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Derivatives | 9 Months Ended
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Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives Occidental uses a variety of derivative financial instruments and physical contracts, including those designated as cash flow hedges, to manage its exposure to commodity price fluctuations, transportation commitments and to fix margins on the future sale of stored volumes of oil and natural gas. Where Occidental buys product for its own consumption or sells its production to a defined customer, Occidental elects normal purchases and normal sales exclusions. Occidental usually applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecast sales of its natural gas storage volumes, and at times for other strategies to lock in margins. Occidental also enters into derivative financial instruments for speculative or trading purposes; however, the results of any transactions are immaterial to the marketing portfolio. The financial instruments not designated as hedges will impact Occidental's earnings through mark-to-market until the offsetting future physical commodity is delivered. For GAAP purposes, any physical inventory is carried at lower of cost or market on the balance sheet. A substantial majority of Occidental's physical derivative contracts are index-based and carry no mark-to-market value in earnings. Net gains and losses associated with derivative instruments not designated as hedging instruments are recognized currently in net sales. Net gains and losses attributable to derivative instruments subject to hedge accounting reside in accumulated other comprehensive loss and are reclassified to earnings as the transactions to which the derivatives relate are recognized in earnings. Credit Risk The majority of Occidental's counterparty credit risk is related to the physical delivery of energy commodities to its customers and any potential inability to meet their settlement commitments. Occidental manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring collateral or other credit risk mitigants, as appropriate. Occidental actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. Occidental also enters into future contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk as a significant portion of these transactions settle on a daily margin basis. 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 would need to post. Occidental believes that if it had received a one-notch reduction in its credit ratings, it would not have resulted in a material change in its collateral-posting requirements as of September 30, 2018, and December 31, 2017. Cash flow Hedges Occidental’s marketing operations store natural gas purchased from third parties at Occidental’s leased storage facilities. Derivative instruments are used to fix margins on the future sales of the stored volumes. As of September 30, 2018, Occidental had approximately 6 billion cubic feet (Bcf) of natural gas held in storage, and had cash flow hedges for the forecast sales, to be settled by physical delivery, of approximately 4 Bcf of stored natural gas. As of December 31, 2017, Occidental had approximately 7 Bcf of natural gas held in storage, and had cash flow hedges for the forecast sales, to be settled by physical delivery, of approximately 7 Bcf of stored natural gas. The amount of cash flow hedges, including the ineffective portion, was immaterial for the nine months ended September 30, 2018, and the year ended December 31, 2017. Derivatives Not Designated as Hedging Instruments Forward unrealized instruments that are derivatives not designated as hedging instruments are required to be recorded on the income statement and balance sheet at fair value. The fair value represents an unrealized gain or loss between executed sales prices and market prices at the end of the period. The fair value does not reflect the realized or cash value of the instrument. Substantially all of the fair value of Occidental's derivative instruments not designated as hedges are used to manage its exposure to commodity price fluctuations and settle within three months at a weighted average contract price of $69.98 and $2.67 for crude oil and natural gas, respectively, at September 30, 2018. The remaining fair value of derivative instruments not designated as hedges was immaterial. The weighted average contract price was $57.38 and $2.73 for crude oil and natural gas, respectively, at December 31, 2017. The following table summarizes the amounts reported in net sales related to the outstanding commodity derivatives not designated as hedging instruments as of September 30, 2018, and December 31, 2017.
(in millions, except Long/(Short) volumes) |  | 2018 |  | 2017
Unrealized gain (loss) on derivatives not designated as hedges |  |  |  |
Crude Oil Commodity Contracts |  | $ | (37 | ) |  | $ | (47 | )
Natural Gas Commodity Contracts |  | $ | (1 | ) |  | $ | 1 |
Outstanding net volumes on derivatives not designated as hedges |  |  |  |
Crude Oil Commodity Contracts |  |  |  |
Volume (MMBL) |  | 73 |  |  | 61 |
Natural Gas Commodity Contracts |  |  |  |
Volume (Bcf) |  | (88 | ) |  | (47 | )
Fair Value of Derivatives The following table presents the gross and net fair values of Occidental’s outstanding derivatives as of September 30, 2018, and December 31, 2017 (in millions):
As of September 30, 2018 (in millions) |  | Fair Value Measurements Using |  | Netting (b) |  | Total Fair Value
Balance Sheet Location |  | Level 1 |  | Level 2 |  | Level 3 |  |
Assets: |  |  | Derivatives not designated as hedging instruments (a)
Other current assets |  | 1,210 |  |  | 631 |  |  | — |  |  | (1,235 | ) |  | 606 |
Long-term receivables and other assets, net |  | 101 |  |  | 4 |  |  | — |  |  | (101 | ) |  | 4 |
Liabilities: |  |  | Cash flow hedges (a)
Accrued liabilities |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
|  | Derivatives not designated as hedging instruments (a)
Accrued liabilities |  | 1,252 |  |  | 627 |  |  | — |  |  | (1,235 | ) |  | 644 |
Deferred credits and other liabilities - other |  | 101 |  |  | 4 |  |  | — |  |  | (101 | ) |  | 4 |
As of December 31, 2017 (in millions) |  | Fair Value Measurements Using |  | Netting (b) |  | Total Fair Value
Balance Sheet Location |  | Level 1 |  | Level 2 |  | Level 3 |  |
Assets: |  | Cash flow hedges (a)
Other current assets |  | — |  |  | 3 |  |  | — |  |  | — |  |  | 3 |
|  | Derivatives not designated as hedging instruments (a)
Other current assets |  | 485 |  |  | 227 |  |  | — |  |  | (517 | ) |  | 195 |
Long-term receivables and other assets, net |  | 1 |  |  | 2 |  |  | — |  |  | (1 | ) |  | 2 |
Liabilities: |  | Derivatives not designated as hedging instruments (a)
Accrued liabilities | 535 |  |  | 222 |  |  | — |  |  | (517 | ) |  | 240 |
Deferred credits and other liabilities - other | 1 |  |  | 3 |  |  | — |  |  | (1 | ) |  | 3 |
(a) | Fair values are presented at gross amounts, including when the derivatives are subject to master netting arrangements and presented on a net basis in the consolidated condensed balance sheets.
(b) | These amounts do not include collateral. As of September 30, 2018, no collateral received has been netted against derivative assets and collateral paid of $64 million has been netted against derivative liabilities. As of December 31, 2017, no collateral received has been netted against derivative assets and collateral paid of $54 million has been netted against derivative liabilities. Select clearinghouse and brokers require Occidental to post an initial margin deposit. Collateral deposited by Occidental, mainly for initial margin, of $73 million and $53 million as of September 30, 2018 and December 31, 2017, respectively, has not been reflected in these derivative fair -value tables. This collateral is included in other current assets in the consolidated condensed balance sheets.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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