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General | 6 Months Ended
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Jun. 30, 2020
Accounting Policies [Abstract] |
General |
NOTE 1 - GENERAL
NATURE OF OPERATIONS In this report, "Occidental" means Occidental Petroleum Corporation, a Delaware corporation (OPC), or OPC 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 (GAAP) 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, 2019 (the 2019 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 financial position as of June 30, 2020 and December 31, 2019, the consolidated condensed statements of operations, comprehensive income, cash flows and stockholders' equity for the three and six months ended June 30, 2020 and 2019. 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 June 30, 2020 and 2019, are not necessarily indicative of the income or cash flows to be expected for the full year. THE ACQUISITION On August 8, 2019, pursuant to the Agreement and Plan of Merger dated May 9, 2019, Occidental acquired all of the outstanding shares of Anadarko Petroleum Corporation (the Acquisition). The Acquisition added to Occidental's oil and gas portfolio, primarily in the Permian Basin, DJ Basin, Gulf of Mexico and Algeria, and an interest in Western Midstream Partners, L.P. (WES). The Acquisition constituted a business combination. Under the acquisition method of accounting, the acquisition consideration is allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. As of June 30, 2020, Occidental has substantially completed the allocation of the consideration; however, Occidental continues to gather information related to the evaluation for a limited number of assets. Estimates were recorded as of the Acquisition date related to these remaining items and the valuations could change as additional information is received. For the three and six months ended June 30, 2020, there were no material changes to the allocation presented in the 2019 Form 10-K. Occidental expensed $149 million and $297 million in acquisition-related costs for the three and six months ended June 30, 2020, respectively, primarily related to severance costs. DISCONTINUED OPERATIONS In connection with the Acquisition, Occidental entered into a purchase and sale agreement with TOTAL S.A. (Total) to sell all of the assets, liabilities, businesses, and operations of Anadarko's operations in Algeria, Ghana, Mozambique and South Africa. Total and Occidental completed the sale of the Mozambique assets in September 2019 and the South Africa assets in January 2020. In April 2020, subsequent to communications with Algerian government officials, Occidental determined that the sale of the Algeria assets to Total would not be consummated, and the decision was made to continue to operate within Algeria. As a result, Occidental no longer classified the Algeria operations as a held for sale asset in discontinued operations and reclassified prior periods to reflect the Algeria operations as continuing operations, see Note 3 - Dispositions and Other Transactions for the impact on prior periods. In addition, Occidental recorded a $931 million impairment to remeasure the Algeria oil and gas properties to their fair value which was lower than the carrying amount as if depreciation, depletion and amortization (DD&A) were recorded from the date of the Acquisition. The fair value of the oil and gas properties was measured based on the income approach, see Note 7 - Fair Value Measurements for a description of inputs and assumptions utilized. In May 2020, Occidental and Total mutually agreed to execute a waiver of the obligation to purchase and sell the Ghana assets, so that Occidental could begin marketing the sale of the Ghana assets to other third parties. Occidental is currently marketing the Ghana assets. The assets and liabilities for Ghana remain presented as held for sale at June 30, 2020, and the carrying amount of the assets and liabilities of the Ghana disposal group were adjusted to their estimated fair value. Occidental recorded an after-tax impairment of $1.4 billion to reflect the held for sale assets at their fair value less costs to sell based on the income approach, refer to Note 7 - Fair Value Measurements. The results of operations of Ghana continue to be presented as discontinued operations, see Note 3 - Dispositions and Other Transactions. Unless otherwise indicated, information presented in the Notes to the Consolidated Condensed Financial Statements relates only to Occidental's continuing operations. Information related to discontinued operations is included in Note 3 - Dispositions and Other Transactions, and in some instances, where appropriate, is included as a separate disclosure within the individual Notes to the Consolidated Condensed Financial Statements. SUPPLEMENTAL CASH FLOW INFORMATION Occidental paid U.S. domestic state and foreign income taxes for continuing operations of $281 million and $544 million during the six months ended June 30, 2020 and 2019, respectively. Occidental received tax refunds of $96 million and $2 million during the six months ended June 30, 2020 and 2019, respectively, related to continuing operations. Interest paid for continuing operations totaled $775 million and $199 million during the six months ended June 30, 2020 and 2019, respectively. 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 balance at June 30, 2020 includes 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 three months ended June 30, 2020 to the line items within the Consolidated Condensed Balance Sheet at June 30, 2020. There was no restricted cash or restricted cash equivalents at June 30, 2019.
millions |
Cash and cash equivalents | $ | 1,011 |
Restricted cash and restricted cash equivalents | 124 |
Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net | 78 |
Cash, cash equivalents, restricted cash and restricted cash equivalents | $ | 1,213 |
Total restricted cash and restricted cash equivalents are primarily associated with a benefits trust for former Anadarko employees that was funded as part of the Acquisition, payments of future hard-minerals royalties conveyed, and a judicially controlled account related to a Brazilian tax dispute. EQUITY METHOD INVESTMENT-WES On December 31, 2019, Occidental and WES executed several agreements to allow WES to operate as an independent midstream company. Occidental's loss of control of WES on December 31, 2019 resulted in Occidental recognizing, at fair value, an equity method investment of $5.1 billion based on the closing market price of WES. As of June 30, 2020, the carrying amount of the investment in WES was $4.9 billion. The decline in the equity method investment from December 31, 2019 to June 30, 2020 was primarily attributable to Occidental's interest in WES's approximately $440 million impairment of its goodwill during the first quarter of 2020. Occidental has concluded that the short-term loss in value did not meet the other-than-temporary criteria under accounting literature governing equity method investments as of June 30, 2020. However, if WES’s unit price remains significantly below its year-end 2019 unit price for the remainder of 2020, Occidental may be be required to reduce the carrying amount of its equity method investment in WES. WES owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties, which could be impacted by lower demand for oil and gas associated with the ongoing COVID-19 pandemic. Subsequent to loss of control, transactions between Occidental and WES were no longer eliminated upon consolidation. Occidental and WES entered into the following related-party transactions for the three and six months ended June 30, 2020.
millions |  | Three months ended June 30, 2020 |  | Six months ended June 30, 2020
Sales |  | $ | 6 |  |  | $ | 119 |
Purchases |  | $ | 92 |  |  | $ | 311 |
Transportation, gathering and other fees paid |  | $ | 236 |  |  | $ | 546 |

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