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Lease Commitments | 9 Months Ended
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Sep. 30, 2020
Leases [Abstract] |
Lease Commitments |
NOTE 9 - LEASE COMMITMENTS
Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including offshore and onshore drilling rigs of $56 million, compressors of $155 million, storage facilities of $297 million, office space of $417 million and other field equipment of $58 million, which are recorded gross on the Consolidated Condensed Balance Sheet and in the lease cost disclosures below. Contract expiration terms generally range from two to eight years. Further, 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, rail cars, easements, aircrafts and other real estate of $262 million, which typically are not associated with joint-interest recoveries. Office space and other real estate leases have contract expiration terms ranging from one to 13 years. Occidental’s finance lease agreements include leases for oil and gas exploration and development equipment, as well as real estate offices, compressors and field equipment of approximately $325 million. The following table presents lease balances and their location on the Consolidated Condensed Balance Sheet at September 30, 2020, and December 31, 2019:
millions |  | Balance sheet location |  | September 30, 2020 |  | December 31, 2019
Assets: |  |  |  |  |  |
Operating |  | Operating lease assets |  | $ | 1,196 |  |  | $ | 1,411 |
Finance |  | Property, plant and equipment |  | 329 |  |  | 397 |
Total lease assets |  |  |  | $ | 1,525 |  |  | $ | 1,808 |
Liabilities: |  |  |  |  |  |
Current |  |  |  |  |  |
Operating |  | Current operating lease liabilities |  | $ | 459 |  |  | $ | 579 |
Finance |  | Current maturities of long-term debt |  | 33 |  |  | 51 |
Non-current |  |  |  |  |  |
Operating |  | Deferred credits and other liabilities - Operating lease liabilities |  | 786 |  |  | 872 |
Finance |  | Long-term debt, net |  | 292 |  |  | 347 |
Total lease liabilities |  |  |  | $ | 1,570 |  |  | $ | 1,849 |
At September 30, 2020, Occidental's leases expire based on the following schedule:
|  | Operating |  | Finance |  |
millions |  | Leases (a) |  | Leases (b) |  | Total
Remainder of 2020 |  | $ | 117 |  |  | $ | 7 |  |  | $ | 124 |
2021 |  | 454 |  |  | 35 |  |  | 489 |
2022 |  | 182 |  |  | 34 |  |  | 216 |
2023 |  | 110 |  |  | 32 |  |  | 142 |
2024 |  | 89 |  |  | 30 |  |  | 119 |
Thereafter |  | 480 |  |  | 261 |  |  | 741 |
Total lease payments |  | 1,432 |  |  | 399 |  |  | 1,831 |
Less: Interest |  | (187) |  |  | (74) |  |  | (261) |
Total lease liabilities |  | $ | 1,245 |  |  | $ | 325 |  |  | $ | 1,570 |
(a) The weighted-average remaining lease term is 6.0 years and the weighted-average discount rate is 4.53%. (b) The weighted-average remaining lease term is 11.8 years and the weighted-average discount rate is 3.37%. The following tables present Occidental's total lease cost and classifications, as well as cash paid for amounts included in the measurement of operating and finance lease liabilities:
millions |  | Three months ended September 30, |  | Nine months ended September 30,
Lease cost classification (a) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating lease costs (b) |  |  |  |  |  |  |  |
Property, plant and equipment, net |  | $ | 24 |  |  | $ | 139 |  |  | $ | 153 |  |  | $ | 321 |
Cost of sales |  | 131 |  |  | 135 |  |  | 417 |  |  | 273 |
Selling, general and administrative expenses |  | 37 |  |  | 26 |  |  | 80 |  |  | 61 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of ROU assets |  | 5 |  |  | 5 |  |  | 14 |  |  | 11 |
Interest on lease liabilities |  | 3 |  |  | 1 |  |  | 9 |  |  | 1 |
Total lease cost |  | $ | 200 |  |  | $ | 306 |  |  | $ | 673 |  |  | $ | 667 |
(a) Amounts reflected are gross before joint-interest recoveries. (b) Includes short-term lease cost of $42 million and $146 million for the three and nine months ended September 30, 2020, respectively, and $139 million and $295 million for the three and nine months ended September 30, 2019, respectively. Includes variable lease cost of $11 million and $73 million for the three and nine months ended September 30, 2020, respectively, and $55 million and $115 million for the three and nine months ended September 30, 2019, respectively.
