Occidental Petroleum 10-Q 2022-06-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-9210

_____________________

OCCIDENTAL PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

(713) 215-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

þ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ Accelerated Filer ☐ Non-Accelerated Filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

ABBREVIATIONS USED WITHIN THIS DOCUMENT

PART I FINANCIAL INFORMATION

(a) Included $97 million and $85 million of current finance lease liabilities as of June 30, 2022 and December 31, 2021, respectively.

(b) Included $543 million and $504 million of finance lease liabilities as of June 30, 2022 and December 31, 2021, respectively.

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

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The following discussion should be read together with the Consolidated Condensed Financial Statements and the notes to the Consolidated Condensed Financial Statements, which are included in this report in Part I, Item 1; the information set forth in Risk Factors under Part II, Item 1A; the Consolidated Financial Statements and the notes to the Consolidated Financial Statements, which are included in Part II, Item 8 of Occidental's Annual Report on Form 10-K for the year ended December 31, 2021; and the information set forth in Risk Factors under Part I, Item 1A of the 2021 Form 10-K.

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. 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. Words such as “estimate,” “project,” “predict,” “will,” “would,” “should,” “could,” “may,” “might,” “anticipate,” “plan,” “intend,” “believe,” “expect,” “aim,” “goal,” “target,” “objective,” "commit," "advance," “likely” or similar expressions that convey the prospective nature of events or outcomes are generally indicative of forward-looking statements. 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.

Although Occidental believes that the expectations reflected in any of its forward-looking statements are reasonable, actual results may differ from anticipated results, sometimes materially. 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. 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, 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 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 our 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 and its impact on markets and economic activity; 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; 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 regulation (including regulations related to climate change); environmental risks and liability under federal, regional, state, provincial, tribal, local and international environmental laws and regulations (including remedial actions); 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 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.

Additional information concerning these and other factors that may cause Occidental’s results of operations and financial position to differ from expectations can be found in Occidental’s other filings with the SEC, including Occidental’s 2021 Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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 and chemical product prices. The average WTI price per barrel for the six months ended June 30, 2022 was $101.35, compared to $61.96 for the six months ended June 30, 2021. The return of oil demand to its pre-pandemic levels, the ongoing global impact of the Russia-Ukraine war and whether the oil industry will be able to sustain a continued supply response have resulted in a significant increase in benchmark oil prices. It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks and the effects on oil demand resulting from international COVID-19-related travel restrictions and stay-at-home orders.

Occidental does not operate or own assets in either Russia or Ukraine, but continues to monitor any impacts resulting from the Russia-Ukraine war on the global markets for its commodities.

2022 PRIORITIES

Occidental’s capital and operational priorities for 2022 are intended to maximize cash flow by sustaining 2021 production levels and maintaining capital discipline. Occidental intends to utilize operating cash flows to:

■continue to reduce financial leverage;

■maintain a robust liquidity position; and

■continue its shareholder return framework in the form of a sustainable common share dividend and active share buyback plan.

During the first half of 2022, Occidental generated cash flow from continuing operations of $8.6 billion and incurred capital expenditures of $1.8 billion.

LIABILITY MANAGEMENT

In the second quarter of 2022, Occidental repaid debt with maturities ranging from 2024 through 2049 and a face value of $4.8 billion. In the first quarter of 2022, Occidental repaid debt with maturities ranging from 2022 through 2049 and a face value of $3.3 billion.

For the combined first and second quarter repayments, Occidental used $7.1 billion of cash, which reduced outstanding debt with a total face value of $8.1 billion and a net book value of $7.4 billion, and resulted in a gain of $161 million. As of June 30, 2022, Occidental has remaining near-term debt maturities of approximately $362 million in 2023 and $1.4 billion in 2024.

