Lease Commitments

3 Months Ended

Mar. 31, 2020


NOTE 9 - LEASE COMMITMENTS

Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including offshore and onshore drilling rigs and storage platforms of $105 million, compressors of $154 million and other field equipment of $341 million, which are recorded gross on the Consolidated Condensed Balance Sheet and in the lease cost disclosures below. Contract expiration terms generally range from two to eight years. Further, actual expenditures are netted against joint-interest recoveries on the income statement through the normal joint-interest billing process. Occidental’s leases also include pipelines, rail cars, storage facilities, easements and real estate of $619 million, which typically are not associated with joint-interest recoveries. Real estate leases have contract expiration terms ranging from one to thirteen years.

Occidental’s finance lease agreements include leases for oil and gas exploration and development equipment, as well as real estate offices, compressors and field equipment of approximately $347 million.

The following table presents lease balances and their location on the Consolidated Condensed Balance Sheet at March 31, 2020 and December 31, 2019:


millions	Balance sheet location	2020		2019
Assets:
Operating	Operating lease assets	$	1,193	$	1,385
Finance	Property, plant and equipment	343		397
Total lease assets		$	1,536	$	1,782

Liabilities:
Current
Operating	Current operating lease liabilities	$	453	$	569
Finance	Current maturities of long-term debt	38		51
Non-current
Operating	Deferred credits and other liabilities - Operating lease liabilities	768		854
Finance	Long-term debt, net	308		347
Total lease liabilities		$	1,567	$	1,821

At March 31, 2020, Occidental's leases expire based on the following schedule:


	Operating		Finance
millions	Leases ^(a)		Leases ^(b)		Total
Remainder of 2020	$	382	$	31	$	413
2021	386		37		423
2022	136		34		170
2023	102		32		134
2024	81		30		111
Thereafter	248		261		509
Total lease payments	1,335		425		1,760
Less: Interest	(114)		(79)		(193)
Total lease liabilities	$	1,221	$	346	$	1,567

^(a) The weighted-average remaining lease term is 4.8 years and the weighted-average discount rate is 2.85%.

^(b) The weighted-average remaining lease term is 11.8 years and the weighted-average discount rate is 3.39%.

The following tables present Occidental's total lease cost and classifications, as well as cash paid for amounts included in the measurement of operating and finance lease liabilities:


millions	Three months ended March 31,
Lease cost classification ^(a)	2020		2019
Operating lease costs ^(b):
Property, plant and equipment, net	$	85	$	91
Cost of sales	143		77
Selling, general and administrative expenses	21		16
Finance lease cost:
Amortization of ROU assets	4		—
Interest on lease liabilities	3		—
Total lease cost	$	256	$	184

^(a)Amounts reflected are gross before joint-interest recoveries.

^(b)Includes short-term lease cost of $54 million and $86 million for the three months ended March 31, 2020 and 2019,

respectively. Includes variable lease cost of $38 million and $31 million for the three months ended March 31, 2020

and 2019, respectively.


	Three months ended March 31,
millions	2020		2019
Operating cash flows	$	145	$	48
Investing cash flows	$	36	$	19
Financing cash flows	$	9	$	—

Lease Commitments


NOTE 9 - LEASE COMMITMENTS