LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2016

LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

NOTE 7    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.  We plan 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.  Reserve balances at December 31, 2016 and 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 have certain commitments under contracts, including purchase commitments for goods and services.  At December 31, 2016, total purchase obligations on a discounted basis were approximately $340 million, which included approximately $74 million, $189 million, $30 million, $12 million and $4 million that will be paid in 2017, 2018, 2019, 2020 and 2021, respectively.  Included in these obligations is a commitment to invest approximately $170 million in evaluation and development activities for one of our oil and gas properties prior to the end of 2018.  Any deficiency in meeting this capital investment obligation would need to be paid in cash.  Our 2017 capital program includes development plans for these properties, and we expect to fulfill the minimum investment requirement.

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 December 31, 2016, we are not aware of material indemnity claims pending or threatened against the Company.