DERIVATIVES

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

NOTE 5 - DERIVATIVES

OBJECTIVE AND STRATEGY

Occidental enters into derivative financial instruments for trading purposes. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. Occidental may occasionally use a variety of derivative financial instruments and physical contracts to manage its exposure to commodity price fluctuations, foreign currency fluctuations, interest rate risks and transportation commitments and to fix margins on the future sale of stored commodity volumes.

Occidental may elect normal purchases and normal sales exclusions when physically delivered commodities are purchased or sold to a customer. Occidental occasionally applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecasted sales of its natural gas storage volumes, and at times for other strategies, such as to lock in rates on debt issuances. The value of cash flow hedges was insignificant for all periods presented.

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

As of March 31, 2023, Occidental’s derivatives not designated as hedges consisted of marketing derivatives. Occidental retired all remaining outstanding interest rate swaps in the twelve months ended December 31, 2022.

Derivative instruments that are not designated as hedging instruments are required to be recorded on the balance sheet at fair value. Changes in fair value will impact Occidental’s earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled.

MARKETING DERIVATIVES

Occidental's marketing derivative instruments not designated as hedges are short-duration physical and financial forward contracts. As of March 31, 2023, the weighted-average settlement price of these forward contracts was $77.70 per barrel and $2.12 per Mcf for crude oil and natural gas, respectively. The weighted-average settlement price was $81.37 per barrel and $7.89 per Mcf for crude oil and natural gas, respectively, as of December 31, 2022. Net gains and losses associated with marketing derivative instruments not designated as hedging instruments are recognized currently in net sales.

The following table summarizes net short volumes associated with the outstanding marketing commodity derivatives not designated as hedging instruments:

long (short)	March 31, 2023	December 31, 2022
Oil commodity contracts
Volume (MMbbl)	(34)	(33)
Natural gas commodity contracts
Volume (Bcf)	(143)	(112)

FAIR VALUE OF DERIVATIVES

The following tables present the fair values of Occidental’s outstanding derivatives. Fair values are presented at gross amounts below, including when the derivatives are subject to netting arrangements, and are presented on a net basis in the Consolidated Condensed Balance Sheets:

millions	Fair Value Measurements Using						Netting (a)		Total Fair Value
Balance Sheet Classifications	Level 1		Level 2		Level 3
March 31, 2023
Marketing Derivatives
Other current assets	$	1,025	$	99	$	—	$	(1,090)	$	34
Long-term receivables and other assets, net	9		2		—		(9)		2
Accrued liabilities	(1,035)		(87)		—		1,090		(32)
Deferred credits and other liabilities - other	(9)		—		—		9		—
December 31, 2022
Marketing Derivatives
Other current assets	$	920	$	127	$	—	$	(980)	$	67
Long-term receivables and other assets, net	1		2		—		(1)		2
Accrued liabilities	(938)		(96)		—		980		(54)
Deferred credits and other liabilities - other	(1)		(1)		—		2		—

(a)These amounts do not include collateral. Occidental netted $3 million of collateral deposited with brokers against derivative liabilities related to marketing derivatives as of March 31, 2023 and netted $15 million of collateral deposited with brokers against derivative liabilities related to marketing derivatives as of December 31, 2022.

GAINS AND LOSSES ON DERIVATIVES

The following table presents net gains related to Occidental's derivative instruments on the Consolidated Condensed Statements of Operations:

millions	Three months ended March 31,
Income Statement Classification	2023		2022
Interest Rate Swaps
Gains on interest rate swaps, net (a)	$	—	$	135
Marketing Derivatives
Net sales (b)	$	107	$	135

(a)     Occidental retired all remaining outstanding interest rate swaps in the twelve months ended December 31, 2022.

(b)     Includes derivative and non-derivative marketing activity.

CREDIT RISK

Certain of Occidental's over-the-counter derivative instruments contain credit-risk-contingent features, primarily tied to credit ratings for Occidental or its counterparties, which may affect the amount of collateral that each party would need to post. The aggregate fair value of derivative instruments with credit-risk-related contingent features for which a net liability position existed as of March 31, 2023 was $9 million. The aggregate fair value of derivative instruments with credit-risk-contingent features for which a net liability position existed as of December 31, 2022 was $18 million.