XML 32 R22.htm IDEA: XBRL DOCUMENT
v3.19.2

Leases | 6 Months Ended
--- | ---
Jun. 30, 2019
Leases [Abstract] |
Leases | Leases On January 1, 2019, Occidental adopted ASC 842 using the modified retrospective approach, which provided a method for recording existing leases at adoption and did not require restatement of prior year amounts and disclosures which continue to be reflected in accordance with ASC 840. Occidental elected certain practical expedients including:
• | Leases that commenced before the effective date carried forward their historical lease classification.
• | Existing or expired land easements as of December 31, 2018 were not reassessed to determine whether or not they contained a lease.
• | Leases with a lease term of 12 months or less from lease commencement date are considered short-term leases and not recorded on the consolidated condensed balance sheet; however, the lease expenditures recognized are captured and reported as incurred.
• | For asset classes, except long-term drilling rigs, Occidental elected to account for the lease and non-lease components as a single lease component as the non-lease portions were not significant to separate in determining the lease liability. For drilling rigs considered long-term in nature, Occidental bifurcated the lease and non-lease components using relative fair value as a stand-alone selling price between the asset rental and the services obtained.
ASC 842 requires lessees to recognize an ROU asset and lease liability for all long-term leases. An ROU asset represents Occidental’s right to use an underlying asset for the lease term and the associated lease liability represents the discounted obligation of future minimum lease payments. Occidental identifies leases through its accounts payable and contract monitoring process. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The ROU assets include the discounted obligation in addition to any upfront payments or costs incurred during the contract execution of the lease. Except for leases with explicitly defined contract terms, Occidental utilizes judgment to assess likelihood of renewals, terminations and purchase options, in order to determine the lease term. Occidental uses the incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate equates to the rate of interest that Occidental would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain leases include variable lease payments which are over and above the minimum lease liability used to derive the ROU asset and lease liability and are based on the underlying asset’s operations. These variable lease costs are reported in the lease cost classification table below. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The criteria for distinguishing between finance and operating leases are substantially similar to criteria under ASC 840. Adoption of ASC 842 resulted in recording of net lease assets and lease liabilities of $772 million, respectively, as of January 1, 2019. There was no material impact to net income, cash flows or stockholders’ equity. Nature of Leases Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including drilling rigs, compressors and other field equipment, which are recorded gross on the consolidated condensed balance sheet and in the lease cost disclosures below. 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 and other transportation equipment, rail cars, power plants, machinery, terminals, storage facilities, land, easements and residential and office space, which typically are not associated with joint interest recoveries. The following table presents Occidental's lease balances and their location on the consolidated condensed balance sheet at June 30, 2019 (in millions):
|  | Balance sheet location |  | 2019
Assets: |  |  |  |
Operating |  | Operating lease assets, net |  | $ | 681 |
Finance |  | Property, plant, and equipment, net |  | 19 |
Total lease assets |  |  |  | $ | 700 |
Liabilities: |  |  |  |
Current |  |  |  |
Operating |  | Current lease liabilities |  | $ | 242 |
Finance |  | Current lease liabilities |  | 10 |
Non-current |  |  |  |
Operating |  | Deferred credits and other liabilities - Lease liabilities |  | 437 |
Finance |  | Deferred credits and other liabilities - Lease liabilities |  | 8 |
Total lease liabilities |  |  |  | $ | 697 |
At June 30, 2019, Occidental's leases matured on the following schedule (in millions):
|  | Operating |  | Finance |  |
|  | Leases (a) |  | Leases (b) |  | Total
Remainder of 2019 |  | $ | 122 |  |  | $ | 6 |  |  | $ | 128 |
2020 |  | 190 |  |  | 12 |  |  | 202 |
2021 |  | 116 |  |  | 1 |  |  | 117 |
2022 |  | 81 |  |  | — |  |  | 81 |
2023 |  | 61 |  |  | — |  |  | 61 |
Thereafter |  | 170 |  |  | — |  |  | 170 |
Total lease payments |  | 740 |  |  | 19 |  |  | 759 |
Less: Interest |  | (61 | ) |  | (1 | ) |  | (62 | )
Present value of lease liabilities |  | $ | 679 |  |  | $ | 18 |  |  | $ | 697 |
(a) | The weighted average remaining lease term is 5.5 years and the weighted average discount rate is 3.03%.
