FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2013

NOTE 15

FAIR VALUE MEASUREMENTS

FAIR VALUES – RECURRING

The following tables provide fair value measurement information for assets and liabilities that are measured on a recurring basis as of December 31, 2013 and 2012 (in millions):

	Fair Value Measurements at December 31, 2013 Using
Description	Level 1		Level 2		Level 3		Netting and Collateral			Total Fair Value
Assets:
Commodity derivatives	$	185	$	195	$	—	$	(329	)	$	51
Liabilities:
Commodity derivatives	$	199	$	223	$	—	$	(364	)	$	58

	Fair Value Measurements at December 31, 2012 Using
Description	Level 1		Level 2		Level 3		Netting and Collateral			Total Fair Value
Assets:
Commodity derivatives	$	107	$	312	$	—	$	(301	)	$	118
Liabilities:
Commodity derivatives	$	99	$	398	$	—	$	(371	)	$	126

FAIR VALUES – NONRECURRING

During its annual capital planning process in the fourth quarter of 2013, management determined that it would not pursue development of certain of its non-producing domestic oil and gas acreage based on product prices, availability of transportation capacity to market the products and regulatory and environmental considerations. As a result, Occidental recorded pre-tax impairment charges of $0.6 billion for the acreage.

At year end 2012, Occidental performed impairment tests with respect to its proved and unproved properties due to the negative revisions to certain of its natural gas reserves and the continued deterioration of natural gas prices. In the fourth quarter of 2012, Occidental recorded pre-tax impairment charges of $1.7 billion, almost all of which were for certain assets in Midcontinent, over 90 percent of which were related to natural gas properties, which were acquired more than five years ago on average.

The impairment tests, including the fair value estimation, incorporated a number of assumptions involving expectations of future cash flows. These assumptions included estimates of future product prices, which Occidental based on forward price curves and, where applicable, contractual prices, estimates of oil and gas reserves, estimates of future expected operating and development costs and appropriate discount rates. These properties were impacted by persistently low natural gas prices in the United States changing management’s development plans. Occidental used the income approach to measure the fair value of these properties, using inputs categorized as Level 3 in the fair value hierarchy.

FINANCIAL INSTRUMENTS FAIR VALUE

The carrying amounts of cash and cash equivalents and other on-balance-sheet financial instruments, other than fixed-rate debt, approximate fair value. The cost, if any, to terminate off-balance-sheet financial instruments is not significant.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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