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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 September 30, 2019
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)
Delaware
 
95-4035997
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
5 Greenway Plaza, Suite 110
 
Houston,
Texas
77046
 
(Address of principal executive offices) (Zip Code)
 
(713) 215-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.20 par value
OXY
New York Stock Exchange

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   o 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   o 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 Filerþ    Accelerated Filer        o    Non-Accelerated Filer     o
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. o
  
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.
 
Class
 
Outstanding at September 30, 2019
 
 
Common stock $.20 par value
 
893,317,470
 




OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS
PAGE
Part I
Financial Information
 
 
Item 1.
 
 
 
2
 
 
4
 
 
5
 
 
6
 
 
7
 
 
9
 
 
9
 
 
11
 
 
Note 3—The Merger
12
 
 
Note 4—Acquisitions, Dispositions and Other Transactions
16
 
 
18
 
 
21
 
 
Note 7—Derivative Instruments
21
 
 
27
 
 
28
 
 
31
 
 
34
 
 
35
 
 
37
 
 
37
 
 
38
 
Item 2.
38
 
 
39
 
 
44
 
 
44
 
 
45
 
 
45
 
Item 3.
45
 
Item 4.
46
Part II
Other Information
 
 
Item 1.
47
 
Item 1A.
47
 
Item 2.
50
 
Item 6.
50



1



PART I    FINANCIAL INFORMATION
 

Item 1.
Financial Statements (unaudited)

OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
millions
 
September 30, 2019
 
December 31, 2018
 
 
 
 
 
ASSETS
 
 
 
 
CURRENT ASSETS
 
 
 
 
Cash and cash equivalents
 
$
4,840

 
$
3,033

Restricted cash and restricted cash equivalents
 
454

 

Trade receivables, net
 
5,854

 
4,893

Inventories
 
1,601

 
1,260

Assets held for sale
 
6,445

 

Other current assets
 
1,750

 
746

Total current assets
 
20,944

 
9,932

 
 
 
 
 
INVESTMENTS IN UNCONSOLIDATED ENTITIES ($2,261 related to WES)
 
3,684

 
1,680

 
 
 
 
 
PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
Oil and Gas segment
 
110,668

 
58,799

Chemical segment
 
7,092

 
7,001

Marketing and Other Midstream segment
 
8,133

 
8,070

WES Midstream segment
 
9,635

 

Corporate
 
1,397

 
550

 
 
136,925

 
74,420

Accumulated depreciation, depletion, and amortization
 
(46,804
)
 
(42,983
)
 
 
90,121

 
31,437

 
 
 
 
 
OPERATING LEASE ASSETS
 
1,078

 

 
 
 
 
 
LONG-TERM RECEIVABLES AND OTHER ASSETS, NET
 
1,155

 
797

 
 
 
 
 
INTANGIBLES, NET ($2,380 related to WES)
 
2,387

 
8

 
 
 
 
 
GOODWILL - WES
 
6,074

 

 
 
 
 
 
TOTAL ASSETS
 
$
125,443

 
$
43,854

 
 
 
 
 
Western Midstream Partners, LP (WES) is a Variable Interest Entity (VIE). See Note 1 - General. The related parenthetical references reflect amounts as of September 30, 2019.
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

2



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)
 
millions, except share amounts
 
September 30, 2019
 
December 31, 2018
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
Current maturities of long-term debt
 
$
31

 
$
116

 
Current operating lease liabilities
 
463

 

 
Accounts payable
 
6,789

 
4,885

 
Accrued liabilities ($315 related to WES)
 
5,175

 
2,411

 
Accrued income taxes
 
1,036

 

 
Liabilities of assets held for sale
 
2,203

 

 
Total current liabilities
 
15,697

 
7,412

 
 
 
 
 
 
 
LONG-TERM DEBT, NET
 
 
 
 
 
Long-term debt, net - Occidental
 
39,946

 
10,201

 
Long-term debt, net - WES
 
7,637

 

 
 
 
47,583

 
10,201

 
 
 
 
 
 
 
DEFERRED CREDITS AND OTHER LIABILITIES
 
 
 
 
 
Deferred income taxes ($1,167 related to WES)
 
9,920

 
907

 
Asset retirement obligations ($319 related to WES)
 
4,164

 
1,424

 
Pension and postretirement obligations
 
1,927

 
809

 
Environmental remediation reserves
 
905

 
762

 
Operating lease liabilities
 
676

 

 
Other
 
3,566

 
1,009

 
 
 
21,158

 
4,911

 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
Preferred stock, at $1.00 per share par value (100,000 shares at September 30, 2019)
 
9,762

 

 
Common stock, at $0.20 per share par value (1,043,640,621 shares at September 30, 2019, and 895,115,637 shares at December 31, 2018)
 
209

 
179

 
Treasury stock (150,323,151 shares at September 30, 2019, and 145,726,051 shares at December 31, 2018)
 
(10,653
)
 
(10,473
)
 
Additional paid-in capital
 
14,867

 
8,046

 
Retained earnings
 
22,227

 
23,750

 
Accumulated other comprehensive loss
 
(332
)
 
(172
)
 
Total stockholders' equity
 
36,080

 
21,330

 
 
 
 
 
 
 
Noncontrolling interests
 
4,925

 

 
Total equity
 
41,005

 
21,330

 
 
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
 
$
125,443

 
$
43,854

 
 
 
 
 
 
 
Western Midstream Partners, LP (WES) is a Variable Interest Entity (VIE). See Note 1 - General. The related parenthetical references reflect amounts as of September 30, 2019.
 
 
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

3



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 
 
Three months ended September 30
 
Nine months ended September 30
millions, except per-share amounts
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
REVENUES AND OTHER INCOME
 
 
 
 
 
 
 
 
Net sales
 
$
5,687

 
$
5,216

 
$
14,111

 
$
13,062

Interest, dividends, and other income
 
56

 
34

 
175

 
101

Gain on sale of assets, net
 
128

 
926

 
150

 
969

 
 
5,871

 
6,176

 
14,436

 
14,132

COSTS AND OTHER DEDUCTIONS
 
 
 
 
 
 
 
 
Oil and gas operating expense
 
962

 
680

 
2,324

 
1,909

Transportation expense
 
217

 
41

 
281

 
121

Chemical and midstream cost of sales
 
741

 
722

 
2,046

 
2,128

Purchased commodities
 
441

 
343

 
1,237

 
456

Selling, general and administrative
 
242

 
151

 
545

 
423

Other operating expense
 
363

 
280

 
861

 
717

Taxes other than on income
 
198

 
110

 
432

 
333

Depreciation, depletion, and amortization
 
1,706

 
1,023

 
3,710

 
2,891

Asset impairments and other items
 
325

 
214

 
325

 
256

Anadarko merger-related costs
 
924

 

 
974

 

Exploration expense
 
63

 
24

 
134

 
60

Interest and debt expense, net
 
381

 
96

 
632

 
290

 
 
6,563

 
3,684

 
13,501

 
9,584

Income (loss) before income taxes and other items
 
(692
)
 
2,492

 
935

 
4,548

 
 
 
 
 
 
 
 
 
OTHER ITEMS
 
 
 
 
 
 
 
 
Gains (losses) on interest rate swaps and warrants, net
 
(33
)
 

 
(33
)
 

Income from equity investments
 
104

 
87

 
274

 
228

 
 
71

 
87

 
241

 
228

 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes
 
(621
)
 
2,579

 
1,176

 
4,776

Income tax expense
 
(116
)
 
(710
)
 
(647
)
 
(1,351
)
Income (loss) from continuing operations
 
(737
)
 
1,869

 
529

 
3,425

Discontinued operations, net of tax
 
(15
)
 

 
(15
)
 

NET INCOME (LOSS)
 
(752
)
 
1,869

 
514

 
3,425

Less: Net income attributable to noncontrolling interests
 
(42
)
 

 
(42
)
 

Less: Preferred stock dividends
 
(118
)
 

 
(118
)
 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
 
(912
)
 
1,869

 
354

 
3,425

 
 
 
 
 
 
 
 
 
PER COMMON SHARE
 
 
 
 
 
 
 
 
Income (loss) from continuing operations—basic
 
$
(1.06
)
 
$
2.44

 
$
0.47

 
$
4.46

Income (loss) from discontinued operations—basic
 
(0.02
)
 

 
(0.02
)
 

Net income (loss) attributable to common stockholders—basic
 
$
(1.08
)
 
$
2.44

 
$
0.45

 
$
4.46

 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations—diluted
 
$
(1.06
)
 
$
2.44

 
$
0.47

 
$
4.45

Income (loss) from discontinued operations—diluted
 
(0.02
)
 

 
(0.02
)
 

Net income (loss) attributable to common stockholders—diluted
 
$
(1.08
)
 
$
2.44

 
$
0.45

 
$
4.45

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

4



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
 
 
Three months ended September 30
 
Nine months ended September 30
millions
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(752
)
 
$
1,869

 
$
514

 
$
3,425

Other comprehensive income (loss) items:
 
 
 
 
 
 
 
 
Losses on derivatives (a)
 
(114
)
 
(1
)
 
(130
)
 
(5
)
Pension and postretirement (losses) gains (b)
 
(34
)
 
144

 
(30
)
 
153

Reclassification of losses on derivatives (c)
 

 
10

 

 
13

Other comprehensive (loss) income, net of tax
 
(148
)
 
153

 
(160
)
 
161

Comprehensive income (loss)
 
(900
)
 
2,022

 
354

 
3,586

Comprehensive income attributable to noncontrolling interests
 
(42
)
 

 
(42
)
 

Comprehensive income (loss) attributable to preferred and common stockholders
 
$
(942
)
 
$
2,022

 
$
312

 
$
3,586


(a)
Net of tax of $32 million and zero for the three months ended September 30, 2019, and 2018, and $36 million and $1 million for the nine months ended September 30, 2019, and 2018, respectively.
(b)
Net of tax of $10 million and $(40) million for the three months ended September 30, 2019, and 2018, and $8 million and $(43) million for the nine months ended September 30, 2019, and 2018, respectively.
(c)
Net of tax of $(3) million for the three months ended September 30, 2018, and $(4) million for the nine months ended September 30, 2018, respectively.

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

5



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
 
Nine months ended September 30
millions
 
2019
 
2018
 
 
 
 
 
CASH FLOW FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
514

 
$
3,425

Adjustments to reconcile net income to net cash provided by
operating activities:
 
 
 
 
Discontinued operations, net
 
15

 

Depreciation, depletion and amortization of assets
 
3,710

 
2,891

Deferred income tax (benefit) provision
 
(1,050
)
 
550

Other noncash charges to income
 
578

 
74

Gain on sale of assets, net
 
(150
)
 
(969
)
Asset impairments and other items
 
325

 
256

Undistributed earnings from affiliates
 
(50
)
 
(16
)
Dry hole expenses
 
41

 
27

Changes in operating assets and liabilities, net
 
1,506

 
(1,069
)
Cash provided by operating activities - continuing operations
 
5,439

 
5,169

Cash used by operating activities - discontinued operations
 
(73
)
 

Net cash provided by operating activities
 
5,366

 
5,169

 
 
 
 
 
CASH FLOW FROM INVESTING ACTIVITIES
 
 
 
 
Capital expenditures
 
(4,184
)
 
(3,638
)
Change in capital accrual
 
(160
)
 
7

Proceeds from sale of assets and equity investments, net
 
4,809

 
2,745

Purchase of businesses and assets, net
 
(27,926
)
 
(726
)
Equity investments and other, net
 
(140
)
 
(88
)
Cash used by investing activities - continuing operations
 
(27,601
)
 
(1,700
)
Cash used by investing activities - discontinued operations
 
(125
)
 

Net cash used by investing activities
 
(27,726
)
 
(1,700
)
 
 
 
 
 
CASH FLOW FROM FINANCING ACTIVITIES
 
 
 
 
Proceeds from long-term debt, net
 
21,557

 
978

Payments of long-term debt
 
(4,949
)
 
(500
)
Proceeds from WES revolvers
 
1,240

 

Payment of revolvers - WES
 
(1,000
)
 

Proceeds from issuance of common and preferred stock
 
10,010

 
17

Purchases of treasury stock
 
(237
)
 
(908
)
Cash dividends paid to common stockholders
 
(1,766
)
 
(1,780
)
Distributions to noncontrolling interest
 
(127
)
 

Other financing, net
 
(35
)
 
6

Cash provided (used) by financing activities - continuing operations
 
24,693

 
(2,187
)
Cash used by financing activities - discontinued operations
 
(1
)
 

Net cash provided by (used) by financing activities
 
24,692

 
(2,187
)
 
 
 
 
 
Increase in cash, cash equivalents, restricted cash and restricted cash equivalents
 
2,332

 
1,282

Cash and cash equivalents — beginning of period
 
3,033

 
1,672

Cash, cash equivalents, restricted cash and restricted cash equivalents
— end of period
 
$
5,365

 
$
2,954

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

6



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
 
 
Total Stockholders' Equity
 
 
 
 
millions
 
Common Stock
 
Preferred Stock
 
Treasury Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Non-controlling Interests
 
Total Equity
Balance at June 30, 2019
 
$
179

 
$

 
$
(10,653
)
 
$
8,157

 
$
23,848

 
$
(184
)
 
$

 
$
21,347

Net income (loss)
 

 

 

 

 
(794
)
 

 
42

 
(752
)
Other comprehensive loss, net of tax
 

 

 

 

 

 
(148
)
 

 
(148
)
Dividends on common stock, $0.79 per share
 

 

 

 

 
(709
)
 

 

 
(709
)
Dividends on preferred stock, $1,489 per share
 

 

 

 

 
(118
)
 

 

 
(118
)
Issuance of common stock and other, net
 
30

 

 

 
6,710

 

 

 

 
6,740

Issuance of preferred stock, net
 

 
9,762

 

 

 

 

 

 
9,762

Fair value of noncontrolling interest acquired
 

 

 

 

 

 

 
4,875

 
4,875

Noncontrolling interest contributions, net
 

 

 

 

 

 

 
8

 
8

Balance at
September 30, 2019
 
$
209

 
$
9,762

 
$
(10,653
)
 
$
14,867

 
$
22,227

 
$
(332
)
 
$
4,925

 
$
41,005


 
 
Total Stockholders' Equity
 
 
 
 
millions
 
Common Stock
 
Preferred Stock
 
Treasury Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Non-controlling Interests
 
Total Equity
Balance at June 30, 2018
 
$
179

 
$

 
$
(9,268
)
 
$
7,967

 
$
22,361

 
$
(308
)
 
$

 
$
20,931

Net income
 

 

 

 

 
1,869

 

 

 
1,869

Other comprehensive income, net of tax
 

 

 

 

 

 
153

 

 
153

Dividends on common stock, $0.78 per share
 

 

 

 

 
(595
)
 

 

 
(595
)
Issuance of common stock, net
 

 

 

 
24

 

 

 

 
24

Purchases of treasury stock
 

 

 
(894
)
 

 

 

 

 
(894
)
Reclassification of stranded tax effects
 

 

 

 

 

 

 

 

Noncontrolling interest
 

 

 

 

 

 

 

 

Balance at
September 30, 2018
 
$
179

 
$

 
$
(10,162
)
 
$
7,991

 
$
23,635

 
$
(155
)
 
$

 
$
21,488


The accompanying notes are an integral part of these consolidated condensed financial statements.


7



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY (Continued)

 
 
Total Stockholders' Equity
 
 
 
 
millions
 
Common Stock
 
Preferred Stock
 
Treasury Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Non-controlling Interests
 
Total Equity
Balance at
December 31, 2018
 
$
179

 
$

 
$
(10,473
)
 
$
8,046

 
$
23,750

 
$
(172
)
 
$

 
$
21,330

Net income
 

 

 

 

 
472

 

 
42

 
514

Other comprehensive loss, net of tax
 

 

 

 

 

 
(160
)
 

 
(160
)
Dividends on common stock, $2.35 per share
 

 

 

 

 
(1,877
)
 

 

 
(1,877
)
Dividends on preferred stock, $1,489 per share
 

 

 

 

 
(118
)
 

 

 
(118
)
Issuance of common stock, net
 
30

 

 

 
6,821

 

 

 

 
6,851

Issuance of preferred stock
 

 
9,762

 

 

 

 

 

 
9,762

Purchases of treasury stock
 

 

 
(180
)
 

 

 

 

 
(180
)
Fair value of noncontrolling interest acquired
 

 

 

 

 

 

 
4,875

 
4,875

Noncontrolling interest contributions, net
 

 

 

 

 

 

 
8

 
8

Balance at
September 30, 2019
 
$
209

 
$
9,762

 
$
(10,653
)
 
$
14,867

 
$
22,227

 
$
(332
)
 
$
4,925

 
$
41,005


 
 
Total Stockholders' Equity
 
 
 
 
millions
 
Common Stock
 
Preferred Stock
 
Treasury Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss
 
Non-controlling Interests
 
Total Equity
Balance at
December 31, 2017
 
$
179

 
$

 
$
(9,168
)
 
$
7,884

 
$
21,935

 
$
(258
)
 
$

 
$
20,572

Net income
 

 

 

 

 
3,425

 

 

 
3,425

Other comprehensive income, net of tax
 

 

 

 

 

 
161

 

 
161

Dividends on common stock, $2.32 per share
 

 

 

 

 
(1,783
)
 

 

 
(1,783
)
Issuance of common stock, net
 

 

 

 
107

 

 

 

 
107

Purchases of treasury stock
 

 

 
(994
)
 

 

 

 

 
(994
)
Reclassification of stranded tax effects
 

 

 

 

 
58

 
(58
)
 

 

Noncontrolling interest
 

 

 

 

 

 

 

 

Balance at
September 30, 2018
 
$
179

 
$

 
$
(10,162
)
 
$
7,991

 
$
23,635

 
$
(155
)
 
$

 
$
21,488


The accompanying notes are an integral part of these consolidated condensed financial statements.


8



OCCIDENTAL PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019

Note 1 - General

Nature of Operations
In this report, "Occidental" means Occidental Petroleum Corporation, a Delaware corporation (OPC), or OPC and one or more entities in which it owns a controlling interest (subsidiaries). Occidental conducts its operations through various subsidiaries and affiliates. On August 8, 2019, pursuant to the Agreement and Plan of Merger, dated as of May 9, 2019 (the Merger Agreement), among Occidental, Baseball Merger Sub 1, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of Occidental (Merger Subsidiary), and Anadarko Petroleum Corporation (Anadarko), Occidental acquired all of the outstanding shares of Anadarko through a transaction in which Merger Subsidiary merged with and into Anadarko (the Merger), with Anadarko continuing as the surviving entity and as an indirect, wholly owned subsidiary of Occidental. See Note 3 - The Merger.

Occidental's principal businesses consist of four reporting segments: Oil and Gas, Chemical, Marketing and Other Midstream, and WES Midstream, which includes the operations of Western Midstream Partners, LP (WES), a publicly traded limited partnership and a consolidated subsidiary of OPC. The Oil and Gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The Chemical segment (OxyChem) mainly manufactures and markets basic chemicals and vinyls. The Marketing and Other Midstream segment purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity, and invests in entities that conduct similar activities. Also within the Marketing and Other Midstream segment is Oxy Low Carbon Ventures (OLCV). OLCV seeks to capitalize on Occidental’s enhanced oil recovery (EOR) leadership by developing carbon capture, utilization and storage projects that source anthropogenic carbon dioxide and promote innovative technologies that drive cost efficiencies and grow Occidental’s business while reducing emissions. The WES Midstream segment owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties. WES is a variable interest entity (VIE) to Occidental.

Principles of Consolidation
The unaudited consolidated financial statements have been prepared in conformity with United States Generally Accepted Accounting Principles (GAAP) and include the accounts of OPC, its subsidiaries, VIEs for which Occidental is the primary beneficiary, and its undivided interests in oil and gas exploration and production ventures. Occidental has made its disclosures in accordance with GAAP as they apply to interim reporting, and condensed or omitted, as permitted by the Securities and Exchange Commission's rules and regulations, certain information and disclosures normally included in consolidated financial statements and notes. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in Occidental's Annual Report on Form 10-K for the year ended December 31, 2018 (the 2018 Form 10-K).

The Merger, including the addition of WES Midstream as a new reporting segment, introduced different revenue and expense streams to Occidental's legacy operations. As a result, changes were made to the structure of certain financial statements, notes and supplementary data to provide clarity and to conform to the current presentation.

Variable Interest Entities
Occidental, through its ownership of the general partner interest in WES, has the power to direct the activities that significantly affect the economic performance of WES and the obligation to absorb losses or the right to receive benefits that could be significant to WES; therefore, Occidental is considered the primary beneficiary and consolidates WES and all of its consolidated subsidiaries. WES maintains its own capital structure that is separate from Occidental, consisting of its own debt instruments and publicly traded common units. All intercompany transactions have been eliminated.

The assets of WES and its subsidiaries cannot be used by Occidental for general corporate purposes and are included in and disclosed parenthetically on Occidental's consolidated condensed balance sheets, if material. The carrying amount of liabilities related to WES for which the creditors do not have recourse to Occidental's assets are also included in and disclosed parenthetically on Occidental's Consolidated Condensed Balance Sheets, if material.


9



All outstanding debt for WES at September 30, 2019, including any borrowings under the WES revolving credit facility (WES RCF) and WES Term Loan Facility, is recourse to the general partner of Western Midstream Operating, LP (WES Operating), which in turn has been indemnified in certain circumstances by certain indirect wholly owned subsidiaries of Occidental for such liabilities. See Note 9 - Long-Term Debt.

WES's sources of liquidity include cash and cash equivalents, cash flows generated from operations, interest income from a note receivable from Anadarko, borrowings under the WES RCF, the issuance of additional partnership units, and debt offerings.

Concurrent with the closing of its May 2008 initial public offering, WES Operating loaned Anadarko $260 million in exchange for a 30-year note bearing interest at a fixed annual rate of 6.50%, payable quarterly. The note receivable and related interest income are eliminated in consolidation.

Noncontrolling Interest
WES is a publicly traded limited partnership with its common units traded on the New York Stock Exchange (NYSE) under the ticker symbol "WES." WES also owns the entire non-economic general partner interest and a 98% limited partner interest in WES Operating, a Delaware limited partnership formed by Anadarko in 2007 to acquire, own, develop and operate midstream assets. In addition, Occidental has a 2% limited partner interest in WES Operating and its ownership is held through the investment in WES.

At September 30, 2019, Occidental’s ownership interest in WES consisted of the entire non-economic general partner interest and a 55.4% limited partner interest. The noncontrolling interest primarily consists of the 44.6% limited partner interest of WES owned by the public.

Discontinued Operations
In connection with the Merger, Occidental agreed to sell to TOTAL S.A. (Total) all of the assets, liabilities, businesses, and operations of Anadarko's operations in Algeria, Ghana, Mozambique and South Africa (collectively, the Africa Assets) for $8.8 billion, subject to certain purchase price adjustments. In August 2019, a purchase and sale agreement was executed for these Africa Assets. This transaction is conditioned on the receipt of required regulatory approvals, as well as other customary closing conditions. On September 27, 2019, Occidental completed the sale of Anadarko’s Mozambique LNG assets to Total for $4.2 billion. The assets and liabilities for Algeria, Ghana and South Africa, are presented as held for sale at September 30, 2019. The results of operations of the Africa Assets are presented as discontinued operations, see Note 4 - Acquisitions, Dispositions, and Other.

Unless otherwise indicated, information presented in the Notes to the Consolidated Condensed Financial Statements relates only to Occidental's continuing operations. Information related to discontinued operations is included in Note 4 - Acquisitions, Dispositions, and Other, and in some instances, where appropriate, is included as a separate disclosure within the individual Notes to the Consolidated Condensed Financial Statements.

Goodwill and Other Intangible Assets
Goodwill resulting from the Merger was assigned to WES Midstream and represents the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed. Goodwill is subject to annual impairment testing. Changes in goodwill may result from, among other things, finalization of preliminary purchase price allocations, impairments, additional acquisitions, or divestitures. See Note 3 - The Merger.

Other intangible assets represent contractual rights obtained in connection with the Merger that had favorable contractual terms relative to market terms as well as customer-related intangible assets, including customer relationships. Other intangible assets are amortized over their estimated useful lives and are assessed for impairment with the associated long-lived asset group whenever impairment indicators are present. See Note 3 - The Merger.


10



Supplemental Cash Flow Information
Occidental paid international and domestic state income taxes of $751 million and $838 million during the nine months ended September 30, 2019, and 2018, respectively. Occidental received domestic state tax refunds of $2 million in each of the nine months ended September 30, 2019, and 2018. No federal income tax payments were made during the nine months ended September 30, 2019, and 2018. Interest paid totaled $610 million and $298 million during the nine months ended September 30, 2019, and 2018, respectively.

Cash Equivalents and Restricted Cash Equivalents
Occidental considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents or restricted cash equivalents. The cash equivalents and restricted cash equivalents balance at September 30, 2019, includes investments in government money market funds in which the carrying value approximates fair value.

The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as reported at the end of the period in the Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2019 to the line items within the Consolidated Condensed Balance Sheet at September 30, 2019. There was no restricted cash or restricted cash equivalents at September 30, 2018 or December 31, 2018.
millions
 
September 30, 2019
Cash and cash equivalents
 
$
4,840

Restricted cash and restricted cash equivalents
 
454

Cash and restricted cash included in assets held for sale
 
16

Restricted cash and restricted cash equivalents included in long-term receivables and other assets, net
 
55

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents
 
$
5,365



Total restricted cash and restricted cash equivalents are primarily associated with a benefits trust for former Anadarko employees that was funded as part of the Merger, payments of future hard-minerals royalties conveyed, and a judicially-controlled account related to a Brazilian tax dispute.

Note 2 - Accounting and Disclosure Changes

In January 2019, Occidental adopted the new lease standard Accounting Standards Codification Topic 842 - Leases (ASC 842). The new standard requires Occidental to recognize most leases, including operating leases, on the balance sheet. The new rules require lessees to recognize a right-of-use asset (ROU) and lease liability for all leases with lease terms of more than 12 months. Occidental adopted the standard using the modified retrospective approach, including adopting several optional practical expedients. See Note 10 - Lease Commitments.


11



Note 3 - The Merger

On May 9, 2019, Occidental entered into the Merger Agreement with Anadarko. On August 8, 2019, Anadarko’s stockholders voted to approve the Merger and it was made effective the same day. The Merger added to Occidental's oil and gas portfolio, primarily in the Permian Basin, DJ Basin and Gulf of Mexico, and a controlling interest in WES.

In exchange for each share of Anadarko common stock, Anadarko stockholders received $59.00 in cash and 0.2934 of a share of Occidental common stock, plus cash in lieu of any fractional share of Occidental common stock that otherwise would have been issued, based on the average price of $46.31 per share of Occidental common stock on the NYSE on August 8, 2019.

In connection with the Merger, Occidental issued $13.0 billion of new senior unsecured notes, $8.8 billion of term loans (the Term Loans) and 100,000 shares of series A preferred stock (the Preferred Stock) with a warrant to purchase 80 million shares of Occidental common stock at an exercise price of $62.50 (the Warrant) for $10 billion. In addition, Occidental increased its existing $3.0 billion revolving credit facility by an additional $2.0 billion in commitments. See Note 9 - Long-term Debt and Note 14 - Stockholders' Equity for additional information.

