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General | 9 Months Ended
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Sep. 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 September 30, 2020 and December 31, 2019, the consolidated condensed statements of operations, comprehensive income, cash flows and stockholders' equity for the three and nine months ended September 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 September 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 was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. Occidental expensed $302 million in acquisition-related costs for the nine months ended September 30, 2020, 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 operations to Total would not be consummated, and the decision was made to continue to operate within Algeria. As a result, as of the second quarter of 2020, 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 - Divestitures and Other Transactions for the impact on prior periods. In addition, in the second quarter 2020, 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 September 30, 2020. Occidental recorded an after-tax impairment of $1.4 billion in the second quarter 2020 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 - Divestitures 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 - Divestitures 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 $375 million and $827 million during the nine months ended September 30, 2020 and 2019, respectively. Occidental received tax refunds of $223 million and $5 million during the nine months ended September 30, 2020 and 2019, respectively, related to continuing operations. Interest paid for continuing operations totaled $1.3 billion and $611 million during the nine months ended September 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 September 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 nine months ended September 30, 2020 and 2019, respectively.
millions |  | 2020 |  | 2019
Cash and cash equivalents |  | $ | 1,896 |  |  | $ | 4,840 |
Restricted cash and restricted cash equivalents |  | 51 |  |  | 467 |
Cash and restricted cash included in assets held for sale |  | 113 |  |  | 3 |
Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net |  | 14 |  |  | 55 |
Cash, cash equivalents, restricted cash and restricted cash equivalents |  | $ | 2,074 |  |  | $ | 5,365 |
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 and a judicially controlled account related to a Brazilian tax dispute. Assets held for sale includes restricted cash for the payments of future hard-minerals royalties conveyed, see Note 3 - Divestitures and Other Transactions. 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. The amounts presented as non-controlling interest on the Consolidated Condensed Statements of Operations relate to the period prior to Occidental's loss of control. Prior to the loss of control, Occidental consolidated WES as a variable interest entity, for which the non-controlling interest primarily consisted of the 44.6% limited partner interest of WES owned by the public. In the first quarter 2020, Occidental recorded a loss from an equity investment of $440 million as a result of WES’s write-off of its goodwill. At the end of the third quarter 2020, Occidental recorded an other-than-temporary impairment of $2.7 billion, as the fair value of Occidental’s investment in WES has remained significantly lower than its book value for the majority of the nine months ended September 30, 2020. Occidental concluded that the difference between the fair value and book value of WES was not temporary, primarily given both the magnitude and the duration that the fair value was below its book value. This other-than-temporary impairment was calculated based on the closing market price of WES as of September 30, 2020. The market value of WES’s publicly traded common units is considered a Level 1 input. In addition, Occidental recorded a loss of $46 million as a result of a non-cash transaction with WES in which Occidental exchanged approximately 27.9 million of its WES common units to retire a $260 million note payable to WES, see Note 8 - Long-Term Debt. Subsequent to this exchange and WES’s retirement of those common units, Occidental has a 2% non-voting general partner interest, a 51.5% limited partner interest and a 2% non-voting limited partner interest in WES Operating, a subsidiary of WES. As of September 30, 2020, on a combined basis, Occidental's total effective economic interest in WES and its subsidiaries is 53.5%. Occidental intends to reduce its limited partner ownership interest in WES to below 50%. As of September 30, 2020, Occidental’s equity method investment in WES was $1.9 billion, which exceeds Occidental’s pro-rata interest in the net assets of WES by $370 million. This basis difference is primarily associated with WES's property, plant and equipment and equity investments and is subject to amortization over their estimated average lives. Subsequent to the other-than-temporary impairment there is no equity method goodwill associated with WES equity investment. 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 nine months ended September 30, 2020.
millions |  | Three months ended September 30, 2020 |  | Nine months ended September 30, 2020
Sales |  | $ | 46 |  |  | $ | 165 |
Purchases |  | $ | 164 |  |  | $ | 474 |
Transportation, gathering and other fees paid |  | $ | 258 |  |  | $ | 804 |

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