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DERIVATIVES | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES |
NOTE 8 - DERIVATIVES
OBJECTIVE AND STRATEGY Occidental uses a variety of derivative financial instruments and physical contracts to manage its exposure to commodity price fluctuations, 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. The value of cash flow hedges was insignificant for all periods presented. See Note 1 - Summary of Significant Accounting Policies for Occidental’s accounting policy on derivatives. DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS As of December 31, 2022, Occidental’s derivatives not designated as hedges consisted of marketing derivatives. All interest rate swaps were settled prior to December 31, 2022. 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. A substantial majority of Occidental’s physically settled derivative contracts are index-based and carry no mark-to-market valuation in earnings. As of December 31, 2022, the weighted-average settlement price of these forward contracts was $81.37/Bbl and $7.89/Mcf for crude oil and natural gas, respectively. The weighted-average settlement price was $74.85/Bbl and $4.61/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 as of December 31:
|  | 2022 |  | 2021
Oil commodity contracts |  |  |  |
Volume (MMbbl) |  | (33) |  |  | (28) |
Natural gas commodity contracts |  |  |  |
Volume (Bcf) |  | (112) |  |  | (136) |
INTEREST RATE SWAPS Occidental retired all remaining outstanding interest rate swaps in the twelve months ended December 31, 2022. Occidental's interest rate swap contracts locked in a fixed interest rate in exchange for a floating interest rate indexed to the three-month LIBOR throughout the reference period. Net gains and losses associated with interest rate swaps and warrants, were recognized currently in gains (losses) on interest rate swaps, net in the Consolidated Statements of Operations. Interest rate swaps and collateralization are classified as cash flows from financing activities. For the twelve months ended December 31, 2022, the interest rate swaps were terminated through the application of $144 million of collateral and cash payments of $255 million. Prior to termination, Occidental paid $35 million of periodic settlements and $179 million of collateral was returned. FAIR VALUE OF DERIVATIVES Occidental has categorized its assets and liabilities that are measured at fair value in a three-level fair value hierarchy, based on the inputs to the valuation techniques: Level 1 – using quoted prices in active markets for the assets or liabilities; Level 2 – using observable inputs other than quoted prices for the assets or liabilities; and Level 3 – using unobservable inputs. Transfers between levels, if any, are reported at the end of each reporting period. The following table presents the fair values of Occidental’s outstanding derivatives. Fair values are presented at gross amounts below, including when derivatives are subject to netting arrangements, and are presented on a net basis in the Consolidated Balance Sheets.
millions |  | Fair Value Measurements Using |  |  |  | Total Fair Value
Balance Sheet Classification |  | Level 1 |  | Level 2 |  | Level 3 |  | Netting (a) |
December 31, 2022 |  |  |  |  |  |  |  |  |  |
Marketing Derivatives |  |  |  |  |  |  |  |  |  |
Other current assets |  | $ | 920 |  |  | $ | 127 |  |  | $ | — |  |  | $ | (980) |  |  | $ | 67 |
Long-term receivables and other assets, net |  | 1 |  |  | 2 |  |  | — |  |  | (1) |  |  | 2 |
Accrued liabilities |  | (938) |  |  | (96) |  |  | — |  |  | 980 |  |  | (54) |
Deferred credits and other liabilities - other |  | (1) |  |  | (1) |  |  | — |  |  | 2 |  |  | — |
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 December 31, 2021, $323 million of collateral related to interest rate swaps had been netted against derivative liabilities. Occidental netted $15 million and $110 million of collateral deposited with brokers against derivative liabilities related to marketing derivatives as of December 31, 2022, and December 31, 2021, respectively. GAINS AND LOSSES ON DERIVATIVES The following table presents gains and (losses) related to Occidental’s derivative instruments in the Consolidated Statements of Operations for the years ended December 31:
millions |  |  |  |
Income Statement Classification |  |  |  |  |  | 2022 |  | 2021 |  | 2020
Collars and Calls(a) |  |  |  |  |  |  |  |  |  |
Net sales |  |  |  |  |  | $ | — |  |  | $ | (344) |  |  | $ | 1,064 |
Marketing Derivatives |  |  |  |  |  |  |  |  |  |
Net sales (b) |  |  |  |  |  | 381 |  |  | 338 |  |  | (393) |
Interest Rate Swaps |  |  |  |  |  |  |  |  |  |
Gains (losses) on interest rate swaps and warrants, net |  |  |  |  |  | 317 |  |  | 122 |  |  | (428) |
(a)All of Occidental’s collars and calls expired on or before December 31, 2021. (b)Includes derivative and non-derivative marketing activity. CREDIT RISK The majority of Occidental’s counterparty credit risk is related to the physical delivery of energy commodities to its customers and their inability to meet their settlement commitments. Occidental manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring collateral or other credit risk mitigants, as appropriate. Occidental actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. Occidental also enters into futures contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk, if any. Certain of Occidental’s OTC 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-contingent features for which a net liability position existed as of December 31, 2022 was $18 million. 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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