The Merger constitutes a business combination and was accounted for using the acquisition method of accounting. The following table presents the Merger consideration paid to Anadarko stockholders as a result of the Merger:
millions, except per share amounts
 
 
Total shares of Anadarko common stock eligible for Merger consideration
 
491.6

Cash consideration (per share of common stock and shares underlying Anadarko stock-based awards eligible for Merger consideration)
 
$
59.00

Cash portion of Merger consideration
 
$
29,002

 
 
 
Total shares of Anadarko common stock and shares underlying Anadarko stock-based awards eligible for Merger consideration
 
492.0

Exchange ratio (per share of Anadarko common stock)
 
0.2934

Total shares of Occidental common stock issued to Anadarko stockholders
 
144

Average share price of Occidental common stock at August 8, 2019
 
$
46.31

Stock portion of Merger consideration
 
$
6,684

Total Merger consideration
 
$
35,686



12



The following table sets forth the preliminary allocation of the Merger consideration. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, final appraisals of assets acquired and liabilities assumed, valuation of pre-merger contingencies and final tax returns that provide underlying tax basis of assets acquired and liabilities assumed. Occidental will finalize the purchase price allocation during the 12-month period following the Merger date, during which time the value of the assets and liabilities may be revised as appropriate.
millions
 
As of August 8, 2019
Fair value of assets acquired:
 
 
Current assets
 
$
3,590

Anadarko's Africa Assets held for sale
 
10,746

Investments in unconsolidated entities
 
2,430

Property, plant and equipment, net - Anadarko
 
48,771

Property, plant and equipment, net - WES Midstream
 
9,475

Other assets
 
797

Intangible assets - WES Midstream
 
2,400

Amount attributable to assets acquired
 
$
78,209

 
 

Fair value of liabilities assumed:
 

Current liabilities
 
$
3,677

Liabilities of Anadarko's Africa Assets held for sale
 
2,329

Long-term debt - Anadarko
 
12,829

Long-term debt - WES Midstream
 
7,407

Deferred income taxes
 
10,040

Asset retirement obligations
 
2,728

Pension and post retirement obligations
 
1,125

Non-current derivative liabilities
 
1,279

Other long-term liabilities
 
2,308

Amount attributable to liabilities assumed
 
$
43,722

 
 
 
Net assets
 
$
34,487

Less: Fair value of noncontrolling interests in WES Midstream
 
4,875

Fair value of net assets acquired
 
29,612

Goodwill - WES Midstream
 
6,074

Total Merger consideration
 
$
35,686



The aggregate purchase price noted above was allocated to the major categories of assets and liabilities acquired based upon their preliminary estimated fair values at the date of the Merger. The valuation of certain assets, including property and intangible assets, are based on preliminary appraisals. The majority of measurements of assets acquired and liabilities assumed, other than debt, are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired properties and equipment is based on both available market data and a cost approach. Oil and natural gas properties were valued using either available market data based on the nature of the properties and the location or an income approach. Intangible assets primarily consist of third-party customer contracts, the fair value of which was determined using an income approach. Deferred income taxes represent the tax effects of differences in the tax basis and merger-date fair values of assets acquired and liabilities assumed. The measurement of debt instruments was based on unadjusted quoted prices in an active market and are primarily Level 1; approximately $6.1 billion of the assumed debt is considered Level 2. The value of derivative instruments was based on observable inputs, primarily forward commodity-price and interest-rate curves and is considered Level 2.


13



The excess of the purchase price over the preliminary estimated fair value of the net tangible and identifiable intangible assets acquired totaled $6.1 billion in goodwill. Goodwill is attributable to the difference in the WES Midstream market capitalization value at the date of the Merger and the WES Midstream net assets acquired, and primarily represents the intrinsic value of the customer relationship between WES Midstream and Occidental.

With the completion of the Merger, Occidental acquired proved and unproved properties of approximately $18.2 billion and $26.0 billion, respectively, primarily associated with the Permian Basin, DJ Basin, Gulf of Mexico and Powder River Basin. The remaining $5.0 billion is related to land, mineral interests and corporate properties.

Other intangible assets of $2.4 billion primarily relate to customer contracts associated with the WES Midstream segment. These contracts are amortized over 25 years. The annual aggregate amortization expense for intangible assets is expected to be $108 million.

From the date of the Merger through September 30, 2019, revenues and net loss attributable to common stockholders associated with Anadarko assets totaled $1.5 billion and $400 million, respectively.

The following summarizes the unaudited pro forma condensed financial information of Occidental as if the Merger had occurred on January 1, 2018:
 
 
Three months ended September 30
 
Nine months ended September 30
millions, except per-share amounts
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Revenues
 
$
7,335

 
$
8,913

 
$
22,419

 
$
23,095

Net income (loss) attributable to common stockholders
 
$
(427
)
 
$
2,060

 
$
475

 
$
3,405

Net income (loss) attributable to common stockholders per share—basic
 
$
(0.50
)
 
$
2.27

 
$
0.51

 
$
3.74

Net income (loss) attributable to common stockholders per share—diluted
 
$
(0.50
)
 
$
2.26

 
$
0.50

 
$
3.73

 
 
 
 
 
 
 
 
 


The unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the Merger been completed at January 1, 2018, nor is it necessarily indicative of future operating results of the combined entity. The unaudited pro forma information for 2019 and 2018 is a result of combining the three and nine months statements of operations of Occidental with the pre-merger results from January 1, 2019, and 2018 of Anadarko and includes adjustments for revenues and direct expenses. The pro forma results exclude results from the Africa Assets and the impact of any merger-related costs. The pro forma results include adjustments to DD&A (Depreciation, depletion and amortization) based on the purchase price allocated to property, plant, and equipment and intangibles and the estimated useful lives as well as adjustments to interest expense. The pro forma adjustments include estimates and assumptions based on currently available information. Management believes the estimates and assumptions are reasonable, and the relative effects of the Merger are properly reflected. The unaudited pro forma information does not reflect any cost savings anticipated as a result of the Merger or any merger-related costs.


14



Anadarko Merger-Related Costs
The following table summarizes the merger-related costs incurred:
millions
 
Three months ended September 30, 2019
 
Nine months ended September 30, 2019
Employee severance and related cost
 
$
459


$
459

Licensing fees for critical seismic data
 
329


354

Bank, legal and consulting fees
 
136


161

Total
 
$
924


$
974

 
 
 
 
 


Employee severance and related cost primarily relates to one-time severance costs and the accelerated vesting of certain Anadarko share-based awards for former Anadarko employees based on the terms of the Merger Agreement and existing change of control provisions within the former Anadarko employment agreements. In addition, employee severance and related cost includes expenses for a voluntary separation program for eligible employees. Occidental initiated this program to align the size and composition of its workforce with its expected future operating and capital plans. Employee notifications related to the voluntary separation program were ongoing at September 30, 2019, with additional expenses associated with the program expected to be incurred throughout the remainder of 2019 and through most of 2020.

The seismic licensing fees relate to relicensing of critical seismic data related to the Gulf of Mexico, Permian Basin and DJ Basin that Anadarko had licensed from third-party vendors. The third-party vendors who own the seismic data require a transfer fee in order for Occidental to use the data.

Occidental Stock-based Incentive Plans
On the date of the Merger, Occidental issued restricted share awards covering 1.7 million shares of common stock in exchange for Anadarko stock-based incentive shares to the former Anadarko employees. These restricted shares vest in periods ranging from one month to 3.5 years and are conditioned solely on the employees' continued service, with a weighted-average grant-date fair value of $47.13 and a weighted-average remaining life of 1.3 years. Under the terms of the Merger Agreement, these restricted share awards would be subject to accelerated vesting based on a qualifying termination event.




15



Note 4 - Acquisitions, Dispositions and Other Transactions

On September 27, 2019, Occidental completed the sale of Anadarko’s Mozambique LNG assets to Total for $4.2 billion, with proceeds used to pay down a portion of the Term Loans. Occidental and Total continue to work toward completing the sales of the remaining Africa Assets. Occidental anticipates that the remaining sales will be completed before June 2020. The carrying amount of the remaining Africa Assets will be adjusted in future periods based on changes in fair value. The results of the Africa Assets are presented as discontinued operations in the Consolidated Condensed Statements of Operations and Cash Flows.

The following table presents the amounts reported in discontinued operations, net of income taxes, related to the Africa Assets subsequent to the Merger closing date through September 30, 2019:
millions
 
2019
 
 
 
REVENUES AND OTHER INCOME
 
 
Net sales
 
$
228

 
 


COSTS AND OTHER DEDUCTIONS
 
 
Oil and gas operating expense
 
$
32

Transportation and marketing expense
 
4

Taxes other than on income
 
46

Fair value adjustment on assets held for sale
 
65

Selling, general and administrative
 
8

Other
 
4

 
 
$
159

 
 
 
Income before income taxes
 
$
69

Income tax expense
 
(84
)
Discontinued operations, net of tax
 
$
(15
)
 
 
 
 


16



The following table presents the amounts reported in the Consolidated Condensed Balance Sheets as held for sale related to the Africa Assets and other corporate property.
millions
 
September 30, 2019
 
 
 
Cash and cash equivalents
 
$
16

Inventories
 
207

Other current assets
 
110

Property, plant and equipment, net
 
5,863

Operating lease assets
 
29

Long-term receivables and other assets, net
 
220

Assets held for sale
 
$
6,445

 
 
 
Current maturities of debt - finance leases
 
13

Current operating lease liabilities
 
11

Accounts payable
 
217

Accrued liabilities
 
152

Long-term debt, net - finance leases
 
187

Deferred income taxes
 
1,281

Asset retirement obligations
 
142

Other
 
200

Liabilities of assets held for sale
 
$
2,203

 
 
 
Net assets held for sale
 
$
4,242

 
 
 

Sale of Plains Investment
On September 23, 2019, Occidental sold its remaining equity investment in Plains All American Pipeline, L.P. and Plains GP Holdings, L.P. (together, Plains) for net proceeds of $646 million, which resulted in a pre-tax gain of $111 million. The proceeds were used to pay down a portion of the Term Loans.

Ecopetrol Joint Venture
On July 31, 2019, Occidental and Ecopetrol entered into definitive agreements to form a joint venture to develop approximately 97,000 net acres of Occidental’s Midland Basin properties in the Permian Basin. Ecopetrol will pay $750 million in cash at closing and $750 million of carried capital in exchange for a 49-percent interest in the new venture. Occidental will own a 51-percent interest and operate the joint venture. During the carry period, Ecopetrol will pay 75-percent of Occidental’s share of capital expenditures, up to $750 million. The joint venture allows Occidental to accelerate its development plans in the Midland Basin, where it currently has minimal activity. Occidental will retain production and cash flow from its existing operations in the Midland Basin. This transaction is expected to close in the fourth quarter of 2019.


17



Note 5 - Revenue Recognition

Revenue from customers is recognized when obligations under the terms of a contract with our customers are satisfied; this generally occurs with the delivery of oil, gas, NGL, chemicals or services, such as transportation. As of September 30, 2019, trade receivables, net, of $5.9 billion represent rights to payment for which Occidental has satisfied its obligations under a contract and its right to payment is conditioned only on the passage of time.

The following table shows a reconciliation of revenue from customers to total net sales:
 
 
Three months ended September 30
 
Nine months ended September 30
millions
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Revenue from customers
 
$
5,231

 
$
4,257

 
$
12,397

 
$
11,813

All other revenues (a)
 
456

 
959

 
1,714

 
1,249

Net sales
 
$
5,687

 
$
5,216

 
$
14,111

 
$
13,062

 
 
 
 
 
 
 
 
 
 (a) Includes net marketing derivatives, oil collars and calls, and chemical exchange contracts.

Disaggregation of Revenue from Contracts with Customers
The following table presents Occidental's revenue from customers by segment, product and geographical area. The Oil and Gas segment typically sells its oil, gas and NGL at the lease or concession area. WES Midstream's operations are entirely in the United States. Chemical revenues are shown by geographic area based on the location of the sale. Excluding net marketing revenue, Marketing and Other Midstream revenues are shown by the location of sale:
millions
 
United States
 
Middle East
 
Latin America
 
Other International
 
Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
$
2,453

 
$
683

 
$
177

 
$

 
$

 
$
3,313

NGL
 
177

 
63

 

 

 

 
240

Gas
 
125

 
78

 
5

 

 

 
208

Other
 
(18
)
 
3

 

 

 

 
(15
)
Segment total
 
$
2,737

 
$
827

 
$
182

 
$

 
$

 
$
3,746

 
 
 
 
 
 
 
 
 
 
 
 
 
Chemical
 
$
1,009

 
$

 
$
36

 
$
16

 
$

 
$
1,061

 
 
 
 
 
 
 
 
 
 
 
 
 
Marketing and Other Midstream
 
 
 
 
 
 
 
 
 
 
 
 
Gas processing
 
93

 
81

 

 

 

 
174

Power and other
 
198

 

 

 
37

 

 
235

Segment total
 
$
291

 
$
81

 
$

 
$
37

 
$

 
$
409

 
 
 
 
 
 
 
 
 
 
 
 
 
WES Midstream
 
$
383

 
$

 
$

 
$

 
$

 
$
383

 
 
 
 
 
 
 
 
 
 
 
 
 
Eliminations
 
$

 
$

 
$

 
$

 
$
(368
)
 
$
(368
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
4,420

 
$
908

 
$
218

 
$
53

 
$
(368
)
 
$
5,231

 
 
 
 
 
 
 
 
 
 
 
 
 

18



millions
 
United States
 
Middle East
 
Latin America
 
Other International
 
Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
$
1,326

 
$
1,016

 
$
197

 
$

 
$

 
$
2,539

NGL
 
139

 
77

 

 

 

 
216

Gas
 
47

 
80

 
5

 

 

 
132

Other
 
3

 

 
(1
)
 

 

 
2

Segment total
 
$
1,515

 
$
1,173

 
$
201

 
$

 
$

 
$
2,889

 
 
 
 
 
 
 
 
 
 
 
 
 
Chemical
 
$
1,112

 
$

 
$
51

 
$
21

 
$

 
$
1,184

 
 
 
 
 
 
 
 
 
 
 
 
 
Marketing and Other Midstream
 
 
 
 
 
 
 
 
 
 
 
 
Gas processing
 
148

 
108

 

 

 

 
256

Pipelines
 
115

 

 

 

 

 
115

Power and other
 
38

 

 

 

 

 
38

Segment total
 
$
301

 
$
108

 
$

 
$

 
$

 
$
409

 
 
 
 
 
 
 
 
 
 
 
 
 
Eliminations
 
$

 
$

 
$

 
$

 
$
(225
)
 
$
(225
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
2,928

 
$
1,281

 
$
252

 
$
21

 
$
(225
)
 
$
4,257

millions
 
United States
 
Middle East
 
Latin America
 
Other International
 
Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
$
5,105

 
$
2,266

 
$
524

 
$

 
$

 
$
7,895

NGL
 
339

 
196

 

 

 

 
535

Gas
 
180

 
233

 
14

 

 

 
427

Other
 
(40
)
 
(2
)
 

 

 

 
(42
)
Segment total
 
$
5,584

 
$
2,693

 
$
538

 
$

 
$

 
$
8,815

 
 
 
 
 
 
 
 
 
 
 
 
 
Chemical
 
$
2,937

 
$

 
$
119

 
$
53

 
$

 
$
3,109

 
 
 
 
 
 
 
 
 
 
 
 
 
Marketing and Other Midstream
 
 
 
 
 
 
 
 
 
 
 
 
Gas processing
 
302

 
272

 

 

 

 
574

Power and other
 
274

 

 

 
37

 

 
311

Segment total
 
$
576

 
$
272

 
$

 
$
37

 
$

 
$
885

 
 
 
 
 
 
 
 
 
 
 
 
 
WES Midstream
 
$
383

 
$

 
$

 
$

 
$

 
$
383

 
 
 
 
 
 
 
 
 
 
 
 
 
Eliminations
 
$

 
$

 
$

 
$

 
$
(795
)
 
$
(795
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
9,480

 
$
2,965

 
$
657

 
$
90

 
$
(795
)
 
$
12,397



19



millions
 
United States
 
Middle East
 
Latin America
 
Other International
 
Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
$
3,907

 
$
2,507

 
$
547

 
$

 
$

 
$
6,961

NGL
 
339

 
192

 

 

 

 
531

Gas
 
141

 
218

 
12

 

 

 
371

Other
 
10

 
1

 

 

 

 
11

Segment total
 
$
4,397

 
$
2,918

 
$
559

 
$

 
$

 
$
7,874

 
 
 
 
 
 
 
 
 
 
 
 
 
Chemical
 
$
3,294

 
$

 
$
154

 
$
59

 
$

 
$
3,507

 
 
 
 
 
 
 
 
 
 
 
 
 
Marketing and Other Midstream
 
 
 
 
 
 
 
 
 
 
 
 
Gas processing
 
416

 
308

 

 

 

 
724

Pipelines
 
310

 

 

 

 

 
310

Power and other
 
84

 

 

 

 

 
84

Segment total
 
$
810

 
$
308

 
$

 
$

 
$

 
$
1,118

 
 
 
 
 
 
 
 
 
 
 
 
 
Eliminations
 
$

 
$

 
$

 
$

 
$
(686
)
 
$
(686
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
8,501

 
$
3,226

 
$
713

 
$
59

 
$
(686
)
 
$
11,813



Contract Liabilities
Contract liabilities relate to WES fees and capital reimbursements that are charged to customers for only a portion of the contract term and must be recognized as revenues over the expected period of benefit, fixed and variable fees that are received from customers but revenue recognition is deferred under midstream cost of service contracts, and hard-minerals bonus payments received from customers that must be recognized as revenue over the expected period of benefit.

The following table summarizes current period activity related to contract liabilities from contracts with customers:
millions
 
 
Balance at December 31, 2018
 
$

Increase due to contract liabilities acquired with Anadarko
 
154

Increase due to cash received, excluding revenues recognized in the period
 
9

Decrease due to revenue recognized
 
(13
)
Balance at September 30, 2019
 
$
150




20



Transaction Price Allocated to Remaining Performance Obligations
Revenue expected to be recognized from certain performance obligations that are unsatisfied as of September 30, 2019, is reflected in the table below. Occidental applies the optional exemptions in Topic 606 and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied performance obligations. As a result, the following table represents a small portion of Occidental's expected future consolidated revenues, as future revenue from the sale of most products and services is dependent on future production or variable customer volume and variable commodity prices for that volume:
millions
 
Oil and Gas
 
WES Midstream
 
Eliminations
 
Total
Remainder of 2019
 
$
26

 
$
193

 
$
(127
)
 
$
92

2020
 
103

 
863

 
(589
)
 
377

2021
 
103

 
912

 
(645
)
 
370

2022
 
7

 
963

 
(703
)
 
267

2023
 
7

 
915

 
(690
)
 
232

Thereafter
 
60

 
4,399

 
(3,768
)
 
691

Total
 
$
306

 
$
8,245

 
$
(6,522
)
 
$
2,029



Note 6 - Inventories

Commodity inventory and finished goods primarily represents crude oil, which is carried at the lower of weighted-average cost or market value, and caustic soda and chlorine, which are valued under the last-in, first-out (LIFO) method. Inventories consisted of the following:
millions
 
September 30, 2019
 
December 31, 2018
 
 
 
 
 
Raw materials
 
$
67

 
$
74

Materials and supplies
 
916

 
445

Commodity inventory and finished goods
 
665

 
788

 
 
1,648

 
1,307

Revaluation to LIFO
 
(47
)
 
(47
)
Total
 
$
1,601

 
$
1,260



Note 7 - Derivative Instruments

Occidental uses a variety of derivative financial instruments and physical contracts to manage its exposure to commodity-price fluctuations and transportation commitments, to fix margins on the future sale of stored commodity volumes and interest rate risks. Occidental also enters into derivative financial instruments for trading purposes.

Occidental may elect normal purchases and normal sales exclusions when physically delivered commodities are purchased or sold to a customer. Occidental occasionally applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecasted sales of its natural gas storage volumes, and at times for other strategies, such as to lock rates on forecasted debt issuances. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty.
  

21



Derivatives Not Designated as Hedging Instruments
As of September 30, 2019, Occidental's derivatives not designated as hedges consist of three-way oil collars and call options, interest rate swaps, marketing derivatives and the Warrant.

Derivative instruments that are derivatives not designated as hedging instruments are required to be recorded on the statement of operations and balance sheet at fair value. Changes in fair value will impact Occidental's earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled. The fair value does not reflect the realized or cash value of the instrument.

Three-way Oil Collars and Call Options
In July 2019, Occidental entered into three-way costless collar derivative instruments for 2020 and additional call options in 2021 to manage its near-term exposure to cash-flow variability from commodity-price risks. A three-way collar is a combination of three options: a sold call, a purchased put and a sold put. The sold call establishes the ceiling price that Occidental will receive for the contracted commodity volume for a defined period of time. The purchased put establishes the floor price that Occidental will receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the floor price equals the reference price plus the difference between the purchased put strike price and the sold put strike price for a defined period of time. Occidental entered into the 2021 call options to substantially improve the ceiling price that Occidental will receive for the contracted commodity volumes in 2020. In the Merger, Occidental also assumed three-way costless collars that expire throughout the rest of 2019. Net gains and losses associated with collars and calls are recognized currently in net sales. Hedge accounting was not elected for these contracts.

Occidental had the following collars and calls outstanding at September 30, 2019:
Collars and Calls, not designated as hedges
 
 
2019 Settlement
 
 
 
Three-way collars (Oil MMBL)
 
 
8.0

 
Average price per barrel (NYMEX/Brent oil pricing)
 
 
 
 
 
Ceiling sold price (call)
 
 
$
72.98

 
 
Floor purchased price (put)
 
 
$
56.72

 
 
Floor sold price (put)
 
 
$
46.72

 
 
 
 
 
 
2020 Settlement
 
 
 
Three-way collars (Oil MMBL)
 
 
109.8

 
Average price per barrel (Brent oil pricing)
 
 
 
 
 
Ceiling sold price (call)
 
 
$
74.09

 
 
Floor purchased price (put)
 
 
$
55.00

 
 
Floor sold price (put)
 
 
$
45.00

 
 
 
 
 
 
2021 Settlement
 
 
 
Call Options sold (Oil MMBL)
 
 
109.5

 
Average price per barrel (Brent oil pricing)
 
 
 
 
 
Ceiling sold price (call)
 
 
$
74.09



Occidental Interest Rate Swaps (Excluding WES Midstream)
Occidental acquired interest rate swap contracts in the Merger. The contracts lock in a fixed interest rate in exchange for a floating interest rate indexed to three-month London Inter-Bank Offered Rate (LIBOR) throughout the reference period. Net gains and losses associated with interest rate derivative instruments not designated as hedging instruments are recognized currently in losses on interest rate swaps and warrants, net.


22



Occidental had the following outstanding interest rate swaps at September 30, 2019:
millions except percentages
 
 
 
Mandatory
 
Weighted-Average
Notional Principal Amount
 
Reference Period
 
Termination Date
 
Interest Rate
$
125

 
 
September 2016 - 2046
 
October 2019
 
6.782
%
$
550

 
 
September 2016 - 2046
 
September 2020
 
6.418
%
$
125

 
 
September 2016 - 2046
 
September 2022
 
6.835
%
$
100

 
 
September 2017 - 2047
 
September 2020
 
6.891
%
$
250

 
 
September 2017 - 2047
 
September 2021
 
6.570
%
$
450

 
 
September 2017 - 2047
 
September 2023
 
6.445
%

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.

Derivative settlements and collateralization are classified as cash flows from operating activities unless the derivatives contain an other-than-insignificant financing element, in which case the settlements and collateralization are classified as cash flows from financing activities. As a result of prior extensions of reference-period start dates without settlement of the related interest rate derivative obligations, the interest rate derivatives in Occidental's portfolio contain an other-than-insignificant financing element, and therefore, any settlements, collateralization or cash payments for amendments related to these extended interest rate derivatives are classified as cash flows from financing activities. Net cash payments related to settlements and amendments of interest rate swap agreements were $43 million during the period from August 8, 2019, through September 30, 2019. Subsequent to September 30, 2019, Occidental settled interest rate swaps that had a mandatory termination date of October 11, 2019, and a notional value of $125 million.

WES Interest Rate Swaps
In the Merger, Occidental also acquired interest rate swap contracts held by WES. WES exchanged a floating interest rate indexed to the three-month LIBOR for a fixed interest rate. Net gains and losses associated with these interest rate derivative instruments are recognized currently in losses on interest rate swaps and warrants, net. The following interest rate swaps were outstanding at September 30, 2019:
millions except percentages
 
 
 
Mandatory
 
Weighted-Average
Notional Principal Amount
 
Reference Period
 
Termination Date
 
Interest Rate
$
375

 
 
December 2019 - 2024
 
December 2019
 
2.662
%
$
375

 
 
December 2019 - 2029
 
December 2019
 
2.802
%
$
375

 
 
December 2019 - 2049
 
December 2019
 
2.885
%

Depending on market conditions, liability-management actions, or other factors, WES may settle or amend certain or all of the currently outstanding interest rate swaps.
Marketing Derivatives
Occidental's marketing derivative instruments not designated as hedges are physical and financial forward contracts which typically settle within three months. A substantial majority of Occidental's physically settled derivative contracts are index-based and carry no mark-to-market valuation in earnings. These instruments settle at a weighted-average contract price of $58.39 per barrel and $2.22 per thousand cubic feet (Mcf) for crude oil and natural gas, respectively, at September 30, 2019. The weighted-average contract price was $58.81 per barrel and $3.18 per Mcf for crude oil and natural gas, respectively, at December 31, 2018. Net gains and losses associated with marketing derivative instruments not designated as hedging instruments are recognized currently in net sales.

The following table summarizes net long/(short) volumes associated with the outstanding marketing commodity derivatives not designated as hedging instruments as of September 30, 2019, and December 31, 2018.
 
 
2019
 
2018
 
 
 
 
 
Crude Oil Commodity Contracts
 
 
 
 
Volume (MMBL)
 
36

 
61

Natural Gas Commodity Contracts
 
 
 
 
Volume (Bcf)
 
(128
)
 
(142
)


23





The Warrant
The Warrant issued with the Preferred Stock in connection with the Merger is exercisable at the holder's option, in whole or in part, until the first anniversary of the date on which no shares of Preferred Stock remain outstanding at which point the Warrant expires. The holder of the Warrant may require net cash settlement if certain shareholder and regulatory approvals to issue Occidental common stock are not obtained on a timely basis. The initial fair value of the Warrant, $188 million, was measured at the date of the Merger using the Black Scholes option model. The following inputs were used in the Black Scholes option model; the expected life is based on the estimated term of the Warrant, the volatility factor is based on historical volatilities of Occidental common stock, and the call option price for Occidental common stock at $62.50. The fair value of the Warrant is remeasured each reporting period based on changes in the inputs above.

Derivatives Designated as Hedging Instruments
Net gains and losses attributable to derivative instruments subject to cash flow hedge accounting reside in accumulated other comprehensive loss and are reclassified to earnings as the transactions to which the derivatives relate are recognized in earnings.

Cash Flow Hedges
Occidental’s marketing operations store natural gas purchased from third parties at Occidental’s leased storage facilities. Derivative instruments are used to fix margins on the future sales of the stored volumes. As of September 30, 2019, Occidental had approximately 5 billion cubic feet (Bcf) of natural gas held in storage, and had cash flow hedges for the forecast sales, to be settled by physical delivery, of approximately 3 Bcf of stored natural gas. As of December 31, 2018, Occidental had approximately 5 Bcf of natural gas held in storage, and had cash flow hedges for the forecasted sales, to be settled by physical delivery, of approximately 4 Bcf of stored natural gas. The fair value of the cash flow hedges associated with stored natural gas was immaterial at September 30, 2019 and December 31, 2018. The ineffective portion recognized through earnings was immaterial for the nine months ended September 30, 2019, and the year ended December 31, 2018.

In June 2019, in anticipation of issuing debt in the third quarter to partially finance the cash portion of the Merger consideration, Occidental entered into a series of U.S. treasury locks which were designated as cash flow hedges. In August 2019, the U.S. treasury locks were unwound with the issuance of the $13.0 billion new senior unsecured notes, and the resulting after-tax accumulated other comprehensive loss of $125 million will be amortized to interest expense over the life of the underlying senior notes.

24



Fair Value of Derivatives
The following tables present the fair values of Occidental’s outstanding derivatives. Fair values are presented at gross amounts, including when the derivatives are subject to master netting arrangements, and are presented on a net basis in the Consolidated Condensed Balance Sheets.
Balance Sheet Classification
 
Fair-Value Measurements Using
 
Netting (a)
 
Total Fair Value
millions
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2019
 
 
 
 
 
 
 
 
 
 
Oil Collars and Calls
 
 
 
 
 
 
 
 
 
 
Other current assets
 
$

 
$
217

 
$

 
$
(4
)
 
$
213

Accrued liabilities
 

 
3

 

 
(3
)
 

Deferred credits and other liabilities - other
 

 
97

 

 

 
97

Marketing Derivatives
 
 
 
 
 
 
 
 
 
 
Other current assets
 
838

 
97

 

 
(861
)
 
74

Long-term receivables and other assets, net
 
70

 
12

 

 
(70
)
 
12

Accrued liabilities
 
827

 
45

 

 
(861
)
 
11

Deferred credits and other liabilities - other
 
71

 
1

 

 
(70
)
 
2

Interest Rate Swaps (excluding WES)
 
 
 
 
 
 
 
 
 
 
Other current assets
 

 
14

 

 

 
14

Long-term receivables and other assets, net
 

 
13

 

 

 
13

Accrued liabilities
 

 
882

 

 

 
882

Deferred credits and other liabilities - other
 

 
879

 

 

 
879

WES Interest Rate Swaps
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
 

 
171

 

 

 
171

Warrant
 
 
 
 
 
 
 
 
 
 
Deferred credits and other liabilities - other
 

 
168

 

 

 
168

 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
Marketing Derivatives
 
 
 
 
 
 
 
 
 
 
Other current assets
 
$
2,531

 
$
110

 
$

 
$
(2,392
)
 
$
249

Long-term receivables and other assets, net
 
5

 
9

 

 
(6
)
 
8

Accrued liabilities
 
2,357

 
101

 

 
(2,392
)
 
66

Deferred credits and other liabilities - other
 
6

 
2

 

 
(6
)
 
2

(a)
These amounts do not include collateral.

As of September 30, 2019, $359 million of collateral has been netted against derivative liabilities related to interest rate swaps. Occidental had $36 million of initial margin deposited with brokers as of September 30, 2019, related to marketing derivatives. As of December 31, 2018, $45 million collateral received has been netted against derivative assets, and collateral posted of $1 million has been netted against derivative liabilities. Occidental had $178 million of initial margin deposited with brokers as of December 31, 2018. Initial margin is included in other current assets in the Consolidated Condensed Balance Sheets and has not been reflected in these derivative fair-value tables.


25



Gains and Losses on Derivatives
The following table presents the effect of Occidental's derivative instruments on the Consolidated Condensed Statements of Operations:
Income Statement Classification
 
Three months ended September 30
 
Nine months ended September 30
millions
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Oil Collars and Calls
 
 
 
 
 
 
 
 
Net sales
 
$
75

 
$

 
$
75

 
$

Marketing Derivatives
 
 
 
 
 
 
 
 
Net sales
 
91

 
36

 
(119
)
 
8

Interest Rate Swaps (Excluding WES)
 
 
 
 
 
 
 
 
Losses on interest rate swaps and warrants, net
 
(45
)
 

 
(45
)
 

Interest Rate Swaps (WES)
 
 
 
 
 
 
 
 
Losses on interest rate swaps and warrants, net
 
(8
)
 

 
(8
)
 

Warrants
 
 
 
 
 
 
 
 
Gains on interest rate swaps and warrants, net
 
20

 

 
20

 



Credit Risk
Occidental's counterparty credit risk related to the physical delivery of energy commodities results from its customers' potential inability to meet their settlement commitments. Occidental manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring collateral or other credit risk mitigants, as appropriate. Occidental actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. Occidental also enters into future contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk as a significant portion of these transactions settle on a daily margin basis.

Certain over-the-counter derivative instruments contain credit-risk-contingent features, primarily tied to credit ratings for Occidental or its counterparties, which may affect the amount of collateral that each party would need to post. The aggregate fair value of derivative instruments with credit-risk-related contingent features for which a net liability position existed at September 30, 2019 was $1.6 billion (net of $0.3 billion collateral), primarily related to acquired interest-rate swaps, and $68 million (net of $1 million of collateral) existed at December 31, 2018.


26



Note 8 - Fair-Value Measurements

Occidental has categorized its assets and liabilities that are measured at fair value in a three-level fair-value hierarchy, based on the inputs to the valuation techniques: Level 1 — using quoted prices in active markets for the assets or liabilities; Level 2 — using observable inputs other than quoted prices for the assets or liabilities; and Level 3 — using unobservable inputs. Transfers between levels, if any, are recognized at the end of each reporting period.

Fair Values — Recurring
In January 2012, Occidental entered into a long-term contract to purchase CO2. This contract contains a price adjustment clause that is linked to changes in NYMEX crude oil prices. Occidental determined that the portion of this contract linked to NYMEX oil prices is not clearly and closely related to the host contract, and Occidental therefore bifurcated this embedded pricing feature from its host contract and accounts for it at fair value in the Consolidated Condensed Financial Statements.
The following tables provide fair-value measurement information for embedded derivatives that are measured on a recurring basis:
millions
 
Fair-Value Measurements Using
 
 
 
 
Embedded derivatives
 
Level 1
 
Level 2
 
Level 3
 
Netting and
Collateral
 
Total Fair
Value
As of September 30, 2019
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
 
$

 
$
54

 
$

 
$

 
$
54

Deferred credits and other liabilities - other
 

 
73

 

 

 
73

 
 
 
 
 
 
 
As of December 31, 2018
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
 
$

 
$
66

 
$

 
$

 
$
66

Deferred credits and other liabilities - other
 

 
116

 

 

 
116



Fair-Values — Nonrecurring
During the nine months ended September 30, 2019, Occidental measured assets and liabilities at merger-date fair value on a nonrecurring basis related to the Merger. See Note 3 - The Merger for more detail.

During the three and nine months ended September 30, 2019, Occidental's Oil and Gas segment recognized pre-tax impairment and related charges of $285 million related to domestic undeveloped leases that were set to expire in the near term, where Occidental had no plans to pursue exploration activities, and $40 million related to Occidental's mutually agreed early termination of its Qatar Idd El Shargi South Dome (ISSD) contract.

During 2018, Occidental recognized pre-tax impairment and related charges of $416 million primarily related to Idd El Shargi North Dome (ISND) and ISSD proved properties and inventory. The fair value of the proved properties was measured based on the income approach, which incorporated a number of assumptions involving expectations of future cash flows. These assumptions included estimates of future product prices, which Occidental based on forward price curves, estimates of oil and gas reserves, estimates of future expected operating and capital costs and a risk-adjusted discount rate of 10 percent. These inputs are categorized as Level 3 in the fair-value hierarchy.
 
Other Financial Instruments
The carrying amounts of cash and cash equivalents and other on-balance-sheet financial instruments, other than long-term, fixed-rate debt, approximate fair value. The cost, if any, to terminate Occidental's off-balance-sheet financial instruments is not significant. Occidental estimates the fair value of fixed-rate debt based on the quoted market prices for those instruments or on quoted market yields for similarly rated debt instruments, taking into account such instruments’ maturities. 

The estimated fair value of Occidental’s debt as of September 30, 2019, was $47.8 billion, which included $7.6 billion in debt related to WES. The majority of Occidental's debt is classified as Level 1, with $12.5 billion classified as Level 2. At December 31, 2018, the estimated fair value of Occidental's debt was $10.3 billion.


27



Note 9 - Long-Term Debt

Long-term debt consisted of the following:
millions
 
Balance at
September 30, 2019
Occidental
 
 
4.850% senior notes due 2021
 
$
677

2.600% senior notes due 2021
 
1,500

4.100% senior notes due 2021
 
1,249

Variable rate bonds due 2021 (3.137% as of September 30, 2019)
 
500

Variable rate bonds due 2021 (3.437% as of September 30, 2019)
 
500

2-year variable rate Term Loan due 2021 (3.417% as of September 30, 2019)
 
3,966

2.700% senior notes due 2022
 
2,000

3.125% senior notes due 2022
 
814

2.600% senior notes due 2022
 
400

Variable rate bonds due 2022 (3.637% as of September 30, 2019)
 
1,500

2.700% senior notes due 2023
 
1,191

8.750% medium-term notes due 2023
 
22

2.900% senior notes due 2024
 
3,000

6.950% senior notes due 2024
 
650

3.450% senior notes due 2024
 
248

3.500% senior notes due 2025
 
750

5.550% senior notes due 2026
 
1,100

3.200% senior notes due 2026
 
1,000

3.400% senior notes due 2026
 
1,150

7.500% debentures due 2026
 
112

3.000% senior notes due 2027
 
750

7.125% debentures due 2027
 
150

7.000% debentures due 2027
 
48

6.625% debentures due 2028
 
14

7.150% debentures due 2028
 
235

7.200% senior debentures due 2028
 
82

7.200% debentures due 2029
 
135

7.950% debentures due 2029
 
116

8.450% senior debentures due 2029
 
116

3.500 senior notes due 2029
 
1,500

Variable rate bonds due 2030 (1.785% as of September 30, 2019)
 
68

7.500% senior notes due 2031
 
900

7.875% senior notes due 2031
 
500

6.450% senior notes due 2036
 
1,750

Zero Coupon senior notes due 2036
 
2,271

4.300% senior notes due 2039
 
750

7.950% senior notes due 2039
 
325

6.200% senior notes due 2040
 
750

4.500% senior notes due 2044
 
625

4.625% senior notes due 2045
 
750

6.600% senior notes due 2046
 
1,100

4.400% senior notes due 2046
 
1,200

4.100% senior notes due 2047
 
750

4.200% senior notes due 2048
 
1,000

4.400% senior notes due 2049
 
750

7.730% debentures due 2096
 
60

7.500% debentures due 2096
 
78

7.250% debentures due 2096
 
49

Total borrowings at face value (a)
 
39,151

Adjustments to book value:
 
 
Unamortized premium, net
 
859

Debt issuance costs
 
(133
)
Long-term finance leases
 
69

Long-term Debt, net - Occidental
 
$
39,946

(a) Total borrowings at face value also includes a $310 thousand 7.25% senior note due 2025

28



millions
 
Balance at
September 30, 2019
WES
 
 
5.375% senior notes due 2021
 
$
500

4.000% senior notes due 2022
 
670

3.950% senior notes due 2025
 
500

4.650% senior notes due 2026
 
500

4.500% senior notes due 2028
 
400

4.750% senior notes due 2028
 
400

5.450% senior notes due 2044
 
600

5.300% senior notes due 2048
 
700

5.500% senior notes due 2048
 
350

WES Term Loan Facility (3.420% as of September 30, 2019)
 
3,000

WES revolving credit facility (3.340% as of September 30,2019)
 
160

Total borrowings at face value
 
$
7,780

Adjustments to book value:
 
 
Unamortized discount net
 
(135
)
Debt issuance costs
 
(8
)
Long-term Debt, net - WES
 
$
7,637

 
 
 
Occidental Consolidated
 
 
Total borrowings at face value
 
$
46,931

 
 
 
Adjustments to book value:
 
 
Unamortized premium, net
 
724

Debt issuance costs
 
(141
)
Long-term finance leases
 
69

Total Occidental Consolidated Long-term Debt
 
$
47,583


millions
 
Balance at
December 31, 2018
Occidental
 
 
9.250% senior debentures due 2019
 
$
116

4.100% senior notes due 2021
 
1,249

3.125% senior notes due 2022
 
813

2.600% senior notes due 2022
 
400

2.700% senior notes due 2023
 
1,191

8.750% medium-term notes due 2023
 
22

3.500% senior notes due 2025
 
750

3.400% senior notes due 2026
 
1,150

3.000% senior notes due 2027
 
750

7.200% senior debentures due 2028
 
82

8.450% senior debentures due 2029
 
116

4.625% senior notes due 2045
 
750

4.400% senior notes due 2046
 
1,200

4.100% senior notes due 2047
 
750

4.200% senior notes due 2048
 
1,000

Variable rate bonds due 2030 (1.9% as of December 31, 2018)
 
68

 
 
10,407

Adjustments to book value:
 
 
Unamortized discount, net
 
(36
)
Debt issuance costs
 
(54
)
Current maturities
 
(116
)
Total Occidental Consolidated Long-term Debt
 
$
10,201






29



Debt Issued
On August 8, 2019, Occidental issued $13.0 billion of new senior unsecured notes, consisting of both floating and fixed rate debt. Occidental also borrowed under the Term Loans, which consist of: (1) a 364-day senior unsecured variable-rate term loan tranche of $4.4 billion and (2) a two-year senior unsecured variable-rate term loan tranche of $4.4 billion. In total, the $21.8 billion in debt issued was used to finance part of the cash portion of the purchase price for the Merger.

Debt Assumed as Part of the Merger
In the Merger, Occidental assumed Anadarko and WES debt with an outstanding principal balance of $11.9 billion and $4.6 billion, respectively. In addition, WES had borrowings of $2.9 billion under an RCF and term loan facilities at the Merger date. Debt assumed from Anadarko and WES was recorded at fair value at the Merger date, refer to Note 3 - The Merger. In September 2019, Occidental completed its offers to exchange the Anadarko senior notes and debentures assumed as part of the Merger for notes of a corresponding series issued by Occidental and cash, and related solicitation of consents. Of the approximately $11.9 billion in aggregate principal amount of Anadarko senior notes and debentures offered in the exchange, 97 percent, or approximately $11.5 billion, were tendered and accepted in the exchange offers. The portion not exchanged, approximately $400 million, remains outstanding with the original terms.

Debt Repayment
In September 2019, Occidental paid down $4.8 billion on the Term Loans, primarily using proceeds from the sales of both the Anadarko Mozambique LNG asset and Occidental's equity investment in Plains.

WES Debt
Debt related to WES included $4.6 billion in senior unsecured notes, $3.0 billion under the WES Term Loan Facility due December 2020, and $160 million drawn against the WES RCF at September 30, 2019. The WES Term Loan Facility has a maturity date of December 31, 2020 and requires that net cash proceeds received from future asset sales and debt or equity offerings must be used to repay amounts outstanding under the facility, with a $1.0 billion exclusion for debt offering proceeds. The WES RCF has a maturity date of February 2024 and a borrowing capacity of $2.0 billion. In September 2019, WES borrowed $1.0 billion under the WES Term Loan Facility and used the funds to repay borrowings under the WES RCF.

Revolving Credit Facility
On June 3, 2019, Occidental entered into an amendment to its existing $3.0 billion revolving credit facility (Occidental RCF) pursuant to which, among other things, the commitments under the Occidental RCF were increased to $5.0 billion at the closing of the Merger. Borrowings under the Occidental RCF bear interest at various benchmark rates, including LIBOR, plus a margin based on Occidental's senior debt ratings. The facility has similar terms to other debt agreements and does not contain material adverse change clauses or debt-ratings triggers that could restrict Occidental's ability to borrow, or that would permit lenders to terminate their commitments or accelerate debt repayment. The facility provides for the termination of loan commitments and requires immediate repayment of any outstanding amounts if certain events of default occur. Occidental has not drawn down any amounts under the Occidental RCF.

Zero Coupon Notes Due 2036
The Zero Coupon senior notes due 2036 (Zero Coupons) have an aggregate principal amount due at maturity of approximately $2.3 billion, reflecting an accretion rate of 5.24%. The 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. None of the Zero Coupons were put to Occidental in October 2019. The Zero Coupons can next be put to Occidental in October 2020, which, if put in whole, would be $992 million at such date. Occidental has the ability and intent to refinance these obligations using long-term debt should a put be exercised.

30



Note 10 - Lease Commitments

On January 1, 2019, Occidental adopted ASC 842 using the modified retrospective approach, which provided a method for recording existing leases at adoption and did not require restatement of prior year amounts and disclosures, which continue to be reflected in accordance with ASC 840. Occidental elected certain practical expedients as follows:

Leases that commenced before the effective date carried forward their historical lease classification.
Existing or expired land easements as of December 31, 2018, were not reassessed to determine whether or not they contained a lease.
Leases with a lease term of 12 months or less from lease commencement date are considered short-term leases and not recorded on the Consolidated Condensed Balance Sheet; however, the lease expenditures recognized are captured and reported as incurred.
For asset classes, except long-term drilling rigs, Occidental elected to account for the lease and non-lease components as a single lease component as the non-lease portions were not significant to separate in determining the lease liability. For long-term drilling rig contracts, Occidental bifurcated the lease and non-lease components using relative fair value as a stand-alone selling price between the asset rental and the services obtained.

ASC 842 requires lessees to recognize a ROU asset and lease liability for all long-term leases. A ROU asset represents Occidental’s right to use an underlying asset for the lease term and the associated lease liability represents the discounted obligation of future minimum lease payments. Occidental identifies leases through its accounts payable and contract monitoring process. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The ROU assets include the discounted obligation in addition to any upfront payments or costs incurred during the contract execution of the lease and amortized on a straight-line basis over the course of the lease term. Except for leases with explicitly defined contract terms, Occidental utilizes judgment to assess likelihood of renewals, terminations and purchase options, in order to determine the lease term. Occidental uses the incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate equates to the rate of interest that Occidental would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain leases include variable lease payments which are over and above the minimum lease liability used to derive the ROU asset and lease liability and are based on the underlying asset’s operations. These variable lease costs are reported in the lease cost classification table.

Recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The criteria for distinguishing between finance and operating leases are substantially similar to the criteria under ASC 840. For Occidental operations, adoption of ASC 842 resulted in recording of net lease assets and lease liabilities of $772 million as of January 1, 2019. There was no material impact to net income, cash flows, or stockholders’ equity.

Merger Impact
ASC 805 Business Combinations requires lease-related assets and liabilities acquired to be measured as if the lease were new at the merger date. Occidental measured the Anadarko legacy lease agreements using an updated incremental borrowing rate curve. This resulted in legacy Anadarko assets and liabilities of $498 million and $574 million, respectively, excluding the Africa Assets at the Merger date. These agreements are still under further review for above-or below-market impacts.


31



The following table reconciles the undiscounted cash flows related to the operating and finance lease liabilities assumed in the Merger and recorded on the Consolidated Condensed Balance Sheet at the Merger date:
millions
 
Operating Leases
 
Finance Leases
 
Total
Remainder of 2019
 
$
90

 
$
7

 
$
97

2020
 
172

 
25

 
197

2021
 
64

 
15

 
79

2022
 
42

 
12

 
54

2023
 
28

 
7

 
35

Thereafter
 
136

 
42

 
178

Total lease payments
 
532

 
108

 
640

Less: Interest
 
(44
)
 
(22
)
 
(66
)
Total lease liabilities
 
$
488

 
$
86

 
$
574



Additionally, Occidental has elected short-term lease treatment for those acquired lease contracts which, at the Merger date, have a remaining lease term of 12 months or less. For the leases acquired through the Merger, Occidental will retain the previous lease classification.

Nature of Leases
Occidental’s operating lease agreements include leases for oil and gas exploration and development equipment, including offshore and onshore drilling rigs of $186 million, compressors of $174 million and other field equipment of $97 million, which are recorded gross on the Consolidated Condensed Balance Sheet and in the lease cost disclosures below. Contract expiration terms generally range from two to seven years. Further, actual expenditures are netted against joint-interest recoveries on the income statement through the normal joint-interest billing process. Occidental’s leases also include pipelines, rail cars, storage facilities, easements and real estate of $682 million, which typically are not associated with joint-interest recoveries. Real estate leases have contract expiration terms ranging from 1 to 16 years.

Occidental’s finance lease agreements include leases for oil and gas exploration and development equipment, as well as real estate offices, compressors, and field equipment of approximately $100 million.

The following table presents lease balances and their location on the Consolidated Condensed Balance Sheet at September 30, 2019:
millions
 
Balance sheet location
 
2019
Assets:
 
 
 
 
Operating
 
Operating lease assets
 
$
1,078

Finance
 
Property, plant and equipment
 
97

Total lease assets
 
 
 
$
1,175

 
 
 
 
 
Liabilities:
 
 
 
 
Current
 
 
 
 
Operating
 
Current operating lease liabilities
 
$
463

Finance
 
Current maturities of long-term debt
 
31

Non-current
 
 
 
 
Operating
 
Deferred credits and other liabilities - Operating lease liabilities
 
676

Finance
 
Long-term debt, net - Occidental
 
69

Total lease liabilities
 
 
 
$
1,239




32



At September 30, 2019, Occidental's leases expire based on the following schedule:
 
 
Operating
 
Finance
 
 
millions
 
Leases (a)
 
Leases (b)
 
Total
Remainder of 2019
 
$
119

 
$
8

 
$
127

2020
 
390

 
38

 
428

2021
 
197

 
15

 
212

2022
 
129

 
12

 
141

2023
 
94

 
7

 
101

Thereafter
 
311

 
42

 
353

Total lease payments
 
1,240

 
122

 
1,362

Less: Interest
 
(101
)
 
(22
)
 
(123
)
Total lease liabilities
 
$
1,139

 
$
100

 
$
1,239

(a) The weighted-average remaining lease term is 5.3 years and the weighted-average discount rate is 2.79%.
(b) The weighted-average remaining lease term is 6.4 years and the weighted-average discount rate is 4.92%.

At December 31, 2018, future undiscounted net minimum fixed lease payments for non-cancellable operating leases, prepared in accordance with accounting standards prior to the adoption of ASC 842, were as follows:
 
 
Operating
millions
 
Leases
2019
 
$
186

2020
 
147

2021
 
96

2022
 
68

2023
 
49

Thereafter
 
158

Total minimum lease payments(a)
 
$
704

(a) The amount represents the future undiscounted cash flows at December 31, 2018, excluding any amount associated with the Merger.

The following tables present Occidental's total lease cost and classifications, as well as cash paid for amounts included in the measurement of operating and finance lease liabilities.
Lease cost classification(a)
 
Three months ended September 30, 2019
 
Nine months ended September 30, 2019
millions
 
 
Operating lease costs(b)
 
 
 
 
Property, plant and equipment, net
 
$
139

 
$
321

Cost of sales
 
133

 
271

Selling, general and administrative expenses
 
26

 
61

Finance lease cost
 
 
 
 
Amortization of ROU assets
 
5

 
11

Interest on lease liabilities
 
1

 
1

 
 
$
304

 
$
665

(a) Amounts reflected are gross before joint-interest recoveries.
(b) Includes short-term lease cost of $139 million and $295 million for the three and nine months ended September 30, 2019, respectively, and variable lease cost of $55 million and $115 million for the three and nine months ended September 30, 2019, respectively.
millions
 
Nine months ended September 30, 2019
Operating cash flows
 
$
162

Investing cash flows
 
83

Financing cash flows
 
11




33



Note 11 - Lawsuits, Claims, Commitments and Contingencies

Legal Matters
Occidental or certain of its subsidiaries are involved, in the normal course of business, in lawsuits, claims and other legal proceedings that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief. Occidental or certain of its subsidiaries also are involved in proceedings under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and similar federal, state, local and foreign environmental laws. These environmental proceedings seek funding or performance of remediation and, in some cases, compensation for alleged property damage, punitive damages, civil penalties and injunctive relief. Usually Occidental or such subsidiaries are among many companies in these environmental proceedings and have to date been successful in sharing response costs with other financially sound companies. Further, some lawsuits, claims and legal proceedings involve acquired or disposed assets with respect to which a third party or Occidental retains liability or indemnifies the other party for conditions that existed prior to the transaction.

In accordance with applicable accounting guidance, 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. In Note 12 - Environmental Liabilities and Expenditures, Occidental has disclosed its reserve balances for environmental remediation matters that satisfy this criteria. Reserve balances for matters, other than environmental remediation, that satisfy this criteria as of September 30, 2019, and December 31, 2018, were not material to Occidental’s Consolidated Condensed Balance Sheets.

In 2016, Occidental received payments from the Republic of Ecuador of approximately $1.0 billion pursuant to a November 2015 arbitration award for Ecuador’s 2006 expropriation of Occidental's Participation Contract for Block 15. The awarded amount represented a recovery of 60 percent of the value of Block 15. In 2017, Andes Petroleum Ecuador Ltd. (Andes) filed a demand for arbitration, claiming it is entitled to a 40 percent share of the judgment amount obtained by Occidental. Occidental contends that Andes is not entitled to any of the amounts paid under the 2015 arbitration award because Occidental’s recovery was limited to Occidental’s own 60 percent economic interest in the block. The merits hearing is scheduled for May 2020. Occidental intends to vigorously defend against this claim in arbitration.

On May 30, 2019, a complaint was filed in the Court of Chancery of the State of Delaware by purported Occidental stockholders High River Limited Partnership, Icahn Partners Master Fund LP and Icahn Partners LP (the “Icahn Complainants”), captioned High River Ltd. P’ship v. Occidental Petroleum Corp., C.A. No. 2019-0403-JRS, seeking inspection of Occidental’s books and records pursuant to Section 220 of the Delaware General Corporation Law. In the complaint, the Icahn Complainants noted that they had accumulated over $1.6 billion of Occidental Common Stock. On June 14, 2019, Occidental filed an answer to the complaint in the Court of Chancery of the State of Delaware. A trial was held on September 20, 2019, and the parties are awaiting a ruling.

The ultimate outcome and impact of outstanding lawsuits, claims and proceedings on Occidental cannot be predicted. Management believes that the resolution of these matters will not, individually or in the aggregate, have a material adverse effect on Occidental's Consolidated Condensed Balance Sheets. If unfavorable outcomes of these matters were to occur, future results of operations or cash flows for any particular quarterly or annual period could be materially adversely affected. Occidental’s estimates are based on information known about the legal matters and its experience in contesting, litigating and settling similar matters. Occidental reassesses the probability and estimability of contingent losses as new information becomes available.

Tax Matters
During the course of its operations, Occidental is subject to audit by tax authorities for varying periods in various federal, state, local and foreign tax jurisdictions. With the Merger, Occidental maintains two separate federal consolidated groups. For the legacy Occidental group, taxable years through 2016 for United States federal income tax purposes have been audited by the United States Internal Revenue Service (IRS) pursuant to its Compliance Assurance Program and subsequent taxable years are currently under review. Taxable years through 2009 have been audited for state income tax purposes. While a single foreign tax jurisdiction is open for 2002 and subsequent years, all other significant audit matters in foreign jurisdictions have been resolved through 2010.


34



For Anadarko, taxable years through 2016 for United States federal and state income tax purposes have been audited by the IRS and respective state taxing authorities. While the local country audit of a single foreign tax jurisdiction is open for tax years 2011 through 2013, there are no outstanding significant audit matters in foreign jurisdictions. During the course of tax audits, disputes have arisen and other disputes may arise as to facts and matters of law. Occidental believes that the resolution of outstanding tax matters would not have a material adverse effect on its consolidated financial position or results of operations.

The tax deduction for the Tronox Adversary Proceeding (Tronox) settlement payment contributed to a net operating loss reported on Anadarko’s 2015 federal income tax return that was subsequently carried back to previous years and resulted in a tentative cash refund of $881 million of prior taxes paid, which was received in 2016. While Occidental believes it is entitled to this refund, in accordance with ASC 740's guidance on the accounting for uncertain tax positions, as of September 30, 2019, Occidental has recorded no tax benefit on the tentative cash tax refund of prior federal taxes paid of $881 million. As a result, should Occidental not ultimately prevail on the issue, there would be no tax expense recorded for financial statement purposes other than future interest. However, in that event Occidental would be required to repay approximately $917 million ($898 million federal and $19 million in state taxes) plus accrued interest of approximately $171 million.  

Indemnities to Third Parties
Occidental, its subsidiaries, or both, have indemnified various parties against specified liabilities those parties might incur in the future in connection with purchases and other transactions that they have entered into with Occidental. These indemnities usually are contingent upon the other party incurring liabilities that reach specified thresholds. As of September 30, 2019, Occidental is not aware of circumstances that it believes would reasonably be expected to lead to indemnity claims that would result in payments materially in excess of reserves.

Purchase Obligations and Commitments
Occidental, its subsidiaries, or both, have entered into agreements providing for future payments to secure terminal and pipeline capacity, drilling rigs and services, electrical power, steam and certain chemical raw materials. Occidental has certain other commitments under contracts, guarantees and joint ventures, including purchase commitments for goods and services at market-related prices and certain other contingent liabilities.

As of September 30, 2019, there were no material changes to Occidental's legacy purchase obligations since disclosure in the 2018 Form 10-K. In the Merger, Occidental assumed purchase obligations of approximately $5.2 billion, which included approximately $315 million, $1.0 billion, $907 million, $735 million, $589 million and $1.6 billion that will be paid for the remainder of 2019, 2020, 2021, 2022, 2023, and 2024 and thereafter, respectively. These amounts were discounted at 3.88%. These purchase obligations are related to long-term and work-related commitments for drilling wells, obtaining and processing seismic data, and fulfilling rig commitments, as well as various processing, transportation, storage, and purchase agreements to access markets and provide flexibility to sell its oil, natural gas, and NGL in certain areas.

Note 12 - Environmental Liabilities and Expenditures

Occidental’s operations are subject to stringent federal, state, local, and international laws and regulations related to improving or maintaining environmental quality. The laws that require or address environmental remediation, including the CERCLA and similar federal, state, 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.


35



As of September 30, 2019, Occidental participated in or monitored remedial activities or proceedings at 185 sites. The following table presents Occidental’s current and non-current environmental remediation reserves as of September 30, 2019. The current portion, $149 million, is included in accrued liabilities and the non-current portion, $905 million, in deferred credits and other liabilities - environmental remediation reserves. The reserves are grouped as environmental remediation sites listed or proposed for listing by the United States Environmental Protection Agency (EPA) on the CERCLA National Priorities List (NPL) sites and three categories of non-NPL sites — third-party sites, Occidental-operated sites and closed or non-operated Occidental sites. Occidental continues to evaluate environmental liabilities assumed through the Merger with an initial determination that it will participate in or monitor remedial activities or proceedings at 42 sites. The underlying reserve balance for the environmental sites assumed through the Merger will change as more site-specific information and clean-up measures becomes available.
 
 
Number of Sites
 
Reserve Balance
(
millions)
 
 
 
 
 
NPL sites
 
34

 
$
452

Third-party sites
 
66

 
223

Occidental-operated sites
 
14

 
110

Closed or non-operated Occidental sites
 
29

 
127

Environmental sites assumed from the Merger
 
42

 
142

Total
 
185

 
$
1,054



As of September 30, 2019, Occidental’s environmental reserves exceeded $10 million each at 19 of the 185 sites described above, and 112 of the sites had reserves from zero to $1 million each. Based on current estimates, Occidental expects to expend funds corresponding to approximately 40 percent of the environmental reserves at the sites described above over the next three to four years and the remaining balance at these sites over the subsequent 10 or more years. Occidental believes its range of reasonably possible additional losses beyond those liabilities recorded for environmental remediation at these sites could be up to $1.2 billion. Other than the sites assumed through the Merger, the status of Occidental's involvement with the sites and related significant assumptions, including those sites indemnified by Maxus Energy Corporation (Maxus), has not changed materially since December 31, 2018.

Maxus Environmental Sites
When Occidental acquired Diamond Shamrock Chemicals Company (DSCC) in 1986, Maxus, a subsidiary of YPF S.A. (YPF), agreed to indemnify Occidental for a number of environmental sites, including the Diamond Alkali Superfund Site (Site) along a portion of the Passaic River. On September 17, 2016, Maxus and several affiliated companies filed for Chapter 11 bankruptcy in Federal District Court in the State of Delaware. Prior to filing for bankruptcy, Maxus defended and indemnified Occidental in connection with clean-up and other costs associated with the sites subject to the indemnity, including the Site.

In March 2016, the EPA issued a Record of Decision (ROD) specifying remedial actions required for the lower 8.3 miles of the Lower Passaic River. The ROD does not address any potential remedial action for the upper nine miles of the Lower Passaic River or Newark Bay. During the third quarter of 2016, and following Maxus’s bankruptcy filing, Occidental and the EPA entered into an Administrative Order on Consent (AOC) to complete the design of the proposed clean-up plan outlined in the ROD at an estimated cost of $165 million. The EPA announced that it will pursue similar agreements with other potentially responsible parties.

Occidental has accrued a reserve relating to its estimated allocable share of the costs to perform the design and remediation called for in the AOC and the ROD, as well as for certain other Maxus-indemnified sites. Occidental's accrued estimated environmental reserve does not consider any recoveries for indemnified costs. Occidental’s ultimate share of this liability may be higher or lower than the reserved amount, and is subject to final design plans and the resolution of Occidental's allocable share with other potentially responsible parties. Occidental continues to evaluate the costs to be incurred to comply with the AOC, the ROD, and to perform remediation at other Maxus-indemnified sites in light of the Maxus bankruptcy and the share of ultimate liability of other potentially responsible parties. In June 2018, Occidental filed a complaint under CERCLA in Federal District Court in the State of New Jersey against numerous potentially responsible parties for reimbursement of amounts incurred or to be incurred to comply with the AOC, the ROD, or to perform other remediation activities at the Site.


36



In June 2017, the court overseeing the Maxus bankruptcy approved a Plan of Liquidation (Plan) to liquidate Maxus and create a trust to pursue claims against YPF, Repsol, and others to satisfy claims by Occidental and other creditors for past and future cleanup and other costs. In July 2017, the court-approved Plan became final and the trust became effective. Among other responsibilities, the trust will pursue claims against YPF, Repsol and others and distribute assets to Maxus' creditors in accordance with the trust agreement and Plan. In June 2018, the trust filed its complaint against YPF and Repsol in Delaware bankruptcy court asserting claims based upon, among other things, fraudulent transfer and alter ego. On February 15, 2019, the bankruptcy court denied Repsol's and YPF's motions to dismiss the complaint.

Note 13 - Retirement and Postretirement Benefit Plans

Occidental has various defined benefit pension plans for certain domestic union, non-union hourly and foreign national employees. In addition, Occidental also provides medical and other benefits for certain active, retired and disabled employees and their eligible dependents.

In conjunction with the Merger, Occidental acquired certain Anadarko contributory and non-contributory defined benefit pension plans, which include both qualified and supplemental plans, and plans that provide health care and life insurance benefits for certain retired employees. The Anadarko pension and postretirement obligations were remeasured as of the Merger date. The disclosures below exclude the Africa Assets classified as held for sale as of September 30, 2019.

The remeasurement resulted in an increase to the benefit obligation of $193 million. Accumulated other comprehensive income balances of $390 million were eliminated in purchase price accounting.

Net periodic benefit costs related to pension benefits included a curtailment gain of $34 million and a $10 million cost of special termination benefits for both the three and nine months ended September 30, 2019. The curtailment gain and cost of special termination benefits for 2019 relate to the separation program initiated in conjunction with the Merger. Excluding these items, net periodic benefit costs related to pension benefits were $15 million and $19 million for the three and nine months ended September 30, 2019, respectively, compared to $2 million and $4 million for the same periods in 2018.

Net periodic benefit costs related to postretirement benefits were $19 million and $48 million for the three and nine months ended September 30, 2019, respectively, compared to $15 million and $55 million for the same periods in 2018.

Occidental contributed approximately $7 million and $2 million in the three months ended September 30, 2019, and 2018, respectively, and approximately $8 million and $4 million in the nine months ended September 30, 2019, and 2018, respectively, to its defined benefit plans.

Note 14 - Stockholders' Equity

The following table is a summary of common stock issuances:
shares in thousands
 
Common Stock
Balance at December 31, 2018
 
895,116

Issued in the ordinary course
 
2,394

Issued as part of the Merger (a)
 
146,131

Balance at September 30, 2019
 
1,043,641

(a) Includes approximately 2 million shares of common stock issued to a benefits trust for former Anadarko employees treated as treasury stock at September 30, 2019.

Occidental has authorized 50 million shares of preferred stock with a par value of $1.00 per share. On August 8, 2019, in connection with the Merger, Occidental issued 100,000 shares of a new series A preferred stock (the Preferred Stock), having a face value of $100,000 per share. Dividends on the Preferred Stock will accrue on the face value at a rate per annum of 8 percent, but will be paid only when, as, and if declared by Occidental’s Board of Directors. At any time, when such dividends have not been paid in full, the unpaid amounts will accrue dividends, compounded quarterly, at a rate per annum of 9 percent. Following the payment in full of any accrued but unpaid dividends, the dividend rate will remain at 9 percent per annum. On October 15, 2019, Occidental paid approximately $149 million in Preferred Stock dividends. At September 30, 2019, Occidental had 100,000 shares of preferred stock issued and outstanding, and none were outstanding at December 31, 2018.

The following table presents the calculation of basic and diluted net income (loss) attributable to common stockholders per share:
 
 
Three months ended September 30
 
Nine months ended September 30
millions except per-share amounts
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
 
$
(912
)
 
$
1,869

 
$
354

 
$
3,425

Less: Net income allocated to participating securities
 

 
8

 
1

 
16

Net income (loss), net of participating securities
 
$
(912
)
 
$
1,861

 
$
353

 
$
3,409

 
 
 
 
 
 
 
 
 
Weighted average number of basic shares
 
845.7

 
761.7

 
781.1

 
764.3

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders per share—basic
 
$
(1.08
)
 
$
2.44

 
$
0.45

 
$
4.46

 
 
 
 
 
 
 
 
 
Net income (loss), net of participating securities
 
$
(912
)
 
$
1,861

 
$
353

 
$
3,409

 
 
 
 
 
 
 
 
 
Weighted average number of basic shares
 
845.7

 
761.7

 
781.1

 
764.3

Dilutive securities
 

 
1.6

 
1.1

 
1.5

Total diluted weighted-average common shares
 
845.7

 
763.3

 
782.2

 
765.8

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders per share—diluted
 
$
(1.08
)
 
$
2.44

 
$
0.45

 
$
4.45



Accumulated other comprehensive loss consisted of the following after-tax amounts:
millions
 
Gains and (losses) on derivatives
 
Pension and postretirement benefit plans
 
Foreign currency translation adjustments
 
Total
Balance at December 31, 2018
 
$
5

 
$
(170
)
 
$
(7
)
 
$
(172
)
Other comprehensive loss, before reclassifications
 
(130
)
 
(30
)
 

 
(160
)
Balance at September 30, 2019
 
$
(125
)
 
$
(200
)
 
$
(7
)
 
$
(332
)


37



Note 15 - Industry Segments

Occidental conducts its operations through four segments: (1) Oil and Gas; (2) Chemical; (3) Marketing and Other Midstream; and (4) WES Midstream. 

Income taxes, interest income, interest expense, environmental remediation expenses, Anadarko merger-related costs and unallocated corporate expenses are included under Corporate and Eliminations. 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. The following tables present Occidental’s industry segments:
millions
 
Oil
and
Gas
 
Chemical
 
Marketing and Other Midstream
 
WES Midstream (a)
 
Corporate and Eliminations
 
Total
Three months ended
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
3,821

 
$
1,071

 
$
780

 
$
383

 
$
(368
)
 
$
5,687

Income (loss) from continuing operations before income taxes
 
$
221

 
$
207

 
$
266

 
$
134

 
$
(1,449
)
(b) 
$
(621
)
Income tax expense
 

 

 

 

 
(116
)
 
(116
)
Income (loss) from continuing operations
 
$
221

 
$
207

 
$
266

 
$
134

 
$
(1,565
)
 
$
(737
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
2,889

 
$
1,185

 
$
1,367

 
$

 
$
(225
)
 
$
5,216

Income (loss) from continuing operations before income taxes
 
$
767

 
$
321

 
$
1,698

 
$

 
$
(207
)
 
$
2,579

Income tax expense
 

 

 

 

 
(710
)
 
(710
)
Income (loss) from continuing operations
 
$
767

 
$
321

 
$
1,698

 
$

 
$
(917
)
 
$
1,869

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
8,890

 
$
3,128

 
$
2,505

 
$
383

 
$
(795
)
 
$
14,111

Income (loss) from continuing operations before income taxes
 
$
1,431

 
$
680

 
$
876

 
$
134

 
$
(1,945
)
(b) 
$
1,176

Income tax expense
 

 

 

 


 
(647
)
 
(647
)
Income (loss) from continuing operations
 
$
1,431

 
$
680

 
$
876

 
$
134

 
$
(2,592
)
 
$
529

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
7,874

 
$
3,515

 
$
2,359

 
$

 
$
(686
)
 
$
13,062

Income (loss) from continuing operations before income taxes
 
$
2,297

 
$
936

 
$
2,127

 
$

 
$
(584
)
 
$
4,776

Income tax expense
 

 

 

 


 
(1,351
)
 
(1,351
)
Income (loss) from continuing operations
 
$
2,297

 
$
936

 
$
2,127

 
$

 
$
(1,935
)
 
$
3,425



(a) The WES Midstream segment results represent the period from August 8, 2019, the Merger date, through September 30, 2019.
(b) The three months ended September 30, 2019 includes merger-related costs of $924 million and amortized debt financing fees of $65 million. The nine months ended September 30, 2019 includes merger-related costs of $974 million and amortized debt financing fees of $122 million.
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

In this report, “Occidental” means Occidental Petroleum Corporation (OPC), or OPC and one or more entities in which it owns a controlling interest (subsidiaries). 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 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,” “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 any forward-looking statements as a result of new information, future events or otherwise.

Although Occidental believes that the expectations reflected in any of our forward-looking statements are reasonable, actual results may differ from anticipated results, sometimes materially. Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: the extent to which Occidental is able to successfully integrate Anadarko Petroleum Corporation (Anadarko), manage expanded operations, including Western Midstream Partners, LP (WES), and realize the anticipated benefits of combining Occidental and Anadarko; Occidental's ability to successfully complete the sale of the remaining assets, liabilities, businesses and operations of the Africa assets to Total S.A. (Total); global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; uncertainties about the estimated quantities of oil and natural gas reserves; lower-than-expected production from development projects or acquisitions; exploration risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver our oil and natural gas and other processing and transportation considerations; general economic slowdowns domestically or internationally; difficult and adverse conditions in the domestic and global capital and credit markets; the impact of potential changes in Occidental's credit ratings; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; political conditions and events; liability under environmental regulations, including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks or insurgent activity; failure of risk management; changes in law or regulations; reorganization or restructuring of Occidental’s operations; changes in tax rates; actions by third parties that are beyond Occidental's control; and the ability to generate cash to fund operations and repay indebtedness.

Additional information concerning these and other factors can be found in Occidental’s filings with the U.S. Securities and Exchange Commission, including Occidental’s Annual Report on Form 10-K for the year ended December 31, 2018 (the 2018 Form 10-K), Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.


38



The Merger
On August 8, 2019, Occidental acquired all of the outstanding shares of Anadarko Petroleum Corporation (Anadarko) through a transaction in which an indirect, wholly owned subsidiary of Occidental merged with and into Anadarko (the Merger). Occidental believes that the Merger will enhance Occidental’s Permian Basin leadership position and bolster its portfolio with additional free cash flow-generating assets; generate significant cost and capital synergies as well as capital spending efficiency; enhance its dividend growth strategy while maintaining balance sheet strength; permit Occidental to apply its proven technology and operational excellence to Anadarko’s asset portfolio; and create a global energy leader with enhanced scale and expertise to lead energy into a lower-carbon future.
In connection with the Merger, Occidental agreed to sell to Total all of Anadarko's assets, liabilities, businesses, and operations for Algeria, Ghana, Mozambique, and South Africa (collectively, the Africa Assets) for $8.8 billion, subject to certain purchase price adjustments. In August 2019, a purchase and sale agreement was executed for these assets. On September 27, 2019, Occidental completed the sale of Anadarko’s Mozambique LNG assets to Total for $4.2 billion. The assets and liabilities for Algeria, Ghana and South Africa, are presented as held for sale at September 30, 2019. The results of operations of the Africa Assets are presented as discontinued operations.
See Note 3 - The Merger, in the Notes to Consolidated Condensed Financial Statements in Part 1 Item 1 of this Form 10-Q, and Risk Factors in Part II Item 1A of this Form 10-Q for more information. Occidental's results of operations include the results of Anadarko from August 8, 2019 to September 30, 2019.
Consolidated Results of Operations 
Occidental reported a loss from continuing operations of $737 million for the third quarter of 2019 on net sales of $5.7 billion, compared to income from continuing operations of $1.9 billion on net sales of $5.2 billion for the third quarter of 2018. Diluted earnings from continuing operations per share was a loss of $1.06 for the third quarter of 2019 compared to earnings of $2.44 for the third quarter of 2018.

Occidental reported income from continuing operations of $529 million for the nine months ended September 30, 2019 on net sales of $14.1 billion, compared to income from continuing operations of $3.4 billion on net sales of $13.1 billion for the nine months ended September 30, 2018. Diluted earnings from continuing operations per share was $0.47 for the nine months ended September 30, 2019, compared to $4.45 for the nine months ended September 30, 2018.

Excluding the impact of Anadarko merger-related costs, asset impairments, asset and equity investment sales gains, the decrease in income from continuing operations for the three and nine months ended September 30, 2019, compared to the same periods in 2018, is primarily related to lower crude oil prices, lower realized caustic soda prices and lower marketing margins, the effects of which were partially offset by higher crude oil production volumes acquired with the Merger and from legacy Occidental operations in the Permian Basin.

Selected Statements of Operations Items
Net sales increased for the three and nine months ended September 30, 2019, compared to the same period in 2018, primarily due to higher domestic crude oil volumes from the assets acquired through the Merger and from legacy Permian Resources operations. Increases in net sales were partially offset by lower crude oil prices and lower realized caustic soda prices in the Chemical segment.

Oil and gas operating expense and transportation expense increased for the three and nine months ended September 30, 2019, compared to the same periods in 2018, primarily due to higher production costs for surface operations and maintenance due to increased production as a result of the Merger. Purchased commodities increased for the three and nine months ended September 30, 2019, compared to the same periods in 2018, due to higher third-party crude purchases related to the Marketing and Other Midstream segment. DD&A (depreciation, depletion and amortization) expense increased for the three and nine months ended September 30, 2019, compared to the same periods in 2018, was primarily due to depreciation associated with assets acquired through the Merger.

Interest and debt expense, net, increased for the three and nine months ended September 30, 2019, compared to the same periods in 2018, due to the increase in debt issued to partially fund the Merger, as well as the debt assumed through the Merger.

The decrease in the provision for income taxes for the three and nine months ended September 30, 2019 compared to the same periods in 2018 reflects lower pre-tax income, which is offset by an increase in tax as a result of transaction-related costs for which Occidental received no tax benefit.


39



Segment Operations
Occidental conducts its operations through four segments: (1) Oil and Gas; (2) Chemical; (3) Marketing and Other Midstream; and (4) WES Midstream. The Oil and Gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The Chemical segment mainly manufactures and markets basic chemicals and vinyls. The Marketing and Other Midstream segment purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, CO2 and power. Additionally, the Marketing and Other Midstream segment invests in entities that conduct similar activities. The WES Midstream segment owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties.

The following table sets forth the sales and earnings of each operating segment and corporate items for the three and nine months ended September 30, 2019, and 2018:
 
 
Three months ended September 30
 
Nine months ended September 30
millions
 
2019
 
2018
 
2019
 
2018
Net sales (a)
 
 
 
 
 
 
 
 
Oil and Gas
 
$
3,821

 
$
2,889

 
$
8,890

 
$
7,874

Chemical
 
1,071

 
1,185

 
3,128

 
3,515

Marketing and Other Midstream
 
780

 
1,367

 
2,505

 
2,359

WES Midstream (b)
 
383

 

 
383

 

Eliminations
 
(368
)
 
(225
)
 
(795
)
 
(686
)
 
 
$
5,687

 
$
5,216

 
$
14,111

 
$
13,062

Income from continuing operations
 
 
 
 
 
 
 
 
Oil and Gas
 
$
221

 
$
767

 
$
1,431

 
$
2,297

Chemical
 
207

 
321

 
680

 
936

Marketing and Other Midstream
 
266

 
1,698

 
876

 
2,127

WES Midstream (b)
 
134

 

 
134

 

 
 
$
828


$
2,786

 
$
3,121

 
$
5,360

Unallocated corporate items
 
 
 
 
 
 
 
 
Interest expense, net
 
(360
)
 
(92
)
 
(586
)
 
(275
)
Income tax expense
 
(116
)
 
(710
)
 
(647
)
 
(1,351
)
Other items, net (c)
 
(1,089
)
 
(115
)
 
(1,359
)
 
(309
)
Income (loss) from continuing operations
 
$
(737
)
 
$
1,869

 
$
529

 
$
3,425

(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) The WES Midstream segment results represent the period from August 8, 2019, the Merger date, through September 30, 2019.
(c) The three months ended September 30, 2019 includes merger-related costs of $924 million and amortized debt financing fees of $65 million. The nine months ended September 30, 2019 includes merger-related costs of $974 million and amortized debt financing fees of $122 million.



40



Items Affecting Comparability
The following table sets forth items affecting the comparability of Occidental's earnings that either arose in connection with the Merger or vary widely and unpredictably in nature, timing, and amount for the three and nine months ended September 30, 2019, and 2018:
 
 
Three months ended September 30
 
Nine months ended September 30
millions
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas
 
 
 
 
 
 
 
 
Asset impairments - domestic
 
$
(285
)

$


$
(285
)

$

Asset impairments - international
 
(40
)

(196
)

(40
)

(196
)
Oil collars gains
 
75




75



Total oil and gas
 
$
(250
)

$
(196
)

$
(250
)

$
(196
)
 
 











Marketing and Other Midstream
 











Asset and equity investment sales gains
 
$
111


$
902


$
111


$
902

 
 











Corporate
 











Anadarko merger-related costs
 
$
(924
)

$


$
(974
)

$

Bridge loan financing fees
 
(65
)



(122
)


Merger-related pension and other termination benefits
 
20




20



Gains (losses) on interest rate swaps and warrants, net
 
(33
)



(33
)


Total Corporate
 
$
(1,002
)

$


$
(1,109
)

$

 
 











Tax effect of items affecting comparability
 
151


(197
)

164


(197
)
Income from continuing operations
 
(990
)
 
509

 
(1,084
)
 
509

Discontinued operations
 
(15
)
 

 
(15
)
 

Total
 
$
(1,005
)

$
509


$
(1,099
)

$
509


Worldwide Effective Tax Rate
The following table sets forth the calculation of the worldwide effective tax rate:
 
 
Three months ended September 30
 
Nine months ended September 30
millions, except percentages
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes
 
$
(621
)
 
$
2,579

 
$
1,176

 
$
4,776

Income tax (expense) benefit
 
 
 
 
 
 
 
 
Federal and state
 
181

 
(362
)
 
69

 
(533
)
Foreign
 
(297
)
 
(348
)
 
(716
)
 
(818
)
Total income tax expense
 
(116
)

(710
)
 
(647
)
 
(1,351
)
Income (loss) from continuing operations
 
$
(737
)
 
$
1,869

 
$
529

 
$
3,425

Worldwide effective tax rate
 
(19
)%
 
28
%
 
55
%
 
28
%

The decrease in the provision for income taxes for the three and nine months ended September 30, 2019 compared to the same periods in 2018, reflects lower pre-tax income, which is offset by an increase in tax as a result of merger-related costs for which Occidental received no tax benefit.



41



Oil and Gas Segment
Oil and Gas segment earnings were $221 million and $1.4 billion for the three and nine months ended September 30, 2019, compared with segment earnings of $767 million and $2.3 billion for the same periods of 2018. The decrease in earnings primarily reflected lower realized crude oil, NGL and natural gas prices, partially offset by higher crude oil, NGL and natural gas sales volumes mostly due to added production from the Merger and increased production in the legacy Occidental Permian Resources business unit.

The following table sets forth the total sales volumes per day for oil, NGL, and natural gas:
 
 
Three months ended September 30
 
Nine months ended September 30
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Sales Volumes per Day
 
 
 
 
 
 
 
 
Oil (MBBL)
 
 
 
 
 
 
 
 
United States
 
486

 
256

 
351

 
241

Middle East
 
120

 
154

 
133

 
138

Latin America
 
35

 
31

 
33

 
31

NGL (MBBL)
 
 
 
 
 
 
 
 
United States
 
168

 
73

 
112

 
65

Middle East
 
33

 
34

 
33

 
30

Natural Gas (MMCF)
 
 
 
 
 
 
 
 
United States
 
1,085

 
332

 
633

 
315

Middle East
 
550

 
552

 
540

 
504

Latin America
 
8

 
6

 
7

 
6

Total Continuing Operations Volumes (MBOE) (a)
 
1,116

 
696

 
859

 
643

Discontinued Operations - Africa
 
41

 

 
14

 

Total Sales Volumes (MBOE) (a)
 
1,157

 
696

 
873

 
643

(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 equivalence.

Average daily sales volumes from continuing operations were 1,116 MBOE for the third quarter of 2019, compared to 696 MBOE for the third quarter of 2018. The increase in average daily sales volumes from continuing operations of 420 MBOE is primarily due to 377 MBOE in acquired production from the Merger including 163 MBOE in DJ Basin, 90 MBOE in the Gulf of Mexico, and 90 MBOE in the Delaware Basin as well as an increase of 75 MBOE, or 33 percent, in the legacy Occidental Permian Resources business unit as a result of increased drilling and well productivity.

Average daily sales volumes from continuing operations for the first nine months of 2019 were 859 MBOE compared to 643 MBOE for the same period in 2018. The increase in average daily sales volumes from continuing operations of 216 MBOE is primarily due to 127 MBOE in acquired production from the Merger including 55 MBOE in DJ Basin, 30 MBOE in the Gulf of Mexico and 30 MBOE in the Delaware Basin as well as an increase of 83 MBOE, or 41 percent, in the legacy Occidental Permian Resources business unit from increased drilling and well productivity, and Al Hosn, which increased by 11 MBOE, or 16 percent, due to the expansion of capacity and improved plant performance.



42



The following table presents information about Occidental's average realized prices and index prices:
 
 
Three months ended September 30
 
Nine months ended September 30
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Average Realized Prices
 
 
 
 
 
 
 
 
Oil ($/BBL)
 
 
 
 
 
 
 
 
United States
 
$
54.90

 
$
56.36

 
$
53.27

 
$
59.38

Middle East
 
$
62.17

 
$
71.71

 
$
62.86

 
$
66.80

Latin America
 
$
54.98

 
$
69.94

 
$
58.00

 
$
64.90

Total Worldwide
 
$
56.26

 
$
62.67

 
$
56.02

 
$
62.29

NGL ($/BBL)
 
 
 
 
 
 
 
 
United States
 
$
13.91

 
$
31.82

 
$
15.20

 
$
29.38

Middle East
 
$
20.22

 
$
24.66

 
$
21.33

 
$
23.50

Total Worldwide
 
$
14.96

 
$
29.55

 
$
16.62

 
$
27.54

Natural Gas ($/MCF)
 
 
 
 
 
 
 
 
United States
 
$
1.25

 
$
1.58

 
$
1.05

 
$
1.70

Latin America
 
$
7.05

 
$
6.74

 
$
7.14

 
$
6.16

Total Worldwide
 
$
1.38

 
$
1.62

 
$
1.33

 
$
1.67

 
 
 
 
 
 
 
 
 
Average Index Prices
 
 
 
 
 
 
 
 
WTI oil ($/BBL)
 
$
56.45

 
$
69.50

 
$
57.06

 
$
66.75

Brent oil ($/BBL)
 
$
62.01

 
$
75.97

 
$
64.74

 
$
72.68

NYMEX gas ($/MCF)
 
$
2.27

 
$
2.88

 
$
2.72

 
$
2.83

 
 
 
 
 
 
 
 
 
Average Realized Prices as Percentage of Average Index Prices
 
 
 
 
 
 
 
 
Worldwide oil as a percentage of average WTI
 
100
%
 
90
%
 
98
%
 
93
%
Worldwide oil as a percentage of average Brent
 
91
%
 
82
%
 
87
%
 
86
%
Worldwide NGL as a percentage of average WTI
 
27
%
 
43
%
 
29
%
 
41
%
Domestic natural gas as a percentage of average NYMEX
 
55
%
 
55
%
 
39
%
 
60
%


Chemical Segment
Chemical segment earnings for the three months ended September 30, 2019, and 2018 were $207 million and $321 million, respectively. Compared to the third quarter of 2018, the third quarter of 2019 reflected a decline in realized caustic soda prices along with weaker vinyl margins, slightly offset by stronger export caustic soda demand. Chemical segment earnings for the nine months ended September 30, 2019, and 2018, were $680 million and $936 million, respectively. Compared to the same period in 2018, the nine months ended September 30, 2019, reflected lower realized caustic soda prices partially offset by favorable feedstock costs. The nine months earnings also reflected fees received under a pipeline easement agreement that was executed during the first quarter of 2019.

Marketing and Other Midstream Segment
Marketing and Other Midstream segment earnings were $266 million for the three months ended September 30, 2019, compared with earnings of $1.7 billion for the same period of 2018. Marketing and Other Midstream earnings were $876 million for the nine months ended September 30, 2019, compared with earnings of $2.1 billion for the same period of 2018. Earnings for the three and nine months ended September 30, 2018 included a $902 million gain from the sale of non-core domestic midstream assets. Excluding this gain on sale, the decrease in earnings was attributable to lower marketing margins due to decreased crude oil price spreads, lower NGL prices impacting gas processing and lower pipeline income due to the sale of non-core domestic midstream assets in the third quarter of 2018.


43



WES Midstream Segment
WES Midstream segment earnings from the Merger date to September 30, 2019 was $134 million and income attributable to noncontrolling interests was $42 million.

Liquidity and Capital Resources
At September 30, 2019, Occidental had $4.8 billion in cash and cash equivalents and $0.5 billion in restricted cash and restricted cash equivalents, which was primarily associated with a benefits trust for former Anadarko employees that was funded as part of the Merger. Restricted cash within the benefits trust will be made available to Occidental as payments are made to former Anadarko employees. In the third quarter of 2019, Occidental initiated a voluntary severance program to align the size and composition of its workforce with its expected future operating and capital plans. Additional expenses associated with the program are expected to be incurred throughout the remainder of 2019 and through most of 2020. With a continued focus on capital and operational efficiencies, Occidental expects to fund its liquidity needs, including future dividend payments, through cash on hand, cash generated from operations, monetization of non-core assets or investments and, if necessary, proceeds from other forms of capital issuance.

Operating cash flow from continuing operations was $5.4 billion for the first nine months of 2019, compared to $5.2 billion for the same period of 2018. The increase in operating cash flow from continuing operations mainly reflected higher production, which was partially offset by lower oil prices and Merger-related costs.

Occidental’s net cash used by investing activities from continuing operations was $27.6 billion for the first nine months of 2019, compared to $1.7 billion for the same period of 2018. Capital expenditures for the first nine months of 2019 were $4.2 billion, of which $3.8 billion was for the Oil and Gas segment, compared to $3.6 billion for the first nine months of 2018, of which $3.2 billion was for the Oil and Gas segment. The primary use of cash for investing activities was the cash portion of the Merger consideration, net of the cash acquired in the Merger. Proceeds from the sale of assets and equity investments, net included the sale of Anadarko's Mozambique LNG assets, as well as proceeds from the sale of Occidental's Plains All American Pipeline equity investment.

Occidental’s net cash provided by financing activities from continuing operations was $24.7 billion for the first nine months of 2019, compared to $2.2 billion cash used for the same period of 2018. Cash provided by financing activities for the first nine months of 2019 mainly reflected the issuance of long-term debt and preferred shares to consummate the Merger. These proceeds were partially offset by the partial repayment of the term loans and the payment of dividends. The nine months ended September 30, 2019, and 2018, each included dividend payments of $1.8 billion.

As of September 30, 2019, Occidental was in compliance with all covenants of its financing agreements and had capacity for the payment of cash dividends and other distributions on, or acquisitions of, Occidental stock.

Environmental Liabilities and Expenditures
Occidental’s operations are subject to stringent federal, state, local and foreign 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, state, 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 of hazardous substances; or operation and maintenance of remedial systems. These 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.

Refer to Note 12 - Environmental Liabilities and Expenditures, in the Notes to the Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q and to the Environmental Liabilities and Expenditures section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2018 Form 10-K for additional information regarding Occidental’s environmental expenditures.


44



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. Reserve balances for other matters as of September 30, 2019, and December 31, 2018, were not material to Occidental's Consolidated Condensed Balance Sheets. See Note 11 - Lawsuits, Claims, Commitments and Contingencies, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q for further information.

Recently Adopted Accounting and Disclosure Changes
See Note 2 - Accounting and Disclosure Changes, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Occidental's primary market risks are attributable to fluctuations in commodity prices and interest rates. These risks can affect revenues and cash flows, and Occidental's risk-management policies provide for the use of derivative instruments to manage these risks. The types of commodity derivative instruments used by Occidental include futures, swaps, options and fixed-price physical-delivery contracts. The volume of commodity derivatives entered into by Occidental is governed by risk-management policies and may vary from year to year. Both exchange and over-the-counter traded derivative instruments may be subject to margin-deposit requirements, and Occidental may be required from time to time to deposit cash or provide letters of credit with exchange brokers or counterparties to satisfy these margin requirements. For additional information relating to Occidental's derivative and financial instruments, see Note 7—Derivative Instruments in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q.

Commodity Price Risk
Occidental's most significant market risk relates to prices for oil, natural gas, and NGL. Management expects energy prices to remain unpredictable and potentially volatile. As energy prices decline or rise significantly, revenues and cash flows are likewise affected. In addition, a non-cash write-down of Occidental's oil and gas properties or goodwill may be required if commodity prices experience a significant decline.

Derivative Instruments Held for Non-Trading Purposes 
As of September 30, 2019, Occidental had derivative instruments in place to reduce the price risk associated with future crude oil production of 300 thousand barrels per day. As of September 30, 2019, these derivative instruments were at a $95 million net derivative asset position.

The following table shows a sensitivity analysis based on both a five-percent and ten-percent change in commodity prices and their effect on the net derivative asset position of $95 million at September 30, 2019:
millions (except for percentages)
 
 
 
 
Percent change in commodity prices
 
Resulting Net Fair Value position-asset (liability)
 
Change to Fair Value from September 30, 2019 position
+ 5%
 
$(91)
 
$(186)
- 5%
 
$261
 
$166
+ 10%
 
$(300)
 
$(395)
-10%
 
$410
 
$315


45



Interest Rate Risk
Occidental acquired interest rate swap contracts in the Merger. Occidental pays a fixed interest rate and receives a floating interest rate indexed to three-month London Inter-Bank Offered Rate (LIBOR). The swaps have an initial term of 30 years with mandatory termination dates in September 2020 through 2023 and a total notional amount of $1.6 billion as of September 30, 2019. In October 2019, $125 million of notional interest rate swaps were terminated. As of September 30, 2019, Occidental had a net liability of $1.4 billion based on the fair value of the swaps of negative $1.7 billion netted against $359 million in posted cash collateral. A 25-basis point decrease in implied LIBOR rates over the term of the swaps would result in an additional liability of approximately $130 million on these swaps.

As of September 30, 2019, Occidental had $6.5 billion of variable-rate debt outstanding, excluding WES. A 25-basis point increase in LIBOR interest rates would increase gross interest expense approximately $16 million per year.

As of September 30, 2019, Occidental had $32.6 billion of fixed-rate debt outstanding, excluding WES. A 25-basis point change in Treasury rates would change the fair value of the fixed-rate debt approximately $680 million.
Item 4. Controls and Procedures

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 September 30, 2019.

Except as described below, 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 Securities Exchange Act of 1934) during the three months ended September 30, 2019, that has materially affected, or is reasonably likely to materially affect, Occidental's internal control over financial reporting.

In the third quarter of 2019, Occidental started the process of integrating Anadarko into its operations and internal control processes, resulting in some of Anadarko’s historical internal controls being superseded by Occidental’s internal controls. Management will continue to integrate Anadarko's historical internal controls over financial reporting with Occidental's internal controls over financial reporting. This integration may lead to changes in Occidental's or Anadarko’s historical internal controls over financial reporting in future fiscal periods. Occidental is also in the process of implementing a new Enterprise Resource Planning (ERP) system. Occidental intends to integrate Anadarko’s internal control processes into Occidental’s internal control processes in conjunction with implementation of the ERP system. Management expects the integration process to be completed during 2021.



46



PART II    OTHER INFORMATION
 
Item 1.Legal Proceedings

On July 17, 2019, an Occidental subsidiary received a draft consent agreement and final order from the U.S. Environmental Protection Agency (EPA) regarding alleged violations under the Clean Air Act (CAA) and various sections of the EPA’s Chemical Accident Prevention Provisions at the Convent, Louisiana facility. EPA’s order includes allegations associated with process reviews, procedures and recordkeeping. EPA’s draft settlement proposal includes a civil penalty of $185,545. Occidental is currently negotiating a resolution of this matter with EPA.

On September 13, 2019, an Occidental subsidiary received a draft consent agreement and final order from EPA regarding alleged violations under the CAA and various sections of the EPA’s Chemical Accident Prevention Provisions at the Geismar, Louisiana facility. EPA’s order includes allegations associated with operating procedures, inspections, contractor reviews, medical protocols in the emergency response plan, administrative updates and four historical on-site incidents. EPA’s draft settlement proposal includes a civil penalty of $931,990. Occidental is currently negotiating a resolution of this matter with EPA.

For information regarding legal proceedings, see Note - 11, Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Condensed Financial Statements, in Part I Item 1 of this Form 10-Q.


Item 1A. Risk Factors

Other than as set forth below, there have been no material changes to the disclosure presented in the 2018 Form 10-K under Part I Item 1A.

The diversion of resources and management’s attention to the integration of Anadarko could adversely affect day-to-day business.

The integration of Anadarko places a significant burden on Occidental’s management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect financial results.

Occidental may not be able to integrate Anadarko successfully, and many of the anticipated benefits of combining Anadarko and Occidental may not be realized.

Occidental acquired Anadarko with the expectation that the Merger will result in various benefits, including, among other things, operating efficiencies. Achieving those anticipated benefits is subject to a number of uncertainties, including whether Occidental can integrate the business of Anadarko in an efficient and effective manner, and Occidental cannot assure you that those benefits will be realized as quickly as expected or at all. If Occidental does not achieve those benefits, costs could increase, expected net income could decrease, and future business, financial condition, operating results, and prospects could suffer.

The integration process could take longer than anticipated and involve unanticipated costs. Disruptions of each company’s ongoing businesses, processes, and systems or inconsistencies in standards, controls, procedures, practices, policies, and compensation arrangements could adversely affect the combined company. Occidental may also have difficulty addressing differences in corporate cultures and management philosophies, and in harmonizing other systems and business practices. Although Occidental expects that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will over time offset the substantial incremental transaction and Merger-related costs, Occidental may not achieve this net benefit in the near term, or at all.


47



Future results will be negatively impacted if Occidental does not effectively manage its expanded operations.

With completion of the Merger, the size of Occidental’s business has increased significantly. Occidental’s continued success depends, in part, upon its ability to manage this expanded business, which poses substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. Occidental cannot assure you that it will be successful or that it will realize the expected operating efficiencies, cost savings, and other benefits from the combination currently anticipated.

Occidental has incurred a substantial amount of indebtedness and other payment obligations in connection with the financing of the Merger and may be unable to service and repay such indebtedness.

Occidental funded the cash portion of the Merger consideration by incurring $21.8 billion of third-party indebtedness and issuing shares of series A preferred stock and a warrant to acquire common stock pursuant to the Berkshire Hathaway Inc. investment. In addition, Occidental assumed approximately $11.9 billion aggregate principal amount of Anadarko’s outstanding long-term debt, excluding finance lease liabilities, as well as approximately $7.3 billion aggregate principal amount of WES Midstream’s outstanding short- and long-term debt in the Merger. Occidental cannot guarantee that it will be able to generate sufficient cash flow to service and repay this indebtedness or to pay the dividends required to be paid on the series A preferred stock, or that it will be able to refinance such indebtedness on favorable terms, or at all. The failure to so repay or refinance such indebtedness, or to pay dividends on such series A preferred stock, could have a material adverse effect on Occidental’s business, financial condition, results of operations, cash flows and/or share price. If Occidental is unable to service such indebtedness and fund its operations, Occidental may be forced to reduce or delay capital expenditures, seek additional capital, sell assets or refinance Occidental’s indebtedness. Any such action may not be successful and Occidental may be unable to service such indebtedness and its operations, which could have a material adverse effect on Occidental’s business, financial condition, results of operations, cash flows and/or share price.

Occidental may not be able to complete the sale to Total S.A. of the assets, liabilities, businesses and operations of Anadarko in Algeria, Ghana and South Africa or complete its planned divestitures of certain assets on favorable terms or at all.

The Total transaction is conditioned on the receipt of required regulatory approvals as well as other customary closing conditions. Occidental may not be able to complete the Total transaction or obtain the proceeds that could be realized from it, and those cash proceeds may not be adequate to meet any debt service obligations then due. In addition, although Occidental intends to complete $10 billion to $15 billion of divestitures of certain assets within 24 months after completion of the Merger (including the Total transaction), Occidental may not be able to complete its planned divestitures on favorable terms or at all. Any difficulties with respect to the completion of the Total transaction or other planned divestitures could have a material adverse effect on Occidental’s business, financial condition, results of operations, cash flows and/or stock price. See Note 4 - Acquisitions, Dispositions, and Other, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q for more information about the Total transaction.


48



Occidental’s operations and financial results could be significantly negatively impacted by its offshore operations.

Occidental is vulnerable to risks associated with our offshore operations that could negatively impact our operations and financial results. Occidental conducts offshore operations in the Gulf of Mexico, Ghana and other countries. Occidental's operations and financial results could be significantly impacted by conditions in some of these areas and are also vulnerable to certain unique risks associated with operating offshore, including those relating to the following:

• hurricanes and other adverse weather conditions
• geological complexities and water depths associated with such operations
• limited number of partners available to participate in projects
• oilfield service costs and availability
• compliance with environmental, safety, and other laws and regulations
• terrorist attacks or piracy
• remediation and other costs and regulatory changes resulting from oil spills or releases of hazardous materials
• failure of equipment or facilities
• response capabilities for personnel, equipment, or environmental incidents

In addition, Occidental conducts some of its exploration in deep waters (greater than 1,000 feet) where operations, support services, and decommissioning activities are more difficult and costly than in shallower waters. The deep waters in the Gulf of Mexico, as well as international deepwater locations, lack the physical and oilfield service infrastructure present in shallower waters. As a result, deepwater operations may require significant time between a discovery and the time that Occidental can market its production, thereby increasing the risk involved with these operations.

49



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

On August 8, 2019, in connection with the Merger, Occidental issued to Berkshire Hathaway Inc. and certain of its subsidiaries 100,000 shares of series A preferred stock (the Preferred Stock) with a warrant to purchase 80 million shares of Occidental common stock at an exercise price of $62.50 (the Warrant) for $10 billion. The Preferred Stock and the Warrant have not been registered under the Securities Act of 1933, as amended, and were issued and sold in a private placement pursuant to Section 4(a)(2) thereof. See Note 3 - The MergerNote 7 - Derivative Instruments, and Note 14 - Stockholders’ Equity, in the Notes to Consolidated Condensed Financial Statements in Part I Item 1 of this Form 10-Q for more information.

Share Repurchase Activities
Occidental's share repurchase activities for the nine months ended September 30, 2019, 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 Number of Shares that May Yet be Purchased Under the Plans or Programs (b)
 
 
 
 
 
 
 
 
 
First Quarter 2019
 
2,690,000

 
$
66.94

 
2,690,000

 
 
Second Quarter 2019
 

 
$

 

 
 
Third Quarter 2019
 

 
$

 

 
 
Total
 
2,690,000

 
$
66.94

 
2,690,000

 
44,206,787

(a)
There were no purchases from the trustee of Occidental's defined contribution savings plan in the third quarter.
(b)
Represents the total number of shares remaining at September 30, 2019, under Occidental's share repurchase program of 185 million shares. The program was initially announced in 2005. The program does not obligate Occidental to acquire any specific number of shares and may be discontinued at any time.

Item 6.    Exhibits
2.1
 
 
3.1
 
 
4.1
 
 
4.2
 
 
4.3
 
 
4.4
 
 
4.5
 
 
4.6
 
 

50



4.7
 
 
4.8
 
 
4.9
 
 
4.10
 
 
4.11
 
 
4.12
 
 
4.13
 
 
4.14
 
 
4.15
 
 
4.16
 
 
4.17
 
 
4.18
 
 
4.19
 
 

51



4.20
 
 
4.21
 
 
4.22
 
 
4.23
 
 
4.24
 
 
4.25
 
 
4.26
 
 
4.27
 
 
4.28
 
 
4.29
 
 
4.30
 
 
4.31
 
 
4.32
 
 
4.33
 
 
4.34
 
 
4.35
 
 

52



4.36
 
 
4.37
 
 
4.38
 
 
4.39
 
 
4.40
 
 
4.41
 
 
4.42
 
 
10.1
 
 
10.2
 
 
10.3#
 
 
10.4#*
 
 
10.5#*
 
 
10.6#
 
 
10.7#*
 
 
10.8#*
 
 
10.9#*
 
 
31.1*
 
 
31.2*
 
 
32.1**
 
 
101.INS*
Inline XBRL Instance Document.
 
 
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
 
 
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
 
 

53



101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.
 
 
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
 
 
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

# Indicates a management contract or compensatory plan or arrangement.
* Filed herewith.
** Furnished herewith.
^ Exhibits and schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. Occidental Petroleum Corporation agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.


54



SIGNATURES


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.


 
OCCIDENTAL PETROLEUM CORPORATION
 


November 4, 2019
/s/ Christopher O. Champion
 
 
Christopher O. Champion
 
 
Vice President, Chief Accounting Officer and
 
 
Controller
 

55


ANADARKO RETIREMENT RESTORATION PLAN
(As Amended and Restated Effective as of August 8, 2019)







TABLE OF CONTENTS
Page
ARTICLE I PURPOSES OF THE PLAN    1
ARTICLE II DEFINITIONS    1
2.01    Definitions    1
ARTICLE III ADMINISTRATION    4
3.01    Administration by Committee    4
3.02    Administration of Plan    4
3.03    Action by Committee    4
3.04    Delegation    4
3.05    Reliance Upon Information    4
3.06    Indemnity of Plan Administration Employee    5
ARTICLE IV ELIGIBILITY    5
ARTICLE V AMOUNT OF BENEFIT    6
5.01    General Benefits    6
5.02    Supplemental Benefits    6
5.03    Other Supplemental Benefits    7
ARTICLE VI PAYMENT OF BENEFIT    7
6.01    Lump Sum Benefit    7
6.02    Payment Under Retirement Plan Before 2009    7
6.03    Specified Employees    8
ARTICLE VII PARTICIPANT’S RIGHTS AND NATURE OF PLAN    8
ARTICLE VIII AMENDMENT AND DISCONTINUANCE    8
ARTICLE IX CLAIMS PROCEDURE    10
9.01    Filing a Claim    10
9.02    Denial of Claim    10
9.03    Reasons for Denial    10
9.04    Review of Denial    10
9.05    Decision Upon Review    11
9.06    Other Procedures    11
9.07    Finality of Determinations; Exhaustion of Remedies    11
9.08    Effect of Committee Action    12
ARTICLE X MISCELLANEOUS    12
10.01    Construction    12
10.02    Powers of the Company    12
10.03    Beneficiary Designations    12
10.04    Limitation of Rights    13
10.05    Distribution due to Qualified Domestic Relations Order    14
10.06    Nonalienation of Benefits    14

        i



10.07    Facility of Payments    14
10.08    Withholding of Taxes    14
10.09    Adoption of Plan by Affiliated Entity    14
10.10    Waiver    14
10.11    Notice    15
10.12    Severability    15
10.13    Gender, Tense and Headings    15
10.14    Governing Law    15



        ii



ANADARKO RETIREMENT RESTORATION PLAN
(As Amended and Restated Effective as of August 8, 2019)
Article I

PURPOSES OF THE PLAN
The purposes of the Plan are (i) to recognize the value to the Company of the past and present services of the Eligible Employees and (ii) to encourage their continued employment service by providing benefits for their future retirement security. The Plan was created because of certain Limitations which are imposed on the Retirement Plan by the Code.
The Plan was originally effective as of January 1, 1995, amended effective as of July 31, 2003, and amended and restated generally effective as of November 7, 2007, and again effective as of January 1, 2017. The Plan as set forth herein constitutes an amendment and restatement of the Plan as in effect immediately prior to the Effective Date in order to modify certain provisions of the Plan related to Plan administration. This amendment and restatement of the Plan shall be effective as of the Effective Date.
With respect to Participants other than Limited 415 Participants, the Plan is intended as an unfunded plan to be maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” within the meaning of such phrase for purposes of Sections 201(2), 301(a)(3) and 401(a)(1) of the Act, and as such it is intended that the Plan be exempt from the participation and vesting, funding, and fiduciary responsibility requirements of Title I of the Act. The Plan is also intended to qualify for simplified reporting under U.S. Department of Labor Regulation Section 2530.104-23, which provides for an alternative method of compliance for plans described in such regulation. With respect to Limited 415 Participants, the portion of the Plan that provides benefits to such Limited 415 Participants solely due to limitations applicable to the Retirement Plan by reason of Code Section 415 is intended to be treated as a separate plan that is an “excess benefit plan” within the meaning of such phrase for purposes of Sections 3(36) and 4(b)(5) of the Act. Moreover, the Plan is intended to comply with the requirements of Code Section 409A for nonqualified deferred compensation plans to the extent applicable. The Plan is not intended to satisfy the tax qualification requirements of Code Section 401(a).
ARTICLE II    

DEFINITIONS
2.01    Definitions. Where the following words and phrases appear in this Plan they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary.
(a)    Act. The Employee Retirement Income Security Act of 1974, as amended and the regulations and other authority issued thereunder by the appropriate governmental authority.

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(b)    Actuarial Equivalent. The equivalence of a benefit, as determined by an actuary appointed by the Committee (“Actuary”), in terms of another benefit utilizing such assumptions as in the aggregate represent the Actuary’s best estimate of equivalent value for the purpose for which the determination is being made.
(c)    Affiliated Entity. An entity which is affiliated by common ownership or control with the Company.
(d)    Beneficiary. Means the beneficiary or beneficiaries designated by the Participant, in accordance with Section 10.03, to receive any amounts distributable under the Plan upon his death.
(e)    Code. The Internal Revenue Code of 1986, as amended and the regulations and other authority related thereto.
(f)    Committee. “Committee” means the committee appointed by the Board to administer the Plan; provided, however, that if the Board has not appointed a committee, then each reference herein to the “Committee” shall instead refer to the Board.
(g)    Company. Anadarko Petroleum Corporation or its successor in interest.
(h)    Directors. The Board of Directors of the Company.
(i)    Effective Date. August 8, 2019, as to this amendment and restatement of the Plan.
(j)    Eligible Employee. An Employee who participates in the Retirement Plan and whose benefits are reduced by Limitations or whose taxable compensation has been reduced as a result of an election by the Employee to defer compensation pursuant to a deferred compensation plan maintained by an Employer.
(k)    Employee. An Employee as defined in the Retirement Plan.
(l)    Employer. The Company or an Affiliated Entity which has been designated by the Company as a participating employer in the Plan and has adopted the Plan.
(m)    Employment. Means that the individual is in employment as an Employee. In this regard, neither the transfer of a Participant from employment by an Employer to employment by an Affiliated Entity nor the transfer of a Participant from employment by an Affiliated Entity to employment by an Employer shall be deemed to be a Separation from Service by the Participant.
(n)    Limitations. The aggregate of the limitations imposed under Code Sections 401(a)(17) and 415 plus any amounts deferred as the result of an election by an Employee to defer compensation pursuant to a deferred compensation plan

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maintained by an Employer. From and after the Effective Date, the term “Limitations” shall also include any amendment to the Retirement Plan that is adopted on or after the Effective Date and that is expressly identified in connection with its adoption as an amendment that is intended to reduce or limit accruals under the Retirement Plan with respect to an Employee who is a “highly compensated employee” (as defined in Code Section 414(q)) due to the application of the Nondiscrimination Rules. Notwithstanding the preceding provisions of this Section 2.01(n), with respect to a Limited 415 Participant, for all purposes of the Plan the term “Limitations” shall mean solely the limitation imposed by Code Section 415 on the amount of benefits which may be earned or paid under the Retirement Plan.
(o)    Limited 415 Participant. Any Employee whose benefit under the Retirement Plan is limited by the limitation imposed by Code Section 415 and who has not otherwise been designated as a Participant in the Plan by the Committee pursuant to the provisions of Article IV hereof.
(p)    Nondiscrimination Rules. The nondiscrimination rules set forth in Code Section 401(a)(4), Code Section 410(b) or other provisions of the Code that are applicable to the Retirement Plan and that are intended to prevent discrimination in favor of “highly compensated employees” (as defined in Code Section 414(q)).
(q)    Participant. Any Eligible Employee who has been designated by the Committee to participate in the Plan or any other individual who has an accrued benefit under the Plan which has not been fully distributed. The term “Participant” shall include a Limited 415 Participant except where expressly provided otherwise in the Plan.
(r)    Plan. The Anadarko Retirement Restoration Plan, as it may be amended from time to time.
(s)    Plan Year. The twelve consecutive month period commencing on January 1 of each year.
(t)    Retirement Plan. The Anadarko Retirement Plan, as amended from time to time.
(u)    Section 16 Officer. An Eligible Employee who is subject to Section 16 of the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(v)    Separation from Service. The Participant’s separation from service with the Employer and all Affiliated Entities, within the meaning of Code Section 409A.
(w)    Specified Employee. Any Participant who is a “Specified Employee” (as defined in Code Section 409A) upon his Separation from Service, as determined by the Company or the Committee.

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ARTICLE III    

ADMINISTRATION
3.01    Administration by Committee. The Committee shall be the plan administrator with respect to the Plan, except that for all matters (including, without limitation, interpretation of the Plan) directly relating to participation, claims or benefits associated with individuals who are then Section 16 Officers, the Committee shall be the Executive Compensation Committee of the Board of Directors of Occidental Petroleum Corporation.
The members of the Committee shall not receive any special compensation for serving in their capacities as members, but shall be reimbursed by the Company for any reasonable expenses incurred in connection therewith. No bond or other security need be required of the Committee or any member thereof.
3.02    Administration of Plan. The Committee shall operate, administer, interpret, construe and construct the Plan, including correcting any defect, supplying any omission or reconciling any inconsistency. The Committee shall have all powers necessary or appropriate to implement and administer the terms and provisions of the Plan, including the power to make findings of fact. The determination of the Committee as to the proper interpretation, construction, or application of any term or provision of the Plan shall be final, binding, and conclusive with respect to all Participants and other interested persons.
3.03    Action by Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting at which a quorum is present shall decide any question brought before the meeting and shall be the act of the Committee. In addition, the Committee may take any other action otherwise proper under the Plan by an affirmative vote, taken without a meeting, of a majority of its members.
3.04    Delegation. The Committee may, in its discretion, delegate one or more of its duties to its designated agents or to an Employee, but it may not delegate its authority to make the determinations specified in Section 3.02.
3.05    Reliance Upon Information. No member of the Committee shall be liable for any decision, action, omission, or mistake in judgment, provided that he acted in good faith in connection with the administration of the Plan. Without limiting the generality of the foregoing, any decision or action taken by the Committee (or member thereof) in reasonable reliance upon any information supplied to it by the Directors, any Employee, the Employer’s legal counsel, the Employer’s independent accountants or the Actuary, shall be deemed to have been taken in good faith.
The Committee (or an individual member thereof) may consult with legal counsel, who may be counsel for the Employer or other counsel, with respect to its obligations or duties hereunder, or with respect to any action, proceeding or question at law, and shall not be liable with respect to any action taken or omitted, in good faith, pursuant to the advice of such counsel.