DEBT RATINGS

As of June 30, 2022, Occidental’s long-term debt was rated Ba1 by Moody’s Investors Service, BB+ by Fitch Ratings and BB+ by Standard and Poor’s. Occidental received credit rating upgrades from all three agencies in the period from December 2021 through March 2022. Any downgrade in credit ratings could impact Occidental's ability to access capital markets and increase its cost of capital. In addition, given that Occidental’s current debt ratings are non-investment grade, Occidental or its subsidiaries may be requested, and in some cases required, to provide collateral in the form of cash, letters of credit, surety bonds or other acceptable support as financial assurance of its performance and payment obligations under certain contractual arrangements such as pipeline transportation contracts, environmental remediation obligations, oil and gas purchase contracts and certain derivative instruments.

SHAREHOLDER RETURNS

During the six months ended June 30, 2022, Occidental declared dividends to common shareholders of $249 million or $0.26 per share. In the same period, Occidental purchased 12.4 million common shares at an average price of $57.89. Occidental repurchased an additional 6.8 million shares for $420 million under its share repurchase plan in the period from July 1, 2022, through August 1, 2022.

Occidental’s operations and cash flows can vary significantly based on changes in oil, NGL and natural gas prices and the prices it receives for its chemical products. Such changes in prices could result in adjustments in capital investment levels and how such capital is allocated, which could impact production volumes. Significant changes have occurred in the macro-economic environment over the previous year, which have led to an increase in commodity prices, chemical product pricing, and correspondingly Occidental's results of operations and cash flows. Occidental's results of operations and cash flows are driven by these macro-economic effects rather than seasonality. In accordance with the SEC final rule issued in November 2020, Occidental elected to discuss its results of operations on a sequential-quarter basis starting with Occidental’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

SELECTED STATEMENTS OF OPERATIONS ITEMS

The following tables set forth consolidated sales from continuing operations as well as sales and earnings of each operating segment and corporate items:

Q2 2022 compared to Q1 2022

(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.

(b) Refer to the Items Affecting Comparability table which sets forth items affecting Occidental's earnings that vary widely and unpredictably in nature, timing and amount.

Net sales increased for the three months ended June 30, 2022, compared to the immediately preceding quarter, primarily due to higher crude oil, NGL and natural gas prices and higher crude oil and NGL sales volumes in the oil and gas segment as well as higher realized prices and improved demand across most chemical product lines.

Purchased commodities increased for the three months ended June 30, 2022, compared to the immediately preceding quarter, due to higher prices on third-party crude purchases related to the midstream and marketing segment.

Interest and debt expense decreased for the three months ended June 30, 2022, compared to the immediately preceding quarter, due to debt repayments.

The income tax expense for the three months ended June 30, 2022, compared to a benefit for the immediately preceding quarter, resulted primarily from the non-cash tax benefit associated with Occidental's legal entity reorganization that was recognized in the first quarter of 2022. See Income Taxes section for further discussion.

YTD 2022 compared to YTD 2021

(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.

(b) Please refer to the Items Affecting Comparability table which sets forth items affecting Occidental's earnings that vary widely and unpredictably in nature, timing and amount.

Net sales increased for the six months ended June 30, 2022, compared to the same period in 2021, primarily due to higher crude oil, NGL and natural gas prices in the oil and gas segment and higher realized prices and improved demand across most chemical product lines.

Oil and gas operating expense increased for the six months ended June 30, 2022, compared to the same period in 2021, primarily as a result of higher downhole maintenance, energy, well enhancement and purchased injectant costs in the Permian and higher surface operations and maintenance costs in the Gulf of Mexico.

Chemical and midstream cost of sales increased for the six months ended June 30, 2022, compared to the same period in 2021, primarily as a result of higher raw material costs in the chemical segment and increased power generation costs related to the midstream and marketing segment.

Purchased commodities increased for the six months ended June 30, 2022, compared to the same period in 2021, due to higher prices on third-party crude purchases related to the midstream and marketing segment.

Taxes other than on income increased for the six months ended June 30, 2022, compared to the same period of 2021, primarily due to higher production taxes, which are directly tied to revenues.