(b) | The weighted average remaining lease term is 1.8 years and the weighted average discount rate is 2.93%.
At December 31, 2018, future undiscounted net minimum fixed lease payments for non-cancellable operating leases, prepared in accordance with accounting standards prior to the adoption of ASC 842, were as follows (in millions):
|  | Amount
2019 |  | $ | 186 |
2020 |  | 147 |
2021 |  | 96 |
2022 |  | 68 |
2023 |  | 49 |
Thereafter |  | 158 |
Total minimum lease payments |  | $ | 704 |
The following tables present Occidental's total lease cost and classifications as well as cash paid for amounts included in the measurement of operating lease liabilities. Lease costs and amounts paid associated with finance leases were immaterial for the three and six months ended June 30, 2019 (in millions):
Lease cost classification(a,b) |  | Three months ended June 30, 2019 |  | Six months ended June 30, 2019
Property, plant and equipment, net |  | $ | 91 |  |  | $ | 182 |
Cost of sales |  | 61 |  |  | 138 |
Selling, general and administrative expenses |  | 19 |  |  | 35 |
Total |  | $ | 171 |  |  | $ | 355 |
(a) | Includes short-term lease costs of $70 million and variable lease costs of $29 million for the three months ended June 30, 2019. Includes short-term lease costs of $156 million and variable lease costs of $60 million for the six months ended June 30, 2019.
(b) | Amounts reflected are gross before joint interest recoveries.
Cash paid on operating leases(a) |  | Six months ended June 30, 2019
Cash flow from operating activities |  | $ | 95 |
Cash flow from investing activities |  | $ | 44 |
(a) Amounts reflected are gross before joint interest recoveries.
Leases | Leases On January 1, 2019, Occidental adopted ASC 842 using the modified retrospective approach, which provided a method for recording existing leases at adoption and did not require restatement of prior year amounts and disclosures which continue to be reflected in accordance with ASC 840. Occidental elected certain practical expedients including:
• | Leases that commenced before the effective date carried forward their historical lease classification.
• | Existing or expired land easements as of December 31, 2018 were not reassessed to determine whether or not they contained a lease.
• | Leases with a lease term of 12 months or less from lease commencement date are considered short-term leases and not recorded on the consolidated condensed balance sheet; however, the lease expenditures recognized are captured and reported as incurred.
• | For asset classes, except long-term drilling rigs, Occidental elected to account for the lease and non-lease components as a single lease component as the non-lease portions were not significant to separate in determining the lease liability. For drilling rigs considered long-term in nature, Occidental bifurcated the lease and non-lease components using relative fair value as a stand-alone selling price between the asset rental and the services obtained.