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3.06    Indemnity of Plan Administration Employee. To the full extent permitted by law, the Company shall defend, indemnify and hold harmless each past, present and future member of the Committee and each other Employee who acts in the capacity of an agent, delegate or representative of the Committee under the Plan (hereafter, all such indemnified persons shall be jointly and severally referred to as “Plan Administration Employee”) against, and each Plan Administration Employee shall be entitled without further act on his part to indemnity from the Company for, any and all losses, claims, damages, judgments, settlements, liabilities, expenses and costs (and all actions in respect thereof and any legal or other costs and expenses in giving testimony or furnishing documents in response to a subpoena or otherwise), including the cost of investigating, preparing or defending any pending, threatened or anticipated action, claim, suit or other proceeding, whether or not in connection with litigation in which the Plan Administration Employee is a party (collectively, the “Losses”), as and when incurred, directly or indirectly, relating to, based upon, arising out of, or resulting from his being or having been a Plan Administration Employee; provided, however, that such indemnity shall not include any Losses incurred by such Plan Administration Employee with respect to any matters as to which he is finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or intentional misconduct in the performance of his duties as a Plan Administration Employee. The foregoing right of indemnification shall be in addition to any liability or obligation that any Employer may otherwise have to the Plan Administration Employee, and shall be in addition to all other rights to which the Plan Administration Employee may be entitled as a matter of law, contract, or otherwise.
The Plan Administration Employee shall have the right to retain counsel of its own choice to represent him, provided that such counsel is acceptable to the Employer (which acceptance shall not be unreasonably withheld). The Company shall pay the fees and expenses of such counsel, and such counsel shall to the full extent consistent with its professional responsibilities cooperate with the Employer and its counsel. The rights of indemnification under this Section 3.06 shall inure to the benefit of the successors and assigns, and the heirs, executors, administrators and personal representatives of each Plan Administration Employee, shall be in addition to any liability or obligation that any Employer may otherwise have to the Plan Administration Employee and shall be in addition to all other rights to which the Plan Administration Employee may be entitled as a matter of law, contract, or otherwise.
ARTICLE IV    

ELIGIBILITY
Each Employee who was a Participant in the Plan immediately prior to the Effective Date shall continue as a Participant in the Plan as of the Effective Date.
From and after the Effective Date, before the start of a Plan Year, or at any other time and from time to time, the Committee, in its sole discretion, shall designate the Participants and the effective date and other terms and conditions of participation; provided, however, an Employee may be a Participant only if the Committee determines that such individual is “a member of a select group of management or highly compensated employees” of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Act. Notwithstanding the foregoing, any Employee whose benefit under the Retirement Plan is limited by the limitation imposed by Code Section 415

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and who is not otherwise designated by the Committee as a Participant pursuant to the preceding sentence shall automatically participate in the Plan as a Limited 415 Participant.
ARTICLE V    

AMOUNT OF BENEFIT
5.01    General Benefits. The benefits payable under this Plan to a Participant (or Beneficiary thereof) shall be paid at the time and in the manner described in Article VI based upon an amount equal to the Actuarial Equivalent of the excess, if any of (a) over (b), where:
(a)     is the benefit that would have been payable to such Participant or Beneficiary under the Retirement Plan if the provisions of the Retirement Plan were administered without regard to the Limitations; and
(b)    is the benefit, if any, that is in fact payable to such Participant or Beneficiary under the Retirement Plan.
Benefits determined under this Section 5.01 shall be computed by the Actuary in accordance with the foregoing and with the objective that such recipient should receive under the Plan and the Retirement Plan that total aggregate amount which would have been payable to that recipient solely under the Retirement Plan but without regard to imposition of the Limitations. The benefits provided under this Plan shall be subject to the same vesting schedule that applies to the Participant under the Retirement Plan, and he shall thus vest hereunder on the same terms as provided in the Retirement Plan but subject to Schedule A.
5.02    Supplemental Benefits. In the case of a Participant (other than a Limited 415 Participant) who would have been entitled to supplemental benefits under the Retirement Plan but for the fact that his compensation for the calendar year ending December 31, 2002 exceeded the $200,000 limit under the terms of the Retirement Plan, such Participant shall be entitled to a supplemental benefit under this Plan as determined in accordance with the formula described in this Section 5.02.
If the Employment of a Participant is terminated and (1) such termination is designated by the Employer, in its sole discretion, as being part of a “reduction in force program,” (2) the Participant’s designated termination date occurs on or after July 31, 2003 and on or before December 31, 2003, and (3) as of the designated termination date, the Participant had attained the age of 45, completed 5 or more years of Vesting Service (as defined in the Retirement Plan) and the sum of the Participant’s age and Vesting Service equals or exceeds 60, such Participant will qualify for an early retirement benefit under the Retirement Plan commencing as of his Normal Retirement Date (as defined in the Retirement Plan) or as of the first day of the first month coinciding with or next following the date he attains the age of 55 or the first date of any subsequent month pursuant to the terms of the Retirement Plan, reduced as described under the Retirement Plan. Such Participant’s Annuity Starting Date (as defined in the Retirement Plan) shall be as described under the Retirement Plan. A Participant who satisfied the conditions in clauses (1), (2), and (3) of the first sentence of this paragraph shall not be eligible for the supplemental benefit under the Retirement Plan if his

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compensation for the calendar year ending December 31, 2002 exceeded the $200,000 limit under the terms of the Retirement Plan, and thus such Participant shall receive the Actuarial Equivalent of such supplemental benefits under this Plan in the manner, and at the time, as prescribed in Article VI.
5.03    Other Supplemental Benefits. Upon Separation from Service, the Company shall pay or cause to be paid to such Participant (or his Beneficiary) other supplemental benefits as determined by the Directors and contained in any other Employer-provided plan or program or in the Participant’s employment contract or other agreement with the Employer; provided that such supplemental benefits for each Participant entitled to such other supplemental benefits are set forth on Schedule A attached and incorporated into this Plan for all purposes (which may be amended or supplemented from time to time), including the amount, type, and terms and conditions of such other supplemental benefits. Other supplemental benefits under this Section 5.03 shall be vested and nonforfeitable to the extent provided in the applicable Employer-paid plan or program, the Participant’s employment contract or other agreement with the Employer, or as set forth on Schedule A to the Plan. Notwithstanding the foregoing, this Section 5.03 shall not be construed to provide duplicate other supplemental benefits under the Plan, or under any such applicable Employer-provided plan or program, or the Participant’s employment contract or other agreement with the Employer, or as set forth on Schedule A to the Plan, to or on behalf of any Participant or Beneficiary.
ARTICLE VI    

PAYMENT OF BENEFIT
6.01    Lump Sum Benefit. Subject to Sections 6.02 and 6.03, the form of the benefits payable under Article V shall be a cash lump sum payment that is made within ninety (90) days after the date of the Participant’s Separation from Service.
6.02    Payment Under Retirement Plan Before 2009. If a Participant (a) incurs a Separation from Service after December 31, 2004 and (b) receives or commences receipt of any pension benefits payment under the Retirement Plan at any time before January 1, 2009, such Participant (or his Beneficiary) shall receive his benefits under this Plan in a cash lump sum payment that is made within ninety (90) days from the date that benefits are paid, or commence to be paid, under the terms of the Retirement Plan. If a Participant (a) incurs a Separation from Service after December 31, 2004 and (b) does not receive or commence receipt of any pension benefits payment under the Retirement Plan at any time before January 1, 2009, such Participant (or his Beneficiary) shall receive his benefits under this Plan in a cash lump sum payment that is made within ninety (90) days after December 31, 2008. If a Participant incurs a Separation from Service before January 1, 2005, such Participant (or his Beneficiary) shall receive his benefits under this Plan in a cash lump sum payment within ninety (90) days from the date that benefits are paid, or commence to be paid, under the terms of the Retirement Plan, regardless of whether or not such benefits are paid, or commence to be paid, under the Retirement Plan before January 1, 2009.

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6.03    Specified Employees. Notwithstanding anything in this Plan to the contrary, if the payment of any benefit under this Article VI would be subject to taxation under Code Section 409A because the timing of such payment is not delayed to the extent required under Code Section 409A for a Specified Employee upon his Separation from Service, then if the Participant is a Specified Employee, any such payment that the Participant would otherwise be entitled to receive during the first six (6) months following his Separation from Service shall be accumulated and paid, within ninety (90) days after the date that is six months following the date of his Separation from Service, or such earlier date upon which such amount can be paid or provided under Code Section 409A without being subject to such additional taxes and interest such as, for example, due to the death of Participant.
ARTICLE VII    

PARTICIPANT’S RIGHTS AND NATURE OF PLAN
Benefits payable under the Plan shall be a general, unsecured obligation of the Company to be paid by the Company from its own general assets, and such payments shall not (a) impose any obligation upon the Retirement Plan; (b) be paid by the Retirement Plan; or (c) have any effect whatsoever upon the Retirement Plan or the payment of benefits under the Retirement Plan. No Participant or his Beneficiary shall have any title to or beneficial ownership in any assets which the Company may earmark to pay benefits hereunder.
No amounts in respect of such benefits are required to be set aside or held in trust, and no recipient of any benefits shall have any right to have the benefit paid out of any particular assets of the Company; provided, however, nothing herein shall be construed to prevent a transfer of funds to a grantor trust (pursuant to applicable Code provisions) for the purpose of paying any benefits under this Plan. Any grantor trust established by the Company for benefits under this Plan shall be subject to the claims of the Company’s general and unsecured creditors in the event that the Company becomes insolvent. The Company intends that any such grantor trust shall constitute an unfunded arrangement and thus not affect, in any way, the status of this Plan as an unfunded plan that is maintained to provide deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Act.
ARTICLE VIII    

AMENDMENT AND DISCONTINUANCE
The Directors may, in their absolute discretion, from time to time, amend, suspend or terminate in whole or in part, and if terminated, reinstate any or all of the provisions of this Plan, except that no amendment, suspension or termination may apply so as to reduce the payment to any Participant (or Beneficiary) of any benefit under this Plan that was earned and accrued prior to the effective date of such amendment, suspension or termination, unless the particular Participant (or Beneficiary) consents to such reduction in writing.
Notwithstanding the immediately preceding paragraph, the Plan may be amended by the Directors at any time if required to ensure that the Plan satisfies the requirements of the Code for

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nonqualified deferred compensation plans including Code Section 409A and (a) with respect to Limited 415 Participants, is characterized as an “excess benefit plan” as described in Sections 3(36) and 4(b)(5) of the Act and (b) with respect to Participants other than Limited 415 Participants, is characterized as a “top-hat plan” of deferred compensation maintained for a select group of management or highly compensated employees as described in Sections 201(2), 301(a)(3), and 401(a)(1) of the Act. No such amendment for this exclusive purpose shall be considered prejudicial to the interest of a Participant or a Beneficiary hereunder.
The Directors may delegate to an officer of the Company or Occidental Petroleum Corporation, the authority to execute an amendment to the Plan that has been approved by the Directors.
Upon termination of the Plan, distribution of benefits shall be made to Participants and Beneficiaries, as applicable, in the manner and at the time described in the Plan, unless one of the following termination events occurs, in which case, all such amounts shall be distributed in a lump sum upon termination, or upon the earliest date allowable under Code Section 409A: (1) the Company’s termination and liquidation of the Plan within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court; (2) the Company’s termination and liquidation of the Plan pursuant to irrevocable action taken by the Company within the thirty (30) days preceding or twelve (12) months following a change in control event (within the meaning of Code Section 409A), provided that all agreements, methods, programs, and other arrangements sponsored by the Company that are aggregated under Code Section 409A are terminated and liquidated with respect to each Participant or Beneficiary who experiences the change in control event; or (3) the Company’s termination and liquidation of the Plan, provided that (a) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company, (b) the Company terminates and liquidates all agreements, methods, programs, and other arrangements sponsored by the Company that would be aggregated under Code Section 409A if the same Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements sponsored by the Company that are terminated and liquidated, (c) no payments in liquidation of the Plan are made within twelve (12) months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would have been payable absent the termination and liquidation, (d) all payments are made within twenty-four (24) months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan and (e) the Company does not adopt a new plan that would be aggregated with any terminated and liquidated plan under Code Section 409A if the same Participant participated in both plans, at any time within three (3) years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan.


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ARTICLE IX    

CLAIMS PROCEDURE
9.01    Filing a Claim. A Participant or his authorized representative may file a claim for benefits under the Plan (hereafter, referred to as a “Claimant”). Any claim must be in writing and submitted to the Committee at such address as may be specified from time to time. Claimants will be notified in writing of approved claims, which will be processed as claimed. A claim is considered approved only if its approval is communicated in writing to the Claimant.
9.02    Denial of Claim. In the case of the denial of a claim respecting benefits paid or payable with respect to a Participant, a written notice will be furnished to the Claimant within 90 days of the date on which the claim is received by the Committee. If special circumstances (such as for a hearing) require a longer period, the Claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time; provided, however, that no extensions will be permitted beyond 90 days after the expiration of the initial 90-day period.
9.03    Reasons for Denial. A denial or partial denial of a claim will be dated and signed by the Committee and will clearly set forth:
(a)    the specific reason or reasons for the denial;
(b)    specific reference to pertinent Plan provisions on which the denial is based;
(c)    a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and
(d)    an explanation of the procedure for review of the denied or partially denied claim set forth below, including the claimant’s right to bring a civil action under Section 502(a) of the Act following an adverse benefit determination on review.
9.04    Review of Denial. Upon denial of a claim, in whole or in part, the Claimant or his duly authorized representative will have the right to submit a written request to the Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Committee within 60 days of the receipt by the Claimant of written notice of the denial of the claim. A Claimant or the Claimant’s authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits and may submit issues and comments in writing. The review will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
If the Claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the Claimant precluded from reasserting it. If the Claimant

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does file a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.
9.05    Decision Upon Review. The Committee will provide a prompt written decision on review to the Claimant. If the claim is denied on review, the decision shall set forth:
(a)    the specific reason or reasons for the adverse determination;
(b)    specific reference to pertinent Plan provisions on which the adverse determination is based;
(c)    a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and
(d)    a statement describing any voluntary appeal procedures offered by the Plan and the Claimant’s right to obtain the information about such procedures, as well as a statement of the Claimant’s right to bring an action under Section 502(a) of the Act.
A decision will be rendered no more than 60 days after the Committee’s receipt of the request for review, except that such period may be extended for an additional 60 days if the Committee determines that special circumstances (such as for a hearing) require such extension. If an extension of time is required, written notice of the extension will be furnished to the Claimant before the end of the initial 60-day period.
To the extent of its responsibility to review the denial of benefit claims, the Committee will have full authority to interpret and apply in its discretion the provisions of the Plan. The decision of the Committee will be final and binding upon any and all Claimants, including, but not limited to, the Participant and any other individual making a claim through him.
9.06    Other Procedures. Notwithstanding the foregoing, the Committee may, in its discretion, adopt different procedures for different claims without being bound by past actions. Any procedures adopted, however, shall be designed to afford a Claimant a full and fair review of his claim and shall comply with applicable regulations under the Act.
9.07    Finality of Determinations; Exhaustion of Remedies. To the extent permitted by law, decisions reached under the claims procedures set forth in this Article IX shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the Claimant has exhausted his remedies under this Section. In any such legal action, the Claimant may only present evidence and theories which the Claimant presented during the claims procedure. Any claims which the Claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a Claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the Claimant presented during the claims procedure. Any suit

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or legal action initiated by a Claimant under the Plan must be brought by the Claimant no later than one year following a final decision on the claim for benefits by the Committee. The one-year limitation on suits for benefits will apply in any forum where a Claimant initiates such suit or legal action.
9.08    Effect of Committee Action. The Plan shall be interpreted by the Committee in accordance with the terms of the Plan and their intended meanings. However, the Committee shall have the discretion to make any findings of fact needed in the administration of the Plan, and shall have the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any fashion they deem to be appropriate in their sole judgment. The validity of any such finding of fact, interpretation, construction or decision shall not be given de novo review if challenged in court, by arbitration or in any other forum, and shall be upheld unless clearly arbitrary or capricious. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Committee in its sole and exclusive judgment, the provision shall be considered ambiguous and shall be interpreted by the Committee in a fashion consistent with its intent, as determined by the Committee in its sole discretion. The Committee may amend the Plan retroactively to cure any such ambiguity. This Section 9.08 may not be invoked by any person to require the Plan to be interpreted in a manner which is inconsistent with its interpretation by the Committee. All actions taken and all determinations made in good faith by the Committee shall be final and binding upon all persons claiming any interest in or under the Plan.
ARTICLE X    

MISCELLANEOUS
10.01    Construction. The Plan is (a) an unfunded plan which is not intended to meet the qualification requirements of Code Section 401(a), and (b) designed to provide benefits to Participants after the Limitations are exceeded. All terms and provisions of the Plan shall be construed and constructed in accordance with such intent.
10.02    Powers of the Company. The existence of outstanding and unpaid benefits under the Plan shall not affect in any way the right or power of the Employer to make or authorize any adjustments, recapitalization, reorganization or other changes in the Employer’s capital structure or in its business, or any merger or consolidation of the Employer, or any issue of bonds, debentures, common or preferred stock, or the dissolution or liquidation of the Employer, or any sale or transfer of all or any part of their assets or business, or any other act or corporate proceeding, whether of a similar character or otherwise.
10.03    Beneficiary Designations. The Beneficiary designation for a Participant shall be the same as his Beneficiary designation under the Retirement Plan. If no valid Beneficiary designation exists at the time of the Participant’s death under the Retirement Plan, then the designation of a Beneficiary will follow the default provisions of the Retirement Plan if the Participant is a participant in the Retirement Plan at the time of his death.

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In the event an Eligible Employee, upon becoming a Participant, is not a participant in the Retirement Plan, he may file with the Committee (or its delegate) a designation of one or more Beneficiaries to whom benefits otherwise payable to the Participant shall be made prior to the complete distribution of his benefits under the Plan. Such a Beneficiary designation shall be on the form prescribed by the Committee and shall be effective when received and accepted by the Committee. A Participant who is not a participant in the Retirement Plan may, from time to time, revoke or change his Beneficiary designation by filing a new designation form with the Committee. The last valid designation received by the Committee shall be controlling; provided, however, that no Beneficiary designation, or change or revocation thereof, shall be effective unless received prior to the Participant’s death, and shall not be effective as of a date prior to its receipt or if the Participant is a participant in the Retirement Plan at the time of his death.
If no valid Beneficiary designation exists at the time of the Participant’s death under the foregoing provisions of this Section 10.03 or if no designated Beneficiary under this Plan survives the Participant, or if such designation conflicts with applicable law, benefits shall be paid to the Participant’s surviving lawful spouse, if any. If there is no surviving spouse, then payment of benefits shall be made to the executor or administrator of the Participant’s estate, or if there is no administration on Participant’s estate, in accordance with the laws of descent and distribution. If the Committee is in doubt as to the right of any person to receive such amount, it may direct that the amount be paid into any court of competent jurisdiction in an interpleader action, and such payment shall be a full and complete discharge of any liability or obligation under the Plan to the full extent of such payment.
10.04    Limitation of Rights. Nothing in this Plan shall be construed to:
(a)    Except with respect to Limited 415 Participants, give any individual who is an Employee any right to be a Participant unless and until such person has been designated as such by the Committee;
(b)    Give any Participant any rights, other than as an unsecured general creditor of the Employer, with respect to any benefits accrued under the Plan until such amounts are actually distributed to him;
(c)    Limit in any way the right of the Employer to terminate a Participant’s Employment with the Employer;
(d)    Give a Participant or any other person any interest in any fund or in any specific asset of the Employer;
(e)    Give a Participant or any other person any interests or rights other than those of an unsecured general creditor of the Employer;
(f)    Be evidence of any agreement or understanding, express or implied, that the Employer will employ a Participant in any particular position, at any particular rate of remuneration, or for any particular time period; or

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(g)    Create a fiduciary relationship between the Participant and the Directors, Employer and/or Committee.
10.05    Distribution due to Qualified Domestic Relations Order. A distribution may be allowed for a “qualified domestic relations order” (“QDRO”) as described in Code Section 414(p). The Committee shall establish procedures to determine whether any domestic relations order submitted to the Committee is a QDRO and to administer distributions under any valid QDROs. If the Committee, in its discretion, determines a domestic relations order to be a QDRO, the Committee shall direct payment hereunder as it deems necessary to comply with such QDRO.
10.06    Nonalienation of Benefits. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same will be void and without effect. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. The previous two sentences shall not preclude (a) the Participant from designating a Beneficiary to receive any benefit payable hereunder upon his death or (b) the executors, administrators, or other legal representatives of the Participant or his estate from assigning any rights hereunder to the person or persons entitled thereto.
10.07    Facility of Payments. If the Committee determines that any person entitled to payment under the Plan is physically or mentally incompetent to receive such payment, the Committee shall direct the payment to the legal guardian or other personal representative of such person for the use and benefit of such person. If the Committee for any reason is unable to determine with reasonable certainty the proper person to pay pursuant to the immediately preceding sentence, the Committee may direct that any amounts due hereunder be paid into a court of competent jurisdiction in an interpleader proceeding for purposes of being directed by such court as to the proper disposition of such amounts. Any such payment shall be a full and complete discharge of any liability or obligation under the Plan.
10.08    Withholding of Taxes. Participant hereby acknowledges and agrees that, as a result of any (a) deferral under this Plan or (b) payment received under this Plan, the Participant is solely responsible for any and all (i) federal, state and local income taxes and (ii) FICA and Medicare taxes ordinarily paid by Participant as an Employee. The Employer is hereby authorized to withhold from any amount payable hereunder any applicable withholding taxes and to take such other action as may be necessary or desirable, in the opinion of the Employer, to satisfy all obligations for the withholding and payment of such taxes.
10.09    Adoption of Plan by Affiliated Entity. Any Affiliated Entity may adopt the Plan with the consent of the Directors or the Committee, effective as of the date specified therein. Any Employer, other than the Company, which has adopted the Plan shall not be responsible for the administration of the Plan.
10.10    Waiver. No term or condition of this Plan shall be deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of this Plan, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate

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only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
10.11    Notice. Any notice required or permitted to be given under this Plan shall be sufficient if in writing and delivered via telecopier, messenger, or courier with appropriate proof of receipt, or sent by U.S. registered or certified or registered mail, return receipt requested, to the appropriate person or entity at the address last furnished by such person or entity. Such notice shall be deemed given as of the date of delivery to the recipient or, if delivery is made by U.S. mail, as of the date shown on the receipt for registration or certification.
10.12    Severability. In the event that any provision of the Plan is declared invalid in a final decree or order issued by a court of competent jurisdiction, such declaration shall not affect the validity of the other provisions of the Plan which shall remain in full force and effect.
10.13    Gender, Tense and Headings. Whenever the context requires, words of the masculine gender used herein shall include the feminine and neuter, and words used in the singular shall include the plural. The words “hereof,” “hereunder,” “herein,” and similar compounds of the word “here” shall refer to the entire Plan and not to any particular term or provision of the Plan. Headings of Articles and Sections, as used herein, are inserted solely for convenience and reference and shall not affect the meaning, interpretation or scope of the Plan.
10.14    Governing Law. The Plan shall be subject to and governed by the laws of the State of Texas (other than its laws relating to choice of laws), except to the extent preempted by the Act, the Code or other controlling federal law.
[Signature page follows.]

IN WITNESS WHEREOF, Anadarko Petroleum Corporation has caused this amended and restated Plan to be adopted and executed by its duly authorized officer effective as of the Effective Date.
ANADARKO PETROLEUM CORPORATION
By:    /s/ Marcia E. Backus    
Name: Marcia E. Backus    
Title:    Senior Vice President    

Anadarko Retirement Restoration Plan
Schedule A
This Schedule A forms a part of the Anadarko Retirement Restoration Plan, as amended from time to time (the “Plan”). The provisions of this Schedule A shall apply only to those Participants who are named herewith.
Supplemental Benefits for Robert A. Walker, Jr.
Plan Supplemental Benefit
If Mr. Walker remains employed by the Company at least until February 20, 2012 (attainment of age 55), then the benefit payable, as described in Section 5.01 of the Plan, shall be determined such that his aggregate benefits under the Retirement Plan and the Plan, and any successors thereto (collectively, the “Pension Plans”), are equal to the aggregate benefits to which he would have been entitled under the Pension Plans, if his years of Credited Service (as such term is defined in the Retirement Plan) with the Company (but not his age) were increased by eight (“Retiree Supplemental Benefit”). The Retiree Supplemental Benefit payable under this paragraph shall be paid at the same time or times as Mr. Walker’s benefit under the Plan.
Retiree Medical and Dental Supplemental Benefit
If Mr. Walker remains employed by the Company at least until February 20, 2012 (attainment of age 55), then Mr. Walker’s benefits under the Company’s retiree medical and dental plans shall be determined as if his years of service with the Company were increased by eight (“Medical Supplemental Benefit”). Upon his Separation from Service, he will be entitled to receive a lump sum payment under the Plan with the present value being computed by discounting to Mr. Walker’s date of termination, the projected Company paid retiree medical and dental premiums from his date of termination through February 20, 2022 (attainment of age 65) (i.e., the value of the Company subsidized portion of retiree medical and dental benefits) using a discount rate that is equivalent to the interest rate used to determine lump sum distributions under the Plan. For purposes of the aforementioned present value calculation, such calculation shall be performed by an accredited and certified actuarial firm, as designated by the Company. The Medical Supplemental Benefit payable under this paragraph shall be paid at the same time or times as Mr. Walker’s benefit under the Plan.
If, at the time of Mr. Walker’s termination of employment, the Company no longer provides subsidized pre-65 retiree medical and dental benefits, then the aforementioned lump sum payment will not be made. If, at the time of Mr. Walker’s termination of employment, Mr. Walker is otherwise eligible for subsidized retiree medical and dental benefits, then the aforementioned lump sum payment will not be made.

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ANADARKO PETROLEUM CORPORATION
SAVINGS RESTORATION PLAN
(As Amended and Restated Effective August 8, 2019)







TABLE OF CONTENTS

Page
ARTICLE I. SCOPE OF PLAN    1
1.01    Background and Purpose    1
1.02    Sources of Payments    2
ARTICLE II. DEFINITIONS    2
2.01    Account    3
2.02    Affiliate    3
2.03    Beneficiary    3
2.04    Board    3
2.05    Code    3
2.06    Code Limits    3
2.07    Committee    4
2.08    Company    4
2.09    Company Matching Contributions    4
2.10    Contribution Rate    4
2.11    ERISA    4
2.12    Effective Date    4
2.13    Eligible Employee    4
2.14    Employee    4
2.15    Employer    4
2.16    Fund    4
2.17    Investment Experience    4
2.18    Key Employee    5
2.19    Limited 415 Participant    5
2.20    Participant    5
2.21    Plan    5
2.22    Plan Year    5
2.23    Post-2004 Savings Restoration Plan Account    5
2.24    PRA Plan    5
2.25    Pre-2005 Savings Restoration Plan Account    5

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2.26    Savings Plan    5
2.27    Section 16 Officer    5
2.28    Separation from Service    5
2.29    Valuation Date    5
ARTICLE III. ELIGIBILITY AND PARTICIPATION    6
ARTICLE IV. AMOUNT OF BENEFITS    6
4.01    Post-2004 Savings Restoration Plan Account    6
4.02    Pre-2005 Savings Restoration Plan Account    7
ARTICLE V. HYPOTHETICAL INVESTMENT OPTIONS    7
5.01    Investment of Account in Investment Funds    7
5.02    No Warranties    9
ARTICLE VI. PAYMENT OF BENEFITS    9
6.01    Payment of Participant’s Account    9
6.02    Six-Month Delay    9
6.03    Vesting    9
ARTICLE VII. ADMINISTRATION    9
7.01    Administration by Committee    9
7.02    Administration of Plan    10
7.03    Action by Committee    10
7.04    Delegation    10
7.05    Reliance Upon Information    10
7.06    Rules of Conduct    10
7.07    Legal, Accounting, Clerical and Other Services    10
7.08    Indemnification    11
7.09    Claims Review Procedures    11
7.10    Finality of Determinations; Exhaustion of Remedies    13
7.11    Effect of Committee Action    13
7.12    Effect of Mistake    14
ARTICLE VIII. GENERAL PROVISIONS    14
8.01    Plan Amendment, Suspension and/or Termination    14
8.02    Plan Not an Employment Contract    15
8.03    Non-alienation of Benefits    15
8.04    Special Payment Situations    15

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8.05    Spin-offs    16
8.06    Duty to Provide Data    16
8.07    Tax Consequences Not Guaranteed    17
8.08    Tax Withholding    17
8.09    Incompetency    17
8.10    Severability    17
8.11    Governing Law    17
8.12    Headings    18

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ANADARKO PETROLEUM CORPORATION
SAVINGS RESTORATION PLAN
Article I.
SCOPE OF PLAN
1.01    Background and Purpose. This “Anadarko Petroleum Corporation Savings Restoration Plan” (the “Plan”) was originally established by Anadarko Petroleum Corporation (the “Company”) effective as of January 1, 1995. The Company amended the Plan effective as of January 29, 1998, to add a change of control provision, and as of January 1, 2005, to reflect certain design changes thereto.
Effective as of August 10, 2006, the Company acquired Kerr-McGee Corporation (“KMG”). KMG had previously sponsored the Kerr-McGee Corporation Benefits Restoration Plan (the “KMG Plan”). The KMG Plan provided benefits that were not payable to eligible employees under its qualified defined contribution plan and its qualified defined benefit pension plan due to benefit limitations under the Internal Revenue Code of 1986, as amended (the “Code”). Effective as of January 1, 2007, the Company, acting pursuant to authority granted under the KMG Plan, spun off and transferred from the KMG Plan the portion of the KMG Plan representing benefits attributable to eligible employees under its qualified defined contribution plan (the “KMG Plan Benefits”) and merged such portion of the KMG Plan with and into the Plan, with the Plan being the survivor.
The Company subsequently amended and restated the Plan generally effective as of January 1, 2007, primarily for the purposes of (i) incorporating changes required by Code Section 409A, effective as of January 1, 2005, (ii) designating certain amounts held under the Plan as being exempt from the requirements of Code Section 409A as effective January 1, 2005, (iii) incorporating provisions to reflect the spin-off and transfer of the KMG Plan Benefits into the Plan effective as of January 1, 2007, and (iv) incorporating certain other design changes into the Plan. The amended and restated Plan referred to in the preceding sentence was subsequently amended to incorporate certain design and administrative changes on July 1, 2010, November 30, 2011, and December 18, 2014. The Company subsequently amended and restated the Plan effective January 1, 2017, to incorporate these amendments and make certain other changes to the Plan.
Effective as of August 8, 2019, the Company became a wholly-owned subsidiary of Occidental Petroleum Corporation through a merger. The Plan as set forth herein constitutes an amendment and restatement of the Plan as in effect immediately prior to August 8, 2019 (the “Effective Date”) in order to modify certain provisions of the Plan related to Plan administration in connection with this merger. This amendment and restatement of the Plan shall be effective as of the Effective Date.
The Company intends that this amendment and restatement does not constitute a “material modification” within the meaning of such term under Code Section 409A with respect to (i) amounts held under the Plan prior to January 1, 2005 that qualify as exempt from Code Section 409A and (ii) all balances transferred to the Plan pursuant to the spin-off and transfer of the KMG

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Plan Benefits with and into the Plan effective as of January 1, 2007. To the extent that any amendments incorporated into this amended and restated Plan document are required for compliance with Code Section 409A as generally effective January 1, 2005, such amendments shall be effective as of January 1, 2005 or as of such other date that is required by Code Section 409A as provided herein.
With respect to Participants other than Limited 415 Participants (as such terms are defined in Article II), the Plan is intended as an unfunded plan to be maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” within the meaning of such phrase for purposes of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and as such it is intended that the Plan be exempt from the participation and vesting, funding, and fiduciary responsibility requirements of Title I of ERISA. The Plan is also intended to qualify for simplified reporting under U.S. Department of Labor Regulation Section 2530.104-23, which provides for an alternative method of compliance for plans described in such regulation. With respect to Limited 415 Participants, the portion of the Plan that provides benefits to such Limited 415 Participants solely due to the limitations applicable to the Savings Plan by reason of Code Section 415 is intended to be treated as a separate plan that is an “excess benefit plan” within the meaning of such phrase for purposes of Sections 3(36) and 4(b)(5) of ERISA. Moreover, the Plan is intended to comply with the requirements of Code Section 409A for nonqualified deferred compensation plans to the extent applicable. The Plan is not intended to satisfy the tax qualification requirements of Code Section 401(a).
1.02    Sources of Payments. Benefits provided by the Plan constitute general obligations of the Company and shall at all times be subject to the claims of the general creditors of the Company, in accordance with the terms hereof. No amounts in respect of such benefits shall be set aside or held in trust, and no recipient of any benefits shall have any right to have the benefit paid out of any particular assets of the Company; provided, however, nothing herein shall be construed to prevent a transfer of funds to a grantor trust for the purpose of paying any benefits under the Plan.
Any grantor trust established by the Company for benefits under the Plan shall be subject to the claims of the Company’s general and unsecured creditors in the event that the Company becomes insolvent. The Company intends that any such grantor trust shall constitute an unfunded arrangement and thus not affect the status of the Plan as an unfunded plan that is maintained to provide deferred compensation for a select group of management or highly compensated employees for purposes of Title I of ERISA.
Benefits payable to Participants and their Beneficiaries under the Plan cannot be anticipated, assigned (either at law or in equity), alienated, pledged or encumbered, or subjected to attachment, levy, execution or other legal or equitable process.
ARTICLE II.    
DEFINITIONS
The masculine gender when used in the Plan shall be deemed to include the feminine

2    



gender, and the single shall include the plural and vice versa, unless the context clearly indicates to the contrary. Where capitalized words and phrases appear in this Plan, they shall have the respective meanings set forth below.
2.01    Account. “Account” means, with respect to a Participant, the notional, ledger accounts maintained by the Committee under the Plan to reflect such Participant’s proportionate interest in the Plan. The following accounts shall be established for each Participant as applicable:
(a)    Pre-2005 Savings Restoration Plan Account; and
(b)    Post-2004 Savings Restoration Plan Account.
2.02    Affiliate. “Affiliate” means:
(a)    Any corporation other than the Company (i.e., either a subsidiary corporation or an affiliated or associated corporation of the Company), which together with the Company is a member of a “controlled group” of corporations pursuant to Code Section 414(b);
(b)    Any organization with which the Company is under “common control” pursuant to Code Section 414(c);
(c)    Any organization which together with the Company is an “affiliated service group” pursuant to Code Section 414(m); or
(d)    Any foreign affiliate of the Company which is covered by an agreement under Code Section 3121(1) pursuant to Code Section 406(a).
2.03    Beneficiary. “Beneficiary” means the recipients of any benefit payable under the Plan in the event of such Participant’s death. The Participant shall not have the right to designate a beneficiary under the Plan; rather the Participant’s Beneficiary hereunder shall be the same as his designated beneficiary under the Savings Plan.
2.04    Board. “Board” means the then Board of Directors of the Company or any designated committee of the Board that is duly authorized by the Board to act under the Plan.
2.05    Code. “Code” means the Internal Revenue Code of 1986, as amended, and regulations and other authority issued thereunder by the appropriate governmental authority. References to any section of the Code or the regulations thereunder shall include reference to any successor section or provision of the Code or regulations, as applicable.
2.06    Code Limits. “Code Limits” means either a limitation imposed under Code Section 401(a)(17) or under Code Section 415 with respect to the amount of compensation or benefits which may be earned or taken into account, as applicable, under the Savings Plan. Notwithstanding the preceding provisions of this Section 2.06, with respect to a Limited 415 Participant, for all purposes of the Plan the term “Code Limits” shall mean solely the limitation imposed by Code Section 415 on the amount of benefits which may be earned under the Savings Plan.

3    



2.07    Committee. “Committee” means the committee appointed by the Board to administer the Plan; provided, however, that if the Board has not appointed a committee, then each reference herein to the “Committee” shall instead refer to the Board.
2.08    Company. “Company” means Anadarko Petroleum Corporation, or any successor in interest thereto.
2.09    Company Matching Contributions. “Company Matching Contributions” has the meaning assigned to such term in Section 4.01.
2.10    Contribution Rate. “Contribution Rate” means the combined before-tax, after-tax, Roth, catch-up, and Roth catch-up contribution rate that a Participant has elected under the Savings Plan.
2.11    ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. References to any section of ERISA or the regulations thereunder shall include reference to any successor section of ERISA or regulations, as applicable.
2.12    Effective Date. “Effective Date” means August 8, 2019, as to this amendment and restatement of the Plan.
2.13    Eligible Employee. “Eligible Employee” means any Employee who is currently participating in the Savings Plan and whose benefits under the Savings Plan are reduced or limited by the Code Limits and/or as a result of deferring compensation pursuant to any deferred compensation plan maintained by an Employer and designated by the Company as a deferred compensation plan for purposes of the Plan. Any Eligible Employee who exceeds the Code Limits due to the application of Code Section 401(a)(17) must be a member of a “select group of management or highly compensated employees” for purposes of Title I of ERISA, as determined by the Board or the Committee.
2.14    Employee. “Employee” means each person who is employed by one or more Employers, is on an Employer’s payroll and classified as a regular employee, and whose wages are subject to FICA tax withholding.
2.15    Employer. “Employer” means the Company and any Affiliate which adopts the Plan in accordance with its applicable provisions. The adopting Employers are listed in the Adopting Employers Appendix which is attached to the Plan, as such Appendix may be updated by the Board or the Committee from time to time without the need for a formal amendment to the Plan.
2.16    Fund. “Fund” means any mutual fund designated by the Committee for the deemed investment of Account balances pursuant to Article V.
2.17    Investment Experience. “Investment Experience” means the hypothetical amounts credited (as earnings, gains or appreciation on any hypothetical investments in Funds or other permitted investment measures) or charged (as losses or depreciation on any such hypothetical investments) to the Participant’s Account balance pursuant to Article V.

4    



2.18    Key Employee. “Key Employee” means an employee of an Employer who is treated as a “Specified Employee” under Code Section 409A(a)(2)(B)(i).
2.19    Limited 415 Participant. “Limited 415 Participant” means any Eligible Employee whose benefit under the Savings Plan is limited by the limitation imposed by Code Section 415 and who has not otherwise been designated as a Participant in the Plan by the Committee pursuant to the provisions of Article III.
2.20    Participant. “Participant” means an Eligible Employee who meets the requirements to participate in the Plan in accordance with Article III. The term “Participant” shall include a Limited 415 Participant except where expressly provided otherwise in the Plan.
2.21    Plan. “Plan” means the Anadarko Petroleum Corporation Savings Restoration Plan, as it may be amended from time to time.
2.22    Plan Year. “Plan Year” means the 12-month calendar year beginning on January 1st and ending on December 31st.
2.23    Post-2004 Savings Restoration Plan Account. “Post-2004 Savings Restoration Plan Account” means the separate account under the Participant’s Account as established pursuant to Section 4.01.
2.24    PRA Plan. “PRA Plan” means the Occidental Petroleum Corporation Retirement Plan.
2.25    Pre-2005 Savings Restoration Plan Account. “Pre-2005 Savings Restoration Plan Account” means the separate account under the Participant’s Account as established pursuant to Section 4.02.
2.26    Savings Plan. “Savings Plan” means the Anadarko Employee Savings Plan, as it may be amended from time to time, which Savings Plan is intended to be a 401(k) plan that is qualified under Code Section 401(a); provided, however, that for the 2019 Plan Year, the “Savings Plan” means (i) prior to the Effective Date, the Anadarko Employee Savings Plan and (ii) on and after the Effective Date, the Occidental Petroleum Corporation Savings Plan and the Occidental Petroleum Corporation Retirement Plan.
2.27    Section 16 Officer. “Section 16 Officer” means an Eligible Employee who is subject to Section 16 of the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
2.28    Separation from Service. “Separation from Service” means a “separation from service” within the meaning of Code Section 409A.
2.29    Valuation Date. “Valuation Date” means the date on which a Participant’s Account balance is valued, which date shall be not less often than as of the last day of each calendar quarter during the Plan Year, as well as any interim date as determined by the Committee or Company in its discretion.

5    



ARTICLE III.    
ELIGIBILITY AND PARTICIPATION
Each Eligible Employee who was a Participant in the Plan immediately prior to the Effective Date shall continue as a Participant in the Plan as of the Effective Date.
From and after the Effective Date, any Eligible Employee shall be a Participant only if the Committee (a) determines that such Eligible Employee is a member of a select group of management or highly compensated employees of the Company or its Affiliates for purposes of Title I of ERISA and (b) designates such Eligible Employee as a Participant. Notwithstanding the foregoing, any Eligible Employee whose benefit under the Savings Plan is limited by the limitation imposed by Code Section 415 and who is not otherwise designated by the Committee as a Participant pursuant to the preceding sentence shall automatically participate in the Plan as a Limited 415 Participant.
ARTICLE IV.    
AMOUNT OF BENEFITS
4.01    Post-2004 Savings Restoration Plan Account. Effective as of January 1, 2005, the Company established, or shall establish, a separate account under the Account for each affected Participant, entitled the “Post-2004 Savings Restoration Plan Account.” The Participant’s Post-2004 Savings Restoration Plan Account shall be credited with any amount of the Participant’s “Restoration Account” balance held under the Plan as of December 31, 2004 that was not vested as of December 31, 2004, as well as any contributions made on such Participant’s behalf on and after January 1, 2005. Prior to January 1, 2017, the Participant’s Post-2004 Savings Restoration Plan Account was also credited with any balance in the Participant’s “Post-2004 KMG Plan Benefits Account” (as such term was defined in the Plan immediately prior to January 1, 2017), which latter account was then eliminated.
With respect to each Plan Year beginning on and after January 1, 2005 (or such later Plan Year as an individual becomes a Participant), the Committee shall credit to the Participant’s Post-2004 Savings Restoration Plan Account an amount equal to the excess, if any, of (a) over (b), where:
(a)    equals the Company Matching Contributions which would have been allocated to such Participant’s account under the Savings Plan if the Savings Plan had been administered without regard to (i) the Code Limits and (ii) with respect to a Participant other than a Limited 415 Participant, any elective salary and/or bonus compensation arrangement maintained by an Employer which has been designated by the Company as a deferred compensation plan for purposes of the Plan; and
(b)    equals the amount of Company Matching Contributions which were in fact allocated for such Plan Year to the account of such Participant under the Savings Plan (without regard to earnings thereon).

6    



In determining the amount to be credited to a Participant’s Post-2004 Savings Restoration Plan Account for any Plan Year, the following rules are applicable:
(w)    for purposes of the Plan, including this Section 4.01, the term “Company Matching Contributions” shall include and encompass (i) prior to the Effective Date, any Employer Safe-Harbor Contributions, PWA Contributions and Employer Post-2013 Matching Contributions provided for under the Savings Plan (as such terms are defined in the Anadarko Employee Savings Plan) and (ii) on and after the Effective Date, Matching Contributions (as this term is defined in the Occidental Petroleum Corporation Savings Plan and PWA Employer Contributions (as this term is defined in the Occidental Petroleum Retirement Plan);
(x)    except with respect to Company Matching Contributions associated with PWA Contributions or PWA Employer Contributions, the Participant shall only be entitled to allocations to his Post-2004 Savings Restoration Plan Account if he has made the maximum elective deferrals to the Savings Plan under Code Section 402(g) or the maximum elective contributions permitted under the terms of the Savings Plan for such Plan Year;
(y)    the Participant’s Contribution Rate shall be the rate the Plan utilizes to determine the Participant’s benefit under the Plan; and
(z)    the Participant’s compensation shall be deemed to be (i) prior to the Effective Date, his “Base Compensation” as determined under the Anadarko Petroleum Corporation Employee Savings Plan and (ii) on and after the Effective Date, his “Earnings” as determined under the Occidental Petroleum Corporation Savings Plan, or his “Compensation” as determined under the Occidental Petroleum Corporation Retirement Plan, as applicable; provided, however, that, with respect to a Participant other than a Limited 415 Participant, such determination shall be made without regard to the dollar limit under Code Section 401(a)(17) as in effect for the Plan Year.
4.02    Pre-2005 Savings Restoration Plan Account. Effective as of January 1, 2005, the Company established for each affected Participant a separate account under the Account, entitled the “Pre-2005 Savings Restoration Plan Account”. The Company credited to the Pre-2005 Savings Restoration Plan Account the total value of the Participant’s account balance held under the Plan as of December 31, 2004, and such Account shall share in allocated Investment Experience after such date. The Participant’s Pre-2005 Savings Restoration Plan Account is intended by the Company to be credited only with amounts that are considered to be “earned and vested” not later than December 31, 2004, within the meaning of Code Section 409A, and thus not subject to Section 409A. No additional contributions shall be made to the Participant’s Pre-2005 Savings Restoration Plan Account after December 31, 2004; provided, however, that, prior to January 1, 2017, the Participant’s Pre-2005 Savings Restoration Plan Account was also credited with any balance in the Participant’s “Pre-2005 KMG Plan Benefits Account” (as such term was defined in the Plan immediately prior to January 1, 2017), which latter account was then eliminated.
ARTICLE V.    
HYPOTHETICAL INVESTMENT OPTIONS
5.01    Investment of Account in Investment Funds. The Committee, in its discretion, may permit all Participants to request that their entire Account balances (vested and unvested) be invested

7    



in any one or a combination of Funds which have been selected and designated by the Committee as being available for hypothetical investments under the Plan. If a Participant does not elect to invest all or any portion of his Account balance in Funds, the portion of such Account balance that is not directed by the Participant for investment shall automatically be deemed to be invested in the default Fund investment option selected by the Committee. All investments hereunder shall be considered assets of the Company, and the Participant shall remain subject to all applicable provisions of the Plan including, without limitation, Section 1.02.
The Investment Experience posted and credited to each Participant’s Account shall be based solely on the Investment Experience of the actual Funds in which the Participant’s Account balance is deemed to be invested. Investment Experience shall be promptly posted and credited to the Participant’s Account by the Company as of each Valuation Date.
As authorized by the Committee, each Participant shall have the right to elect hypothetical investments of his Account balance. The Committee (or its delegate) shall prescribe such procedures as it considers necessary to direct the deemed investment of the Participants’ Account balances. Each Participant’s Account shall be credited or debited with the increase or decrease in the realizable net asset value of the designated Funds in which such Account balance is deemed to be invested.
Subject to such limitations as may from time to time be required by law, imposed by the Committee or contained elsewhere in the Plan, and subject to such operating rules and procedures as may be imposed from time to time by the Committee, each Participant may communicate requests regarding the deemed investment of his Account balance between and among the designated Funds. Investment directions shall designate the percentage (in any whole percent multiples) of the Participant’s Account balance that is requested for investment in such Funds, subject to the following rules:
(a)    All amounts credited to the Participant’s Account shall be deemed to be invested in accordance with the Participant’s then-effective investment direction. As of the effective date of any accepted new investment request, the Participant’s Account balance at that date shall be reallocated among the designated Funds according to the percentages specified in the new investment request unless and until a subsequent investment request becomes effective.
(b)    If the Committee (or its delegate) receives an initial or revised investment request that it deems to be incomplete, unclear, or improper, the Participant’s investment request then in effect shall remain in effect (or, in the case of a deficiency in an initial investment direction, the Participant shall be deemed to have invested in the default Fund investment option selected by the Committee), unless the Committee (or its delegate) permits the application of corrective action prior thereto.
(c)    If the Committee (or its delegate) possesses at any time directions as to the deemed investment of less than all of a Participant’s Account, the Participant shall be deemed to have requested that the undesignated portion of his Account balance be deemed for investment in the default Fund investment option selected by the Committee.

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(d)    Each Participant, as a condition to his participation in the Plan, agrees to indemnify and hold harmless the Company and the Committee, and their representatives, delegates and agents, from and against any investment losses or damages of any kind relating to, or arising out of, the deemed investment of the Participant’s Account balance under the Plan.
No assurances are provided by any person or entity that any investment results will be favorable and, as with most investments, there is a risk of loss. All investment earnings or losses resulting from the Participant’s deemed investments shall be periodically posted to his Account by the Company as allocable Investment Experience.
5.02    No Warranties. The Board, Committee, Employer and its Affiliates and officers of the Employer and its Affiliates do not warrant or represent in any respect that the value of any Participant’s Account will increase and not decrease. Each Participant assumes all related investment risk in connection with any change in value.
ARTICLE VI.    
PAYMENT OF BENEFITS
6.01    Payment of Participant’s Account. Payment of any Participant’s Account balance shall be made at one time (in the form of a lump-sum payment) within ninety (90) days following the Participant’s Separation from Service.
6.02    Six-Month Delay. Notwithstanding any provision herein to the contrary, distributions with respect to the portion of a Key Employee’s Post-2004 Savings Restoration Plan Account shall not be made to a Key Employee upon his Separation from Service before the date which is six months after the date of such Separation from Service (or, if earlier, the date of death of the Key Employee).
6.03    Vesting. A Participant shall be 100% vested in his entire Account at all times, except the portion of the Account attributable to PWA Contributions made under the Savings Plan shall vest in accordance with the vesting schedule in the Savings Plan for PWA Contributions. The amount credited to a Participant’s Account which is not vested upon the Participant’s Separation from Service shall be forfeited. Notwithstanding the preceding provisions of this Section 6.03, (a) each Eligible Employee who becomes a Participant on or after the Effective Date shall be 100% vested in his entire Account (including the portion of his Account attributable to PWA Contributions or made under the Savings Plan) at all times, and (b) each Participant in the Plan as of the Effective Date who is employed by an Employer or any Affiliate on such date shall retroactively become 100% vested in each credit to his Account attributable to PWA Contributions made under the Savings Plan as of the date of such credit and shall be 100% vested in his entire Account (including the portion of his Account attributable to PWA Contributions or made under the Savings Plan) at all times from and after the Effective Date.
ARTICLE VII.    
ADMINISTRATION
7.01    Administration by Committee. The Committee shall be the plan administrator with respect to the Plan, except that for all matters (including, without limitation, interpretation of the Plan) directly relating to participation, claims or benefits associated with individuals who are then

9    



Section 16 Officers, the Committee shall be the Executive Compensation Committee of the Board of Directors of Occidental Petroleum Corporation.
The members of the Committee shall not receive any special compensation for serving in their capacities as members, but shall be reimbursed by the Company for any reasonable expenses incurred in connection therewith. No bond or other security need be required of the Committee or any member thereof.
7.02    Administration of Plan. The Committee shall operate, administer, interpret, construe and construct the Plan, including correcting any defect, supplying any omission or reconciling any inconsistency. The Committee shall have all powers necessary or appropriate to implement and administer the terms and provisions of the Plan, including the power to make findings of fact. The determination of the Committee as to the proper interpretation, construction, or application of any term or provision of the Plan shall be final, binding, and conclusive with respect to all interested persons.
7.03    Action by Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting at which a quorum is present shall decide any question brought before the meeting and shall be the act of the Committee. In addition, the Committee may take any other action otherwise proper under the Plan by an affirmative vote, taken without a meeting, of a majority of its members.
7.04    Delegation. The Committee may, in its discretion, delegate one or more of its duties to its designated agents including, without limitation, to Employees.
7.05    Reliance Upon Information. No member of the Committee shall be liable for any decision, action, omission, or mistake in judgment, provided that he acted in good faith in connection with administration of the Plan. Without limiting the generality of the foregoing, any decision or action taken by the Committee in reasonable reliance upon any information supplied to it by the Board, any Employee, the Employer, the Employer’s legal counsel, or the Employer’s independent accountants, shall be deemed to have been taken in good faith.
The Committee may consult with legal counsel, who may be counsel for the Employer or other counsel, with respect to its obligations or duties hereunder, or with respect to any action, proceeding or question at law, and shall not be liable with respect to any action taken, or omitted, in good faith pursuant to the advice of such counsel.
7.06    Rules of Conduct. The Committee shall adopt such rules for the conduct of its business and the administration of the Plan as it considers desirable, provided they do not conflict with the provisions of the Plan.
7.07    Legal, Accounting, Clerical and Other Services. The Committee may authorize one or more of its members or any agent to act on its behalf, and may contract for legal, accounting, clerical and other services to effectuate its duties under the Plan. The Committee shall keep records reflecting its administration of the Plan, which shall be subject to review or audit by the Company

10    



at any time. The Company shall pay all the expenses of the Committee and the other expenses of administering the Plan.
7.08    Indemnification. The officers and directors of the Company, the members of the Committee, and any Employees who have been assigned duties hereunder regarding administration of the Plan, shall each be indemnified and held harmless by the Company from and against (a) any and all losses, costs, liabilities, or expenses (including reasonable attorney’s fees) that may be imposed upon or reasonably incurred by any such person in connection with, or resulting from, any claim, action, suit, or other proceeding to which he is or may be a party, or in which he is or may otherwise be involved, by reason of any action or failure to act under the Plan, and (b) any and all amounts paid by such person in settlement with the Company’s written approval, or paid in satisfaction of a judgment in any such action, suit, or other proceeding; provided, however, the foregoing indemnification provisions shall not be applicable to any indemnified person if the loss, cost, liability, or expense is due to such person’s fraud, gross negligence or willful misconduct.
7.09    Claims Review Procedures
(a)    Filing a Claim. A Participant or his authorized representative hereafter (“Claimant”) may file a claim for benefits under the Plan by filing a written claim, identified as a claim for benefits, with the Committee. In addition, the Committee may treat any writing or other communication received by it as a claim for benefits, even if the writing or communication is not identified as a claim for benefits.
(b)    Acknowledgement of Receipt of Claim. The Committee will send the Claimant a letter acknowledging the receipt of any communication that it treats as a claim for benefits. If the Claimant fails to receive such an acknowledgement within 60 days after making a claim, the Claimant should contact the Committee to determine whether the claim has been received and identified as a claim for benefits.
(c)    Approval of Claim. A claim is considered approved only if its approval is communicated in writing to a Claimant. If a Claimant does not receive a response to a claim for benefits within the applicable time period, the Claimant may proceed with an appeal under the procedures described in Section 7.09(e).
(d)    Denial of Claim. If a claim is denied in whole or in part, the Committee will notify the Claimant of its decision by written notice, in a manner calculated to be understood by the Claimant.
(1)    Timing of Notice. The notice of denial must be given within 90 days after the claim is received by the Committee. If special circumstances (such as a hearing) require a longer period, the Claimant will be notified in writing, before the expiration of the 90-day period, of the expected decision date and the reasons for an extension of time; provided, however, that no extensions will be permitted beyond 90 days after expiration of the initial 90-day period.
(2)    Content of Notice. The notice will set forth:
(A)    the specific reasons for the denial of the claim;

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(B)    a reference to specific provisions of the Plan on which the denial is based;
(C)    a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary; and
(D)    an explanation of the procedure for review of the denied or partially denied claim, including the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
(e)    Request for Review of Denial. Upon denial of a claim in whole or in part, a Claimant has the right to submit a written request to the Committee for a full and fair review of the denied claim, and upon request and free of charge, to reasonable access and copies of all documents, records, and other information relevant to the Claimant’s claim for benefits and may submit issues and comments in writing.
(1)    Scope of Review. The review takes into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(2)    Timing of Request for Review. A request for review of a claim must be submitted within 60 days of receipt by the Claimant of written notice of the denial of the claim (or, if the Claimant has not received a response to the initial claim, within 150 days of the filing of the initial claim). If the Claimant fails to file a request for review within 60 days of the denial notification (or deemed denial after 150 days), the claim under the Plan is forever abandoned and the Claimant is precluded from reasserting it.
(3)    Contents of Request for Review. If the Claimant files a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.
(f)    Denial Upon Review
(1)    Timing of Denial Notice. The Committee must render its decision on the review of the claim no more than 60 days after the Committee’s receipt of the request for review, except that this period may be extended for an additional 60 days if the Committee determines that special circumstances (such as a hearing) require such extension. If an extension of time is required, written notice of the expected decision date and the reasons for the extension will be furnished to the Claimant before the end of the initial 60-day period.
(2)    Contents of Denial. If the Committee issues a negative decision, it shall provide a prompt written decision to the Claimant setting forth:
(A)    the specific reason or reasons for the adverse determination;