Depreciation, depletion and amortization expenses decreased for the six months ended June 30, 2022, compared to the same period of 2021, primarily as a result of lower per Boe DD&A rates due to higher proved reserves as a result of positive program adds during 2021.

Interest and debt expense decreased for the six months ended June 30, 2022, compared to the same period in 2021, due to debt repayments.

The income tax benefit for the six months ended June 30, 2022, compared to an expense for the same period in 2021, resulted primarily from the non-cash tax benefit associated with Occidental's legal entity reorganization that was recognized in the first quarter of 2022. See Income Taxes section for further discussion.

The loss from discontinued operations, net of tax for the six months ended June 30, 2021 was primarily associated with Occidental's former operations in Ecuador, see Note 10 - Lawsuits, Claims, Commitments and Contingencies.

INCOME FROM CONTINUING OPERATIONS

Q2 2022 compared to Q1 2022

Excluding the impact of Items Affecting Comparability detailed in the table below, the increase in income from continuing operations for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, was primarily due to higher crude oil and natural gas prices in the oil and gas segment and higher realized pricing across most chemical product lines.

YTD 2022 compared to YTD 2021

Excluding the impact of Items Affecting Comparability detailed in the table below, the increase in income from continuing operations for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, was primarily due to

higher crude oil and natural gas prices in the oil and gas segment and higher realized pricing across most chemical product lines.

ITEMS AFFECTING COMPARABILITY

The following table sets forth items affecting the comparability of Occidental's earnings that vary widely and unpredictably in nature, timing and amount:

(a) Included in discontinued operations, net of taxes for the first and second quarters of 2021 was a loss contingency associated with Occidental's former operations in Ecuador, see Note 10 - Lawsuits, Claims, Commitments and Contingencies. Results of operations for Ghana was also included in discontinued operations. The Ghana assets were sold in October 2021.

SEGMENT RESULTS OF OPERATIONS

Occidental’s principal businesses consist of three reporting segments: oil and gas, chemical and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, NGL and natural gas. The chemical segment mainly manufactures and markets basic chemicals and vinyls. The midstream and marketing segment purchases, markets, gathers, processes, transports and stores oil (which includes condensate), NGL, natural gas, CO2 and power. It also optimizes its transportation and storage capacity, and invests in entities that conduct similar activities such as WES.

OIL AND GAS SEGMENT

The following table sets forth the average sales volumes per day for oil and NGL in Mbbl and for natural gas in MMcf:

(a) Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one barrel of oil. Barrels of oil equivalent does not necessarily result in price equivalency.

(b) Operations exited or exiting consisted of Ghana.

The following table presents information about Occidental's average realized prices and index prices:

Q2 2022 compared to Q1 2022

Oil and gas segment income was $4.1 billion for the three months ended June 30, 2022, compared with segment income of $2.9 billion for the three months ended March 31, 2022. Excluding the impact of gains on sale, oil and gas segment results for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, reflected higher commodity prices and higher crude oil and NGL sales volumes, which were partially offset by higher lease operating costs.

The increase in average daily sales volumes from continuing operations of 76 Mboe/d for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, primarily reflected Al Hosn Gas and Algeria coming back online from the scheduled expansion and maintenance activities in the first quarter, as well as increased activity in the Permian Basin.

YTD 2022 compared to YTD 2021

Oil and gas segment income was $7.0 billion for the six months ended June 30, 2022, compared with segment income of $569 million for the six months ended June 30, 2021. Excluding the impact of asset impairments and other charges, gains on sale and oil, gas and CO2 derivative gains (losses), oil and gas segment results for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, reflected higher commodity prices and lower DD&A rates, partially offset by lower crude oil sales volumes and higher lease operating costs.