ASC 842 requires lessees to recognize an ROU asset and lease liability for all long-term leases. An ROU asset represents Occidental’s right to use an underlying asset for the lease term and the associated lease liability represents the discounted obligation of future minimum lease payments. Occidental identifies leases through its accounts payable and contract monitoring process. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The ROU assets include the discounted obligation in addition to any upfront payments or costs incurred during the contract execution of the lease. Except for leases with explicitly defined contract terms, Occidental utilizes judgment to assess likelihood of renewals, terminations and purchase options, in order to determine the lease term. Occidental uses the incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate equates to the rate of interest that Occidental would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain leases include variable lease payments which are over and above the minimum lease liability used to derive the ROU asset and lease liability and are based on the underlying asset’s operations. These variable lease costs are reported in the lease cost classification table below. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The criteria for distinguishing between finance and operating leases are substantially similar to criteria under ASC 840. Adoption of ASC 842 resulted in recording of net lease assets and lease liabilities of $772 million, respectively, as of January 1, 2019. There was no material impact to net income, cash flows or stockholders’ equity. Nature of Leases Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including drilling rigs, compressors and other field equipment, which are recorded gross on the consolidated condensed balance sheet and in the lease cost disclosures below. 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 and other transportation equipment, rail cars, power plants, machinery, terminals, storage facilities, land, easements and residential and office space, which typically are not associated with joint interest recoveries. The following table presents Occidental's lease balances and their location on the consolidated condensed balance sheet at June 30, 2019 (in millions):
|  | Balance sheet location |  | 2019
Assets: |  |  |  |
Operating |  | Operating lease assets, net |  | $ | 681 |
Finance |  | Property, plant, and equipment, net |  | 19 |
Total lease assets |  |  |  | $ | 700 |
Liabilities: |  |  |  |
Current |  |  |  |
Operating |  | Current lease liabilities |  | $ | 242 |
Finance |  | Current lease liabilities |  | 10 |
Non-current |  |  |  |
Operating |  | Deferred credits and other liabilities - Lease liabilities |  | 437 |
Finance |  | Deferred credits and other liabilities - Lease liabilities |  | 8 |
Total lease liabilities |  |  |  | $ | 697 |
At June 30, 2019, Occidental's leases matured on the following schedule (in millions):
|  | Operating |  | Finance |  |
|  | Leases (a) |  | Leases (b) |  | Total
Remainder of 2019 |  | $ | 122 |  |  | $ | 6 |  |  | $ | 128 |
2020 |  | 190 |  |  | 12 |  |  | 202 |
2021 |  | 116 |  |  | 1 |  |  | 117 |
2022 |  | 81 |  |  | — |  |  | 81 |
2023 |  | 61 |  |  | — |  |  | 61 |
Thereafter |  | 170 |  |  | — |  |  | 170 |
Total lease payments |  | 740 |  |  | 19 |  |  | 759 |
Less: Interest |  | (61 | ) |  | (1 | ) |  | (62 | )
Present value of lease liabilities |  | $ | 679 |  |  | $ | 18 |  |  | $ | 697 |
(a) | The weighted average remaining lease term is 5.5 years and the weighted average discount rate is 3.03%.
(b) | The weighted average remaining lease term is 1.8 years and the weighted average discount rate is 2.93%.
At December 31, 2018, future undiscounted net minimum fixed lease payments for non-cancellable operating leases, prepared in accordance with accounting standards prior to the adoption of ASC 842, were as follows (in millions):
|  | Amount
2019 |  | $ | 186 |
2020 |  | 147 |
2021 |  | 96 |
2022 |  | 68 |
2023 |  | 49 |
Thereafter |  | 158 |
Total minimum lease payments |  | $ | 704 |
The following tables present Occidental's total lease cost and classifications as well as cash paid for amounts included in the measurement of operating lease liabilities. Lease costs and amounts paid associated with finance leases were immaterial for the three and six months ended June 30, 2019 (in millions):
Lease cost classification(a,b) |  | Three months ended June 30, 2019 |  | Six months ended June 30, 2019
Property, plant and equipment, net |  | $ | 91 |  |  | $ | 182 |
Cost of sales |  | 61 |  |  | 138 |
Selling, general and administrative expenses |  | 19 |  |  | 35 |
Total |  | $ | 171 |  |  | $ | 355 |
(a) | Includes short-term lease costs of $70 million and variable lease costs of $29 million for the three months ended June 30, 2019. Includes short-term lease costs of $156 million and variable lease costs of $60 million for the six months ended June 30, 2019.
(b) | Amounts reflected are gross before joint interest recoveries.
Cash paid on operating leases(a) |  | Six months ended June 30, 2019
Cash flow from operating activities |  | $ | 95 |
Cash flow from investing activities |  | $ | 44 |
(a) Amounts reflected are gross before joint interest recoveries.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration