Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 2022 Form 10-K; and the information set forth in Risk Factors under Part I, Item 1A of the 2022 Form 10-K.

INDEX			PAGE
Cautionary Statement Regarding Forward-Looking Statements			27
Current Business Outlook			28
Consolidated Results of Operations and Items Affecting Comparability			29
Segment Results of Operations			32
Income Taxes			35
Liquidity and Capital Resources			36
Environmental Liabilities and Expenditures			36
Lawsuits, Claims, Commitments and Contingencies			37

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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, 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. 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 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.

Actual outcomes or results may differ from anticipated results, sometimes materially. Forward-looking and other statements regarding Occidental's sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or require disclosure in Occidental's filings with the SEC. 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. 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, including COVID-19, and actions taken by governmental 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 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, including capital market disruptions and instability of financial institutions; governmental actions, war (including the Russia-Ukraine war) and political conditions and events; health, safety and environmental (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 greenhouse gas 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.

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 2022 Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

CURRENT BUSINESS OUTLOOK

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. The average WTI price per barrel for the six months ended June 30, 2023 was $74.98, compared to $101.35 for the six months ended June 30, 2022. Oil prices decreased in the first six months of 2023 as inflation and economic concerns signaled a potential decrease in energy demand, despite the ongoing global impact of the Russia-Ukraine war. It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks, evolving macro-economic environment that impacts energy demand, future actions by OPEC and non-OPEC oil producing countries and the Biden Administration's management of the U.S. Strategic Petroleum Reserve.

Occidental works to manage inflation impacts by capitalizing on operational efficiencies, proactive contract management and working closely with vendors to secure the supply of critical materials. As of June 30, 2023, substantially all of Occidental's outstanding debt is fixed rate.

2023 PRIORITIES

Occidental’s capital and operational priorities for 2023 are intended to maximize cash flow through focused investments in short and medium-cycle projects intended to enhance current year and future cash flows. Occidental intends to utilize future operating cash flows to:

■preserve and enhance its existing asset base with investments in its core cash-generative oil and gas and chemical businesses as well as its emerging low-carbon businesses with a focus on its net-zero pathway;

■continue its shareholder return framework in the form of a sustainable and growing common share dividend and an active share buyback plan, driving partial redemptions of preferred stock and further improving Occidental's financial position; and

■continue to opportunistically reduce financial leverage.

During the first six months of 2023, Occidental generated cash flow from operations of $5.9 billion and incurred capital expenditures of $3.1 billion.

DEBT RATINGS

As of June 30, 2023, Occidental’s long-term debt was rated Baa3 by Moody’s Investors Service, BBB- by Fitch Ratings and BB+ by Standard and Poor’s. Occidental's credit rating was upgraded to investment grade by Moody's Investors Service in March 2023 and by Fitch Ratings in May 2023. Any downgrade in credit ratings could impact Occidental's ability to access capital markets and increase its cost of capital. In addition, Occidental or its subsidiaries may be requested, elect to provide or in some cases be required to provide collateral in the form of cash, letters of credit, surety bonds or other acceptable support as financial assurance of their 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. Occidental has no remaining debt maturities in 2023, and has $1.1 billion of debt maturities due in the third quarter of 2024.

SHAREHOLDER RETURNS

During the six months ended June 30, 2023, Occidental declared dividends to common shareholders of $325 million or $0.36 per share and repurchased 19.7 million common shares at an average price of $59.61 per share under the stock repurchase plan announced in February 2023.

In the three months ended June 30, 2023, Occidental triggered the redemption of preferred stock with a face value of $522 million, and an additional $52 million premium. Occidental triggered the redemption of preferred stock of $1.3 billion, inclusive of a 10% premium, in the six months ended June 30, 2023. Of this amount, $304 million, inclusive of a 10% premium, was settled in cash subsequent to June 30, 2023 but before the date of this filing. To the extent Occidental's trailing 12-month distributions to common shareholders remain above $4.00 per share, Occidental is required to continue to match any common shareholder distributions with preferred stock redemptions. As of the date of this filing, approximately $8.8 billion face value of preferred stock remains outstanding.