The decrease in average daily sales volumes from continuing operations of 44 Mboe/d for the six months ended June 30, 2022, compared to the same period in 2021, primarily reflected the impact of the planned shutdown of Al Hosn Gas in the first quarter of 2022 to allow for tie in work for the expansion project, reduced capital investment in the DJ Basin and the impact of rising commodity prices that reduce Occidental's share of production under production sharing contracts.

The following table presents an analysis of the impacts of changes in average realized prices and sales volumes with regard to Occidental's domestic and international oil and gas revenue:

(a) Includes the impact of international production sharing contracts.

(b) Excludes "other" oil and gas revenue.

(a) Includes the impact of international production sharing contracts.

(b) Excludes "other" oil and gas revenue.

Subsequent Event

On July 19, 2022, Occidental entered into a new production sharing arrangement with Sonatrach and the other Algeria working interest partners which, if approved by the government, will be for a new 25-year term for all of the fields under the current agreement.

CHEMICAL SEGMENT

Chemical segment results generally correlate with the health of the global economy, specifically in the housing, construction, automotive and durable goods markets. Margins depend on market supply and demand balances and feedstock and energy prices which could be negatively affected by supply chain interruptions, labor constraints and rising inflation rates. Despite strong year-to-date results, adverse economic conditions in the markets listed above and the resulting changes in the prices of the chemical segment's products and feedstocks may negatively impact results.

Q2 2022 compared to Q1 2022

Chemical segment earnings for the three months ended June 30, 2022 were $800 million, compared to $671 million for the three months ended March 31, 2022. The improvement in results was primarily driven by higher realized pricing and volumes across most product lines, partially offset by higher raw material costs.

YTD 2022 compared to YTD 2021

Chemical segment earnings for the six months ended June 30, 2022 were $1.5 billion, compared to $563 million for the six months ended June 30, 2021. The improvement in results was primarily due to significantly higher realized pricing and volumes across most product lines, partially offset by higher raw material costs.

MIDSTREAM AND MARKETING SEGMENT

Midstream and marketing segment results are affected primarily by commodity price changes and margins in oil and gas transportation. The marketing business results can experience significant volatility depending on commodity prices and the Midland-to-Gulf-Coast oil spreads. Midstream results are affected by the volumes that are processed and transported through the segment's plants and pipelines, as well as the margins obtained on related services.

Q2 2022 compared to Q1 2022

Midstream and marketing segment earnings for the three months ended June 30, 2022 were $264 million, compared with losses of $50 million for the three months ended March 31, 2022. Excluding the impact of derivative losses, the improvement in midstream and marketing segment results was primarily driven by higher sulfur prices and volumes from Al Hosn Gas, which was shutdown during the first quarter of 2022 to allow for tie in work for the expansion project, and higher Dolphin pipeline equity income due to planned maintenance in the first quarter, partially offset by the timing impact of crude oil sales.

YTD 2022 compared to YTD 2021

Midstream and marketing segment earnings for the six months ended June 30, 2022 were $214 million, compared with earnings of $252 million for the six months ended June 30, 2021. Excluding the impact of derivative accounting and gains on sales of assets, the increase in midstream and marketing segment results was due to higher equity income from WES, higher sulfur prices at Al Hosn Gas, and higher domestic NGL prices impacting the gas processing business, which were partially offset by lower marketing income due to the timing of crude oil sales.

The following table sets forth the calculation of the worldwide effective tax rate for income from continuing operations:

Occidental estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which Occidental operates, adjusted for certain discrete items. Each quarter, Occidental updates these rates and records a cumulative adjustment to its income taxes by applying the rates to the pre-tax income excluding certain discrete items. Occidental’s quarterly estimate of its effective tax rates can vary significantly based on various forecasted items, including future commodity prices, capital expenditures, expenses for which tax benefits are not recognized and the geographic mix of pre-tax income and losses. The 25% worldwide effective tax rate for the three months ended June 30, 2022 is primarily driven by Occidental's jurisdictional mix of income. U.S. income is taxed at a U.S. federal statutory rate of 21%, while international income is subject to tax at statutory rates as high as 55%. This effective rate differs from the negative 58% and negative 7% effective tax rates for income from continuing operations for the three months ended March 31, 2022 and six months ended June 30, 2022, respectively, which were impacted by a non-cash tax benefit associated with Occidental's legal entity reorganization, as further described below. The effective tax rate of 13% for the six months ended June 30, 2021 was impacted by a state margin tax rate reduction and one-time benefits associated with the settlement of federal and state audit matters.

