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What changed in Occidental Petroleum's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Occidental Petroleum's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+506 added−400 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-27)

Top changes in Occidental Petroleum's 2023 10-K

506 paragraphs added · 400 removed · 317 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

102 edited+109 added−23 removed49 unchanged
Biggest changeA cyber attack involving our information or industrial control systems and related infrastructure, or that of our business associates, could negatively impact our operations in a variety of ways, including, but not limited to, the following: ■ Unauthorized access to seismic data, reserves information, strategic information or other sensitive or proprietary information could have a negative impact on Occidental’s ability to compete for oil and natural gas resources; ■ Data corruption, communication or systems interruption or other operational disruption during drilling activities could result in delays and failure to reach the intended target or cause a drilling incident; ■ Data corruption, communication or systems interruption or operational disruptions of production-related infrastructure could result in a loss of production or accidental discharge; ■ A cyber attack on OxyChem’s operations could result in a disruption of the manufacturing and marketing of its products or a potential HSE hazard; ■ A cyber attack on a vendor or service provider could result in supply chain disruptions, which could delay or halt our construction and development projects; ■ A cyber attack on third-party gathering, pipeline, processing, terminal or other infrastructure systems could delay or prevent Occidental from producing, transporting, processing and marketing its production; ■ A cyber attack involving commodities exchanges or financial institutions could slow or halt commodities trading, thus preventing Occidental from marketing its production or engaging in hedging activities; ■ A cyber attack that halts activities at a power generation facility or refinery using natural gas as feedstock could have a significant impact on the natural gas market; ■ A cyber attack on a communications network or power grid could cause operational disruption; ■ A cyber attack on Occidental’s automated and surveillance systems could cause a loss in production and potential HSE hazards; ■ A deliberate corruption of Occidental’s financial or operating data could result in events of non-compliance which could then lead to regulatory fines or penalties; and ■ A cyber attack resulting in the loss or disclosure of, or damage to, Occidental’s or any of its customer’s or supplier’s data or confidential information could harm its business by damaging its reputation, subjecting Occidental to 18 OXY 2022 FORM 10-K RISK FACTORS potential financial or legal liability and requiring it to incur significant costs, including costs to repair or restore its systems and data or to take other remedial steps.
Biggest changeA cyber attack on Occidental’s information or industrial control systems and related infrastructure, or those of its business associates or third-party service providers, could negatively impact Occidental’s operations in a variety of ways, including, but not limited to: ■ Adversely impacting Occidental’s ability to compete for oil and natural gas resources; ■ Resulting in delays and failure to reach the intended target or cause a drilling incident; ■ Resulting in a loss of production or accidental discharge; ■ Resulting in a disruption of the manufacturing and marketing of its products or a potential HSE hazard; ■ Resulting in supply chain disruptions, which could delay or halt Occidental’s construction and development projects; ■ Delaying or preventing Occidental from producing, transporting, processing and marketing its production; ■ Slowing or halting commodities trading, thus preventing Occidental from marketing its production or engaging in hedging activities; ■ Adversely impacting the natural gas market; ■ Causing operational disruption; ■ Causing a loss in production or a potential HSE hazard; ■ Resulting in events of non-compliance which could then lead to regulatory fines or other penalties and legal liability; and ■ Damaging Occidental’s reputation, subjecting it to potential financial or legal liability, regulatory fines and penalties and requiring it to incur significant costs, including compliance costs, costs to repair or restore its systems and data or to take other remedial steps.
They could also promote the use of alternative sources of energy and thereby decrease demand for oil, NGL and natural gas and other products that Occidental’s businesses produce, and could also materially impact OLCV’s current or future operations and strategy.
They could also promote the use of alternative sources of energy and thereby decrease demand for oil, NGL, natural gas and other products that Occidental’s businesses produce, and could also materially impact OLCV’s current or future operations and strategy.
There are multiple proposed or recently adopted changes to various GHG reporting regulations and protocols, including from the EPA, as noted earlier, as well as the SEC, the GHG Protocol and certain countries and states, as well as for additional controls, fees or taxes on emissions.
As noted earlier, there are multiple proposed or recently adopted changes to various GHG reporting regulations and protocols, including from the EPA, the SEC, the GHG Protocol and certain countries and states, as well as for additional controls, fees or taxes on emissions.
As a result, Occidental faces risks of: ■ New or amended laws and regulations, or new or different applications or interpretations of existing laws and regulations, including those related to drilling, manufacturing or production processes (including flaring and well stimulation techniques such as hydraulic fracturing and acidization), pipelines, labor and employment, taxes, royalty rates, permitted production rates, entitlements, import, export and use of raw materials, equipment or products, use or increased use of land, water and other natural resources, air emissions (including restrictions, taxes or fees on emissions of methane, CO 2 ,or other substances), water recycling and disposal, waste minimization and disposal, public and occupational health and safety, the manufacturing of chemicals, asset integrity management, the marketing or export of commodities, security, environmental protection, and climate change-related and sustainability initiatives, all of which may restrict or prohibit activities of Occidental or its contractors or customers, increase Occidental’s costs or reduce demand for Occidental’s products. ■ Violation of certain governmental laws and regulations, which may result in strict, joint and several liability and the imposition of significant administrative, civil or criminal fines and penalties and may also result in liability for remedial actions or assessments.
As a result, Occidental faces risks of: ■ New or amended laws and regulations, or new or different applications or interpretations of existing laws and regulations, including those related to drilling, manufacturing or production processes (including flaring and well stimulation techniques such as hydraulic fracturing and acidization), pipelines, labor and employment, taxes, royalty rates, permitted production rates, entitlements, import, export and use of raw materials, equipment or products, use or increased use of land, water and other natural resources, air emissions (including restrictions, taxes or fees on emissions of methane, CO 2 , or other substances), water recycling and disposal, waste minimization and disposal, public and occupational health and safety, the manufacturing of chemicals, asset integrity management, the marketing or export of commodities, security, environmental protection, and climate change-related and sustainability initiatives, all of which may restrict or prohibit activities of Occidental or its contractors or customers, increase Occidental’s costs or reduce demand for Occidental’s products; ■ Violation of certain laws and regulations, which may result in strict, joint and several liability and the imposition of significant administrative, civil or criminal fines and penalties and may also result in liability for remedial actions or assessments.
Litigation, orders or other proceedings asserting strict, joint and several liability under such laws and regulations may seek to impose significant administrative, civil or criminal fines and penalties, damages or remedial actions or to require significant changes to, or even closure of, facilities or operations; ■ Refusal of, or delay in, the extension or grant of exploration, development or production contracts; and ■ Development delays and cost overruns due to approval delays for, or denial of, drilling, construction, environmental and other regulatory approvals, permits and authorizations .
Litigation, orders or other proceedings asserting strict, joint and several liability under such laws and regulations may seek to impose significant administrative, civil or criminal fines and penalties, damages or remedial actions or to require significant changes to, or even closure of, facilities or operations; ■ Refusal of, or delay in, the extension or grant of exploration, development or production contracts or leases; and ■ Development delays and cost overruns due to approval delays for, or denial of, drilling, construction, environmental and other regulatory approvals, permits and authorizations.
Occidental’s strategy to include carbon management in its product line is also dependent upon demand for carbon sequestration and related CO 2 removal credits, offsets or other attributes. If this market does not develop, or if the regulatory environment does not support carbon management activities, Occidental may not be successful in entering this industry.
Occidental’s strategy to include carbon management in its product line is also dependent upon demand for carbon sequestration and related CO 2 removal credits, offsets or other attributes. If this market does not develop, or if the regulatory environment does not support carbon management activities, Occidental may not be successful in this industry.
While Occidental has reported voluntarily on its net-zero pathway and associated goals and targets, as well as GHG emissions estimates, the proposed rules would require both significant additional disclosure and integration of such disclosure directly into financial reporting processes. Occidental and numerous other stakeholders submitted comments to the SEC on the proposed rules.
While Occidental has reported voluntarily on its net-zero pathway and associated goals and targets, as well as GHG emissions estimates, the SEC’s proposed rules would require both significant additional disclosure and integration of such disclosure directly into financial reporting processes. Occidental and numerous other stakeholders submitted comments to the SEC on the proposed rules.
Occidental’s level of indebtedness could increase its vulnerability to adverse changes in general economic and industry conditions, economic downturns and adverse developments in its businesses or limit Occidental’s flexibility in planning for or reacting to changes in its business and the industries in which it operates. From time to time, Occidental has relied on access to capital markets for funding.
Occidental’s level of indebtedness could increase its vulnerability to adverse changes in general economic and industry conditions, economic downturns and adverse developments in its businesses or limit Occidental’s flexibility in planning for or reacting to changes in its businesses and the industries in which it operates. From time to time, Occidental has relied on access to capital markets for funding.
ITEM 1A. RISK FACTORS Risks related to government regulations and the environment Governmental actions and political instability may adversely affect Occidental’s businesses and results of operations. Occidental’s businesses are subject to, and may be adversely affected by, the actions and decisions of many federal, state, local and international governments and political interests.
ITEM 1A. RISK FACTORS Risks related to government regulations and the environment Government actions and political instability may adversely affect Occidental’s businesses and results of operations. Occidental’s businesses are subject to, and may be adversely affected by, the actions and decisions of many federal, state, local and international governments and political interests.
The value of Occidental’s securities and its ability to raise capital will be adversely impacted if it is not able to replace reserves that are depleted by production or replace our declining production with new production by successfully allocating annual capital to maintain our reserves and production base.
The value of Occidental’s securities and its ability to raise capital will be adversely impacted if it is not able to replace reserves that are depleted by production or replace its declining production with new production by successfully allocating annual capital to maintain its reserves and production base.
These and other governmental actions relating to GHG and other air emissions are expected to require Occidental to incur increased operating and maintenance costs including higher rates charged by service providers and costs to purchase, operate and maintain emissions control systems, acquire emission allowances, pay taxes or fees for methane or carbon emissions and comply with new regulatory or reporting requirements; and they could prevent Occidental from conducting oil and gas development activities in certain areas.
These and other government actions relating to GHG and other air emissions are expected to require Occidental to incur increased operating and maintenance costs including higher rates charged by service providers and costs to purchase, operate and maintain emissions control systems, acquire emission allowances, pay taxes or fees for methane or carbon emissions and comply with new regulatory or reporting requirements; and they could prevent Occidental from conducting oil and gas development activities in certain areas.
Prolonged or substantial decline, or sustained market uncertainty, in these commodity prices may have the following effects on Occidental’s business: ■ Adversely affect Occidental’s financial condition, results of operations, liquidity, ability to reduce debt, access to and cost of capital, and ability to finance planned capital expenditures, pay dividends and repurchase shares; ■ Reduce the amount of oil, NGL and natural gas that Occidental can produce economically; ■ Cause Occidental to delay or postpone some of its capital projects; ■ Reduce Occidental’s revenues, operating income or cash flows; ■ Reduce the amounts of Occidental’s estimated proved oil, NGL and natural gas reserves; ■ Reduce the carrying value of Occidental’s oil and natural gas properties due to recognizing impairments of proved properties, unproved properties and exploration assets; ■ Reduce the standardized measure of discounted future net cash flows relating to oil, NGL and natural gas reserves; and ■ Adversely affect the ability of Occidental’s partners to fund their working interest capital requirements.
Prolonged or substantial decline, or sustained market uncertainty, in these commodity prices may have the following effects on Occidental’s businesses: ■ Adversely affect Occidental’s financial condition, results of operations, liquidity, ability to reduce debt, access to and cost of capital, and ability to finance planned capital expenditures or planned acquisitions, pay dividends and repurchase shares; ■ Reduce the amount of oil, NGL and natural gas that Occidental can produce economically; ■ Cause Occidental to delay or postpone some of its capital projects; ■ Reduce Occidental’s revenues, operating income or cash flows; ■ Reduce the amounts of Occidental’s estimated proved oil, NGL and natural gas reserves; ■ Reduce the carrying value of Occidental’s oil and natural gas properties due to recognizing impairments of proved properties, unproved properties and exploration assets; ■ Reduce the standardized measure of discounted future net cash flows relating to oil, NGL and natural gas reserves; and ■ Adversely affect the ability of Occidental’s partners to fund their working interest capital requirements.
These guidelines also require operators to implement response plans for activities within agency-designated seismic response areas. These states have curtailed water disposal and suspended permits in seismic response areas, particularly in deep disposal wells.
These guidelines also require operators to implement response plans for activities within agency-designated seismic response areas (SRAs). These states have curtailed water disposal and suspended disposal permits in SRAs, particularly in deep disposal wells.
Reported oil and gas reserves are an estimate based on periodic review of reservoir characteristics and recoverability, including production decline rates, operating performance and economic feasibility at the prescribed weighted average commodity prices, future operating costs and capital expenditures, workover and remedial costs, assumed effects of regulation by governmental agencies, the quantity, quality and interpretation of relevant data, taxes and availability of funds.
Reported oil and gas reserves are an estimate based on periodic review of reservoir characteristics and recoverability, including production decline rates, operating performance and economic feasibility at the prescribed weighted average commodity prices, future operating costs and capital expenditures, workover and remedial costs, assumed effects of regulation by government agencies, the quantity, quality and interpretation of relevant data, taxes and availability of funds.
Occidental is subject to actual and threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide range of issues, including regarding our drilling, manufacturing or production processes, commercial disputes, environmental compliance, public health and safety and taxes. The outcomes of these matters are inherently unpredictable and subject to significant uncertainties.
Occidental is subject to actual and threatened claims, litigation, reviews, investigations, and other proceedings, including proceedings by governments and regulatory authorities, involving a wide range of issues, including regarding its drilling, manufacturing or production processes, commercial disputes, environmental compliance, public health and safety and taxes. The outcomes of these matters are inherently unpredictable and subject to significant uncertainties.
Exploration is inherently risky and is subject to delays, misinterpretation of geologic or engineering data, unexpected geologic conditions or finding reserves of disappointing quality or quantity, which may result in significant losses. Claims, litigation, government investigations and other proceedings may adversely affect Occidental’s business, consolidated financial position, results of operations and cash flows.
Exploration is inherently risky and is subject to delays, misinterpretation of geologic or engineering data, unexpected geologic conditions or finding reserves of disappointing quality or quantity, which may result in significant losses. Claims, litigation, government investigations and other proceedings may adversely affect Occidental’s businesses, consolidated financial position, results of operations and cash flows.
As a result, Occidental or its subsidiaries may incur substantial liabilities to third parties or governmental entities for environmental matters for which they do not have insurance coverage, which could reduce or eliminate funds available for exploration, development, acquisitions or other investments in their respective businesses, or cause them to incur losses.
As a result, Occidental or its subsidiaries may incur substantial liabilities to third parties or government entities for environmental matters for which they do not have insurance coverage, which could reduce or eliminate funds available for exploration, development, acquisitions or other investments in their respective businesses, or cause them to incur losses.
Occidental’s ability to produce oil from its CO 2 EOR projects would be hindered if the supply of CO 2 was limited due to, among other things, problems with current CO 2 producing wells and facilities, including compression equipment, catastrophic pipeline failure or the ability to economically purchase naturally occurring or anthropogenic CO 2 .
Occidental’s ability to produce oil from its CO 2 EOR projects would be hindered if the supply of CO 2 were limited due to, among other things, problems with current CO 2 producing wells and facilities, including compression equipment, catastrophic pipeline failure or the ability to economically purchase naturally occurring or anthropogenic CO 2 .
District Court for the District of Columbia against the BLM seeking to invalidate numerous drilling permits for oil and gas wells on federal lands in New Mexico and Wyoming, and potentially other states, that were approved by the BLM during the Biden Administration, including certain permits obtained by Occidental subsidiaries.
District Court for the District of Columbia against the BLM seeking to invalidate numerous drilling permits for oil and gas wells on federal lands in New Mexico and Wyoming, and potentially other states, that were approved by the BLM under the Biden Administration, including certain permits obtained by Occidental subsidiaries.
The carbon management solutions are not well established and, while Occidental believes it has access to the technologies and the expertise necessary to develop these solutions on an industrial scale, Occidental may not ultimately succeed in achieving its GHG emissions reduction and net-zero goals.
The carbon management solutions are not well established and, while Occidental believes it has access to the technologies and the expertise necessary to develop these solutions on an industrial scale, Occidental may not ultimately succeed in doing so and in achieving its GHG emissions reduction and net-zero goals.
Generally, Occidental’s historical practice has been to remain exposed to the market prices of commodities. As of December 31, 2022, there were no active commodity hedges in place. Management may choose to put hedges in place in the future for oil, NGL and natural gas commodities.
Generally, Occidental’s historical practice has been to remain exposed to the market prices of commodities. As of December 31, 2023, there were no active commodity hedges in place. Management may choose to put hedges in place in the future for oil, NGL and natural gas commodities.
These factors include, but are not limited to, the following: ■ Uncertain or volatile political, social, and economic conditions; ■ Social unrest, acts of terrorism, war, or other armed conflict; ■ Public health crises and other catastrophic events, such as the COVID-19 pandemic; ■ Confiscatory taxation or other adverse tax policies; ■ Theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property; ■ Unexpected changes in legal and regulatory requirements, including changes in interpretation or enforcement of existing laws; ■ Restrictions on the repatriation of income or capital; ■ Currency exchange controls; ■ Inflation; and ■ Currency exchange, rate fluctuations and devaluations.
These factors include, but are not limited to, the following: ■ Uncertain or volatile political, social, and economic conditions; ■ Social unrest, acts of terrorism, war, or other armed conflict; ■ Public health crises and other catastrophic events, such as pandemics; ■ Confiscatory taxation or other adverse tax policies; ■ Theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property; ■ Unexpected changes in legal and regulatory requirements, including changes in interpretation or enforcement of existing laws; ■ Restrictions on the repatriation of income or capital; ■ Currency exchange controls; ■ Inflation; and ■ Currency exchange, rate fluctuations and devaluations.
Effective execution of these goals may require substantial new capital, which might not be available to Occidental in the amounts or at the times expected. In addition, raising such capital may increase its leverage or overall costs of doing business.
Effective execution of these goals may require substantial new capital, which might not be available to Occidental in the amounts or at the times expected. In addition, raising such capital may increase its leverage or overall costs of doing businesses.
If Occidental is unable to generate sufficient funds from its operations to satisfy its capital requirements, including its existing debt obligations, or to raise additional capital on acceptable terms, Occidental’s business could be adversely affected.
If Occidental is unable to generate sufficient funds from its operations to satisfy its capital requirements, including its existing debt obligations, or to raise additional capital on acceptable terms, Occidental’s businesses could be adversely affected.
As of the date of this filing, Occidental’s long-term debt was rated BB+ by Fitch Ratings, Ba1 by Moody’s Investors Service and BB+ by Standard and Poor’s. One of Occidental’s subsidiaries acts as the general partner of WES, a publicly traded master limited partnership, which may involve potential legal liability.
As of the date of this filing, Occidental’s long-term debt was rated BBB- by Fitch Ratings, Baa3 by Moody’s Investors Service and BB+ by Standard and Poor’s. One of Occidental’s subsidiaries acts as the general partner of WES, a publicly traded master limited partnership, which may involve potential legal liability.
Occidental’s efforts to research, establish, accomplish and accurately report on our emissions goals, targets and strategies expose it to numerous operational, reputational, financial, legal and other risks. Occidental’s ability to reach our target emissions is subject to a multitude of factors and conditions, many of which are out of its control.
Occidental’s efforts to research, establish, accomplish and accurately report on its emissions goals, targets and strategies expose it to numerous operational, reputational, financial, legal, technological, implementation and other risks. Occidental’s ability to reach its target emissions is subject to a multitude of factors and conditions, many of which are out of its control.
Finally, increasing attention to climate change risks has resulted in an increased possibility of governmental investigations and additional private litigation against Occidental without regard to causation or its contribution to the asserted damage, which could increase its costs or otherwise adversely affect our businesses.
Finally, increasing attention to climate change risks has resulted in an increased possibility of government investigations and additional private litigation against Occidental without regard to causation or its contribution to the asserted damage, which could increase its costs or otherwise adversely affect its businesses.
As of the date of this filing, Occidental believes its range of reasonably possibly additional losses of its subsidiaries beyond those amounts currently recorded for environmental remediation could be up to $2.7 billion on a consolidated basis.
For example, as of the date of this filing, Occidental believes its range of reasonably possibly additional losses of its subsidiaries for environmental remediation beyond those amounts currently recorded could be up to $2.6 billion on a consolidated basis.
For additional discussion of some of these matters, see Note 12 – Environmental Liabilities and Expenditures and Note 13 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K.
For additional discussion of such matters, see Note 12 – Environmental Liabilities and Expenditures and Note 13 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K.
The long-term effects of these and other conditions on the prices of oil, NGL, natural gas and chemical products are uncertain and there can be no assurance that the demand or pricing for Occidental’s products will follow historic patterns in 14 OXY 2022 FORM 10-K RISK FACTORS the near term.
OXY 2023 FORM 10-K 15 RISK FACTORS The long-term effects of these and other conditions on the prices of oil, NGL, natural gas and chemical products are uncertain and there can be no assurance that the demand or pricing for Occidental’s products will follow historic patterns in the near term.
These factors include, among others: ■ Worldwide and domestic supplies of, and demand for, oil, NGL, natural gas and refined products; ■ The cost of exploring for, developing, producing, refining and marketing oil, NGL, natural gas and refined products; ■ Operational impacts such as production disruptions, technological advances and regional market conditions, including available transportation capacity and infrastructure constraints in producing areas; ■ Changes in weather patterns and climate; ■ The impacts of the members of OPEC and other non-OPEC member-producing nations that may agree to and maintain production levels; ■ The ongoing global impact of the Russia-Ukraine war; ■ The worldwide military and political environment, including uncertainty or instability resulting from an escalation or outbreak of armed hostilities or acts of terrorism in the United States or elsewhere; ■ The price and availability of and demand for alternative and competing fuels and emissions reducing technology; ■ Technological advances affecting energy consumption and supply; ■ Government policies and support and market demand for low-carbon technologies; ■ Domestic and international governmental regulations and taxes, including those that restrict the export of hydrocarbons; ■ Shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, NGL and natural gas; ■ Additional or increased nationalization and expropriation activities by international governments; ■ The impact and uncertainty of world health events, including the COVID-19 pandemic and the spread of new variants; ■ The effect of releases from the U.S.
These factors include, among others: ■ Worldwide and domestic supplies of, and demand for, oil, NGL, natural gas and refined products; ■ The cost of exploring for, developing, producing, refining and marketing oil, NGL, natural gas and refined products; ■ Operational impacts such as production disruptions, technological advances and regional market conditions, including available transportation capacity and infrastructure constraints in producing areas; ■ Changes in weather patterns and climate; ■ The impacts of the members of OPEC and non-OPEC member-producing nations that may agree to and maintain production levels; ■ The ongoing global impact of the Russia-Ukraine war and conflicts in the Middle East; ■ The worldwide military and political environment, including uncertainty or instability resulting from an escalation or outbreak of armed hostilities or acts of terrorism in the United States or elsewhere; ■ The price and availability of and demand for alternative and competing fuels and emissions reducing technology; ■ Technological advances affecting energy consumption and supply; ■ Government policies and support and market demand for low-carbon technologies; ■ Domestic and international government regulations and taxes, including those that restrict the export of hydrocarbons; ■ Shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, NGL and natural gas; ■ Additional or increased nationalization and expropriation activities by international governments; ■ The impact and uncertainty of world health events, including pandemics and epidemics; ■ The effect of releases from or replenishment of the U.S.
Other U.S. states where Occidental operates, including Colorado, New Mexico and Texas, adopted or proposed new regulations, policies or strategies in 2021 and 2022 that increase inspection, recordkeeping, reporting, enforcement and controls on flaring, venting and equipment that emit methane and other compounds at oil and gas facilities.
Other U.S. states where Occidental operates, including Colorado, New Mexico and Texas, adopted or proposed new regulations, policies or strategies in recent years that increase inspection, recordkeeping, reporting, enforcement and controls on flaring, venting and equipment that emit methane and other compounds at oil and gas facilities.
Depending on the scope of any such final regulations, or of future TSCA regulations, OxyChem’s ability to use certain chemicals or to manufacture or sell certain of its products could be restricted and its costs could increase.
Depending on the scope of any such final regulations, or of future TSCA regulations, OxyChem’s and its customers’ ability to use certain chemicals or to manufacture or sell certain of its products could be restricted or phased out and OxyChem’s costs could increase.
Information and industrial control technology system failures, network disruptions and breaches of data security could disrupt our operations by causing delays, impeding processing of transactions and reporting financial results, leading to the unintentional disclosure of company, partner, customer or employee information or could damage our reputation.
Information and industrial control technology system failures, network disruptions and breaches of data security could disrupt Occidental’s operations by causing delays, impeding processing of transactions and reporting financial results, or leading to the unintentional disclosure of company, partner, customer or employee information that could damage its reputation.
Given the potential significance of these changes for estimation, reporting and verification of GHG emissions, establishing and reporting on goals targets, and estimating and disclosing costs of emissions reduction and the energy transition, Occidental may be required or elect to modify or update reported emissions and its current set of GHG goals and targets to reflect such new or changed regulations and protocols, although we currently expect to retain our overarching net-zero goals and to continue to implement emissions reduction plans that we believe will complement our investments in DAC, CCUS and other low-carbon technologies and infrastructure.
Given the potential significance of these changes for estimation, reporting and verification of GHG emissions, establishing and reporting on goals and targets, and estimating and disclosing costs of emissions reduction and the energy transition, Occidental may be required or elect to modify or update reported emissions and its current set of GHG goals and targets to reflect such new or changed regulations and protocols, although the Company currently expects to retain its overarching net-zero goals and to continue to implement emissions reduction plans that it believes will complement its investments in DAC, CCUS and other low-carbon technologies and infrastructure.
In its development and exploration activities, Occidental bears the risks of: ■ Equipment failures; ■ Construction delays; ■ Escalating costs or competition for services, materials, supplies or labor; ■ Increasing prices as a result of broad inflation ■ Property or border disputes; ■ Disappointing drilling results or reservoir performance; ■ Title problems and other associated risks that may affect its ability to profitably grow production, replace reserves and achieve its targeted returns; ■ Actions by third-party operators of its properties; ■ Permit delays and costs of drilling wells on lands subject to complex development terms and circumstances; and ■ Oil, NGL and natural gas gathering, transportation and processing availability, restrictions or limitations.
In its development and exploration activities, Occidental bears the risks of: ■ Equipment failures; ■ Construction delays; ■ Escalating costs for, competition for, shortages of or delays in services, materials, supplies, equipment or labor; ■ Increasing prices as a result of broad inflation; ■ Property or border disputes; ■ Disappointing drilling results or reservoir performance; ■ Title problems and other associated risks that may affect its ability to profitably grow production, replace reserves and achieve its targeted returns; ■ Actions by third-party operators of its properties; ■ Delays imposed by or resulting from compliance with permits, laws, regulations or litigation and costs of drilling wells on lands subject to complex development terms and circumstances; and ■ Oil, NGL and natural gas gathering, transportation and processing availability, restrictions or limitations.
Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on Occidental’s business, consolidated financial position, results of operations and cash flows.
Should any of its estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on Occidental’s businesses, consolidated financial position, results of operations and cash flows.
Additional regulation around GHG emissions and future costs related to a less carbon-intensive economy could result in a shortened oil and gas reservoir reserve life as the underlying reserves become uneconomical. If Occidental were required to make significant negative reserve revisions, its results of operations and stock price could be adversely affected.
Additional regulation around GHG emissions and future costs related to a less carbon-intensive economy could result in a shortened OXY 2023 FORM 10-K 17 RISK FACTORS oil and gas reservoir reserve life as the underlying reserves become uneconomical. If Occidental were required to make significant negative reserve revisions, its results of operations and stock price could be adversely affected.
The oil and gas industry is increasingly dependent on digital and industrial control technologies to conduct certain exploration, development and production activities. Occidental relies on digital and industrial control systems, related infrastructure, technologies and networks to run its business and to control and manage its oil and gas, chemicals, marketing and pipeline operations.
The oil and gas industry is increasingly dependent on information technology (IT) and industrial control systems (ICS) to conduct certain exploration, development and production activities. Occidental relies on digital and industrial control systems, related infrastructure, technologies and networks to run its businesses and to control and manage its oil and gas, chemicals, marketing and pipeline operations.
In addition to the governmental actions described above, in February 2021, the Biden Administration established an Interagency Working Group to assign a price to the impact of each metric ton of GHG emissions that federal agencies could use to assess the benefits of more stringent GHG regulations and policy support for low-carbon projects.
In addition to the government actions described above, in February 2021, the Biden Administration established an Interagency Working Group (IWG) to assign a price to the impact of each metric ton of GHG emissions, called the social costs of GHGs (SC-GHG), that federal agencies could use to assess the benefits of more stringent GHG regulations and policy support for low-carbon projects.
OXY 2022 FORM 10-K 11 RISK FACTORS In addition, Occidental has experienced and may continue to experience adverse consequences, such as risk of loss or production limitations, because certain of its international operations are located in countries affected by political instability, nationalizations, corruption, armed conflict, terrorism, insurgency, civil unrest, security problems, labor unrest, OPEC production restrictions, equipment import restrictions and sanctions.
In addition, Occidental has experienced and may continue to experience adverse consequences, such as risk of loss or production limitations, because certain of its international operations are located in countries that may be affected by political instability, nationalizations, corruption, armed conflict, terrorism, insurgency, civil unrest, security problems, labor unrest, OPEC production restrictions, equipment import restrictions and sanctions.
After the settlement became effective in January 2015, Anadarko paid $5.2 billion and deducted this payment on its 2015 federal income tax return. Due OXY 2022 FORM 10-K 19 RISK FACTORS to the deduction, Anadarko had a net operating loss carryback for 2015, which resulted in a tentative tax refund of $881 million in 2016.
After the settlement became effective in January 2015, Anadarko paid $5.2 billion and deducted this payment on its 2015 federal income tax return. Due to the deduction, Anadarko had a net operating loss carryback for 2015, which resulted in a tentative tax refund of $881 million in 2016.
If the payment is ultimately determined not to be deductible, Occidental would be required to repay the tentative refund received plus interest totaling approximately $1.8 billion as of December 31, 2022, which could have a material adverse effect on our liquidity and consolidated balance sheets.
If the payment is ultimately determined not to be deductible, Occidental would be required to repay the tentative refund received plus interest totaling approximately $2.0 billion as of December 31, 2023, which could have a material adverse effect on its liquidity and consolidated balance sheets.
Examples of such factors include evolving government regulation and voluntary protocols for reporting or verification of emissions, capture or sequestration, the pace of changes in technology, the successful development and deployment of existing or new technologies and business solutions on a commercial scale, the availability, timing and cost of equipment, manufactured goods and services, and the availability of requisite financing and federal and state incentive programs.
Examples of such factors include evolving government regulation and voluntary protocols for reporting or verification of emissions, capture or sequestration, the potential for jurisdictions in which it operates to enact opposing or incompatible regulations, the pace of changes in technology, the successful development and deployment of existing or new technologies and business solutions on a commercial scale, the availability, timing and cost of equipment, manufactured goods and services, and the availability of requisite financing and federal and state incentive programs.
The SEC is expected to issue final rules in 2023.
The SEC is expected to issue final rules in 2024.
Any of these risks could adversely affect Occidental’s ability to conduct operations or result in substantial losses as a result of: ■ Damage to and destruction of property and equipment, including property and equipment owned by third-parties which its operations rely upon; ■ Damage to natural resources; ■ Pollution and other environmental damage, including spillage or mishandling of recovered chemicals or fluids; ■ Regulatory investigations, fines and penalties; ■ Loss of well location, acreage, expected production and related reserves; ■ Suspension or delay of its operations; ■ Substantial liability claims; and ■ Significant repair and remediation costs that increase its break-even economics.
Any of these risks could adversely affect Occidental’s ability to conduct operations or result in substantial losses as a result of: 14 OXY 2023 FORM 10-K RISK FACTORS ■ Damage to and destruction of property and equipment, including property and equipment owned by third parties which its operations rely upon; ■ Impacts to Occidental’s workforce and local communities; ■ Damage to natural resources; ■ Pollution and other environmental damage, including spillage or mishandling of recovered chemicals or fluids; ■ Regulatory investigations, fines and penalties; ■ Loss of well location, acreage, expected production and related reserves; ■ Suspension or delay of its operations; ■ Substantial liability claims; and ■ Significant repair and remediation costs that increase its breakeven economics.
Texas and New Mexico have experienced an increase in seismic activity, with events measuring magnitude 3 or greater in each state. In the fourth quarter of 2021, both states issued new guidelines for operators to prevent or mitigate seismic activity, focused on produced water disposal wells.
Texas and New Mexico have experienced an increase in seismic activity in recent years, with events measuring magnitude 4 or greater in each state. In 2021, both states issued guidelines for operators to prevent or mitigate seismic activity, focused on produced water disposal wells.
As cyber attacks continue to evolve in magnitude and sophistication, Occidental may be required to expend additional resources in order to continue to enhance its cyber security measures and to investigate and remediate any digital and operational systems, related infrastructure, technologies and network security vulnerabilities, which would increase its costs.
As cyber attacks continue to evolve in magnitude and sophistication, Occidental may be required to expend additional resources in order to continue to enhance 20 OXY 2023 FORM 10-K RISK FACTORS its cybersecurity measures and to investigate and remediate any digital and operational systems, related infrastructure, technologies and network security vulnerabilities, which would increase its costs.
In March 2022, for example, the SEC proposed climate disclosure rules that would require public companies to significantly increase disclosure of GHG emissions and strategies, targets, costs and risks associated with climate change and the energy transition.
Additionally, in March 2022, the SEC proposed climate disclosure rules that would require public companies to significantly increase disclosure of GHG emissions and strategies, targets, costs and risks associated with climate change and the energy transition, which the SEC is expected to finalize in 2024.
The motions are not fully briefed. Trial is set for May 2023. Occidental expects to continue pursuing resolution. In accordance with Accounting Standards Codification (ASC) Topic 740’s guidance on the accounting for uncertain tax positions, as of December 31, 2022, Occidental had recorded no tax benefit on the tentative cash tax refund.
Closing arguments are set for May 2024. Occidental expects to continue pursuing resolution. In accordance with Accounting Standards Codification (ASC) Topic 740’s guidance on the accounting for uncertain tax positions, as of December 31, 2023, Occidental had recorded no tax benefit on the tentative cash tax refund.
Occidental’s results of operations depend on the extent to which it can execute new business strategies effectively relative to both the societal transition to a less carbon-intensive economy and laws, regulations and governmental and private actions regarding the environment and climate change.
Occidental’s future results could be adversely affected if it is unable to execute new business strategies effectively. Occidental’s results of operations depend on the extent to which it can execute new business strategies effectively relative to both the societal transition to a less carbon-intensive economy and laws, regulations and government and private actions regarding the environment and climate change.
Occidental’s ability to obtain additional financing or refinancing will be subject to a number of factors, including general economic and market conditions, Occidental’s performance, investor sentiment and its ability to meet existing debt compliance requirements.
Occidental’s ability to obtain additional financing or refinancing will be subject to a number of factors, including general economic and market conditions such as rising interest rates, inflation or unstable or illiquid market conditions, Occidental’s performance, investor sentiment and Occidental’s ability to meet existing debt compliance requirements.
Use of the internet, cloud services, mobile communication systems and other public networks exposes Occidental’s business and that of other third parties with whom Occidental does business to cyber attacks. Cyber attacks on businesses have escalated in recent years.
Use of the internet, cloud services, mobile communication systems and other public networks exposes Occidental’s businesses and those of third parties with whom Occidental does business, and relies on for certain services including related to Occidental’s systems and data, to the risk of cyber attacks, which have escalated in recent years.
The IRA also directed the EPA to update its GHG Reporting Rule to require greater use of measurements or empirical data, instead of emissions factors, by the third quarter of 2024.
In August 2022, the IRA also directed the EPA to update its GHG Reporting Rule to require greater use of measurements or empirical data, instead of emissions factors.
Occidental and its subsidiaries and their respective operations are subject to numerous laws and regulations relating to public and occupational health, safety and environmental protection, including those governing air and GHG emissions, water use and discharges, waste management and protection of wildlife and ecosystems. The requirements of these laws and regulations are becoming increasingly complex, stringent and expensive to implement.
Occidental and its subsidiaries and their respective operations are subject to numerous laws and regulations relating to public and occupational health, safety and environmental protection, including those governing GHG and other air emissions, water use and discharges, waste management, environmental remediation and protection of wildlife and ecosystems.
Although Occidental has entered into voluntary conservation agreements with respect to these and other species and their associated habitat in the Permian Basin, listing of such species may impose significant operational requirements and costs and increase the potential for litigation and enforcement actions.
In November 2022, the FWS published a final rule listing the Lesser Prairie Chicken as endangered. Although Occidental has entered into voluntary conservation agreements with respect to these and other species and their associated habitat in the Permian Basin, listing of such species may impose significant operational requirements and costs and increase the potential for litigation and enforcement actions.
Occidental may face increased scrutiny from the investment community, customers, other stakeholders and the media related to its emissions reduction and net-zero goals and strategies.
Occidental may face increased scrutiny from the investment community, customers, political advocacy groups, other stakeholders and the media related to its emissions reduction and net-zero goals and strategies, and it may be unable to satisfy all stakeholders.
Strategic Petroleum Reserve; ■ Volatility in commodity markets; ■ The effect of energy conservation efforts; and ■ Global inventory levels and general economic conditions.
Strategic Petroleum Reserve; ■ Volatility in commodity markets; ■ The effect of energy conservation efforts; and ■ Global inventory levels and general economic conditions, including potential economic slowdowns or recessions, domestically or internationally.
Occidental does not operate deep disposal wells in the seismic response areas established by the state agencies to date, and its shallow disposal wells have been authorized to operate at agency-approved volume limits. Occidental also has central water treatment and recycling facilities that reduce the need for disposal of produced water.
Occidental does not operate deep disposal wells in the SRAs established by the state agencies to date, and its shallow disposal wells have been authorized to operate at agency-approved volumes, pressures or injection rates. Occidental also utilizes central water treatment and recycling facilities that reduce the need for disposal of produced water.
Competition for access to reserves may make it more difficult to find attractive investment opportunities or require delay of reserve replacement efforts. Further, during periods of low product prices, any cash conservation efforts may delay production growth and reserve replacement efforts. Also, there is substantial competition for capital available for investment in the oil and natural gas industry.
Further, during periods of low product prices, any cash conservation efforts may delay production growth and reserve replacement efforts. Also, there is substantial competition for capital available for investment in the oil and natural gas industry.
Future costs associated with reducing emissions and carbon impacts, as well as impacts resulting from other risk factors described herein, could lead to impairments in the future, if such costs significantly increase Occidental’s breakeven economics. Occidental uses CO 2 for its EOR operations.
Future costs associated with reducing emissions and carbon impacts, as well as impacts resulting from other risk factors described herein, could lead to impairments in the future, if such costs significantly increase Occidental’s breakeven economics. Occidental uses water and sand and is required to dispose of produced water.
While Occidental’s ability to drill and complete wells or to dispose of surplus produced water has not been impacted by these seismic guidelines to date, increased seismicity, or regulatory responses to seismic events, could impact the location, timing and cost of Occidental’s development program and existing operations in seismic response areas.
While Occidental’s ability to drill and complete wells or to dispose of surplus produced water has not been significantly affected by these seismic guidelines to date, increased seismicity, or responses to seismic events by agencies and companies such as curtailing or relocating disposal, could impact the location, timing and cost of Occidental’s development program and existing operations in or near SRAs.
Occidental’s Consolidated Financial Statements include an uncertain tax position for the approximate repayment of $1.4 billion ($1.4 billion federal and $28 million in state taxes) plus accrued interest of approximately $415 million. This amount is not covered by insurance.
OXY 2023 FORM 10-K 21 RISK FACTORS Occidental’s Consolidated Financial Statements include an uncertain tax position for the approximate repayment of $1.4 billion in federal taxes plus accrued interest of approximately $574 million. This amount is not covered by insurance.
In addition, under certain circumstances, Occidental or its subsidiaries may be liable for environmental conditions on properties that they currently own, lease or operate that were caused by previous owners or operators of those properties.
Third-party insurance may not provide adequate coverage or Occidental or its subsidiaries may be self-insured with respect to the related losses. In addition, under certain circumstances, Occidental or its subsidiaries may be liable for environmental conditions on properties that they currently own, lease or operate that were caused by previous owners or operators of those properties.
However, if in the future Occidental’s cyber security measures are compromised or prove insufficient, the potential consequences to Occidental’s businesses and the communities in which it operates could be significant.
While Occidental has experienced cyber attacks in the past, it has not suffered any material losses. However, if in the future Occidental’s cybersecurity measures are compromised or prove insufficient, the potential consequences to Occidental’s businesses and the communities in which it operates could be significant.
The IRS audited Anadarko’s tax position regarding the deductibility of the payment and in September 2018 issued a statutory notice of deficiency rejecting Anadarko’s refund claim. Anadarko disagreed and filed a petition with the U.S. Tax Court to dispute the disallowance in November 2018. In December 2022, the parties filed competing motions for partial summary judgment.
The IRS audited Anadarko’s tax position regarding the deductibility of the payment and in September 2018 issued a statutory notice of deficiency rejecting Anadarko’s refund claim. Anadarko disagreed and filed a petition with the U.S. Tax Court to dispute the disallowance in November 2018. Trial was held in May 2023. Post-trial briefing is ongoing.
Also, actual future net cash flows may differ from these discounted net cash flows due to the amount and timing of actual production, availability of financing for capital expenditures necessary to develop Occidental’s undeveloped reserves, supply and demand for oil, NGL and natural gas, increases or decreases in consumption of oil, NGL and natural gas and changes in governmental regulations or taxation. 16 OXY 2022 FORM 10-K RISK FACTORS Occidental’s future results could be adversely affected if it is unable to execute new business strategies effectively.
Also, actual future net cash flows may differ from these discounted net cash flows due to the amount and timing of actual production, availability of financing for capital expenditures necessary to develop Occidental’s undeveloped reserves, supply and demand for oil, NGL and natural gas, increases or decreases in consumption of oil, NGL and natural gas and changes in government regulations or taxation.
While, as of December 31, 2022, Occidental is permitted, or had permit applications submitted to applicable regulatory agencies, for nearly all planned 2023 drilling and completions activity in the DJ Basin, any significant delays could result in changes to our development program in the DJ Basin and our ability to establish new proved undeveloped locations by meeting the SEC’s “reasonably certain” threshold for adding PUD reserves.
While, as of December 31, 2023, Occidental's subsidiaries maintained a significant inventory of permits and permit applications with applicable regulatory agencies for a substantial portion of their planned 2024 drilling and completions activity, any significant regulatory delays could result in changes to the Company’s development program and its ability to establish new proved undeveloped locations by meeting the SEC’s “reasonably certain” threshold for adding PUD reserves.
Additionally, institutional lenders who provide financing to oil and gas companies have become more attentive to sustainable lending practices, and some of them may substantially reduce, or elect not to provide, funding for oil and gas companies.
Additionally, institutional lenders who provide financing to oil and gas companies have become more attentive to sustainable lending practices, and some of them may substantially reduce, or elect not to provide, funding for oil and gas companies. Customers and suppliers also may evaluate Occidental’s sustainability practices or require that it adopt certain sustainability policies as a condition of awarding contracts.
In November 2022, the EPA issued a supplemental proposal that would, through a combination of direct EPA regulation and state implementation plans, expand leak detection and repair programs, require rapid reporting and correction of larger emission sources, require emission controls for new and existing wells and facilities and certain types of activities, require replacement or conversion of certain emitting equipment such as pneumatic controllers, and encourage the use of advanced technologies to detect and measure methane emissions.
These regulations expand leak detection and repair programs, require rapid reporting and correction of larger emission sources the EPA calls “super emitters”, require additional emission controls for new and existing wells and facilities and certain types of activities, phase out routine flaring, require replacement or conversion of certain emitting equipment such as gas-driven pneumatic controllers and pumps, and encourage the use of advanced technologies to detect and measure methane emissions.
The plaintiffs allege that the BLM failed to comply with various statutes, including NEPA, the Endangered Species Act and the Federal Land Policy and Management Act, by not adequately addressing GHG emissions 10 OXY 2022 FORM 10-K RISK FACTORS and climate change in the environmental documents underlying the approvals.
The plaintiffs allege that the BLM failed to comply with various statutes, including NEPA, the ESA and the Federal Land Policy and Management Act, by not adequately addressing GHG emissions and climate change in the environmental documents underlying the approvals. Occidental, other producers and multiple trade associations have intervened. In November 2023, the U.S.
Costs of compliance with these laws and regulations are significant and can be unpredictable.
The requirements of these laws and regulations are becoming increasingly complex, stringent and expensive to implement. Costs of compliance with these laws and regulations are significant and can be unpredictable.
It is difficult to predict the timing, certainty and scope of such government actions and their ultimate effect on Occidental, which could depend on, among other things, the type and extent of GHG emissions reductions required, the availability and price of emission allowances or credits, the availability and price of alternative fuel sources, the energy sectors covered and 12 OXY 2022 FORM 10-K RISK FACTORS Occidental’s ability to recover the costs incurred through its operating agreements or the pricing of its oil, NGL, natural gas and other products and whether service providers are able to pass increased costs through to Occidental.
It is difficult to predict the timing, certainty and scope of such government actions and their ultimate effect on Occidental, which could depend on, among other things, the type and extent of GHG emissions reductions required, the availability and price of emission allowances or credits, the availability and price of alternative fuel sources, the energy sectors covered.
In April 2022, the EPA issued a proposed rule with respect to one chemical used in OxyChem’s manufacturing operations, but the EPA has not issued final regulations under the 2016 TSCA amendments with respect to any of these chemicals to date.
In 2022, the EPA issued a proposed rule with respect to one chemical used in OxyChem’s manufacturing operations and several other chemicals that OxyChem produces and sells. The EPA is expected to issue final regulations under the 2016 TSCA amendments with respect to these chemicals in 2024.
For additional discussion of some of these matters, see Note 12 – Environmental Liabilities and Expenditures and Note 13 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K.
For additional discussion of some of these matters, see Note 12 – Environmental Liabilities and Expenditures and Note 13 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K. 16 OXY 2023 FORM 10-K RISK FACTORS Disruptions in the political, regulatory, economic, and social environments of the countries in which Occidental operates could adversely affect its reputation, financial condition, results of operations and cash flows.
Consequently, governmental actions designed to reduce GHG emissions could have an adverse effect on Occidental’s businesses, financial condition, results of operations, cash flows and reserves.
Consequently, government actions designed to reduce GHG emissions could cause Occidental to make changes with respect to its business plan, operations and assets that may impact its business and financial performance and could have an adverse effect on its businesses, financial condition, results of operations, cash flows and reserves.
The procedures and methods for estimating the reserves by Occidental’s internal engineers were reviewed by independent petroleum consultants; however, there are inherent uncertainties in estimating reserves. Actual production, revenues, expenditures, oil, NGL and natural gas prices and taxes with respect to Occidental’s reserves may vary from estimates and the variance may be material.
Actual production, revenues, expenditures, oil, NGL and natural gas prices and taxes with respect to Occidental’s reserves may vary from estimates and the variance may be material.
A system failure or data security breach, or a series of such failures or breaches, could have a material adverse effect on Occidental’s financial condition, results of operations or cash flows. Occidental’s oil and gas reserve additions may not continue at the same rate and a failure to replace reserves may negatively affect Occidental’s business.
A system failure or data security breach, or a series of such failures or breaches, could have a material adverse effect on Occidental’s ability to manage its operations, which may adversely affect its businesses, financial condition, results of operations or cash flows.
If the U.S. Department of the Interior were to issue regulations implementing these recommendations, Occidental’s subsidiaries could incur increased federal royalties and face restrictions on future potential drilling sites or infrastructure on federal lands. In January 2022, the U.S.
If the foregoing regulations are finalized, Occidental’s subsidiaries could incur increased federal royalties and face restrictions on future potential drilling sites or infrastructure on federal lands. In June 2022, advocacy groups filed a petition in the U.S.
Continuing political, social and industry attention to climate change has resulted in both existing and pending international agreements and national, regional and local legislation and regulatory programs to reduce GHG emissions. The Biden Administration has identified climate change as a priority and has described a variety of avenues to prohibit or restrict oil and gas development activities in certain areas.
Continuing political, social and industry attention to climate change has resulted in both existing and pending international agreements and national, regional and local legislation and regulatory programs to reduce GHG emissions.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Occidental has elected to use a $1 million threshold for disclosing certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party and potential monetary sanctions are involved. Occidental believes proceedings under this threshold are not material to Occidental's business and financial condition. In January 2023, the U.S.
Biggest changeITEM 3. LEGAL PROCEEDINGS Occidental has elected to use a $1 million threshold for disclosing certain proceedings arising under federal, state or local environmental laws when a government authority is a party and potential monetary sanctions are involved. Occidental believes proceedings under this threshold are not material to Occidental's businesses and financial condition.
Removed
District Court for the District of New Mexico entered a consent decree under which two Occidental subsidiaries settled a previously-reported citizen suit alleging violations of certain federal air quality regulations, which the subsidiaries deny, by paying a civil penalty of $500,000 to the U.S. Department of the Treasury and depositing an additional $500,000 with the U.S.
Added
A subsidiary of Occidental has settled a previously disclosed matter by paying in January 2024 an administrative penalty of $1.2 million to the State of New Mexico to resolve violations alleged to have occurred under federal and state air quality regulations between 2016 and 2019 at a facility in Eddy County, New Mexico, and that were voluntarily disclosed by the subsidiary.
Removed
District Court for the District of New Mexico to fund a supplemental environmental project in lieu of penalties, among other terms.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

6 edited+2 added−0 removed2 unchanged
Biggest changePeterson Senior Vice President and Chief Financial Officer 52 Senior Vice President and Chief Financial Officer since April 2020; Senior Vice President, Permian EOR, 2019-2020; Vice President Permian Strategy, 2018-2019; Director Permian Business Area, 2017-2018; President OxyChem, 2014-2017. OXY 2022 FORM 10-K 21 MARKET FOR REGISTRANT’S COMMON EQUITY Part II
Biggest changePeterson Executive Vice President, Essential Chemistry 53 Executive Vice President, Essential Chemistry since August 2023; Senior Vice President and Chief Financial Officer 2020-2023; Senior Vice President, Permian EOR, 2019-2020; Vice President Permian Strategy, 2018-2019; Director Permian Business Area, 2017-2018; President OxyChem, 2014-2017. Jeff F.
Kenneth Dillon Senior Vice President 63 Senior Vice President since December 2016; President – International Oil and Gas Operations since June 2016. Vicki Hollub President and Chief Executive Officer 63 President, Chief Executive Officer and Director since April 2016. Richard A. Jackson Senior Vice President 47 President Operations U.S.
Kenneth Dillon Senior Vice President 64 Senior Vice President since December 2016; President – International Oil and Gas Operations since June 2016. Vicki Hollub President and Chief Executive Officer 64 President, Chief Executive Officer and Director since April 2016. Richard A. Jackson Senior Vice President 47 President Operations U.S.
Kerrigan Senior Vice President and Chief Legal Officer 57 Senior Vice President and Chief Legal Officer since October 2022; Executive Director of the Kay Bailey Hutchison Energy Center for Business, Law and Policy at The University of Texas, 2017-2022; Executive Vice President, General Counsel and Corporate Secretary of Marathon Oil Corporation, 2009-2017. Robert L.
Kerrigan Senior Vice President and Chief Legal Officer 58 Senior Vice President and Chief Legal Officer since October 2022; Executive Director of the Kay Bailey Hutchison Energy Center for Business, Law and Policy at The University of Texas, 2017-2022; Executive Vice President, General Counsel and Corporate Secretary of Marathon Oil Corporation, 2009-2017.
Champion Vice President, Chief Accounting Officer and Controller 53 Vice President, Chief Accounting Officer and Controller since August 2019; Anadarko Petroleum Corporation: Senior Vice President, Chief Accounting Officer and Controller, 2017-2019, Vice President, Chief Accounting Officer and Controller, 2015-2017.
Champion Vice President, Chief Accounting Officer and Controller 54 Vice President, Chief Accounting Officer and Controller since August 2019; Anadarko Petroleum Corporation: Senior Vice President, Chief Accounting Officer and Controller, 2017-2019, Vice President, Chief Accounting Officer and Controller, 2015-2017.
The following table sets forth the executive officers of Occidental as of February 27, 2023: Name Current Title Age as of February 27, 2023 Positions with Occidental and Employment History Peter J. Bennett Vice President 55 President, Commercial Development U.S.
The following table sets forth the executive officers of Occidental as of February 14, 2024: Name Current Title Age as of February 14, 2024 Positions with Occidental and Employment History Peter J. Bennett Vice President 56 President, Commercial Development U.S.
MINE SAFETY DISCLOSURES Not applicable. 20 OXY 2022 FORM 10-K OTHER INFORMATION INFORMATION ABOUT EXECUTIVE OFFICERS Each executive officer holds his or her office from the date of election by the Board of Directors until the first board meeting held after the next Annual Meeting of Stockholders or until his or her removal or departure or a successor is duly elected, if earlier.
OXY 2023 FORM 10-K 25 OTHER INFORMATION INFORMATION ABOUT EXECUTIVE OFFICERS Each executive officer holds his or her office from the date of election by the Board of Directors until the first board meeting held after the next Annual Meeting of Stockholders or until his or her removal or departure or a successor is duly elected, if earlier.
Added
Sunil Mathew Senior Vice President and Chief Financial Officer 53 Senior Vice President and Chief Financial Officer since August 2023; Vice President, Strategic Planning, Analysis and Business Development 2020-2023; Vice President, Strategic Planning and Analysis 2014-2020. Robert L.
Added
Simmons Senior Vice President and Chief Petrotechnical Officer 64 Senior Vice President, Technical and Operations Support since November 2021 and Chief Petrotechnical Officer since January 2021; Senior Vice President, Technical Planning and Evaluation 2017-2021; Executive Vice President, Growth and Operations Support 2016-2017. 26 OXY 2023 FORM 10-K MARKET FOR REGISTRANT’S COMMON EQUITY Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(b) Represented the value remaining in Occidental's share repurchase plan. In February 2022, Occidental announced an authorization to repurchase up to $3.0 billion of Occidental's shares of common stock. The plan was completed in the fourth quarter of 2022.
Biggest change(b) In February 2023, Occidental announced a share repurchase program to repurchase up to $3.0 billion of Occidental's shares of common stock. The program does not obligate Occidental to acquire any specific number of shares and may be discontinued at any time. The value remaining in Occidental's share repurchase program as of December 31, 2023 was $1.2 billion.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION, HOLDERS AND DIVIDEND POLICY Occidental’s common stock is listed and traded on the NYSE under the ticker symbol “OXY.” The common stock was held by approximately 24,400 stockholders of record as of January 31, 2023, which does not include beneficial owners for whom Cede and Co. or others act as nominees.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION, HOLDERS AND DIVIDEND POLICY Occidental’s common stock is listed and traded on the NYSE under the ticker symbol “OXY.” The common stock was held by approximately 23,200 stockholders of record as of January 31, 2024, which does not include beneficial owners for whom Cede and Co. or others act as nominees.
In February 2023, the Board authorized a new share repurchase program of up to $3.0 billion of Occidental’s shares of common stock. 22 OXY 2022 FORM 10-K MARKET FOR REGISTRANT’S COMMON EQUITY PERFORMANCE GRAPH The following graph compares the yearly percentage change in Occidental’s cumulative total return on its common stock with the cumulative total return of the S&P 500, which includes Occidental, with that of Occidental’s peer group over the five-year period ended December 31, 2022.
OXY 2023 FORM 10-K 27 MARKET FOR REGISTRANT’S COMMON EQUITY PERFORMANCE GRAPH The following graph compares the yearly percentage change in Occidental’s cumulative total return on its common stock with the cumulative total return of the S&P 500, which includes Occidental, with that of Occidental’s peer group over the five-year period ended December 31, 2023.
Fiscal Year Ended December 31, 2017 2018 2019 2020 2021 2022 Occidental $ 100 $ 87 $ 62 $ 29 $ 49 $ 107 Peer Group $ 100 $ 92 $ 98 $ 65 $ 96 $ 149 S&P 500 $ 100 $ 96 $ 126 $ 149 $ 191 $ 157 The information provided in this Performance Graph shall not be deemed “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act, other than as provided in Item 201 to Regulation S-K under the Exchange Act, or subject to the liabilities of Section 18 of the Exchange Act and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent Occidental specifically requests that it be treated as soliciting material or specifically incorporates it by reference.
Fiscal Year Ended December 31, 2018 2019 2020 2021 2022 2023 Occidental $ 100 $ 72 $ 33 $ 56 $ 123 $ 118 Peer Group $ 100 $ 108 $ 73 $ 108 $ 174 $ 173 S&P 500 $ 100 $ 131 $ 156 $ 200 $ 164 $ 207 The information provided in this Performance Graph shall not be deemed “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act, other than as provided in Item 201 to Regulation S-K under the Exchange Act, or subject to the liabilities of Section 18 of the Exchange Act and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent Occidental specifically requests that it be treated as soliciting material or specifically incorporates it by reference. 28 OXY 2023 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS
Occidental declared dividends of $0.52 per share for the year ended December 31, 2022. In February 2023, the Board of Directors declared a regular quarterly dividend of $0.18 per share on common stock, an increase of five cents from the previous quarter, payable in April 2023.
Occidental declared dividends of $0.72 per share in 2023. In February 2024, the Board of Directors declared a regular quarterly dividend of $0.22 per share on common stock, a 22% increase from the previous quarter, payable in April 2023.
Removed
SHARE REPURCHASE ACTIVITIES Occidental’s share repurchase activities for the year ended December 31, 2022, were as follows: Period Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Value of Shares that May Yet Be Purchased Under the Plans or Programs (b) First Quarter 2022 730,746 $ 50.05 — $ 3,000 Second Quarter 2022 11,679,732 58.38 11,190,640 2,350 Third Quarter 2022 28,571,576 63.02 28,409,099 562 October 1 - 31, 2022 2,330,221 67.35 2,205,352 414 November 1 - 30, 2022 5,993,013 70.68 5,859,478 — December 1 - 31, 2022 — — — — Fourth Quarter 2022 8,323,234 69.75 8,064,830 — Total 2022 49,305,288 62.86 47,664,569 — (a) Included purchases of 1,640,719 shares from the trustee of Occidental's defined contribution savings plan that are not part of publicly announced plans or programs.
Added
SHARE REPURCHASE ACTIVITIES Occidental’s share repurchase activities in 2023, were as follows: Period Total Number of Shares Purchased (a) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs First Quarter 2023 12,511,237 $ 60.09 12,511,237 Second Quarter 2023 7,233,460 58.77 7,233,460 Third Quarter 2023 9,468,451 64.27 9,337,486 October 1 - 31, 2023 186,567 66.46 — November 1 - 30, 2023 — — — December 1 - 31, 2023 — — — Fourth Quarter 2023 186,567 66.46 — Total 2023 (b) 29,399,715 61.15 29,082,183 (a) Includes purchases of shares from the trustee of Occidental's defined contribution savings plan that are not part of publicly announced plans or programs.
Removed
OXY 2022 FORM 10-K 23 MANAGEMENT’S DISCUSSION AND ANALYSIS
Added
(c) Average price paid does not include the impact of accrued excise tax.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

193 edited+75 added−56 removed111 unchanged
Biggest changeThe following table sets forth the sales and earnings of each operating segment and corporate items for the years ended December 31: millions, except per share amounts 2022 2021 2020 NET SALES (a) Oil and gas $ 27,165 $ 18,941 $ 13,066 Chemical 6,757 5,246 3,733 Midstream and marketing 4,136 2,863 1,768 Eliminations (1,424) (1,094) (758) Total $ 36,634 $ 25,956 $ 17,809 SEGMENT RESULTS AND EARNINGS Domestic $ 10,439 $ 2,900 $ (8,758) International 2,580 1,497 (742) Exploration (216) (252) (132) Oil and gas 12,803 4,145 (9,632) Chemical 2,508 1,544 664 Midstream and marketing 273 257 (4,175) Total $ 15,584 $ 5,946 $ (13,143) Unallocated corporate items Interest expense, net (1,030) (1,614) (1,424) Income tax benefit (expense) (813) (915) 2,172 Other (437) (627) (1,138) Income (loss) from continuing operations $ 13,304 $ 2,790 $ (13,533) Discontinued operations, net — (468) (1,298) Net income (loss) 13,304 2,322 (14,831) Less: Preferred stock dividends (800) (800) (844) Net income (loss) attributable to common stockholders $ 12,504 $ 1,522 $ (15,675) Net income (loss) attributable to common stockholders—basic $ 13.41 $ 1.62 $ (17.06) Net income (loss) attributable to common stockholders—diluted $ 12.40 $ 1.58 $ (17.06) (a) Intersegment sales eliminate upon consolidation and are generally made at prices approximating those that the selling entity would be able to obtain in third-party transactions. 40 OXY 2022 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS ITEMS AFFECTING COMPARABILITY OIL AND GAS SEGMENT Results of Operations millions 2022 2021 2020 Segment Sales $ 27,165 $ 18,941 $ 13,066 Segment Results (a) Domestic $ 10,439 $ 2,900 $ (8,758) International 2,580 1,497 (742) Exploration (216) (252) (132) Total $ 12,803 $ 4,145 $ (9,632) Items affecting comparability Asset sale gains (losses), net - domestic (b) $ 148 $ 27 $ (1,275) Asset sale gains (losses), net - international (c) $ 55 $ 43 $ (353) Asset impairments and related items - domestic (d) $ — $ (282) $ (5,904) Asset impairments and related items - international (e) $ — $ — $ (1,195) Oil, natural gas and CO 2 mark-to-market gains (losses) $ — $ (280) $ 1,090 Rig terminations and other - domestic $ — $ — $ (59) Rig terminations and other - international $ — $ — $ (13) (a) Results included significant items affecting comparability discussed in the footnotes below.
Biggest changeThe following table sets forth the sales and earnings of each operating segment and corporate items for the years ended December 31: millions, except per share amounts 2023 2022 2021 NET SALES (a) Oil and gas $ 21,284 $ 27,165 $ 18,941 Chemical 5,321 6,757 5,246 Midstream and marketing 2,551 4,136 2,863 Eliminations (899) (1,424) (1,094) Total $ 28,257 $ 36,634 $ 25,956 SEGMENT RESULTS AND EARNINGS Domestic $ 4,822 $ 10,439 $ 2,900 International 1,859 2,580 1,497 Exploration (441) (216) (252) Oil and gas 6,240 12,803 4,145 Chemical 1,531 2,508 1,544 Midstream and marketing 24 273 257 Total $ 7,795 $ 15,584 $ 5,946 Unallocated corporate items Interest expense, net (945) (1,030) (1,614) Income tax expense (1,733) (813) (915) Other (421) (437) (627) Income from continuing operations $ 4,696 $ 13,304 $ 2,790 Discontinued operations, net — — (468) Net income 4,696 13,304 2,322 Less: Preferred stock dividends and redemption premiums (923) (800) (800) Net income attributable to common stockholders $ 3,773 $ 12,504 $ 1,522 Net income attributable to common stockholders—basic $ 4.22 $ 13.41 $ 1.62 Net income attributable to common stockholders—diluted $ 3.90 $ 12.40 $ 1.58 (a) Intersegment sales eliminate upon consolidation and are generally made at prices approximating those that the selling entity would be able to obtain in third-party transactions.
Proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
Proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
The ultimate impact of the Inflation Reduction Act on Occidental’s emerging low-carbon businesses and net-zero pathway will depend on a number of factors, interpretations and assumptions as well as additional regulatory guidance. INDUSTRY OUTLOOK Midstream and marketing segment results can experience volatility depending on commodity price changes, demand impacting export sales and the Midland-to-Gulf-Coast oil spreads.
The ultimate impact of the Inflation Reduction Act on Occidental’s emerging low-carbon businesses and net-zero pathway will depend on a number of factors, interpretations and assumptions as well as additional regulatory guidance. OUTLOOK Midstream and marketing segment results can experience volatility depending on commodity price changes, demand impacting export sales and the Midland-to-Gulf-Coast oil spreads.
FINANCIAL ■ CROCE - CROCE is calculated as (i) the cash flows from operating activities, before changes in working capital, plus distributions from WES classified as investing cash flows, divided by (ii) the average of the opening and closing balances of total equity plus total debt. ■ Maintain and improve financial leverage to a level consistent with investment grade credit metrics.
FINANCIAL ■ CROCE - CROCE is calculated as (i) the cash flows from operating activities, before changes in working capital, plus distributions from WES classified as investing cash flows, divided by (ii) the average of the opening and closing balances of total equity plus total debt. ■ Credit rating - Maintain and improve financial leverage to a level consistent with investment grade credit metrics.
The Principles reinforce the alignment among Occidental’s core values, goals and strategies, underpin our operational management system, and help to guide our workforce across our businesses. Occidental seeks to meet its sustainability and environmental goals through its development and commercialization of technologies that lower both GHG emissions from industrial processes and existing atmospheric concentrations of CO 2 .
The Principles reinforce the alignment among Occidental’s core values, goals and strategies, underpin its Operational Management System, and help to guide the workforce across its businesses. Occidental seeks to meet its sustainability and environmental goals through its development and commercialization of technologies that lower both GHG emissions from industrial processes and existing atmospheric concentrations of CO 2 .
Occidental has a dedicated stakeholder relations team that conducts regulatory and community outreach with respect to its permit applications and operations in Colorado with a focus on building trust and fostering open communication with those that live and work near our operations.
Occidental has dedicated stakeholder relations team that conducts regulatory and community outreach with respect to its permit applications and operations in Colorado with a focus on building trust and fostering open communication with those that live and work near its operations.
WES owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties. Occidental’s 40% participating interest in Al Hosn Gas also includes sour gas processing facilities that are designed to process 1.33 Bcf/d of natural gas and separate it into salable gas, condensate, NGL and sulfur.
WES owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties. Occidental’s 40% participating interest in Al Hosn Gas also includes sour gas processing facilities that are designed to process 1.45 Bcf/d of natural gas and separate it into salable gas, condensate, NGL and sulfur.
Revisions are necessary due to changes in, among other things, development plans, reservoir performance, prices, economic conditions and governmental restrictions as well as changes in the expected recovery associated with infill drilling. Decreases in prices, for example, may cause a reduction in some proved reserves due to reaching economic limits at an earlier projected date.
Revisions are necessary due to changes in, among other things, development plans, reservoir performance, prices, economic conditions and government restrictions as well as changes in the expected recovery associated with infill drilling. Decreases in prices, for example, may cause a reduction in some proved reserves due to reaching economic limits at an earlier projected date.
Overall, Occidental’s net economic benefit from these contracts is greater when product prices are higher. Approximately $0.5 billion of Occidental’s worldwide capital budget is expected to be allocated to its international operations in 2023. MIDDLE EAST / NORTH AFRICA ASSETS 1. Algeria 2. Oman 3. Qatar 4.
Overall, Occidental’s net economic benefit from these contracts is greater when product prices are higher. Approximately $0.5 billion of Occidental’s worldwide capital budget is expected to be allocated to its international operations in 2024. MIDDLE EAST / NORTH AFRICA ASSETS 1. Algeria 2. Oman 3. Qatar 4.
Since being engaged in 2003, Ryder Scott has reviewed the specific application of Occidental’s reserve estimation methods and procedures for approximately 92% of Occidental’s existing proved oil and gas reserves. Management retained Ryder Scott to provide objective third-party input on its methods and procedures and to gather industry information applicable to Occidental’s reserve estimation and reporting process.
Since being engaged in 2003, Ryder Scott has reviewed the specific application of Occidental’s reserve estimation methods and procedures for approximately 97% of Occidental’s existing proved oil and gas reserves. Management retained Ryder Scott to provide objective third-party input on its methods and procedures and to gather industry information applicable to Occidental’s reserve estimation and reporting process.
The oil and gas business implements Occidental’s strategy primarily by: ■ Operating and developing areas where reserves are known to exist and optimizing capital intensity in core areas, primarily in the Permian Basin, DJ Basin, Gulf of Mexico, UAE, Oman and Algeria; ■ Maintaining a disciplined and prudent approach to capital expenditures with a focus on high-return, short and mid-cycle, cash-flow-generating opportunities and an emphasis on creating value and further enhancing Occidental’s existing positions; ■ Focusing Occidental’s subsurface characterization and technical activities on unconventional opportunities, primarily in the Permian Basin and Rockies; ■ Using secondary and tertiary recovery techniques in mature fields; and ■ Focusing on cost-reduction efficiencies and innovative technologies to reduce carbon emissions.
The oil and gas business implements Occidental’s strategy primarily by: ■ Operating and developing areas where reserves are known to exist and optimizing capital intensity in core areas, primarily in the Permian Basin, DJ Basin, Gulf of Mexico, UAE, Oman and Algeria; ■ Maintaining a disciplined and prudent approach to capital expenditures with a focus on high-return, short and mid-cycle, cash-flow-generating opportunities and an emphasis on creating value and further enhancing Occidental’s existing positions; ■ Focusing Occidental’s subsurface characterization and technical activities on both conventional and unconventional resources in the Permian Basin, Rockies, Gulf of Mexico and International; ■ Using secondary and tertiary recovery techniques in mature fields; and ■ Focusing on cost-reduction efficiencies and innovative technologies to reduce carbon emissions.
In addition to efficient capital allocation and deployment discussed below in the section titled Oil and Gas Segment - Business Strategy , Occidental believes its most significant performance indicators are: OPERATIONAL ■ Total spend per barrel - In 2023, Occidental will continue to focus on controlling total costs from a per-barrel perspective.
In addition to efficient capital allocation and deployment discussed below in the section titled Oil and Gas Segment - Business Strategy , Occidental believes its most significant performance indicators are: OPERATIONAL ■ Total spend per barrel - In 2024, Occidental will continue to focus on controlling total costs from a per-barrel perspective.
RESERVES EVALUATION AND REVIEW PROCESS Occidental’s estimates of proved reserves and associated future net cash flows as of December 31, 2022, were made by Occidental’s technical personnel and are the responsibility of management. The estimation of proved reserves is based on the requirement of reasonable certainty of economic producibility and funding commitments by Occidental to develop the reserves.
RESERVES EVALUATION AND REVIEW PROCESS Occidental’s estimates of proved reserves and associated future net cash flows as of December 31, 2023, were made by Occidental’s technical personnel and are the responsibility of management. The estimation of proved reserves is based on the requirement of reasonable certainty of economic producibility and funding commitments by Occidental to develop the reserves.
If Occidental or its subsidiaries were to adjust the balance of their environmental remediation liabilities based on the factors described above, the amount of the increase or decrease would be recognized in earnings. For example, if the balance were reduced by 10%, Occidental would record a pre-tax increase to income of $105 million.
If Occidental or its subsidiaries were to adjust the balance of their environmental remediation liabilities based on the factors described above, the amount of the increase or decrease would be recognized in earnings. For example, if the balance were reduced by 10%, Occidental would record a pre-tax increase to income of $102 million.
If the balance were increased by 10%, Occidental would record an additional remediation expense of $105 million. INCOME TAXES Occidental and its subsidiaries file various U.S. federal, state and foreign income tax returns. The impact of changes in tax regulations are reflected when enacted.
If the balance were increased by 10%, Occidental would record an additional remediation expense of $102 million. INCOME TAXES Occidental and its subsidiaries file various U.S. federal, state and foreign income tax returns. The impact of changes in tax regulations are reflected when enacted.
The following sections include a discussion of results for fiscal 2022 compared to fiscal 2021 as well as certain 2020 results. The comparative results for fiscal 2021 with fiscal 2020 generally have not been included in this Form 10-K, but may be found in “Part II - Item 7.
The following sections include a discussion of results for fiscal 2023 compared to fiscal 2022 as well as certain 2021 results. The comparative results for fiscal 2022 with fiscal 2021 generally have not been included in this Form 10-K, but may be found in “Part II - Item 7.
These purchases allow Occidental to aggregate volumes to better utilize and optimize its assets. In 2022, compared to the prior year, marketing results were impacted by the timing of crude oil sales, partially offset by higher gas marketing margin from transportation capacity optimization.
These purchases allow Occidental to aggregate volumes to better utilize and optimize its assets. In 2023, compared to the prior year, marketing results were impacted by the timing of crude oil sales, partially offset by higher gas marketing margin from transportation capacity optimization.
Midstream and marketing sales generally represent the margins earned by the marketing business at it strives to optimize the use of its transportation, storage and terminal commitments to provide access to domestic and international markets and, to a lesser extent, NGL and sulfur revenues from the gas processing business.
Midstream and marketing sales generally represent the margins earned by the marketing business as it strives to optimize the use of its transportation, storage and terminal commitments to provide access to domestic and international markets and, to a lesser extent, NGL and sulfur revenues from the gas processing business.
Occidental remains committed to these projects and continues to actively progress the development of these volumes. In addition to the above, Occidental has 57 MMboe of PUD reserves that are scheduled to be developed more than five years from their initial date of booking.
Occidental remains committed to these projects and continues to actively progress the development of these volumes. In addition to the above, Occidental has 29 MMboe of PUD reserves that are scheduled to be developed more than five years from their initial date of booking.
Amounts excluded certain product purchase obligations related to marketing activities for which there are no minimum purchase requirements or the amounts are not fixed or determinable. Long-term purchase contracts were discounte d at a 5.03% discount rate.
Amounts excluded certain product purchase obligations related to marketing activities for which there are no minimum purchase requirements or the amounts are not fixed or determinable. Long-term purchase contracts were discounte d at a 5.10% discount rate.
In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future.
In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future, including future rulemaking.
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, and they include, but are not limited to: any projections of earnings, revenue or other financial items or future financial position or sources of financing; any statements of the plans, strategies and objectives of management for future operations, business strategy or financial position; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue or other financial items or future financial position or sources of financing; any statements of the plans, strategies and objectives of management for future operations or business strategy; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
Individually insignificant unproved properties are combined and amortized on a group basis based on factors such as lease terms, success rates and other factors to provide for full amortization upon lease expiration or abandonment.
Individually insignificant unproved properties are combined and amortized on a group basis based on factors such as geographic location, lease terms, success rates and other factors to provide for full amortization upon lease expiration or abandonment.
(d) Amounts included payments which will become due under long-term agreements to purchase goods and services used in the normal course of business to secure terminal, pipeline and processing capacity, CO 2, electrical power, steam and certain chemical raw materials including but not limited to capital commitments.
(d) Amounts included payments which will become due under long-term agreements to purchase goods and services used in the normal course of business to secure terminal, pipeline and processing capacity, CO 2, electrical power, non-lease components, steam and certain chemical raw materials including but not limited to capital commitments.
See Note 13 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for additional information. 54 OXY 2022 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS SAFE HARBOR DISCUSSION REGARDING OUTLOOK AND OTHER FORWARD-LOOKING DATA Portions of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
See Note 13 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for additional information. 60 OXY 2023 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS SAFE HARBOR DISCUSSION REGARDING OUTLOOK AND OTHER FORWARD-LOOKING DATA Portions of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
OFFSHORE DOMESTIC ASSETS Gulf of Mexico Occidental is the fourth-largest oil and gas producer in the deep-water Gulf of Mexico, operating 10 strategically located deep-water floating platforms, the highest number among all the deep water operators, and producing from 18 active fields while owning a working interest across 252 blocks, including approximately 1.0 million net acres.
OFFSHORE DOMESTIC ASSETS Gulf of Mexico Occidental is the fourth-largest oil and gas producer in the deep-water Gulf of Mexico, operating 10 strategically located deep-water floating platforms, the highest number among all the deep water operators, and producing from 18 active fields while owning a working interest across 261 blocks, including approximately 0.9 million net acres.
OXY 2022 FORM 10-K 49 MANAGEMENT’S DISCUSSION AND ANALYSIS ENVIRONMENTAL LIABILITIES AND EXPENDITURES ENVIRONMENTAL COSTS Environmental costs relate to the prevention, monitoring, control, treatment or abatement of waste, emissions or releases to air, water or land from operations of Occidental’s subsidiaries. These activities are generally integrated with ongoing operations or development projects, so the costs in this table include estimates.
OXY 2023 FORM 10-K 55 MANAGEMENT’S DISCUSSION AND ANALYSIS ENVIRONMENTAL LIABILITIES AND EXPENDITURES ENVIRONMENTAL COSTS Environmental costs relate to the prevention, monitoring, control, treatment or abatement of waste, emissions or releases to air, water or land from operations of Occidental’s subsidiaries. These activities are generally integrated with ongoing operations or development projects, so the costs in this table include estimates.
Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: general economic conditions, including slowdowns and recessions, domestically or internationally; Occidental’s indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations; Occidental’s ability to successfully monetize select assets and repay or refinance debt and the impact of changes in Occidental’s credit ratings; the scope and duration of the global or regional health pandemics or epidemics, including the COVID-19 pandemic and ongoing actions taken by governmental authorities and other third parties in response to the pandemic; assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations and volatility; supply and demand considerations for, and the prices of, Occidental’s products and services; actions by OPEC and non-OPEC oil producing countries; results from operations and competitive conditions; future impairments of Occidental's proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings; unexpected changes in costs; inflation, its impact on markets and economic activity and related monetary policy actions by governments in response to inflation; availability of capital resources, levels of capital expenditures and contractual obligations; the regulatory approval environment, including Occidental's ability to timely obtain or maintain permits or other governmental approvals, including those necessary for drilling and/or development projects; Occidental's ability to successfully complete, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs and adverse tax consequences; uncertainties and liabilities associated with acquired and divested properties and businesses; uncertainties about the estimated quantities of oil, NGL and natural gas reserves; lower-than-expected production from development projects or acquisitions; Occidental’s ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve Occidental’s competitiveness; exploration, drilling and other operational risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver Occidental’s oil and natural gas and other processing and transportation considerations; volatility in the securities, capital or credit markets; governmental actions, war (including the Russia-Ukraine war) and political conditions and events; environmental risks and liability under federal, regional, state, provincial, tribal, local and international environmental laws, and regulations, and litigation (including the potential liability for remedial actions or assessments under existing or future laws, regulations and litigation); legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes, deep-water and onshore drilling and permitting regulations and environmental regulations (including regulations related to climate change); Occidental's ability to recognize intended benefits from its business strategies and initiatives, such as Occidental's low carbon ventures businesses or announced greenhouse gas emissions reduction targets or net-zero goals; potential liability resulting from pending or future litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, power outages, natural disasters, cyber-attacks, terrorist acts or insurgent activity; the creditworthiness and performance of Occidental's counterparties, including financial institutions, operating partners and other parties; failure of risk management; Occidental’s ability to retain and hire key personnel; supply, transportation, and labor constraints; reorganization or restructuring of Occidental’s operations; changes in state, federal or international tax rates; and actions by third parties that are beyond Occidental's control.
Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: general economic conditions, including slowdowns and recessions, domestically or internationally; Occidental’s indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations; Occidental’s ability to successfully monetize select assets and repay or refinance debt and the impact of changes in Occidental’s credit ratings or future increases in interest rates; assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations and volatility; supply and demand considerations for, and the prices of, Occidental’s products and services; actions by OPEC and non-OPEC oil producing countries; the scope and duration of global or regional health pandemics or epidemics, and actions taken by government authorities and other third parties in connection therewith; results from operations and competitive conditions; future impairments of Occidental's proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings; unexpected changes in costs; inflation, its impact on markets and economic activity and related monetary policy actions by governments in response to inflation; availability of capital resources, levels of capital expenditures and contractual obligations; the regulatory approval environment, including Occidental's ability to timely obtain or maintain permits or other government approvals, including those necessary for drilling and/or development projects; Occidental's ability to successfully complete, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or divestitures, including the CrownRock Acquisition; risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs and adverse tax consequences; uncertainties and liabilities associated with acquired and divested properties and businesses; uncertainties about the estimated quantities of oil, NGL and natural gas reserves; lower-than-expected production from development projects or acquisitions; Occidental’s ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve Occidental’s competitiveness; exploration, drilling and other operational risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver Occidental’s oil and natural gas and other processing and transportation considerations; volatility in the securities, capital or credit markets, including capital market disruptions and instability of financial institutions; government actions, war (including the Russia-Ukraine war and conflicts in the Middle East) and political conditions and events; HSE risks, costs and liability under existing or future federal, regional, state, provincial, tribal, local and international HSE laws, regulations, and litigation (including related to climate change or remedial actions or assessments); legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes and deep-water and onshore drilling and permitting regulations; Occidental's ability to recognize intended benefits from its business strategies and initiatives, such as Occidental's low-carbon ventures businesses or announced GHG emissions reduction targets or net-zero goals; potential liability resulting from pending or future litigation, government investigations and other proceedings; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, power outages, natural disasters, cyber-attacks, terrorist acts or insurgent activity; the creditworthiness and performance of Occidental's counterparties, including financial institutions, operating partners and other parties; failure of risk management; Occidental’s ability to retain and hire key personnel; supply, transportation, and labor constraints; reorganization or restructuring of Occidental’s operations; changes in state, federal or international tax rates; and actions by third parties that are beyond Occidental's control.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The impairment test incorporates a number of assumptions involving expectations of future cash flows which can change significantly over time. These assumptions include estimates of future production, product prices, contractual prices, estimates of risk-adjusted oil and gas proved and unproved reserves and estimates of OXY 2022 FORM 10-K 51 MANAGEMENT’S DISCUSSION AND ANALYSIS future operating and development costs.
The impairment test incorporates a number of assumptions involving expectations of OXY 2023 FORM 10-K 57 MANAGEMENT’S DISCUSSION AND ANALYSIS future cash flows which can change significantly over time. These assumptions include estimates of future production, product prices, contractual prices, estimates of risk-adjusted oil and gas proved and unproved reserves and estimates of future operating and development costs.
The Mukhaizna Field in Block 53 is a major pattern steam flood project for EOR that utilizes some of the largest mechanical vapor compressors ever built. Since assuming operations in the Mukhaizna Field in 2005, Occidental has drilled close to 3,580 new wells and has produced over 575 million gross barrels.
The Mukhaizna Field in Block 53 is a major pattern steam flood project for EOR that utilizes some of the largest mechanical vapor compressors ever built. Since assuming operations in the Mukhaizna Field in 2005, Occidental has drilled close to 3,600 new wells and has produced over 607 million gross barrels.
(b) Occidental is the lessee under various agreements for real estate, equipment, plants and facilities. (c) Included long-term obligations and current portions of long-term obligations under postretirement benefits, accrued transportation commitments, ad valorem taxes and other accrued liabilities.
(b) Occidental is the lessee under various agreements for real estate, equipment, plants and facilities. (c) Included long-term obligations under postretirement benefits, accrued transportation commitments, ad valorem taxes and other accrued liabilities.
You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Occidental does not undertake any obligation to update, modify or withdraw any forward-looking statements as a result of new information, future events or otherwise.
You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report unless an earlier date is specified. Unless legally required, Occidental does not undertake any obligation to update, modify or withdraw any forward-looking statements as a result of new information, future events or otherwise.
In 2019 and 2020, Occidental acquired 9-year exploration concessions and, subject to a declaration of commerciality, 35-year production concessions for Onshore Block 3 and Block 5, which cover an area approximately 1.5 million acres and 1.0 million acres, respectively, and are adjacent to Al Hosn Gas.
In 2019 and 2020, Occidental acquired 9-year exploration concessions and, subject to a declaration of commerciality, 35-year production concessions for Onshore Block 3 and Block 5, which cover an area approximately 1.5 million acres and 1.0 million acres, respectively, and are adjacent to Al Hosn Gas. In 2023, Occidental commenced first oil production in Onshore Block 3.
See Note 1 - Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for more information regarding 38 OXY 2022 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS Occidental’s equity method investment in WES.
See Note 1 - Summary of OXY 2023 FORM 10-K 43 MANAGEMENT’S DISCUSSION AND ANALYSIS Significant Accounting Policies in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for more information regarding Occidental’s equity method investment in WES.
For example, a 5% increase or decrease in the amount of oil and gas reserves would change the DD&A rate by approximately $0.60/Bbl, which would increase or decrease pre-tax income by approximately $270 million annually at current production rates.
For example, a 5% increase or decrease in the amount of oil and gas reserves would change the DD&A rate by approximately $0.65/Bbl, which would increase or decrease pre-tax income by approximately $290 million annually at current production rates.
Occidental manages its Permian Basin operations through two businesses: Permian Resources, which includes unconventional opportunities, and Permian EOR, which utilizes secondary and tertiary recovery techniques. Occidental had a leading position in the Permian Basin, producing approximately 8% of the total oil in the basin in 2022.
Occidental manages its Permian Basin operations through two businesses: Permian Resources, which includes unconventional opportunities, and Permian EOR, which utilizes secondary and tertiary recovery techniques. Occidental had a leading position in the Permian Basin, producing approximately 9% of the total oil in the basin in 2023.
These PUD reserves relate to approved long-term development plans, 175 MMboe of which are primarily associated with international development projects with physical limitations in existing gas processing capacity and 66 MMboe of which are related to approved long-term development plans for Permian EOR projects, also with physical limitations in existing gas processing capacity.
These PUD reserves relate to approved long-term development plans, 165 MMboe of which are primarily associated with international development projects with physical limitations in existing gas processing capacity and 47 MMboe of which are related to approved long-term development plans for Permian EOR projects, also with physical limitations in existing gas processing capacity.
The most significant are: (1) cost estimates for remedial activities may vary from the initial estimate; (2) the length of time, type or amount of remediation necessary to achieve the remedial objective may change due to factors such as site conditions, the ability to identify and OXY 2022 FORM 10-K 53 MANAGEMENT’S DISCUSSION AND ANALYSIS control contaminant sources or the discovery of additional contamination; (3) a regulatory agency may ultimately reject or modify proposed remedial plans; (4) improved or alternative remediation technologies may change remediation costs; (5) laws and regulations may change remediation requirements or affect cost sharing or allocation of liability; and (6) changes in allocation or cost-sharing arrangements may occur.
The most significant are: (1) cost estimates for remedial activities may vary from the initial estimate; (2) the length of time, type or amount of remediation necessary to achieve the remedial objective may change due to factors such as site conditions, the ability to identify and control contaminant sources or the discovery of additional contamination; (3) a regulatory agency may ultimately reject or modify proposed remedial plans; (4) improved or alternative remediation technologies may change remediation costs; (5) laws and regulations may change remediation requirements or affect cost sharing or allocation of liability; and (6) changes in allocation or cost-sharing arrangements may occur.
Ryder Scott reviewed the specific application of such methods and procedures for selected oil and gas properties considered to be a valid representation of Occidental’s 2022 year-end total proved reserves portfolio. In 2022, Ryder Scott reviewed approximately 42% of Occidental’s proved oil and gas reserves.
Ryder Scott reviewed the specific application of such methods and procedures for selected oil and gas properties considered to be a valid representation of Occidental’s 2023 year-end total proved reserves portfolio. In 2023, Ryder Scott reviewed approximately 44% of Occidental’s proved oil and gas reserves.
OPERATIONAL EXCELLENCE AND CAPITAL EFFICIENCY Occidental's operational priorities for 2022 were to maximize operational efficiencies by investing $4.5 billion in high return assets to generate long-term sustainable free cash flow that will provide cash flow stability throughout the commodity cycle. Occidental set new operational records and efficiency benchmarks in the Permian, Rockies, Gulf of Mexico, Oman and UAE.
OPERATIONAL EXCELLENCE AND CAPITAL EFFICIENCY Occidental's operational priorities for 2023 were to maximize operational efficiencies by investing $5.0 billion in high return upstream assets to generate long-term free cash flow that will provide cash flow stability throughout the commodity cycle. Occidental set new operational records and efficiency benchmarks in the Permian, Rockies, Gulf of Mexico, Oman and UAE.
The following table shows the breakout of Occidental’s proved reserves from continuing operations by commodity as a percentage of total proved reserves: 2022 2021 Oil 50 % 50 % NGL 22 % 22 % Natural gas 28 % 28 % Occidental does not have any reserves from non-traditional sources.
The following table shows the breakout of Occidental’s proved reserves from continuing operations by commodity as a percentage of total proved reserves: 2023 2022 Oil 49 % 50 % NGL 24 % 22 % Natural gas 27 % 28 % Occidental does not have any reserves from non-traditional sources.
Significant unproved properties, primarily as a result of the Anadarko Acquisition, are assessed individually for impairment and when events or circumstances indicate that the carrying value of property may not be recovered a valuation allowance is provided if an impairment is indicated.
Significant unproved properties are assessed individually for impairment and when events or circumstances indicate that the carrying value of property may not be recovered a valuation allowance is provided if an impairment is indicated.
(b) The 2022 amount included $148 million of gains, primarily related to the sale of certain non-strategic assets in the Permian Basin. The 2021 amount included $27 million in post-closing consideration earned from 2020 asset sales as a result of certain production and pricing targets being met.
(b) The 2023 and 2022 amounts included gains on sales primarily related to certain non-strategic assets in the Permian Basin of $142 million and $148 million, respectively. The 2021 amount included $27 million in post-closing consideration earned from 2020 asset sales as a result of certain production and pricing targets being met.
See Note 6 - Long-Term Debt in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for more information related to Occidental’s debt repayments and see Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in Part II of this Form 10-K and Note 14 - Stockholders' Equity in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for additional information related to Occidental’s share repurchases.
See Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in Part II of this Form 10-K and Note 14 - Stockholders' Equity in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K for additional information related to Occidental’s share repurchases.
INDUSTRY OUTLOOK The oil and gas exploration and production industry is highly competitive, is subject to significant volatility due to various market conditions and operations are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices. Oil prices increased significantly in 2022.
OUTLOOK The oil and gas exploration and production industry is highly competitive, is subject to significant volatility due to various market conditions and operations are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices. Oil prices decreased in 2023.
Occidental holds 6.0 million gross acres and has 10,000 potential well inventory locations. In 2022, Occidental’s share of production was 65 Mboe/d.
Occidental holds 6.0 million gross acres and has 10,000 potential well inventory locations. In 2023, Occidental’s share of production was 66 Mboe/d.
The Permian Basin The Permian Basin extends throughout West Texas and Southeast New Mexico and is one of the largest and most active oil basins in the United States, accounting for more than 43% of total United States oil production in 2022. Overall in 2022, Occidental’s production in the Permian Basin was approximately 513 Mboe/d.
The Permian Basin The Permian Basin extends throughout West Texas and Southeast New Mexico and is one of the largest and most active oil basins in the United States, accounting for more than 45% of total United States oil production in 2023. Overall in 2023, Occidental’s production in the Permian Basin was approximately 584 Mboe/d.
These PUD reserves are related to approved long-term development plans, 41 MMboe of which are associated with international development projects and 16 MMboe with the Gulf of Mexico projects.
These PUD reserves are related to approved long-term development plans, 18 MMboe of which are associated with international development projects and 11 MMboe with the Gulf of Mexico projects.
OXY 2022 FORM 10-K 27 MANAGEMENT’S DISCUSSION AND ANALYSIS DOMESTIC INTERESTS BUSINESS REVIEW Occidental conducts its domestic operations through land leases, subsurface mineral rights it owns, or a combination of both. Occidental’s domestic oil and gas leases have a primary term ranging from one to 10 years, which is extended through the end of production once it commences.
DOMESTIC INTERESTS BUSINESS REVIEW Occidental conducts its domestic operations through land leases, subsurface mineral rights it owns, or a combination of both. Occidental’s domestic oil and gas leases have a primary term ranging from one to 10 years, which is extended through the end of production once it commences.
SOURCES AND USES OF CASH Occidental currently expects its operational cash flows and cash on hand to be sufficient to meet its current debt maturities and other obligations for the next 12 months from the date of this filing.
SOURCES AND USES OF CASH Occidental currently expects its operational cash flows and cash on hand along with the committed CrownRock Acquisition financing to be sufficient to meet its current debt maturities and other obligations for the next 12 months from the date of this filing.
In 2022, compared to the prior year, gas processing, gathering and CO 2 results increased primarily due to higher sulfur and NGL prices. POWER GENERATION FACILITIES Earnings from power and steam generation facilities are derived from sales to affiliates and third parties.
In 2023, compared to the prior year, gas processing, gathering and CO 2 results decreased primarily due to lower sulfur and NGL prices. POWER GENERATION FACILITIES Earnings from power and steam generation facilities are derived from sales to affiliates and third parties.
DELIVERY AND TRANSPORTATION COMMITMENTS Occidental has made long-term commitments to certain refineries and other buyers to deliver oil, NGL and natural gas. The total amount contracted to be delivered is approximately 80 MMbbl of oil through 2025, 567 MMbbl of NGL through 2029 and 845 Bcf of gas through 2029.
DELIVERY AND TRANSPORTATION COMMITMENTS Occidental has made long-term commitments to certain refineries and other buyers to deliver oil, NGL and natural gas. The total amount contracted to be delivered is approximately 58 MMbbl of oil through 2025, 795 MMbbl of NGL through 2034 and 812 Bcf of gas through 2029.
Net capitalized costs attributable to unproved properties were $12.6 billion as of December 31, 2022, and $14.8 billion as of December 31, 2021. The unproved amounts are not subject to DD&A until they are classified as proved properties.
Net capitalized costs attributable to unproved properties were $10.2 billion as of December 31, 2023, and $12.6 billion as of December 31, 2022. The unproved amounts are not subject to DD&A until they are classified as proved properties.
Occidental discloses such remediation liabilities on a consolidated basis. In determining the environmental remediation liability and the range of reasonably possible additional losses, Occidental refers to currently available information, including relevant past experience, remedial objectives, available technologies, applicable laws and regulations and cost-sharing arrangements.
In determining the environmental remediation liability and the range of reasonably possible additional losses, Occidental refers to currently available information, including relevant past experience, remedial objectives, available technologies, applicable laws and regulations and cost-sharing arrangements.
INDEX PAGE Current Business Outlook and Strategy 25 Oil and Gas Segment 27 Chemical Segment 37 Midstream and Marketing Segment 38 Segment Results of Operations and Items Affecting Comparability 40 Income Taxes 45 Consolidated Results of Operations 46 Liquidity and Capital Resources 47 Lawsuits, Claims, Commitments and Contingencies 49 Environmental Liabilities and Expenditures 50 Global Investments 50 Critical Accounting Policies and Estimates 51 Safe Harbor Discussion Regarding Outlook and Other Forward-Looking Data 55 24 OXY 2022 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS CURRENT BUSINESS OUTLOOK AND STRATEGY GENERAL Occidental’s operations, financial condition, cash flows and levels of expenditures are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices, the Midland-to-Gulf-Coast oil spreads, chemical product prices and inflationary pressures in the macro-economic environment.
INDEX PAGE Current Business Outlook and Strategy 30 Oil and Gas Segment 32 Chemical Segment 42 Midstream and Marketing Segment 43 Segment Results of Operations and Items Affecting Comparability 45 Income Taxes 50 Consolidated Results of Operations 51 Liquidity and Capital Resources 52 Lawsuits, Claims, Commitments and Contingencies 55 Environmental Liabilities and Expenditures 56 Global Investments 56 Critical Accounting Policies and Estimates 57 Safe Harbor Discussion Regarding Outlook and Other Forward-Looking Data 61 OXY 2023 FORM 10-K 29 MANAGEMENT’S DISCUSSION AND ANALYSIS CURRENT BUSINESS OUTLOOK AND STRATEGY GENERAL Occidental’s operations, financial condition, cash flows and levels of expenditures are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices, Midland-to-Gulf-Coast oil spreads, chemical product prices and inflationary pressures in the macro-economic environment.
INFLATION REDUCTION ACT In August 2022, Congress passed the Inflation Reduction Act that contains, among other provisions, a corporate book minimum tax on financial statement income, an excise tax on stock buybacks, a methane emissions fee and certain tax incentives related to climate change and clean energy. Occidental is currently evaluating the provisions of this act.
INFLATION REDUCTION ACT AND PILLAR TWO In August 2022, Congress passed the IRA that contains, among other provisions, a corporate book minimum tax on financial statement income, an excise tax on stock buybacks, a methane emissions fee and certain tax incentives related to climate change and clean energy. Occidental is currently evaluating the guidance and proposed regulations released in 2023.
Occidental’s subsidiaries generally record reimbursements or recoveries of environmental remediation costs in income when received, or when receipt of recovery is highly probable. Many factors could affect future remediation costs incurred by Occidental’s subsidiaries and result in adjustments to environmental remediation liabilities and the range of reasonably possible additional losses.
Occidental’s subsidiaries generally record reimbursements or recoveries of environmental remediation costs in income when received, or when receipt of recovery is highly probable. OXY 2023 FORM 10-K 59 MANAGEMENT’S DISCUSSION AND ANALYSIS Many factors could affect future remediation costs incurred by Occidental’s subsidiaries and result in adjustments to environmental remediation liabilities and the range of reasonably possible additional losses.
OXY 2022 FORM 10-K 31 MANAGEMENT’S DISCUSSION AND ANALYSIS Working Interest Block Expiration (Year) Block 9 50 % 2030 Block 27 65 % 2035 Block 53 47 % 2035 Block 62 100 % 2028 Block 65 51 % 2037 Blocks 30, 51 and 72 100 % Exploration Phase Occidental has produced over 754 million gross barrels from Block 9 since the beginning of its operation through successful exploration, continuous drilling improvements and EOR projects.
Working Interest Block Expiration (Year) Block 9 50 % 2030 Block 27 65 % 2035 Block 53 47 % 2035 Block 62 100 % 2028 Block 65 51 % 2037 Blocks 30, 51 and 72 100 % Exploration Phase Occidental has produced over 789 million gross barrels from Block 9 since the beginning of its operation through successful exploration, continuous drilling improvements and EOR projects.
He is an AAPG Certified Petroleum Geologist and currently serves on the AAPG Committee on Resource Evaluation. He is a member of the Society of Petroleum Evaluation Engineers, the Colorado School of Mines Potential Gas Committee and the United Nations Economic Commission for Europe Expert OXY 2022 FORM 10-K 35 MANAGEMENT’S DISCUSSION AND ANALYSIS Group on Resource Management.
He is an AAPG Certified Petroleum Geologist and currently serves on the AAPG Committee on Resource Evaluation. He is a member of the Society of Petroleum Evaluation Engineers, the Colorado School of Mines Potential Gas Committee and the United Nations Economic Commission for Europe Expert Group on Resource Management.
Gas gathering, processing and transportation results are affected by fluctuations in commodity prices and the volumes that are processed and transported through the segment’s plants, as well as the margins obtained on related services from investments in which Occidental has an equity interest. Throughout 2022, the U.S. experienced economy-wide cost increases, which could increase the cost of sequestration projects.
Gas gathering, processing and transportation results are affected by fluctuations in commodity prices and the volumes that are processed and transported through the segment’s plants, as well as the margins obtained on related services from investments in which Occidental has an equity interest. 44 OXY 2023 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS Throughout 2023, the U.S. experienced economy-wide cost increases, which could increase the cost of sequestration and other low-carbon projects.
Occidental’s environmental costs are presented below for each segment for each of the years ended December 31: millions 2022 2021 2020 Operating Expenses Oil and gas $ 304 $ 267 $ 176 Chemical 115 88 73 Midstream and marketing 6 6 4 Total $ 425 $ 361 $ 253 Capital Expenditures Oil and gas $ 110 $ 87 $ 74 Chemical 53 66 40 Midstream and marketing 5 1 1 Total $ 168 $ 154 $ 115 Remediation Expenses Corporate $ 65 $ 28 $ 36 Operating expenses are incurred on a continual basis.
Occidental’s environmental costs are presented below for each segment for each of the years ended December 31: millions 2023 2022 2021 Operating Expenses Oil and gas $ 409 $ 304 $ 267 Chemical 113 115 88 Midstream and marketing 8 6 6 Total $ 530 $ 425 $ 361 Capital Expenditures Oil and gas $ 154 $ 110 $ 87 Chemical 40 53 66 Midstream and marketing 12 5 1 Total $ 206 $ 168 $ 154 Remediation Expenses Corporate $ 79 $ 65 $ 28 Operating expenses are incurred on a continual basis.
It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks, the ongoing global impact of the Russia-Ukraine war, the evolving macro-economic environment and supply activity (as a result of COVID-19) from OPEC and non-OPEC oil producing countries and the Biden Administration’s releases from the US Strategic Petroleum Reserve.
It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks, the ongoing global impact of the Russia-Ukraine war and conflicts in the Middle East, the evolving macro-economic environment and supply activity from OPEC and non-OPEC oil producing countries and the Biden Administration’s releases from the U.S, Strategic Petroleum Reserve.
Caustic soda prices were significantly higher in 2022 and PVC pricing trended downward during the second half of 2022, as supply chain constraints, rising interest rates, global logistics and high inflation continued to disrupt global supply and demand balances.
Caustic soda prices were lower in 2023 and PVC pricing decreased slightly in 2023 after moving downward significantly during the second half of 2022, as supply chain constraints, high interest rates, global logistics and high inflation continued to disrupt global supply and demand balances.
OXY 2022 FORM 10-K 39 MANAGEMENT’S DISCUSSION AND ANALYSIS SEGMENT RESULTS OF OPERATIONS AND ITEMS AFFECTING COMPARABILITY SEGMENT RESULTS OF OPERATIONS Segment earnings exclude income taxes, interest income, interest expense, environmental remediation expenses, unallocated corporate expenses and discontinued operations, but include gains and losses from divestitures of segment assets and income from the segments’ equity investments.
SEGMENT RESULTS OF OPERATIONS AND ITEMS AFFECTING COMPARABILITY SEGMENT RESULTS OF OPERATIONS Segment earnings exclude income taxes, interest income, interest expense, environmental remediation expenses, unallocated corporate expenses and discontinued operations, but include gains and losses from divestitures of segment assets and income from the segments’ equity investments.
Belvieu NGL ($/Bbl) $ 47.81 $ 44.22 $ 18.74 Occidental had proved reserves from continuing operations at year-end 2022 of 3,817 MMboe, compared to the year-end 2021 amount of 3,512 MMboe. Proved developed reserves represented approximately 71% and 75% of Occidental’s total proved reserves at year-end 2022 and 2021, respectively.
Belvieu NGL ($/Bbl) $ 29.94 $ 47.81 $ 44.22 Occidental had proved reserves from continuing operations at year-end 2023 of 3,982 MMboe, compared to the year-end 2022 amount of 3,817 MMboe. Proved developed reserves represented approximately 69% and 71% of Occidental’s total proved reserves at year-end 2023 and 2022, respectively.
Production in the DJ Basin is derived from 2,000 operated vertical wells and 2,400 operated horizontal wells primarily focused in the Niobrara and Codell formations. The DJ Basin, including the North DJ Basin, comprises approximately 800,000 total net acres and provides competitive economics, low breakeven costs and free cash flow generation through Occidental’s contiguous acreage position and royalty uplift.
Production in the DJ Basin is derived from approximately 4,050 wells primarily focused in the Niobrara and Codell formations. The DJ Basin, including the North DJ Basin, comprises approximately 0.7 million total net acres and provides competitive economics, low breakeven costs and free cash flow generation through Occidental’s contiguous acreage position and royalty uplift.
CHANGES IN PROVED RESERVES Changes in Occidental’s 2022 reserves were as follows: MMboe 2022 Revisions of previous estimates 474 Improved recovery 89 Extensions and discoveries 176 Purchases 10 Sales (21) Production (423) Total 305 Occidental’s ability to add reserves, other than through purchases, depends on the success of infill development, extension, discovery and improved recovery projects, each of which depends on reservoir characteristics, technology improvements and oil and natural gas prices, as well as capital and operating costs.