|  | Nine months ended September 30,
millions |  | 2020 |  | 2019
Operating cash flows |  | $ | 401 |  |  | $ | 164 |
Investing cash flows |  | $ | 59 |  |  | $ | 83 |
Financing cash flows |  | $ | 15 |  |  | $ | 11 |
Lease Commitments |
NOTE 9 - LEASE COMMITMENTS
Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including offshore and onshore drilling rigs of $56 million, compressors of $155 million, storage facilities of $297 million, office space of $417 million and other field equipment of $58 million, which are recorded gross on the Consolidated Condensed Balance Sheet and in the lease cost disclosures below. Contract expiration terms generally range from two to eight years. Further, 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, rail cars, easements, aircrafts and other real estate of $262 million, which typically are not associated with joint-interest recoveries. Office space and other real estate leases have contract expiration terms ranging from one to 13 years. Occidental’s finance lease agreements include leases for oil and gas exploration and development equipment, as well as real estate offices, compressors and field equipment of approximately $325 million. The following table presents lease balances and their location on the Consolidated Condensed Balance Sheet at September 30, 2020, and December 31, 2019:
millions |  | Balance sheet location |  | September 30, 2020 |  | December 31, 2019
Assets: |  |  |  |  |  |
Operating |  | Operating lease assets |  | $ | 1,196 |  |  | $ | 1,411 |
Finance |  | Property, plant and equipment |  | 329 |  |  | 397 |
Total lease assets |  |  |  | $ | 1,525 |  |  | $ | 1,808 |
Liabilities: |  |  |  |  |  |
Current |  |  |  |  |  |
Operating |  | Current operating lease liabilities |  | $ | 459 |  |  | $ | 579 |
Finance |  | Current maturities of long-term debt |  | 33 |  |  | 51 |
Non-current |  |  |  |  |  |
Operating |  | Deferred credits and other liabilities - Operating lease liabilities |  | 786 |  |  | 872 |
Finance |  | Long-term debt, net |  | 292 |  |  | 347 |
Total lease liabilities |  |  |  | $ | 1,570 |  |  | $ | 1,849 |
At September 30, 2020, Occidental's leases expire based on the following schedule:
|  | Operating |  | Finance |  |
millions |  | Leases (a) |  | Leases (b) |  | Total
Remainder of 2020 |  | $ | 117 |  |  | $ | 7 |  |  | $ | 124 |
2021 |  | 454 |  |  | 35 |  |  | 489 |
2022 |  | 182 |  |  | 34 |  |  | 216 |
2023 |  | 110 |  |  | 32 |  |  | 142 |
2024 |  | 89 |  |  | 30 |  |  | 119 |
Thereafter |  | 480 |  |  | 261 |  |  | 741 |
Total lease payments |  | 1,432 |  |  | 399 |  |  | 1,831 |
Less: Interest |  | (187) |  |  | (74) |  |  | (261) |
Total lease liabilities |  | $ | 1,245 |  |  | $ | 325 |  |  | $ | 1,570 |
(a) The weighted-average remaining lease term is 6.0 years and the weighted-average discount rate is 4.53%. (b) The weighted-average remaining lease term is 11.8 years and the weighted-average discount rate is 3.37%. The following tables present Occidental's total lease cost and classifications, as well as cash paid for amounts included in the measurement of operating and finance lease liabilities:
millions |  | Three months ended September 30, |  | Nine months ended September 30,
Lease cost classification (a) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Operating lease costs (b) |  |  |  |  |  |  |  |
Property, plant and equipment, net |  | $ | 24 |  |  | $ | 139 |  |  | $ | 153 |  |  | $ | 321 |
Cost of sales |  | 131 |  |  | 135 |  |  | 417 |  |  | 273 |
Selling, general and administrative expenses |  | 37 |  |  | 26 |  |  | 80 |  |  | 61 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of ROU assets |  | 5 |  |  | 5 |  |  | 14 |  |  | 11 |
Interest on lease liabilities |  | 3 |  |  | 1 |  |  | 9 |  |  | 1 |
Total lease cost |  | $ | 200 |  |  | $ | 306 |  |  | $ | 673 |  |  | $ | 667 |
(a) Amounts reflected are gross before joint-interest recoveries. (b) Includes short-term lease cost of $42 million and $146 million for the three and nine months ended September 30, 2020, respectively, and $139 million and $295 million for the three and nine months ended September 30, 2019, respectively. Includes variable lease cost of $11 million and $73 million for the three and nine months ended September 30, 2020, respectively, and $55 million and $115 million for the three and nine months ended September 30, 2019, respectively.
|  | Nine months ended September 30,
millions |  | 2020 |  | 2019
Operating cash flows |  | $ | 401 |  |  | $ | 164 |
Investing cash flows |  | $ | 59 |  |  | $ | 83 |
Financing cash flows |  | $ | 15 |  |  | $ | 11 |

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