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Derivatives | 9 Months Ended
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Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives |
NOTE 6 - DERIVATIVES
OBJECTIVE AND STRATEGY Occidental uses a variety of derivative financial instruments and physical contracts to manage its exposure to commodity price fluctuations, interest rate risks and transportation commitments and to fix margins on the future sale of stored commodity volumes. Occidental also enters into derivative financial instruments for trading purposes. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. Occidental may elect normal purchases and normal sales exclusions when physically delivered commodities are purchased or sold to a customer. Occidental occasionally applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecasted sales of its natural gas storage volumes, and at times for other strategies, such as to lock in rates on debt issuances. The value of cash flow hedges was insignificant for all periods presented. DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS As of September 30, 2022, Occidental’s derivatives not designated as hedges consisted of marketing derivatives and interest rate swaps. Derivative instruments that are not designated as hedging instruments are required to be recorded on the balance sheet at fair value. Changes in fair value will impact Occidental’s earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled. MARKETING DERIVATIVES Occidental's marketing derivative instruments not designated as hedges are short-duration physical and financial forward contracts. As of September 30, 2022, the weighted-average settlement price of these forward contracts was $86.82 per barrel and $6.11 per Mcf for crude oil and natural gas, respectively. The weighted-average settlement price was $74.85 per barrel and $4.61 per Mcf for crude oil and natural gas, respectively, as of December 31, 2021. Net gains and losses associated with marketing derivative instruments not designated as hedging instruments are recognized currently in net sales. The following table summarizes net short volumes associated with the outstanding marketing commodity derivatives not designated as hedging instruments:
long (short) |  | September 30, 2022 |  | December 31, 2021
Oil commodity contracts |  |  |  |
Volume (MMbbl) |  | (28) |  |  | (28) |
Natural gas commodity contracts |  |  |  |
Volume (Bcf) |  | (141) |  |  | (136) |
INTEREST RATE SWAPS Occidental's interest rate swap contracts lock in a fixed interest rate in exchange for a floating interest rate indexed to the three-month London InterBank Offered Rate throughout the reference period. Net gains and losses associated with interest rate swaps are recognized currently in gains (losses) on interest rate swaps, net in the Consolidated Condensed Statements of Operations. Occidental had the following outstanding interest rate swaps as of September 30, 2022:
millions, except percentages |  |  |  | Mandatory |  | Weighted-Average
Notional Principal Amount |  | Reference Period |  | Termination Date |  | Interest Rate
$ | 450 |  |  |  | September 2017 - 2047 |  | September 2023 |  | 6.445 | %
Depending on market conditions, liability management actions or other factors, Occidental may enter into offsetting interest rate swap positions as well as amend or settle certain or all of the currently outstanding interest rate swaps. Derivative settlements and collateralization are classified as cash flow from operating activities unless the derivatives contain an other-than-insignificant financing element, in which case the settlements and collateralization are classified as cash flows from financing activities. Net cash receipts for the nine months ended September 30, 2022 related to interest rate swap agreements were $61 million, which included $86 million paid to settle interest rate swaps, periodic interest settlements of $34 million and the return of $181 million of collateral. FAIR VALUE OF DERIVATIVES The following tables present the fair values of Occidental’s outstanding derivatives. Fair values are presented at gross amounts below, including when the derivatives are subject to netting arrangements, and are presented on a net basis in the Consolidated Condensed Balance Sheets:
millions | Fair Value Measurements Using |  | Netting (a) |  | Total Fair Value
Balance Sheet Classifications | Level 1 |  | Level 2 |  | Level 3 |  |
September 30, 2022 |  |  |  |  |  |  |  |  |
Marketing Derivatives |  |  |  |  |  |  |  |  |
Other current assets | $ | 1,921 |  |  | $ | 210 |  |  | $ | — |  |  | $ | (1,970) |  |  | $ | 161 |
Long-term receivables and other assets, net | 84 |  |  | 1 |  |  | — |  |  | (84) |  |  | 1 |
Accrued liabilities | (1,828) |  |  | (159) |  |  | — |  |  | 1,970 |  |  | (17) |
Deferred credits and other liabilities - other | (84) |  |  | — |  |  | — |  |  | 84 |  |  | — |
Interest Rate Swaps |  |  |  |  |  |  |  |  |
Accrued liabilities | — |  |  | (221) |  |  | — |  |  | — |  |  | (221) |
December 31, 2021 |  |  |  |  |  |  |  |  |
Marketing Derivatives |  |  |  |  |  |  |  |  |
Other current assets | $ | 1,516 |  |  | $ | 173 |  |  | $ | — |  |  | $ | (1,645) |  |  | $ | 44 |
Long-term receivables and other assets, net | 4 |  |  | 1 |  |  | — |  |  | (4) |  |  | 1 |
Accrued liabilities | (1,608) |  |  | (196) |  |  | — |  |  | 1,645 |  |  | (159) |
Deferred credits and other liabilities - other | (4) |  |  | — |  |  | — |  |  | 4 |  |  | — |
Interest Rate Swaps |  |  |  |  |  |  |  |  |
Accrued liabilities | — |  |  | (315) |  |  | — |  |  | — |  |  | (315) |
Deferred credits and other liabilities - other | — |  |  | (436) |  |  | — |  |  | — |  |  | (436) |
(a)These amounts do not include collateral. As of September 30, 2022 and December 31, 2021, $64 million and $323 million of collateral related to interest rate swaps had been netted against derivative liabilities, respectively. Occidental netted $16 million of collateral received from brokers against derivative assets related to marketing derivatives as of September 30, 2022 and netted $110 million of collateral deposited with brokers against derivative liabilities related to marketing derivatives as of December 31, 2021. GAINS AND LOSSES ON DERIVATIVES The following table presents gains and (losses) related to Occidental's derivative instruments on the Consolidated Condensed Statements of Operations:
millions |  | Three months ended September 30, |  | Nine months ended September 30,
Income Statement Classification |  | 2022 |  | 2021 |  | 2022 |  | 2021
Interest Rate Swaps |  |  |  |  |  |  |  |
Gains (losses) on interest rate swaps, net |  | $ | 70 |  |  | $ | (26) |  |  | $ | 332 |  |  | $ | 150 |
Marketing Derivatives |  |  |  |  |  |  |  |
Net sales (a) |  | $ | 14 |  |  | $ | 12 |  |  | $ | 473 |  |  | $ | 214 |
Collars and Calls |  |  |  |  |  |  |  |
Net sales (b) |  | $ | — |  |  | $ | (101) |  |  | $ | — |  |  | $ | (339) |
(a) Includes derivative and non-derivative marketing activity. (b) All of Occidental's calls and collars expired on or before December 31, 2021. CREDIT RISK 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 party would need to post. The aggregate fair value of derivative instruments with credit-risk-related contingent features for which a net liability position existed as of September 30, 2022 was $21 million (net of $64 million of collateral), which was primarily related to interest rate swaps. The aggregate fair value of derivative instruments with credit-risk-contingent features for which a net liability position existed as of December 31, 2021 was $107 million (net of $323 million of collateral), which was primarily related to interest rate swaps.

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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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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