CHANGES IN PROVED RESERVES Changes in Occidental’s 2023 reserves were as follows: MMboe 2023 Revisions of previous estimates 406 Improved recovery 23 Extensions and discoveries 153 Purchases 31 Sales (2) Production (446) Total 165 Occidental’s ability to add reserves, other than through purchases, depends on the success of infill development, extension, discovery and improved recovery projects, each of which depends on reservoir characteristics, technology improvements and oil and natural gas prices, as well as capital and operating costs.
Occidental has developed standards and protocols recognized by the EPA for monitoring, reporting and verifying the amount, safety and permanence of CO 2 stored through secure geologic sequestration. Occidental holds the nation’s first two EPA-approved monitoring, reporting and verification plans for geologic sequestration through EOR production and obtained a third monitoring, reporting and verification plan in 2021.
Occidental has developed standards and protocols recognized by the EPA for monitoring, reporting and verifying the amount, safety and permanence of CO 2 stored through secure geologic sequestration. Occidental holds four EPA-approved monitoring, reporting and verification plans for geologic sequestration through EOR production.
The purchase price allocation is accomplished by recording each asset and liability at its estimated fair value, which may be determined using different methods of fair value measurements, largely based on the availability and quality of market information.
Any excess of the purchase price over the amounts assigned to assets and liabilities is recorded as goodwill. The purchase price allocation is accomplished by recording each asset and liability at its estimated fair value, which may be determined using different methods of fair value measurements, largely based on the availability and quality of market information.
Occidental plans to conduct development and exploration activities in 2023 using one to two floating drill ships, one platform rig and several other well service vessels and continue to optimize its extensive portfolio of lease working interests. 30 OXY 2022 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS INTERNATIONAL INTERESTS BUSINESS REVIEW Occidental conducts its ongoing international operations in two sub-regions: the Middle East and North Africa.
Occidental plans to conduct development and exploration activities in 2024 using two floating drill ships and several other well service vessels and continue to optimize its extensive portfolio of lease working interests. INTERNATIONAL INTERESTS BUSINESS REVIEW Occidental conducts its ongoing international operations in two sub-regions: the Middle East and North Africa.
The environmental costs in the table do not include litigation-related costs, including fines, penalties or settlements, or Occidental’s investments in low-carbon ventures.
The environmental costs in the table do not include litigation-related costs, including fines, penalties or settlements, Occidental’s investments in low-carbon ventures or cost incurred to satisfy asset retirement obligations.
International oil and gas results, excluding significant items affecting comparability, increased in 2022 compared to 2021 primarily due to higher oil prices.
International oil and gas results, excluding significant items affecting comparability, decreased in 2023 compared to 2022 primarily due to lower oil prices.
As of December 31, 2022, Occidental had 1,119 MMboe of PUD reserves of which 73% were associated with domestic onshore, 4% with Gulf of Mexico and 23% with international assets. Occidental’s most active development areas are located in the Permian Basin, which represented 54% of the PUD reserves as of December 31, 2022.
As of December 31, 2023, Occidental had 1,232 MMboe of PUD reserves of which 75% were associated with domestic onshore, 5% with Gulf of Mexico and 20% with international assets. Occidental’s most active development areas are located in the Permian Basin, which represented 50% of the PUD reserves as of December 31, 2023.
OLCV seeks to leverage Occidental’s carbon management expertise through the development of CCUS projects, and invests in emerging low-carbon technologies that are expected to reduce our carbon footprint and enable others to do the same.
OLCV seeks to leverage Occidental’s carbon management expertise through the development of CCUS projects, and invests in emerging low-carbon technologies that are expected to reduce Occidental’s carbon footprint and enable others to do the same. Capital is employed to sustain or expand assets to improve the competitiveness of Occidental’s businesses.
(c) The 2022 amount included $55 million related to post-closing consideration earned from 2020 asset sales as a result of certain production and pricing targets being met as well as the closing of the sale of certain assets that were negotiated with the 2020 Colombia divestiture.
(c) The 2023, 2022 and 2021 amounts of $25 million, $55 million and $43 million, respectively, included post-closing consideration earned as a result of certain production and pricing targets being met as well as the closing of the sale of certain assets that were negotiated with the 2020 Colombia divestiture.
Oil, NGL and natural gas prices used for this purpose were based on posted benchmark prices and adjusted for price differentials including gravity, quality and transportation costs.
Oil, NGL and OXY 2023 FORM 10-K 37 MANAGEMENT’S DISCUSSION AND ANALYSIS natural gas prices used for this purpose were based on posted benchmark prices and adjusted for price differentials including gravity, quality and transportation costs.
(b) Includes the impact of international production sharing contracts. 42 OXY 2022 FORM 10-K MANAGEMENT’S DISCUSSION AND ANALYSIS Production The following table sets forth the production volumes of oil, NGL and natural gas per day from ongoing operations for each of the three years in the period ended December 31, 2022, and includes a year-over-year change calculation: Production per Day, Ongoing Operations (Mboe/d) 2022 Year over Year Change 2021 Year over Year Change 2020 United States Permian 513 5 % 487 (15) % 575 Rockies & Other Domestic 277 (8) % 302 (9) % 332 Gulf of Mexico 147 2 % 144 11 % 130 Total 937 0 % 933 (10) % 1,037 International Algeria & Other International 47 7 % 44 (2) % 45 Al Hosn Gas 73 (4) % 76 (3) % 78 Dolphin 37 (8) % 40 (9) % 44 Oman 65 (12) % 74 (13) % 85 Total 222 (5) % 234 (7) % 252 Total Production from Ongoing Operations 1,159 (1) % 1,167 (9) % 1,289 Operations exited (a) — (100) % 16 (72) % 58 Total Production (Mboe/d) (b) 1,159 (2) % 1,183 (12) % 1,347 (a) Operations exited include the Ghana assets (sold in October 2021) and the Colombia onshore assets (sold in December 2020).
OXY 2023 FORM 10-K 47 MANAGEMENT’S DISCUSSION AND ANALYSIS Production The following table sets forth the production volumes of oil, NGL and natural gas per day from ongoing operations for each of the three years in the period ended December 31, 2023, and includes a year-over-year change calculation: Production per Day, Ongoing Operations (Mboe/d) 2023 Year over Year Change 2022 Year over Year Change 2021 United States Permian 584 14 % 513 5 % 487 Rockies & Other Domestic 271 (2) % 277 (8) % 302 Gulf of Mexico 145 (1) % 147 2 % 144 Total 1,000 7 % 937 — % 933 International Algeria & Other International 35 (26) % 47 7 % 44 Al Hosn Gas 83 14 % 73 (4) % 76 Dolphin 39 5 % 37 (8) % 40 Oman 66 2 % 65 (12) % 74 Total 223 — % 222 (5) % 234 Total Production from Ongoing Operations 1,223 6 % 1,159 (1) % 1,167 Operations exited (a) — — % — (100) % 16 Total Production (Mboe/d) (b) 1,223 6 % 1,159 (2) % 1,183 (a) Operations exited include the Ghana assets (sold in October 2021).
The following table shows the 2022, 2021 and 2020 calculated first-day-of-the-month average prices for both WTI and Brent oil prices, as well as the Henry Hub gas prices measured in MMbtu: 2022 2021 2020 WTI Oil ($/Bbl) $ 93.67 $ 66.56 $ 39.57 Brent Oil ($/Bbl) $ 97.77 $ 69.24 $ 43.41 Henry Hub Natural Gas ($/MMbtu) $ 6.36 $ 3.60 $ 1.98 Mt.
The following table shows the 2023, 2022 and 2021 calculated first-day-of-the-month average prices for both WTI and Brent oil prices, as well as the Henry Hub gas prices: 2023 2022 2021 WTI Oil ($/Bbl) $ 78.22 $ 93.67 $ 66.56 Brent Oil ($/Bbl) $ 82.80 $ 97.77 $ 69.24 Henry Hub Natural Gas ($/MMbtu) $ 2.64 $ 6.36 $ 3.60 Mt.
Improved Recovery In 2022, Occidental added proved reserves of 89 MMboe related to improved recovery, primarily in the Permian EOR, which accounted for 87% of the improved recovery reserve additions. These properties comprise conventional projects, which are characterized by the deployment of EOR development methods, largely employing application of CO 2 flood, waterflood or steam flood.
Improved Recovery In 2023, Occidental added proved reserves of 23 MMboe related to improved recovery in Oman (14 MMboe) and Permian EOR (9 MMboe). These properties comprise conventional projects, which are characterized by the deployment of EOR development methods, largely employing application of CO 2 flood, waterflood or steam flood.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeMarketing results are sensitive to price changes of oil, natural gas and, to a lesser degree, other commodities. A $0.25 change in the Midland-to-Gulf-Coast oil spreads impacts budgeted 2023 operating cash flows by approximately $65 million. Occidental’s results are also sensitive to fluctuations in chemical prices.
Biggest changeIf production levels differ from Occidental’s 2024 budgeted production, the sensitivity of Occidental’s results to prices also will change. Marketing results are sensitive to price changes of oil, natural gas and, to a lesser degree, other commodities. A $0.25 change in the Midland-to-Gulf-Coast oil spreads impacts budgeted 2024 operating cash flows by approximately $65 million.
A 25-basis point change in Treasury rates would change the fair value of the fixed rate debt approximately $295 million. The table below provides information about Occidental’s long-term debt obligations. Debt amounts represent principal payments by maturity date. millions except percentages U.S. Dollar Fixed-Rate Debt U.S.
A 25-basis point change in Treasury rates would change the fair value of the fixed rate debt approximately $282 million. The table below provides information about Occidental’s long-term debt obligations. Debt amounts represent principal payments by maturity date. millions except percentages U.S. Dollar Fixed-Rate Debt U.S.
Occidental also enters into futures contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk, if any. As of December 31, 2022, the substantial majority of the credit exposures were with investment grade counterparties.
Occidental also enters into futures contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk, if any. As of December 31, 2023, the substantial majority of the credit exposures were with investment grade counterparties.
Occidental believes its exposure to credit-related losses as of December 31, 2022, was not material and losses associated with credit risk have been insignificant for all years presented. OXY 2022 FORM 10-K 57 FINANCIAL STATEMENTS INDEX
Occidental believes its exposure to credit-related losses as of December 31, 2023, was not material and losses associated with credit risk have been insignificant for all years presented. OXY 2023 FORM 10-K 63 FINANCIAL STATEMENTS INDEX
As a result of these controls, Occidental believes that the market risk of its trading activities is not reasonably likely to have a material adverse effect on its performance. 56 OXY 2022 FORM 10-K QUANTITATIVE AND QUALITATIVE DISCLOSURES INTEREST RATE RISK GENERAL As of December 31, 2022, Occidental had fixed rate debt with a fair value of $17.5 billion outstanding.
As a result of these controls, Occidental believes that the market risk of its trading activities is not reasonably likely to have a material adverse effect on its performance. 62 OXY 2023 FORM 10-K QUANTITATIVE AND QUALITATIVE DISCLOSURES INTEREST RATE RISK GENERAL As of December 31, 2023, Occidental had fixed rate debt with a fair value of $18.0 billion outstanding.
Price changes at current global prices and levels of production affect Occidental’s budgeted 2023 pre-tax annual income by approximately $200 million for a $1 per barrel change in oil prices and approximately $30 million for a $1 per barrel change in NGL prices.
Price changes at current global prices and levels of production affect Occidental’s budgeted 2024 pre-tax annual income by approximately $215 million for a $1 per barrel change in oil prices and approximately $25 million for a $1 per barrel change in NGL prices.
The following table shows the fair value of Occidental’s derivatives (excluding collateral), segregated by maturity periods and by methodology of fair value estimation: Maturity Periods Source of Fair Value Assets (Liabilities) millions 2023 2024 and 2025 2026 and 2027 2028 and thereafter Total Prices actively quoted $ (18) $ — $ — $ — $ (18) Prices provided by other external sources 31 1 — — 32 Total $ 13 $ 1 $ — $ — $ 14 QUANTITATIVE INFORMATION Occidental uses value at risk to estimate the potential effects of changes in fair values of commodity contracts used in trading activities.
The following table shows the fair value of Occidental’s derivatives (excluding collateral), segregated by maturity periods and by methodology of fair value estimation: Maturity Periods Source of Fair Value Assets (Liabilities) millions 2024 2025 and 2026 2027 and 2028 2029 and thereafter Total Prices actively quoted $ 44 $ — $ — $ — $ 44 Prices provided by other external sources 36 (4) — — 32 Total $ 80 $ (4) $ — $ — $ 76 QUANTITATIVE INFORMATION Occidental uses value at risk to estimate the potential effects of changes in fair values of commodity contracts used in trading activities.
A variation in chlorine and caustic soda prices of $10 per ton would have a pre-tax annual effect on income of approximately $10 million and $30 million, respectively. A variation in PVC prices of $0.01 per lb. would have a pre-tax annual effect on income of approximately $30 million.
Occidental’s results are also sensitive to fluctuations in chemical prices. A variation in chlorine and caustic soda prices of $10 per ton would have a pre-tax annual effect on income of approximately $10 million and $30 million, respectively. A variation in PVC prices of $0.01 per lb. would have a pre-tax annual effect on income of approximately $30 million.
If domestic natural gas prices varied by $0.10 per Mcf, it would have an estimated annual effect on Occidental’s budgeted 2023 pre-tax income of approximately $30 million. These price-change sensitivities include the impact of PSC and similar contract volume changes on income. If production levels change in the future, the sensitivity of Occidental’s results to prices also will change.
If domestic natural gas prices varied by $0.10 per Mcf, it would have an estimated annual effect on Occidental’s budgeted 2024 pre-tax income of approximately $36 million. These price-change sensitivities include the impact of PSC and similar contract volume changes on income.
Dollar Variable-Rate Debt Total (a) 2023 $ 22 $ — $ 22 2024 1,056 — 1,056 2025 1,208 — 1,208 2026 1,448 — 1,448 2027 903 — 903 Thereafter 13,253 68 13,321 Total $ 17,890 $ 68 $ 17,958 Weighted-average interest rate 5.92% 5.32% 5.91% Fair Value $ 17,508 $ 68 $ 17,576 (a) Excluded net unamortized debt premiums of $1.3 billion and debt issuance costs of $73 million.
Dollar Variable-Rate Debt Total (a) 2024 $ 1,055 $ — $ 1,055 2025 1,208 — 1,208 2026 1,448 — 1,448 2027 903 — 903 2028 906 — 906 Thereafter 12,367 68 12,435 Total $ 17,887 $ 68 $ 17,955 Weighted-average interest rate 5.91% 5.75% 5.91% Fair Value $ 18,011 $ 68 $ 18,079 (a) Excluded net unamortized debt premiums of $1.2 billion and debt issuance costs of $106 million.

Other OXY 10-K year-over-year comparisons