LEGAL ENTITY REORGANIZATION

To align Occidental’s legal entity structure with the nature of its business activities after completing the acquisition of Anadarko and subsequent large scale post-acquisition divestiture program, management undertook a legal entity reorganization that was completed in the first quarter of 2022.

As a result of this legal entity reorganization, management made an adjustment to the tax basis in a portion of its operating assets, thus reducing Occidental’s deferred tax liabilities. Accordingly, in the first quarter of 2022, Occidental recorded an estimated non-cash tax benefit of $2.6 billion in connection with this reorganization. The timing of any reduction in Occidental’s future cash taxes as a result of this legal entity reorganization will be dependent on a number of factors, including prevailing commodity prices, capital activity level and production mix. Further refinement of the non-cash tax benefit may be necessary as Occidental finalizes its tax basis calculations, its tax returns and other information.

As of June 30, 2022, Occidental had approximately $1.4 billion of cash and cash equivalents on hand. Through the date of this filing, Occidental has drawn no amounts under its RCF, which has $4.0 billion of borrowing capacity and matures in June 2025. Additionally, Occidental has up to $400 million of available borrowing capacity on its receivables securitization facility which matures in December 2024. There were no amounts outstanding on Occidental's receivable securitization facility as of June 30, 2022.

Operating cash flow from continuing operations was $8.6 billion for the six months ended June 30, 2022, compared to $4.1 billion for the six months ended June 30, 2021. The increase in operating cash flow from continuing operations was primarily due to higher commodity prices as compared to the same period in 2021.

Occidental’s net cash used by investing activities from continuing operations was $2.0 billion for the six months ended June 30, 2022, compared to $1.0 billion for the six months ended June 30, 2021. Capital expenditures, of which substantially all were for the oil and gas segment, were approximately $1.8 billion for the six months ended June 30, 2022, compared to $1.3 billion for the six months ended June 30, 2021. For the six months ended June 30, 2021, $503 million from proceeds from sales of assets, net primarily included the divestiture of non-operated assets in the DJ Basin as well as the sale of WES units.

Occidental’s net cash used by financing activities from continuing operations was $8.0 billion for the six months ended June 30, 2022, compared to $611 million for the six months ended June 30, 2021. Cash used by financing activities for the six months ended June 30, 2022 reflected the payments of $7.1 billion relating to long-term debt, dividend payments of $539 million on preferred and common stock, and treasury share repurchases of $568 million. See Note 5 - Long-Term Debt in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information regarding debt payments. Cash used by financing activities for the six months ended June 30, 2021 reflected dividend payments of $420 million on preferred and common stock and payments on current maturities of long-term debt of $174 million.

Occidental’s Zero Coupons can be put to Occidental in October of each year, in whole or in part, for the then accreted value of the outstanding Zero Coupons. The Zero Coupons can next be put to Occidental in October 2022, which, if put in whole, would require a payment of approximately $415 million at such date. Occidental currently has the ability to meet this obligation and may use available capacity under the RCF to satisfy the put should it be exercised.

The remaining interest rate swaps with a fair value of $308 million, net of collateral, as of June 30, 2022, have mandatory termination dates in September 2022 and 2023. The interest rate swaps' fair value, and cash required to settle them on their termination dates, will continue to fluctuate with changes in interest rates through the mandatory termination dates. Depending on market conditions, liability management actions or other factors, Occidental may enter into offsetting interest rate swap positions or settle or amend certain or all of the currently outstanding interest rate swaps.