CONSOLIDATED RESULTS OF OPERATIONS AND ITEMS AFFECTING COMPARABILITY

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 impacted energy demand leading to decreases in commodity prices and chemical product pricing, and correspondingly Occidental's results of operations and cash flows. Occidental's results of operations and cash flows are primarily driven by these macro-economic effects. Seasonality is not a primary driver of changes in Occidental's consolidated quarterly earnings during the year.

The following table sets forth earnings of each operating segment and corporate items:

millions			Three months ended June 30, 2023			% Change			Three months ended March 31, 2023
Net income
Oil and gas (a)			$	1,059		(35)		%	$	1,640
Chemical			436			(8)		%	472
Midstream and marketing (a)			(30)			(1,600)		%	2
Total			1,465			(31)		%	2,114
Unallocated Corporate Items (a)
Interest expense, net			(230)			3		%	(238)
Income tax expense			(467)			1		%	(471)
Other items, net			92			165		%	(142)
Net income			$	860		(32)		%	$	1,263
Less: Preferred stock dividends and redemption premiums			$	(255)		9		%	$	(280)
Net income attributable to common stockholders			$	605		(38)		%	$	983
Net income per share attributable to common stockholders - diluted			$	0.63		(37)		%	$	1.00

(a) 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.

millions			Six months ended June 30, 2023			% Change			Six months ended June 30, 2022
Net income
Oil and gas (a)			$	2,699		(61)		%	$	6,992
Chemical			908			(38)		%	1,471
Midstream and marketing (a)			(28)			(113)		%	214
Total			3,579			(59)		%	8,677
Unallocated Corporate Items (a)
Interest expense, net			(468)			4		%	(485)
Income tax expense			(938)			(267)		%	562
Other items, net			(50)			59		%	(123)
Net income			$	2,123		(75)		%	$	8,631
Less: Preferred stock dividends and redemption premiums			$	(535)		(34)		%	$	(400)
Net income attributable to common stockholders			$	1,588		(81)		%	$	8,231
Net income per share attributable to common stockholders - diluted			$	1.63		(80)		%	$	8.11

(a) 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.

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:

			Three months ended						Six months ended
millions			June 30, 2023			March 31, 2023						June 30, 2023			June 30, 2022
Oil and gas
Asset impairments - domestic			$	(209)		$	—					$	(209)		$	—
Asset sales gains, net - domestic			—			—						—			137
Legal settlement gain			—			26						26			—
Asset sales gains, net - international			—			—						—			10
Total oil and gas			(209)			26						(183)			147
Midstream and marketing
Asset impairments (a)			—			(26)						(26)			—
Derivative gains (losses), net			48			(8)						40			(102)
Total midstream and marketing			48			(34)						14			(102)
Corporate
Anadarko acquisition-related costs			—			—						—			(78)
Interest rate swap gains, net			—			—						—			262
Maxus receivable valuation allowance adjustment			260			—						260			(22)
Early debt extinguishment			—			—						—			161
Total corporate			260			—						260			323
Income tax impact of legal entity reorganization			—			—						—			2,594
Exploration license expiration tax benefit			—			—						—			13
State tax rate revaluation			—			—						—			(29)
Deferred taxes on Algeria contract renewal			(68)			—						(68)			—
Income taxes			(22)			2						(20)			(82)
Income (loss)			9			(6)						3			2,864
Preferred redemption premiums			(65)			(80)						(145)			—
Total			$	(56)		$	(86)					$	(142)		$	2,864

(a) Included in Income from equity investments and other in the Consolidated Condensed Statement of Operations.

Q2 2023 compared to Q1 2023

Excluding items affecting comparability, the decrease in net income for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was primarily due to lower domestic natural gas and NGL commodity prices and lower domestic crude oil volumes, partially offset by higher international sales volumes in the oil and gas segment.

YTD 2023 compared to YTD 2022

Excluding items affecting comparability, the decrease in net income for the six months ended June 30, 2023, compared to the six months ended June 30, 2022, was primarily due to lower worldwide crude oil, domestic NGL and domestic natural gas commodity prices in the oil and gas segment and lower realized PVC prices and lower demand across most product lines in the chemicals segment, partially offset by higher worldwide sales volumes in the oil and gas segment and lower ethylene and energy costs in the chemical segment.

SELECTED STATEMENTS OF OPERATIONS ITEMS

			Three months ended						Six months ended
millions			June 30, 2023			March 31, 2023									June 30, 2023			June 30, 2022
Net sales			$	6,702		$	7,225								$	13,927		$	19,025
Interest, dividends and other income			$	28		$	29								$	57		$	85
Gain on sale of assets, net			$	1		$	4								$	5		$	158
Oil and gas operating expense			$	1,130		$	1,081								$	2,211		$	1,869
Transportation and gathering expense			$	375		$	384								$	759		$	711
Chemical and midstream cost of sales			$	791		$	745								$	1,536		$	1,653
Purchased commodities			$	490		$	498								$	988		$	1,842
Selling, general and administrative expenses			$	277		$	241								$	518		$	440
Other operating and non-operating expense			$	10		$	308								$	318		$	590
Taxes other than on income			$	266		$	306								$	572		$	761
Depreciation, depletion and amortization			$	1,709		$	1,721								$	3,430		$	3,371
Asset impairments and other charges			$	209		$	—								$	209		$	—
Anadarko acquisition-related costs			$	—		$	—								$	—		$	78
Exploration expense			$	102		$	102								$	204		$	51
Interest and debt expense, net			$	230		$	238								$	468		$	485
Gains on interest rate swaps, net			$	—		$	—								$	—		$	262
Income from equity investments and other			$	185		$	100								$	285		$	390
Income tax benefit (expense)			$	(467)		$	(471)								$	(938)		$	562

Q2 2023 compared to Q1 2023

Net sales decreased for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, primarily due to lower domestic natural gas and NGL commodity prices and lower domestic crude oil volumes, partially offset by higher international sales volumes in the oil and gas segment.

Other operating and non-operating expense decreased for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, due to the $260 million remeasurement of the valuation allowance for the Maxus Liquidating Trust. See Note 8 - Lawsuits, Claims, Commitments and Contingencies for further information.

Asset impairments and other charges for the three months ended June 30, 2023 included a $180 million impairment of undeveloped acreage in the northern non-core area of the Powder River Basin where Occidental has determined not to pursue future exploration and appraisal activities and a $29 million impairment related to an equity method investment in the Black Butte Coal Company.

YTD 2023 compared to YTD 2022

Net sales decreased for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to lower worldwide crude oil and domestic NGL and natural gas commodity prices in the oil and gas segment, as well as lower realized PVC prices and sales volumes across most products in the chemical segment, partially offset by higher domestic sales volumes in the oil and gas segment.

Oil and gas operating expense increased for the six months ended June 30, 2023, compared to the same period in 2022, primarily as a result of higher domestic workover and maintenance activity.

Purchased commodities decreased for the six months ended June 30, 2023, compared to the same period in 2022, due to lower prices on third-party crude purchases related to the midstream and marketing segment.

Other operating and non-operating expense decreased for the six months ended June 30, 2023, compared to same period in 2022, due to the $260 million remeasurement of the valuation allowance for the Maxus Liquidating Trust. See Note 8 - Lawsuits, Claims, Commitments and Contingencies for further information.

