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LEASE COMMITMENTS | 12 Months Ended
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Dec. 31, 2022
Leases [Abstract] |
LEASE COMMITMENTS |
NOTE 7 - LEASE COMMITMENTS
Occidental identifies leases through its accounts payable and contract monitoring processes. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease assets include the lease liability, upfront payments and costs incurred to execute the lease and are amortized on a straight-line basis over the lease term. Occidental assesses the likelihood of exercising renewal, termination and purchase options to determine the lease term. Occidental uses its incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate is the rate of interest that Occidental would pay to borrow an amount equal to the lease payments over a similar term on a collateralized basis in a similar economic environment. Certain leases include variable lease payments based on the underlying asset’s operations that are not included in the lease asset and liability. Occidental has operating leases for oil and gas exploration and development equipment, including office space of $352 million, offshore and onshore drilling rigs of $169 million, compressors of $113 million and $60 million consisting of storage facilities and other field equipment. Operating lease terms generally range from one to eight years. Operating leases also include pipelines, rail cars, easements, aircraft and real estate of $236 million. These operating leases have contract expiration terms ranging from one to 10 years. Occidental’s finance leases include compressors of $378 million, real estate offices of $266 million and $45 million consisting of drilling rigs, vehicles and aircraft leases. The following table presents lease balances and their classification on the Consolidated Balance Sheets as of December 31:
millions |  | Balance sheet classification | 2022 |  | 2021
Assets: |  |  |  |  |
Operating |  | Operating lease assets | $ | 903 |  |  | $ | 726 |
Finance |  | Property, plant and equipment | 686 |  |  | 581 |
Total lease assets |  |  | $ | 1,589 |  |  | $ | 1,307 |
Liabilities: |  |  |  |  |
Current |  |  |  |  |
Operating |  | Current operating lease liabilities | $ | 273 |  |  | $ | 186 |
Finance |  | Current maturities of long-term debt | 143 |  |  | 85 |
Non-current |  |  |  |  |
Operating |  | Deferred credits and other liabilities - Operating lease liabilities | 657 |  |  | 585 |
Finance |  | Long-term debt, net | 546 |  |  | 504 |
Total lease liabilities |  |  | $ | 1,619 |  |  | $ | 1,360 |
As of December 31, 2022, Occidental’s outstanding lease payments, excluding variable component, consisted of the following:
millions |  | Operating Leases (a) |  | Finance Leases (b) |  | Total
2023 |  | $ | 287 |  |  | $ | 146 |  |  | $ | 433 |
2024 |  | 226 |  |  | 109 |  |  | 335 |
2025 |  | 108 |  |  | 95 |  |  | 203 |
2026 |  | 89 |  |  | 84 |  |  | 173 |
2027 |  | 81 |  |  | 66 |  |  | 147 |
Thereafter |  | 250 |  |  | 277 |  |  | 527 |
Total lease payments |  | 1,041 |  |  | 777 |  |  | 1,818 |
Less: Interest |  | (111) |  |  | (88) |  |  | (199) |
Total lease liabilities |  | $ | 930 |  |  | $ | 689 |  |  | $ | 1,619 |
(a)The weighted-average remaining lease term is 5.4 years and the weighted-average discount rate is 3.84%. (b)The weighted-average remaining lease term is 7.7 years and the weighted-average discount rate is 3.05%. The following tables present Occidental’s total lease cost classifications for operating and finance lease liabilities for the years ended December 31:
millions |  |
Lease cost classification (a) | 2022 | 2021
Operating lease costs (b) |  |
Property, plant and equipment, net | $ | 246 |  | $ | 222 |
Operating expense and cost of sales | 234 |  | 487 |
Selling, general and administrative expenses | 78 |  | 109 |
Finance lease cost |  |
Amortization of ROU assets | 83 |  | 39 |
Interest on lease liabilities | 20 |  | 13 |
Total lease cost | $ | 661 |  | $ | 870 |
(a)Amounts reflected are gross before joint-interest recoveries. Lease payments are reduced by joint-interest recoveries on the income statement through the joint-interest billing process. (b)Included short-term lease cost of $184 million and $238 million and variable lease cost of $101 million and $120 million for the years ended December 31, 2022 and 2021, respectively. The following tables present Occidental’s total cash paid for operating and finance lease liabilities for the years ended December 31
millions | 2022 | 2021
Operating cash flows | $ | 211 |  | $ | 401 |
Investing cash flows | $ | 81 |  | $ | 73 |
Financing cash flows | $ | 83 |  | $ | 39 |
LEASE COMMITMENTS |
NOTE 7 - LEASE COMMITMENTS
Occidental identifies leases through its accounts payable and contract monitoring processes. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease assets include the lease liability, upfront payments and costs incurred to execute the lease and are amortized on a straight-line basis over the lease term. Occidental assesses the likelihood of exercising renewal, termination and purchase options to determine the lease term. Occidental uses its incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate is the rate of interest that Occidental would pay to borrow an amount equal to the lease payments over a similar term on a collateralized basis in a similar economic environment. Certain leases include variable lease payments based on the underlying asset’s operations that are not included in the lease asset and liability. Occidental has operating leases for oil and gas exploration and development equipment, including office space of $352 million, offshore and onshore drilling rigs of $169 million, compressors of $113 million and $60 million consisting of storage facilities and other field equipment. Operating lease terms generally range from one to eight years. Operating leases also include pipelines, rail cars, easements, aircraft and real estate of $236 million. These operating leases have contract expiration terms ranging from one to 10 years. Occidental’s finance leases include compressors of $378 million, real estate offices of $266 million and $45 million consisting of drilling rigs, vehicles and aircraft leases. The following table presents lease balances and their classification on the Consolidated Balance Sheets as of December 31:
millions |  | Balance sheet classification | 2022 |  | 2021
Assets: |  |  |  |  |
Operating |  | Operating lease assets | $ | 903 |  |  | $ | 726 |
Finance |  | Property, plant and equipment | 686 |  |  | 581 |
Total lease assets |  |  | $ | 1,589 |  |  | $ | 1,307 |
Liabilities: |  |  |  |  |
Current |  |  |  |  |
Operating |  | Current operating lease liabilities | $ | 273 |  |  | $ | 186 |
Finance |  | Current maturities of long-term debt | 143 |  |  | 85 |
Non-current |  |  |  |  |
Operating |  | Deferred credits and other liabilities - Operating lease liabilities | 657 |  |  | 585 |
Finance |  | Long-term debt, net | 546 |  |  | 504 |
Total lease liabilities |  |  | $ | 1,619 |  |  | $ | 1,360 |
As of December 31, 2022, Occidental’s outstanding lease payments, excluding variable component, consisted of the following:
millions |  | Operating Leases (a) |  | Finance Leases (b) |  | Total
2023 |  | $ | 287 |  |  | $ | 146 |  |  | $ | 433 |
2024 |  | 226 |  |  | 109 |  |  | 335 |
2025 |  | 108 |  |  | 95 |  |  | 203 |
2026 |  | 89 |  |  | 84 |  |  | 173 |
2027 |  | 81 |  |  | 66 |  |  | 147 |
Thereafter |  | 250 |  |  | 277 |  |  | 527 |
Total lease payments |  | 1,041 |  |  | 777 |  |  | 1,818 |
Less: Interest |  | (111) |  |  | (88) |  |  | (199) |
Total lease liabilities |  | $ | 930 |  |  | $ | 689 |  |  | $ | 1,619 |
(a)The weighted-average remaining lease term is 5.4 years and the weighted-average discount rate is 3.84%. (b)The weighted-average remaining lease term is 7.7 years and the weighted-average discount rate is 3.05%. The following tables present Occidental’s total lease cost classifications for operating and finance lease liabilities for the years ended December 31:
millions |  |
Lease cost classification (a) | 2022 | 2021
Operating lease costs (b) |  |
Property, plant and equipment, net | $ | 246 |  | $ | 222 |
Operating expense and cost of sales | 234 |  | 487 |
Selling, general and administrative expenses | 78 |  | 109 |
Finance lease cost |  |
Amortization of ROU assets | 83 |  | 39 |
Interest on lease liabilities | 20 |  | 13 |
Total lease cost | $ | 661 |  | $ | 870 |
(a)Amounts reflected are gross before joint-interest recoveries. Lease payments are reduced by joint-interest recoveries on the income statement through the joint-interest billing process. (b)Included short-term lease cost of $184 million and $238 million and variable lease cost of $101 million and $120 million for the years ended December 31, 2022 and 2021, respectively. The following tables present Occidental’s total cash paid for operating and finance lease liabilities for the years ended December 31
millions | 2022 | 2021
Operating cash flows | $ | 211 |  | $ | 401 |
Investing cash flows | $ | 81 |  | $ | 73 |
Financing cash flows | $ | 83 |  | $ | 39 |

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- 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 https://asc.fasb.org/subtopic&trid=77888251 + Details
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