% Notes Due 2021 and 6.00% Notes Due 2024
Financial performance covenants
Original debt exchanged	$ 23

DEBT - Other (Details)

DEBT - Other (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Other Fixed-Rate and Variable-Rate Debt Disclosures
Estimated fair value of long-term debt	$ 4,300	$ 3,600
Debt carrying value	5,247	6,143
Other Variable-Rate Debt Disclosures
Letters of credit outstanding	127	70
Revolving credit facility
Other Variable-Rate Debt Disclosures
Letters of credit outstanding	$ 122	$ 49
Pro Forma | Credit Facilities
Other Variable-Rate Debt Disclosures
Percentage of change in the variable interest rates	0.125%
Effect of 1/8 percent change in annual interest expense	$ 3

DERIVATIVES - General (Details)

DERIVATIVES - General (Details)	9 Months Ended
	Sep. 30, 2016MMBTU / dbbl / d$ / MMBTU$ / bblbbl	Oct. 01, 2016MMBTU / dbbl / d$ / MMBTU$ / bbl
Calls | October through December 2016 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	25,000
Weighted-average price (in dollars per barrel or MMBTU)	53.62
Calls | January through December 2017 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	20,500	15,500
Weighted-average price (in dollars per barrel or MMBTU)	53.11	54.47
Calls | January through December 2018 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	21,500
Weighted-average price (in dollars per barrel or MMBTU)	58.21
Puts | October through December 2016 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	3,000
Weighted-average price (in dollars per barrel or MMBTU)	50
Puts | January through December 2017 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	14,300
Weighted-average price (in dollars per barrel or MMBTU)	48.60
Swaps | October through December 2016 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	39,000
Weighted-average price (in dollars per barrel or MMBTU)	49.71
Swaps | October through December 2016 production | Gas
Derivatives
Daily Volume (in Bbl or MMBTU) | MMBTU / d	5,500	3,800
Weighted-average price (in dollars per barrel or MMBTU) | $ / MMBTU	3.50	3.49
Swaps | January through December 2017 production | Crude Oil
Derivatives
Daily Volume (in Bbl or MMBTU) | bbl / d	15,000	20,000
Weighted-average price (in dollars per barrel or MMBTU)	53.64	53.98
Maximum increase in volume per quarter of crude oil counter-party swaps (in barrels per day) | bbl	10,000
Weighted-average strike price (in dollars per barrel or MMBTU)	55.46
Forward Contracts | January through December 2017 production | Gas
Derivatives
Daily Volume (in Bbl or MMBTU) | MMBTU / d	6,200	4,700
Weighted-average price (in dollars per barrel or MMBTU) | $ / MMBTU	3.53	3.53

DERIVATIVES - Fair Value (Detai

DERIVATIVES - Fair Value (Details) - Commodity Contracts - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Presented in the Balance Sheet
Fair Value of Derivatives
Amounts	$ (97)	$ 86
Presented in the Balance Sheet | Other current assets
Fair Value of Derivatives
Net Fair Value Presented in the Balance Sheet	25	87
Presented in the Balance Sheet | Other assets
Fair Value of Derivatives
Net Fair Value Presented in the Balance Sheet	6
Presented in the Balance Sheet | Accrued liabilities
Fair Value of Derivatives
Net Fair Value Presented in the Balance Sheet	54	1
Presented in the Balance Sheet | Other long-term liabilities
Fair Value of Derivatives
Net Fair Value Presented in the Balance Sheet	74
Recognized Fair Value
Fair Value of Derivatives
Amounts	(97)	86
Recognized Fair Value | Other current assets
Fair Value of Derivatives
Gross Amounts Recognized at Fair Value	56	87
Gross Amounts Offset in the Balance Sheet	(31)
Recognized Fair Value | Other assets
Fair Value of Derivatives
Gross Amounts Recognized at Fair Value	21
Gross Amounts Offset in the Balance Sheet	(15)
Recognized Fair Value | Accrued liabilities
Fair Value of Derivatives
Gross Amounts Recognized at Fair Value	(85)	$ (1)
Gross Amounts Offset in the Balance Sheet	31
Recognized Fair Value | Other long-term liabilities
Fair Value of Derivatives
Gross Amounts Recognized at Fair Value	(89)
Gross Amounts Offset in the Balance Sheet	$ 15

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) shares in Millions, $ in Millions	1 Months Ended	9 Months Ended
	Oct. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Oct. 31, 2014
September 30 2016 debt exchange for equity
EARNINGS PER SHARE
Number of shares issued		2.1
October 2016 debt exchange for equity
EARNINGS PER SHARE
Number of shares issued for converted debt	1.3
6% Notes Due 2024 | Senior Unsecured Notes
EARNINGS PER SHARE
Interest rate (as a percent)	6.00%	6.00%	6.00%	6.00%	6.00%
5.5% Notes Due 2021 | Senior Unsecured Notes
EARNINGS PER SHARE
Interest rate (as a percent)	5.50%	5.50%	5.50%	5.50%
5.50% Notes Due 2021 and 6.00% Notes Due 2024 | Senior Unsecured Notes | September 30 2016 debt exchange for equity
EARNINGS PER SHARE
Original debt exchanged		$ 80
5.50% Notes Due 2021 and 6.00% Notes Due 2024 | Senior Unsecured Notes | October 2016 debt exchange for equity
EARNINGS PER SHARE
Original debt exchanged	$ 23

EARNINGS PER SHARE - Calculatio

EARNINGS PER SHARE - Calculation of EPS (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
EARNINGS PER SHARE
Common stock issued in connection with employee stock purchase plan	53,000		237,000
Basic EPS calculation
Net income (loss)	$ 546	$ (104)	$ 356	$ (272)
Net income (loss) available to common stockholders	$ 546	$ (104)	$ 356	$ (272)
Weighed-average common shares outstanding - basic	40,600,000	38,300,000	39,700,000	38,300,000
Basic EPS (in dollars per share)	$ 13.45	$ (2.72)	$ 8.97	$ (7.10)
Diluted EPS calculation
Net income (loss)	$ 546	$ (104)	$ 356	$ (272)
Net income (loss) available to common stockholders	$ 546	$ (104)	$ 356	$ (272)
Weighed-average common shares outstanding - basic	40,600,000	38,300,000	39,700,000	38,300,000
Dilutive effect of potentially dilutive securities	1,200,000		800,000
Weighted-average common shares outstanding - diluted	41,800,000	38,300,000	40,500,000	38,300,000
Diluted EPS (in dollars per share)	$ 13.06	$ (2.72)	$ 8.79	$ (7.10)

RETIREMENT AND POSTRETIREMENT34

RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net periodic benefit costs:
Employer contributions	$ 1	$ 0	$ 7	$ 3
Expected contribution to defined benefit pension plans during the reminder of 2016			1
Pension Benefit
Net periodic benefit costs:
Service cost		1	1	3
Interest cost	1	1	2	3
Expected return on plan assets	(1)	(1)	(2)	(3)
Recognized actuarial loss	1	1	1	2
Settlement loss	1	10	6	18
Total	2	12	8	23
Postretirement Benefit
Net periodic benefit costs:
Service cost	1	1	3	3
Interest cost	1	1	3	3
Settlement loss		10		10
Total	$ 2	$ 12	$ 6	$ 16

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
INCOME TAXES
Income tax benefit related to change in valuation allowance on deferred tax assets			$ 78
Pre-tax income	$ 546	$ (154)	278	$ (437)
Income tax expense (benefit) from current operations			$ 0