Asset impairments and other charges for the six months ended June 30, 2023 included a pre-tax impairment of $180 million related to undeveloped acreage in the northern non-core area of the Powder River Basin and a $29 million impairment related to an equity method investment in the Black Butte Coal Company.

The income tax expense for the six months ended June 30, 2023, compared to a benefit for the same period in 2022, resulted primarily from the tax benefit in 2022 associated with Occidental's legal entity reorganization. See Income Taxes section for further discussion.

SEGMENT RESULTS OF OPERATIONS

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.

The midstream and marketing segment also includes Occidental's low carbon ventures businesses. Occidental's low carbon ventures businesses seek to leverage Occidental’s legacy of carbon management expertise to develop carbon capture, utilization and storage projects, including the commercialization of direct air capture technology, invest in other low-carbon technologies intended to reduce greenhouse gas emissions from its operations and strategically partner with other industries to help reduce their emissions.

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:

			Three months ended						Six months ended
			June 30, 2023			March 31, 2023						June 30, 2023			June 30, 2022
Sales Volumes per Day
Oil (Mbbl)
United States			521			551						535			489
International			112			103						108			109
NGL (Mbbl)
United States			251			243						247			217
International			35			28						32			29
Natural Gas (MMcf)
United States			1,310			1,319						1,317			1,204
International			507			414						458			403
Total Sales Volumes (Mboe) (a)			1,222			1,214						1,218			1,112

(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.

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

			Three months ended									Six months ended
			June 30, 2023			March 31, 2023						June 30, 2023			June 30, 2022
Average Realized Prices
Oil ($/Bbl)
United States			$	72.70		$	73.63					$	73.17		$	101.08
International			$	77.76		$	77.42					$	77.60		$	95.75
Total Worldwide			$	73.59		$	74.22					$	73.91		$	100.10
NGL ($/Bbl)
United States			$	17.80		$	23.39					$	20.53		$	41.74
International			$	28.45		$	32.98					$	30.50		$	34.32
Total Worldwide			$	19.08		$	24.41					$	21.67		$	40.90
Natural Gas ($/Mcf)
United States			$	1.36		$	3.01					$	2.18		$	5.20
International			$	1.88		$	1.95					$	1.91		$	1.87
Total Worldwide			$	1.50		$	2.76					$	2.11		$	4.37
Average Index Prices
WTI oil ($/Bbl)			$	73.83		$	76.13					$	74.98		$	101.35
Brent oil ($/Bbl)			$	78.02		$	82.20					$	80.11		$	104.53
NYMEX gas ($/Mcf)			$	2.30		$	3.88					$	3.09		$	5.39
Average Realized Prices as Percentage of Average Index Prices
Worldwide oil as a percentage of average WTI			100		%	97		%				99		%	99		%
Worldwide oil as a percentage of average Brent			94		%	90		%				92		%	96		%
Worldwide NGL as a percentage of average WTI			26		%	32		%				29		%	40		%
Domestic natural gas as a percentage of average NYMEX			59		%	78		%				71		%	96		%

Significant Activity

For the three and six months ended June 30, 2023, Occidental recorded a pre-tax impairment of $180 million related to undeveloped acreage in the northern non-core area of the Powder River Basin where Occidental has determined not to pursue future exploration and appraisal activities and a $29 million impairment related to an equity method investment in the Black Butte Coal Company.

Occidental's extension of its production sharing contract in Algeria became effective in the second quarter of 2023, resulting in a deferred tax charge of $68 million. This charge is included in the table "Items affecting comparability" above.

Q2 2023 compared to Q1 2023

Oil and gas segment income was $1.1 billion for the three months ended June 30, 2023, compared with segment income of $1.6 billion for the three months ended March 31, 2023. Excluding the impact of items affecting comparability, oil and gas segment results for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, reflected lower domestic NGL and natural gas commodity prices and lower domestic crude oil volumes, partially offset by higher international sales volumes.

