Fair Value Measurements

12 Months Ended

Dec. 31, 2014

NOTE 15FAIR VALUE MEASUREMENTS

FAIR VALUES — RECURRING

The following tables provide fair value measurement information for assets and liabilities that are measured on a recurring basis:

(in millions)	Fair Value Measurements at December 31, 2014 Using
							Netting and		Total
Description	Level 1		Level 2		Level 3		Collateral		Fair Value
Assets:
Commodity derivatives	$	712	$	127	$	—	$	(742)	$	97
Available for sale investment	$	394	$	—	$	—	$	—	$	394
Liabilities:
Commodity derivatives	$	750	$	246	$	—	$	(756)	$	240

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

FAIR VALUES — NONRECURRING

As a result of the sharp decline of the forward price curve in the fourth quarter of 2014, Occidental recognized approximately $3.8 billion in pre-tax impairment charges related to proved oil and gas properties. Domestically, Occidental recognized $2.8 billion in pre-tax impairment charges related to domestic oil and gas properties primarily in the Williston Basin and gas and NGLs assets. Internationally, the remaining $1.0 billion related primarily to Bahrain.

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 a risk adjusted discount rate of 8 percent. These properties were impacted by persistently low natural gas prices and the recent decline in oil 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.

In 2014, Occidental recognized approximately $111 million pre-tax charges related to the impairments of Chemical assets.

(in millions)	Fair Value Measurements at December 31, 2014 Using								Total Pre-tax
							Net		(Non-cash)
Description	Level 1		Level 2		Level 3		Book Value (a)		Impairment Loss
Assets:
Impaired proved oil and gas assets - domestic	$	—	$	—	$	2,249	$	5,008	$	2,759
Impaired proved oil and gas assets - international	$	—	$	—	$	45	$	1,084	$	1,039
Impaired Chemical property, plant, and equipment	$	—	$	—	$	18	$	129	$	111

(a)

Amount represents net book value at date of assessment.

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. See Note 5 for the fair value of Long-term Debt.

- 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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