General

9 Months Ended

Sep. 30, 2021


NOTE 1 - GENERAL

NATURE OF OPERATIONS

In this report, "Occidental" means Occidental Petroleum Corporation, a Delaware corporation, and one or more entities in which it owns a controlling interest (subsidiaries). Occidental conducts its operations through various subsidiaries and affiliates. Occidental has made its disclosures in accordance with United States generally accepted accounting principles as they apply to interim reporting, and condensed or omitted, as permitted by the U.S. Securities and Exchange Commission’s rules and regulations, certain information and disclosures normally included in consolidated financial statements and the notes thereto. These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in Occidental’s Annual Report on Form 10-K for the year ended December 31, 2020 (the 2020 Form 10-K).

In the opinion of Occidental’s management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present Occidental’s consolidated condensed balance sheets as of September 30, 2021 and December 31, 2020, and the consolidated condensed statements of operations, comprehensive income (loss), cash flows and equity for the three and nine months ended September 30, 2021 and 2020. Certain data in the financial statements and notes for prior periods have been reclassified to conform to the current presentation. The income and cash flows for the periods ended September 30, 2021 and 2020 are not necessarily indicative of the income or cash flows to be expected for the full year.

CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS

Occidental considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents or restricted cash equivalents. The cash equivalents and restricted cash equivalents balances at September 30, 2021 and 2020 included investments in government money market funds in which the carrying value approximates fair value.

The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as reported at the end of the period in the consolidated condensed statements of cash flows for the nine months ended September 30, 2021 and 2020, respectively.


millions	2021		2020
Cash and cash equivalents	$	2,059	$	1,896
Restricted cash and restricted cash equivalents	220		51
Cash and restricted cash included in assets held for sale	—		113
Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net	15		14
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	2,294	$	2,074

Total restricted cash and restricted cash equivalents were primarily associated with international joint ventures, a benefits trust and a judicially controlled account related to a Brazilian tax dispute. Cash and restricted cash included in assets held for sale at September 30, 2020 included restricted cash for the payments of future hard-minerals royalties conveyed, of which the related assets were sold in October 2020.

SUPPLEMENTAL CASH FLOW INFORMATION

The following table represents U.S. federal, domestic state and international income taxes paid, tax refunds received and interest paid related to continuing operations during the nine months ended September 30, 2021 and 2020, respectively.


millions	2021		2020
Income tax payments	$	(502)	$	(375)
Income tax refunds received	$	70	$	223
Interest paid (a)	$	(1,432)	$	(1,253)

(a) Net of capitalized interest of $46 million and $64 million for the nine months ended September 30, 2021 and 2020, respectively.

WES INVESTMENT

In March 2021, Occidental sold 11.5 million limited partner units of Western Midstream Partners, LP (WES) for proceeds of approximately $200 million, resulting in a gain of $102 million. As of September 30, 2021, Occidental owned all of the 2% non-voting general partner interest and 49.6% of the limited partner units in WES. On a combined basis, with its 2.0% non-voting limited partner interest in WES Operating, a WES subsidiary, Occidental's total effective economic interest in WES and its subsidiaries was 51.7%.

The following table presents the related-party transactions between Occidental and WES for the nine months ended September 30, 2021 and 2020.



millions	2021		2020
Sales	$	111	$	165
Purchases	$	17	$	474
Transportation, gathering and other fees paid	$	717	$	804

At the end of the third quarter 2020, Occidental recorded an other-than-temporary impairment of $2.7 billion, as the fair value of Occidental’s investment in WES had remained significantly lower than its book value for the majority of the nine months ended September 30, 2020. Occidental concluded that the difference between the fair value and book value of WES was not temporary, primarily given both the magnitude and the duration that the fair value was below its book value. This other-than-temporary impairment was calculated based on the closing market price of WES as of September 30, 2020. The market value of WES’s publicly traded common units is considered a Level 1 input. Occidental's equity method investment in WES was $1.9 billion as of September 30, 2020.

DISCONTINUED OPERATIONS

In October 2021, Occidental closed the sale of its Ghana assets for $750 million and net proceeds of $555 million, after closing adjustments to reflect an April 1, 2021 effective date. In addition, Occidental settled certain tax claims related to historical operations in Ghana for $170 million. As of September 30, 2021, the results of operations in Ghana, after-tax income of $3 million for the three months ended September 30, 2021 and after-tax losses of $32 million for the nine months ended September 30, 2021, continue to be presented as discontinued operations. The amounts related to the Ghana assets, of which approximately $1.0 billion and $1.4 billion are related to property, plant and equipment, net, as of September 30, 2021 and December 31, 2020, respectively, and the amounts related to Ghana liabilities, of which approximately $550 million and $670 million are related to deferred income taxes, asset retirement obligations and a finance lease liability as of September 30, 2021 and December 31, 2020, respectively, are presented as assets and liabilities held for sale.

During the first quarter of 2021, Occidental recorded a $403 million after-tax loss contingency in discontinued operations associated with its former operations in Ecuador, see Note 8 - Lawsuits, Claims, Commitments and Contingencies.