The increase in average daily sales volumes of 8 Mboe/d for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, primarily reflected the completion of the Al Hosn Gas expansion project, partially offset by downtime for maintenance in the Gulf of Mexico.

YTD 2023 compared to YTD 2022

Oil and gas segment income was $2.7 billion for the six months ended June 30, 2023, compared with segment income of $7.0 billion for the six months ended June 30, 2022. Excluding the impact of items affecting comparability, oil and gas segment results for the six months ended June 30, 2023, compared to the six months ended June 30, 2022, reflected lower worldwide crude oil, domestic NGL and domestic natural gas commodity prices, partially offset by higher domestic sales volumes.

The increase in average daily sales volumes of 106 Mboe/d for the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily reflected increased activity in the Permian Basin and Gulf of Mexico and the prior year planned shutdown at Al Hosn Gas to allow for tie-in work for the expansion project.

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:

						Increase (Decrease) Related to
millions			Three Months Ended March 31, 2023			Price Realizations			Net Sales Volumes			Three Months Ended June 30, 2023 (b)
United States Revenue
Oil			$	3,650		$	(47)		$	(157)		$	3,446
NGL			460			(131)			23			352
Natural gas			355			(197)			3			161
Total			$	4,465		$	(375)		$	(131)		$	3,959
International Revenue
Oil (a)			$	718		$	6		$	71		$	795
NGL			85			(7)			12			90
Natural gas			72			—			15			87
Total			$	875		$	(1)		$	98		$	972

						Increase (Decrease) Related to
millions			Six Months Ended June 30, 2022 (b)			Price Realizations			Net Sales Volumes			Six Months Ended June 30, 2023 (b)
United States Revenue
Oil			$	8,942		$	(2,720)		$	874		$	7,096
NGL			1,481			(860)			191			812
Natural gas			1,130			(714)			100			516
Total			$	11,553		$	(4,294)		$	1,165		$	8,424
International Revenue
Oil (a)			$	1,897		$	(314)		$	(70)		$	1,513
NGL			175			(24)			24			175
Natural gas			137			4			18			159
Total			$	2,209		$	(334)		$	(28)		$	1,847

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

(b) Excludes "other" oil and gas revenue. See Note 2 - Revenue in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information regarding other revenue.

CHEMICAL SEGMENT

Q2 2023 compared to Q1 2023

Chemical segment earnings for the three months ended June 30, 2023 were $436 million, compared to $472 million for the three months ended March 31, 2023. The decrease in segment earnings was driven primarily by lower realized caustic soda and PVC pricing, partially offset by higher sales volumes for caustic soda as well as lower ethylene and energy costs.

YTD 2023 compared to YTD 2022

Chemical segment earnings for the six months ended June 30, 2023 were $908 million, compared to $1.5 billion for the six months ended June 30, 2022. The decrease in segment earnings was driven primarily by lower realized PVC pricing as well as lower sales volumes due to decreased demand across most product lines, partially offset by lower ethylene and energy cost.

MIDSTREAM AND MARKETING SEGMENT

Q2 2023 compared to Q1 2023

Midstream and marketing segment losses for the three months ended June 30, 2023 were $30 million, compared to segment earnings of $2 million for the three months ended March 31, 2023. Excluding the impact of items affecting comparability, the decrease in midstream and marketing second quarter results reflected higher gas margins due to the winter weather impact in the first quarter in comparison to the second quarter, and the timing impact of crude oil sales.

YTD 2023 compared to YTD 2022

Midstream and marketing segment losses for the six months ended June 30, 2023 were $28 million, compared with segment earnings of $214 million for the six months ended June 30, 2022. Excluding the impact of items affecting comparability, the decrease in midstream and marketing segment results was primarily driven by the timing impact of crude oil sales in the marketing business, lower sulfur prices at Al Hosn Gas, lower equity method investment income from WES, lower NGL prices impacting domestic gas plants, and increased activities in the low carbon ventures businesses, partially offset by favorable gas margins from the optimization of gas transportation capacities in the marketing business and higher volumes from Al Hosn Gas.

