Planned Spin-Off of California Resources Corporation	9 Months Ended
Sep. 30, 2014
Planned Spin-Off of California Resources Corporation
Planned Spin-Off of California Resources Corporation	14. Planned Spin-Off of California Resources Corporation In connection with the planned spin-off, on November 30, 2014, Occidental intends to distribute, on a pro-rata basis, at least 80.1% of CRC common stock to Occidental shareholders as of November 17, 2014, the record date for the spin-off, with each Occidental shareholder to receive 0.4 shares of CRC for every share of Occidental common stock. Fractional shares of CRC will not be distributed and any fractional shares of CRC otherwise issuable to an Occidental shareholder will be sold in the open market on such shareholder’s behalf, and such shareholder will receive a cash payment with respect to that fractional share. Occidental intends to dispose of the up to 19.9% of retained CRC shares within 18 months following the spin-off. The CRC spin-off has been structured to qualify as a tax-free distribution to U.S. holders of Occidental common stock for U.S. federal income tax purposes. Occidental has received a private letter ruling from the Internal Revenue Service with respect to the treatment of certain aspects of the spin-off. Based on the private letter ruling and certain facts, assumptions, representations and undertakings made by Occidental and CRC, Occidental will receive an opinion of counsel to the effect that for U.S. federal income tax purposes, the distribution of CRC common stock and certain related transactions will not be taxable to Occidental or U.S. holders of Occidental common stock, except in respect to cash received in lieu of fractional share interests which generally will be taxable to such holders as capital gain. In October 2014, in connection with the planned spin-off from Occidental, CRC issued $5.0 billion in senior notes (the California Notes) in a private placement, including $1.0 billion of 5.0% senior notes due January 2020, $1.75 billion of 5.50% senior notes due September 2021, and $2.25 billion of 6.0% senior notes due November 2024. The California Notes are fully and unconditionally guaranteed by the material subsidiaries of CRC. Occidental received $4.95 billion in net proceeds from the private placement as a result of a cash distribution from CRC as part of the planned spin-off. In September 2014, CRC entered into a five-year, $1.0 billion Term Loan Facility and a five-year, $2.0 billion Revolving Credit Facility with a syndicate of lenders (the CRC Credit Facilities). The CRC Credit Facilities were entered into as part of the planned spin-off of CRC from Occidental. Borrowings under the CRC Credit Facilities bear interest at either LIBOR or an alternate base rate plus an applicable margin. All obligations under the CRC Credit Facilities are guaranteed by certain subsidiaries of CRC. CRC intends to borrow funds under the CRC Credit Facilities to make a $1.25 billion cash distribution to Occidental concurrent with the spin-off and to repay any intercompany balances to Occidental prior to the spin-off. When Occidental completes the spin-off of CRC at the end of November, the results of operations and cash flows of CRC will be reclassified into discontinued operations in Occidental’s consolidated statements of income and cash flows for all periods presented.

14. Planned Spin-Off of California Resources Corporation

In connection with the planned spin-off, on November 30, 2014, Occidental intends to distribute, on a pro-rata basis, at least 80.1% of CRC common stock to Occidental shareholders as of November 17, 2014, the record date for the spin-off, with each Occidental shareholder to receive 0.4 shares of CRC for every share of Occidental common stock. Fractional shares of CRC will not be distributed and any fractional shares of CRC otherwise issuable to an Occidental shareholder will be sold in the open market on such shareholder’s behalf, and such shareholder will receive a cash payment with respect to that fractional share. Occidental intends to dispose of the up to 19.9% of retained CRC shares within 18 months following the spin-off.

The CRC spin-off has been structured to qualify as a tax-free distribution to U.S. holders of Occidental common stock for U.S. federal income tax purposes. Occidental has received a private letter ruling from the Internal Revenue Service with respect to the treatment of certain aspects of the spin-off. Based on the private letter ruling and certain facts, assumptions, representations and undertakings made by Occidental and CRC, Occidental will receive an opinion of counsel to the effect that for U.S. federal income tax purposes, the distribution of CRC common stock and certain related transactions will not be taxable to Occidental or U.S. holders of Occidental common stock, except in respect to cash received in lieu of fractional share interests which generally will be taxable to such holders as capital gain.

In October 2014, in connection with the planned spin-off from Occidental, CRC issued $5.0 billion in senior notes (the California Notes) in a private placement, including $1.0 billion of 5.0% senior notes due January 2020, $1.75 billion of 5.50% senior notes due September 2021, and $2.25 billion of 6.0% senior notes due November 2024. The California Notes are fully and unconditionally guaranteed by the material subsidiaries of CRC. Occidental received $4.95 billion in net proceeds from the private placement as a result of a cash distribution from CRC as part of the planned spin-off.

In September 2014, CRC entered into a five-year, $1.0 billion Term Loan Facility and a five-year, $2.0 billion Revolving Credit Facility with a syndicate of lenders (the CRC Credit Facilities). The CRC Credit Facilities were entered into as part of the planned spin-off of CRC from Occidental. Borrowings under the CRC Credit Facilities bear interest at either LIBOR or an alternate base rate plus an applicable margin. All obligations under the CRC Credit Facilities are guaranteed by certain subsidiaries of CRC. CRC intends to borrow funds under the CRC Credit Facilities to make a $1.25 billion cash distribution to Occidental concurrent with the spin-off and to repay any intercompany balances to Occidental prior to the spin-off.

When Occidental completes the spin-off of CRC at the end of November, the results of operations and cash flows of CRC will be reclassified into discontinued operations in Occidental’s consolidated statements of income and cash flows for all periods presented.