As of June 30, 2022, and as of the date of this filing, Occidental was in compliance with all covenants in its financing agreements. Occidental currently expects its cash on hand, funds available under its RCF and receivables securitization facility to be sufficient to meet its near-term debt maturities, operating expenditures and other obligations for the next 12 months from the date of this filing.

As of the date of this filing, Occidental or its subsidiaries have provided required financial assurances through a combination of cash, letters of credit and surety bonds. Occidental has not issued any letters of credit under the RCF or other committed facilities. For additional information, see Risk Factors in Part I, Item 1A of Occidental’s 2021 Form 10-K.

For information regarding upcoming debt maturities and other near-term obligations see the Current Business Outlook section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Occidental’s operations are subject to stringent federal, regional, state, provincial, tribal, local and international laws and regulations related to improving or maintaining environmental quality. Occidental’s environmental compliance costs have generally increased over time and are expected to rise in the future. Occidental factors environmental expenditures for its operations as an integral part of its business planning process.

The laws that require or address environmental remediation, including CERCLA and similar federal, regional, state, provincial, tribal, local and international laws, may apply retroactively and regardless of fault, the legality of the original activities or the current ownership or control of sites. Occidental or certain of its subsidiaries participate in or actively monitor a range of remedial activities and government or private proceedings under these laws with respect to alleged past practices at operating, closed and third-party sites. Remedial activities may include one or more of the following: investigation involving sampling, modeling, risk assessment or monitoring; cleanup measures including removal, treatment or disposal; or operation and maintenance of remedial systems. The environmental proceedings seek funding or performance of remediation and, in some cases, compensation for alleged property damage, punitive damages, civil penalties, injunctive relief and government oversight costs.

See Note 9 - Environmental Liabilities and Expenditures in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q and the Environmental Liabilities and Expenditures section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2021 Form 10-K for additional information regarding Occidental’s environmental liabilities and expenditures.

Occidental accrues reserves for outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Occidental has disclosed its reserve balances for environmental remediation matters and its estimated range of reasonably possible additional losses for such matters. See Note 10 - Lawsuits, Claims, Commitments and Contingencies in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for further information.

For the three months ended June 30, 2022, there were no material changes in the information required to be provided under Item 305 of Regulation S-K included under Item 7A, Quantitative and Qualitative Disclosures About Market Risk in the 2021 Form 10-K.

Occidental's President and Chief Executive Officer and its Senior Vice President and Chief Financial Officer supervised and participated in Occidental's evaluation of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, Occidental's President and Chief Executive Officer and Senior Vice President and Chief Financial Officer concluded that Occidental's disclosure controls and procedures were effective as of June 30, 2022.

There has been no change in Occidental’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, Occidental’s internal control over financial reporting.

Part II Other Information

Item 1. 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. Occidental believes proceedings under this threshold are not material to Occidental's business and financial condition. Applying this threshold, there are no such proceedings to disclose for the three months ended June 30, 2022. For information regarding other legal proceedings, see Note - 10 Lawsuits, Claims, Commitments and Contingencies in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.

There have been no material changes from the risk factors included under Part I, Item 1A of Occidental’s Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Occidental’s share repurchase activities for the six months ended June 30, 2022 were as follows:

(a) Includes purchases from the trustee of Occidental's defined contribution savings plan that are not part of publicly announced plans or programs.

(b) Represents the value of shares 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 does not obligate Occidental to acquire any specific number of shares and may be discontinued at any time.

(c) In addition to the 11.2 million shares that Occidental repurchased under its share repurchase plan during the six months ended June 30, 2022, Occidental subsequently repurchased an additional 6.8 million shares in the period from July 1, 2022, through August 1, 2022. As of August 1, 2022, the maximum value of shares that may yet be purchased under the plan is approximately $1,930 million.

• Filed herewith.

** Furnished herewith.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.