INCOME TAXES

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

			Three months ended						Six months ended
millions, except percentages			June 30, 2023			March 31, 2023						June 30, 2023			June 30, 2022
Income before income taxes			$	1,327		$	1,734					$	3,061		$	8,069
Income tax benefit (expense)
Domestic - federal and state			(203)			(300)						(503)			1,121
International			(264)			(171)						(435)			(559)
Total income tax benefit (expense)			(467)			(471)						(938)			562
Net income			$	860		$	1,263					$	2,123		$	8,631
Worldwide effective tax rate			35		%	27		%				31		%	(7)		%

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 35%, 27%, and 31% worldwide effective tax rates for the three months ended June 30, 2023, three months ended March 31, 2023, and six months ended June 30, 2023, respectively, are 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%. These effective rates differ from the negative 7% tax rate for income from continuing operations for the six months ended June 30, 2022, which was impacted by a tax benefit associated with Occidental's legal entity reorganization as described above.

See Note 6 - Income Taxes in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information regarding Occidental’s income taxes and legal entity reorganization in 2022.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2023, Occidental had approximately $0.5 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.

Operating cash flow was $5.9 billion for the six months ended June 30, 2023, compared to $8.6 billion for the six months ended June 30, 2022. The decrease in operating cash flow from continuing operations was primarily due to lower commodity prices as compared to the same period in 2022.

Occidental’s net cash used by investing activities was $3.5 billion for the six months ended June 30, 2023, compared to $2.0 billion for the six months ended June 30, 2022. Capital expenditures, of which the majority were for the oil and gas segment, were approximately $3.1 billion for the six months ended June 30, 2023, compared to $1.8 billion for the six months ended June 30, 2022.

Occidental’s net cash used by financing activities was $2.9 billion for the six months ended June 30, 2023, compared to $8.0 billion for the six months ended June 30, 2022. Cash used by financing activities for the six months ended June 30, 2023 reflected treasury share repurchases of $1.2 billion, preferred stock redemptions of $982 million and dividend payments of $688 million on preferred and common stock. Cash used by financing activities for the six months ended June 30, 2022 reflected repayments of debt of $7.1 billion, dividend payments of $539 million on preferred and common stock, and treasury share repurchases of $568 million. As of June 30, 2023, Occidental had $1.8 billion remaining of the $3.0 billion share repurchase program that was announced in February 2023. The program does not obligate Occidental to acquire any specific number of shares and may be discontinued at any time.

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 2023, which, if put in whole, would require a payment of approximately $344 million at such date. Occidental currently has the ability to meet this obligation and may use available capacity under the RCF and other committed facilities to satisfy the put should it be exercised.

As of June 30, 2023, and through the date of this filing, Occidental was in compliance with all covenants in its financing agreements. Occidental has no remaining debt maturities in 2023, $1.1 billion in 2024, $1.2 billion in 2025, $1.4 billion in 2026 and $14.2 billion thereafter. Occidental currently expects its cash on hand and funds available from the RCF and other committed facilities to be sufficient to meet its near-term debt maturities, operating expenditures, capital expenditures, preferred stock redemptions and other obligations for the next 12 months from the date of this filing.

Occidental or its subsidiaries have provided financial assurances through a combination of cash, letters of credit and surety bonds. As of June 30, 2023, Occidental had 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 2022 Form 10-K.

ENVIRONMENTAL LIABILITIES AND EXPENDITURES

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 Third-Party, Currently Operated, and Closed or Non-Operated 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, natural resource damages, punitive damages, civil penalties, injunctive relief and government oversight costs.

See Note 7 - 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 2022 Form 10-K for additional information regarding Occidental’s environmental liabilities and expenditures.

LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

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 7 - Environmental Liabilities and Expenditures and Note 8 - 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.