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(B)    a reference to specific Plan provisions on which the adverse determination was made;
(C)    a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and
(D)    a statement describing any voluntary appeal procedures offered by the Plan and the Claimant’s right to obtain the information about such procedures and a statement of the Claimant’s right to bring an action under ERISA Section 502(a).
(3)    Authority of Committee. To the extent of its responsibility to review the denial of benefit claims, the Committee has full authority to interpret and apply in its discretion the provisions of the Plan. The decision of the Committee is final and binding upon any and all Claimants and any person making a claim through or under them.
(g)    Limits on Right to Judicial Review. A Claimant must follow the claims procedures described by this Section 7.09 before taking action in any other forum regarding a claim for benefits under the Plan. Any lawsuit or other legal action that is initiated by a Claimant under the Plan must be brought by the Claimant no later than one (1) year following a final decision on the claim for benefits under these claims procedures. The one-year statute of limitations on causes of action for benefits applies in any forum where a Claimant initiates such action. If a civil action is not filed within this period, the Claimant’s benefit claim is deemed permanently waived and abandoned.
(h)    Other Claims. Any other claims that arise under or in connection with the Plan, even though not claims for benefits, must be filed with the Committee and are considered in accordance with the claims and appeals procedures in this Section 7.09.
7.10    Finality of Determinations; Exhaustion of Remedies. To the extent permitted by law, decisions reached under the claims procedures set forth in Section 7.09 shall be final and binding on all Claimants and other interested persons and entities. No legal action for benefits under the Plan shall be brought unless and until the Claimant has exhausted his remedies under Section 7.09. In any such legal action, the Claimant may only present evidence and theories which the Claimant presented during the claims procedures under Section 7.09. Any claims which the Claimant does not in good faith pursue though the review stage of these procedures shall be treated as having been irrevocably waived. Judicial review of a Claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based only on the evidence and theories that the Claimant presented during the claims procedure.
7.11    Effect of Committee Action. The Plan shall be interpreted by the Committee in accordance with its terms and provisions. The Committee has the reserved discretion under the Plan to make any findings of fact it deems necessary or appropriate in the administration of the Plan, and shall have the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any fashion it deems to be appropriate in its sole judgment. The validity of any such finding of fact, interpretation, construction or decision shall not be given de novo review if challenged in

13    



court, by arbitration or in any other forum, and shall be upheld unless clearly arbitrary or capricious. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Committee in its sole and exclusive judgment, the provision shall be considered ambiguous and shall be interpreted by the Committee in a fashion consistent with its intent, as determined by the Committee in its sole discretion. The Committee, without the need for the Board’s approval, may amend the Plan retroactively to cure any such ambiguity as deemed necessary or appropriate by the Committee. This Section 7.11 may not be invoked by any Claimant or other person to require the Plan to be interpreted in a manner which is inconsistent with its interpretation by the Committee. All actions taken and all determinations made in good faith by the Committee shall be final and binding upon all Claimants and other persons claiming any interest in or under the Plan.
7.12    Effect of Mistake. If, in the sole opinion of the Committee, a mistake occurred affecting (a) the eligibility of an Eligible Employee or a Participant or (b) the amount of benefit payments to, or on behalf of, a Participant or Claimant, the Committee shall, to the extent it deems appropriate and practicable, cause an adjustment to be made to correct such mistake.
ARTICLE VIII.    
GENERAL PROVISIONS
8.01    Plan Amendment, Suspension and/or Termination. The Board may, in its discretion, from time to time, amend, suspend or terminate in whole or in part, and if terminated, reinstate any or all of the provisions of the Plan, except that no amendment, suspension or termination may apply so as to decrease the payment to any Participant (or Beneficiary) of any benefit under this Plan accrued prior to the effective date of such amendment, suspension or termination. The Board may delegate to any officer of the Company or of Occidental Petroleum Corporation, the authority to execute an amendment to the Plan that has been approved by the Board. Further, the Plan may be amended by the Committee as prescribed in Section 7.11.
Upon termination of the Plan, distribution of benefits shall be made to Participants and Beneficiaries in the manner and at the time described in the Plan, unless one of the following termination events occurs, in which case, all such amounts shall be distributed in a lump sum upon termination, or upon the earliest date allowable under Code Section 409A: (1) the Company’s termination and liquidation of the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court; (2) the Company’s termination and liquidation of the Plan pursuant to irrevocable action taken by the Company within the 30 days preceding or 12 months following a change in control event (within the meaning of Code Section 409A), provided that all agreements, methods, programs, and other arrangements sponsored by the Company that are aggregated under Code Section 409A are terminated and liquidated with respect to each Participant that experiences the change in control event; or (3) the Company’s termination and liquidation of the Plan, provided that (a) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company, (b) the Company terminates and liquidates

14    



all agreements, methods, programs, and other arrangements sponsored by the Company that would be aggregated under Code Section 409A if the same Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements sponsored by the Company that are terminated and liquidated, (c) no payments in liquidation of the Plan are made within 12 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would have been payable absent the termination and liquidation, (d) all payments are made within 24 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan, and (e) the Company does not adopt a new plan that would be aggregated with any terminated and liquidated plan under Code Section 409A if the same Participant participated in both plans, at any time within three years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan.
8.02    Plan Not an Employment Contract. The Plan is strictly a voluntary undertaking on the part of the Company and does not constitute a contract of employment between the Company or its Affiliates and any Eligible Employee, or consideration for, or an inducement or condition of, the employment of an Eligible Employee. Nothing contained in the Plan shall give any Eligible Employee the right to be retained in the service of the Company or its Affiliates or to interfere with or restrict the right of the Company or its Affiliates, which is hereby expressly reserved, to discharge or retire any Eligible Employee at any time for any reason not prohibited by law, without the Company or its Affiliates being required to show cause for the termination. Participation in the Plan shall not give any Eligible Employee any right or claim to any benefit hereunder except to the extent such right has specifically become fixed under the terms of the Plan. The doctrine of substantial performance shall have no application to Eligible Employees, Participants or Beneficiaries.
8.03    Non-alienation of Benefits. Except as provided in this Section 8.03 and to the extent permitted by law, benefits payable under the Plan shall not, without the Committee’s prior consent, be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary. An unauthorized attempt to charge or otherwise dispose of any right to benefits hereunder shall be subject to seizure by legal process resulting from any attempt by creditors of, or claimants against, any Participant (or Beneficiary), or any person claiming under or through the foregoing, to attach any Account balance under the Plan. Notwithstanding the foregoing, the anti-alienation restrictions of this Section 8.03 shall not apply to “qualified domestic relations order” (“QDRO”) as described in Code Section 414(p). The Committee shall establish procedures to determine whether domestic relations orders submitted to the Committee are QDROs and to administer distributions under any valid QDROs. Nothing in this Section 8.03 shall preclude the Company or its Affiliates from withholding from amounts payable to a Participant or his Beneficiary under the Plan any amount that the Participant owes to the Company or its Affiliates, regardless of whether such amount is related to the Plan.
8.04    Special Payment Situations. The following provisions shall apply to the extent permitted under Code Section 409A.
(a)    Missing Participant or Beneficiary. Payment of benefits to the person entitled thereto may be sent by first class mail, address correction requested, to the last known address on file with the Committee. If, within two months from the date of issuance of the payment, the payment

15    



letter cannot be delivered to the person entitled thereto or the payment has not been negotiated, the payment shall be treated as forfeited. However, if the person to whom the benefit became payable subsequently appears and identifies himself to the satisfaction of the Committee, the amount forfeited (without earnings thereon) shall be distributed to the person entitled thereto. The right of any person to restoration of a benefit which was forfeited pursuant to this Section 8.04(a) shall cease upon termination of the Plan.
(b)    Private Investigators. If the Committee retains a private investigator or other person or service to assist in locating a missing person, all costs incurred for such services shall be charged against the benefit to which the missing person was believed to be entitled and the benefit shall be reduced by the amount of the costs incurred, except as the Committee may otherwise direct in its discretion.
(c)    Delayed Payment. Payments to Participants or Beneficiaries may be postponed by the Committee until any anticipated taxes, expenses, or amounts to be paid under a qualified domestic relations order have been paid in full or until it is determined that such charges will not be imposed. A payment to a Participant or Beneficiary may also be delayed in the event payment might defeat an adverse potential or asserted claim by some other person to the payment. The cost incurred by the Company in dealing with any such adverse claim shall be charged against the benefit to which the claim relates, except as the Committee may otherwise direct in its discretion.
8.05    Spin-offs. If a Participant ceases to be employed by the Company or its Affiliates because of the disposition by the Company or its Affiliates of its interest in a subsidiary, plant, facility or other business unit, or if an entity which employs a Participant ceases to be an Affiliate, such Participant’s employment shall be considered terminated for all Plan purposes. To the extent permitted under Code Section 409A, this Section 8.05 shall not apply to the extent it is overridden by any contrary or inconsistent provision in the applicable sales documents (or any related documents), whether adopted before or after the sale, as determined by the Committee in its discretion and, if so determined, any such contrary or inconsistent provision shall instead apply and be incorporated into the Plan by this reference.
8.06    Duty to Provide Data
(a)    Data Requests. Every person with an interest in the Plan or claiming benefits under the Plan shall furnish the Committee, on a timely and accurate basis, with such documents, evidence or information as it considers necessary or desirable for the purpose of administering the Plan. The Committee may postpone payment of benefits (without accrual of any interest or other earnings) until such information and such documents have been furnished.
(b)    Addresses. Every person claiming a benefit under the Plan shall give written notice to the Committee of his post office address and each change of post office address. Any communication, statement or notice addressed to such a person at his latest post office address as filed with the Committee will, on deposit in the United States mail with postage prepaid, be as binding upon such person for all purposes of the Plan as if it had been received, regardless of whether it is actually received or it is alleged not to have been received. If a person fails to give notice of

16    



his correct address, the Committee, the Company and its Affiliates shall not be obliged to search for, or to ascertain, his whereabouts.
(c)    Failure to Comply. If benefits which are otherwise currently payable cannot be paid to the person entitled to the benefits because the individual has failed to comply with this Section 8.06 or any other Plan provision relating to his claim for benefits, any unpaid past due amount shall be forfeited on the individual’s death or presumed death.
8.07    Tax Consequences Not Guaranteed. The Company does not warrant that this Plan will have any particular tax consequences for Participants or Beneficiaries and shall not be liable to them if tax consequences they anticipate do not actually occur. The Employer shall have no obligation to indemnify a Participant or Beneficiary for lost tax benefits (or other damage or loss) in the event benefits are cancelled as permitted under Section 8.01, or accelerated due to change in Plan design or funding, e.g., establishment of a “secular trust.”
8.08    Tax Withholding. The Company or other payor shall withhold from a benefit payment under the Plan any Federal, state or local taxes required by law to be withheld with respect to such payment, and may withhold such sum as the payor may reasonably estimate as necessary to cover any taxes for which the Employer may be liable or which it determines may be assessed with regard to such payment.
8.09    Incompetency. Any person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent until the date on which the Committee receives a written notice, in an acceptable form and manner, that such person is incompetent and a guardian or other person legally vested with the care of his estate has been appointed. If the Committee finds that any person to whom a benefit is payable under the Plan is unable to care for his affairs because of any disability or infirmity and no legal guardian of such person’s estate has been appointed, any payment due may be paid to the spouse, a child, a parent, a sibling, or to any other person or entity deemed by the Committee to have incurred expense for such person otherwise entitled to payment. Any such payment shall be a complete discharge of any liability under the Plan to the full extent of such payment. If a guardian of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, then benefit payments may be made to such guardian provided that proper proof of appointment and qualification is furnished in such form and manner as acceptable to the Committee. Any such payment shall be a complete discharge of any liability therefor under the Plan.
8.10    Severability. If any provision of the Plan is held invalid or illegal for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision was not contained. The Company shall have the privilege and opportunity to correct and remedy such questions of illegality or invalidity by amendment.
8.11    Governing Law. This Plan is subject to ERISA, but is exempt from most parts of ERISA since it is, in part, an excess benefit plan and the balance of the Plan is an unfunded, deferred compensation plan that is maintained for a select group of management or highly compensated employees for purposes of Title I of ERISA. In no event shall any references to ERISA in the Plan

17    



be construed to mean that the Plan is subject to any particular provisions of ERISA. The Plan shall be governed and construed in accordance with the laws of the State of Texas without regard to its conflicts of law provisions, except to the extent such laws are preempted by ERISA or other applicable federal law.
8.12    Headings. The headings of Articles and Sections herein are included solely for convenience of reference, and, if there is any conflict between such headings and the text of the Plan, the text shall control and govern.
[Signature page follows.]

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IN WITNESS WHEREOF, Anadarko Petroleum Corporation has caused this amended and restated Plan to be adopted and executed by its duly authorized officer effective as of the Effective Date.

ANADARKO PETROLEUM CORPORATION
By:    /s/ Marcia E. Backus    
Name:    Marcia E. Backus    
Title:    Senior Vice President    
    


19    



ADOPTING EMPLOYERS APPENDIX

As of the Effective Date, the Company is the only adopting Employer under the Plan.

        


TERMINATION AMENDMENT
TO THE
ANADARKO EMPLOYEE SAVINGS PLAN
(As Amended and Restated Effective January 1, 2015)
WHEREAS, Anadarko Petroleum Corporation (the “Company”) has previously adopted the Anadarko Employee Savings Plan (as Amended and Restated Effective January 1, 2015), and as further amended from time to time (the “Plan”); and
WHEREAS, pursuant to Section 10.3 of the Plan, the Board of Directors of the Company took all legal actions to terminate the Plan effective as of August 7, 2019 and to cease further purchases in the Plan’s Company Stock Fund effective as of August 8, 2019;
NOW, THEREFORE, the Company hereby amends the Plan, effective as of August 7, 2019, to reflect the Plan termination, as follows:
1.Effective as of August 7, 2019, the following new Section 2.5 shall be added at the end of Article II of the Plan:
2.5    Plan Termination: Effective as of August 7, 2019 (the ‘Termination Date’), the Plan is terminated and, notwithstanding any provision hereof to the contrary, on and after the Termination Date: (i) no new Participants shall be allowed to commence (or re-commence) participation in the Plan; (ii) no Participant Contributions or Rollover Contributions will be made to the Plan after the Termination Date; (iii) no new Participant loans will be made from the Plan on or after the Termination Date; (iv) no Employer Contributions will be made to the Plan based on Compensation earned after the Termination Date; and (v) the unvested portion of any Accounts as of the Termination Date shall be fully vested as of the Termination Date.”
2.Effective as of August 8, 2019, the following new sentences shall be added to the end of Section 4.10(a) of the Plan:
“Notwithstanding the foregoing sentence or any other provision of the Plan to the contrary, effective as of August 8, 2019 (“Freeze Date”), the Plan Sponsor, in its corporate or settlor capacity, froze the Company Stock Fund and on and after the Freeze Date such fund shall no longer be open to or accept new investment or reinvestment, including from another Plan investment option (including amounts

1



that were previously invested in the Company Stock Fund), other than the loan repayments, to the extent the loan amount was funded from the Company Stock Fund prior to the Merger Date, and cash dividends paid with respect to shares of Company common stock in the Company Stock Fund. Any amounts transferred from the Company Stock Fund to any other Plan investment options cannot be subsequently reinvested in the Company Stock Fund on or after the Freeze Date. Any cash amounts received by the Plan on behalf of Participants in consideration for the conversion of the common stock of the Company in the Company Stock Fund in connection with the transaction pursuant to that certain Agreement and Plan of Merger, dated as of May 9, 2019, by and among the Company, Occidental Petroleum Corporation and certain other parties shall be reinvested in the then-designated qualified default investment alternative applicable for such Participants invested in the Company Stock Fund.”
IN WITNESS WHEREOF, this Termination Amendment to the Anadarko Employee Savings Plan (as Amended and Restated Effective January 1, 2015) is hereby approved, ratified and executed by an authorized officer of Anadarko Petroleum Corporation on this 28th day of August 2019, to be effective as provided above.
ANADARKO PETROLEUM CORPORATION
By:    /s/ Marcia E. Backus    
Name:    Marcia E. Backus    
Title:    Senior Vice President    


2


OCCIDENTAL PETROLEUM CORPORATION SAVINGS PLAN
(As Amended and Restated Effective January 1, 2018)
First Amendment
WHEREAS, Occidental Petroleum Corporation (the “Company”) has previously adopted and maintains the Occidental Petroleum Corporation Savings Plan, as amended and restated effective as of January 1, 2018 (the “Plan”), for the benefit of its eligible employees and eligible employees of its affiliates that have adopted the Plan; and
WHEREAS, the Occidental Petroleum Corporation Pension and Retirement Plan Administrative Committee (the “Committee”) has the right under Section 13.1 of the Plan to amend the Plan at any time and from time to time on behalf of the Company; and
WHEREAS, the Committee desires to amend the Plan to clarify that certain Anadarko Petroleum Corporation employees who are “Third Country Nationals” are excluded from participation in the Plan.
NOW, THEREFORE, the Committee hereby amends the definition of “Eligible Employee” in Section 2.1(z) of the Plan to add a new subsection (5), effective as of August 8, 2019, to read as follows:
“(5)
Any Employee of Anadarko Petroleum Corporation who is not a citizen or legal resident of the United States and is not regularly employed at a worksite of Employer within the United States shall not be eligible to participate in the Plan.”

[Signature Page Follows]


Active 41294043.5    1



IN WITNESS WHEREOF, the Company has caused these presents to be executed by its duly authorized officer, effective as of the date set forth herein.

OCCIDENTAL PETROLEUM CORPORATION
By: /s/ Darin S. Moss    
Name: Darin S. Moss    
Title: VP – Human Resources    


Active 41294043.5    2


KERR-McGEE CORPORATION
BENEFITS RESTORATION PLAN
(Amended and Restated Effective August 8, 2019)







TABLE OF CONTENTS
Page
ARTICLE I PURPOSE1
ARTICLE II DEFINITIONS1
2.01Accrued Benefit    1
2.02Affiliate    1
2.03Basic Defined Benefit Plan Benefit    2
2.04Beneficiary    2
2.05Board of Directors    2
2.06Code    2
2.07Committee    2
2.08Company    2
2.09Defined Benefit Plan    2
2.10ERISA    2
2.11Effective Date    2
2.12Eligible Employee    2
2.13KMG Change of Control    2
2.14Limited 415 Participant    2
2.15Limits of the Code    3
2.16Nondiscrimination Rules    3
2.17Participant    3
2.18Personal Wealth Account    3
2.19Plan    3
2.20Restored Defined Benefit Plan Benefit    3
2.21Retirement Choice Accrued Benefit    3
2.22Section 16 Officers    3
2.23Senior Executive Group    3
2.24Senior Executive Group Member    4
2.25Separation from Service    4
ARTICLE III ELIGIBILITY AND PARTICIPATION4
ARTICLE IV PROVISIONS FOR BENEFITS4
ARTICLE V AMOUNT OF BENEFITS4
5.01Restored Defined Benefit Plan Benefits    4
5.02Restored Benefits    5
5.03Payment to Beneficiary    5
5.04Supplement to the Plan    5
ARTICLE VI PAYMENT OF BENEFITS6
6.01Payment of Restored Defined Benefit Plan Benefit    6
6.02Payment Under Defined Benefit Plan Before 2009    7
6.03Specified Employees    7
ARTICLE VII ADMINISTRATION7

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7.01Administration by Committee    7
7.02Rules of Conduct    7
7.03Legal, Accounting, Clerical and Other Services    7
7.04Records of Administration    8
7.05Expenses    8
7.06Indemnification    8
7.07Liability    8
7.08Claims Review Procedures    8
ARTICLE VIII GENERAL PROVISIONS11
8.01Plan Amendment, Suspension and/or Termination    11
8.02Plan Not an Employment Contract    12
8.03Non-alienation of Benefits    12
8.04Provisions relating to the KMG Change of Control    13
8.05Special Payment Situations    13
8.06Termination of Employment    14
8.07Duty to Provide Data    15
8.08Tax Consequences Not Guaranteed    15
8.09Tax Withholding    15
8.10Beneficiary Designations    15
8.11Incompetency    16
8.12Severability    16
8.13Governing Law    16

ii    



KERR-McGEE CORPORATION
BENEFITS RESTORATION PLAN
ARTICLE I
PURPOSE
The purpose of the Plan is to provide benefits which are not payable to an Eligible Employee under the Defined Benefit Plan because of benefit limitations under the Code. The Plan as set forth herein constitutes an amendment and restatement of the Plan as in effect immediately prior to the Effective Date in order to modify certain provisions of the Plan related to Plan administration. This amendment and restatement of the Plan shall be effective as of the Effective Date.
With respect to Participants other than Limited 415 Participants, the Plan is intended as an unfunded plan to be maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” within the meaning of such phrase for purposes of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and as such it is intended that the Plan be exempt from the participation and vesting, funding, and fiduciary responsibility requirements of Title I of ERISA. The Plan is also intended to qualify for simplified reporting under U.S. Department of Labor Regulation Section 2530.104-23, which provides for an alternative method of compliance for plans described in such regulation. With respect to Limited 415 Participants, the portion of the Plan that provides benefits to such Limited 415 Participants solely due to limitations applicable to the Defined Benefit Plan by reason of Code Section 415 is intended to be treated as a separate plan that is an “excess benefit plan” within the meaning of such phrase for purposes of Sections 3(36) and 4(b)(5) of ERISA. Moreover, the Plan is intended to comply with the requirements of Code Section 409A for nonqualified deferred compensation plans to the extent applicable. The Plan is not intended to satisfy the tax qualification requirements of Code Section 401(a).
ARTICLE II    
DEFINITIONS
The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, the single may include the plural, and vice versa, unless the context clearly indicates to the contrary. Where capitalized words and phrases appear in the Plan, they shall have the respective meanings set forth below.
2.01    Accrued Benefit. The term “Accrued Benefit” shall have the meaning assigned to such term under the Defined Benefit Plan.
2.02    Affiliate.
(a)
Any corporation other than the Company (i.e., either a subsidiary corporation or an affiliated or associated corporation of the Company), which together with the Company is a member of a “controlled group” of corporations;
(b)
Any organization with which the Company is under “common control”;
(c)
Any organization which together with the Company is an “affiliated service group”;
(d)
A limited liability company wholly owned by the Company; or
(e)
Any foreign affiliate of the Company which is covered by an agreement under Section 3121(1) of the Code; as those terms are used in Code Sections 414(b), 414(c), 414(m), and 406(a), respectively.
2.03    Basic Defined Benefit Plan Benefit. The amount payable to the Participant under the Defined Benefit Plan after reduction to comply with the Limits of the Code.
2.04    Beneficiary. The beneficiary or beneficiaries designated by the Participant, in accordance with Section 8.10, to receive any amounts distributable under the Plan upon death.
2.05    Board of Directors. The Board of Directors of the Company.
2.06    Code. The Internal Revenue Code of 1986, as amended from time to time and related IRS notices, rules and regulations.
2.07    Committee. The committee appointed by the Board to administer the Plan; provided, however, that if the Board has not appointed a committee, then each reference herein to the “Committee” shall instead refer to the Board.
2.08    Company. Anadarko Petroleum Corporation, as the successor to Kerr-McGee Corporation, or its successor in interest.
2.09    Defined Benefit Plan. Kerr-McGee Corporation Retirement Plan or its successor plan.
2.10    ERISA. The Employee Retirement Income Security Act of 1974, as amended.
2.11    Effective Date. August 8, 2019, as to this amendment and restatement of the Plan.
2.12    Eligible Employee. Any employee of the Company or an Affiliate whose benefit under the Defined Benefit Plan is limited by the Limits of the Code.
2.13    KMG Change of Control. The acquisition prior to the Effective Date of Kerr-McGee Corporation by the Company as its wholly-owned subsidiary.
2.14    Limited 415 Participant. Any employee of the Company or an Affiliate whose benefit under the Defined Benefit Plan is limited by the limitation imposed by Code Section 415 and who has not otherwise been designated as a Participant in the Plan by the Committee pursuant to the provisions of Article III hereof.
2.15    Limits of the Code. The limitations imposed under the Code, which shall include by example but not by limitation Code Sections 401(a)(17) and/or 415, on the amount of benefits which may be earned or paid under the Defined Benefit Plan, including limitations that vary based upon the form of retirement income elected under the Defined Benefit Plan. From and after the Effective Date, the term “Limits of the Code” shall also include any amendment to the Defined Benefit Plan that is adopted on or after the Effective Date and that is expressly identified in connection with its adoption as an amendment that is intended to reduce or limit accruals under the Defined Benefit Plan with respect to a participant therein who is a “highly compensated employee” (as defined in Code Section 414(q)) due to the application of the Nondiscrimination Rules. Notwithstanding the preceding provisions of this Section 2.15, with respect to a Limited 415 Participant, for all purposes of the Plan (other than for the purpose of computing the Basic Defined Benefit Plan Benefit for such Limited 415 Participant), the term “Limits of the Code” shall mean solely the limitation imposed by Code Section 415 on the amount of benefits which may be earned or paid under the Defined Benefit Plan.
2.16    Nondiscrimination Rules. The nondiscrimination rules set forth in Code Section 401(a)(4), Code Section 410(b) or other provisions of the Code that are applicable to the Defined Benefit Plan and that are intended to prevent discrimination in favor of “highly compensated employees” (as defined in Code Section 414(q)).
2.17    Participant. An Eligible Employee of the Company or an Affiliate who meets the requirements to participate in the Plan in accordance with the provisions of Article III hereof. The term “Participant” shall include a Limited 415 Participant except where expressly provided otherwise in the Plan.
2.18    Personal Wealth Account. The term “Personal Wealth Account” shall have the meaning assigned to such term under the Twenty-Eighth Supplement to the Defined Benefit Plan.
2.19    Plan. Kerr-McGee Corporation Benefits Restoration Plan, as amended from time to time.
2.20    Restored Defined Benefit Plan Benefit. A Participant’s benefit, if any, provided under Section 5.01 hereof attributable to the reduction in the Participant’s Defined Benefit Plan benefit in compliance with the Limits of the Code.
2.21    Retirement Choice Accrued Benefit. The term “Retirement Choice Accrued Benefit” shall have the meaning assigned to such term under the Defined Benefit Plan.
2.22    Section 16 Officers. A Participant who is subject to Section 16 of the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
2.23    Senior Executive Group. Participants designated by the Chairman of the Board of Directors of Kerr-McGee Corporation prior to the KMG Change of Control to be a member of the Senior Executive Group.
2.24    Senior Executive Group Member. A participant in the Senior Executive Group.
2.25    Separation from Service. The Participant’s separation from service with the Company and all Affiliated Entities within the meaning of Code Section 409A.
ARTICLE III    
ELIGIBILITY AND PARTICIPATION
Each employee of the Company or an Affiliate who was a Participant in the Plan immediately prior to the Effective Date shall continue as a Participant in the Plan as of the Effective Date.
From and after the Effective Date, any Eligible Employee shall be a Participant only if the Committee (a) determines that such Eligible Employee is a member of a select group of management or highly compensated employees of the Company or its Affiliates for purposes of Title I of ERISA and (b) designates such Eligible Employee as a Participant. Notwithstanding the foregoing, any employee of the Company or an Affiliate whose benefit under the Defined Benefit Plan is limited by the limitation imposed by Code Section 415 and who is not otherwise designated by the Committee as a Participant pursuant to the preceding sentence shall automatically participate in the Plan as a Limited 415 Participant.
In addition, any employee who, prior to the KMG Change of Control, was (a) a participant in the Defined Benefit Plan and (b) a Senior Executive Group Member, was deemed to have been eligible to participate in the Plan on the day prior to the KMG Change of Control, whether or not benefits under the Defined Benefit Plan were limited by the Code.
ARTICLE IV    
PROVISIONS FOR BENEFITS
Benefits provided by the Plan shall constitute general obligations of the Company and its Affiliates and shall at all times be subject to the claims of the general creditors of the Company and its Affiliates if any such Affiliate is also the employer of the Participant, in accordance with the terms hereof. No amounts in respect of such benefits shall be set aside or held in trust and no recipient of any benefit shall have any right to have the benefit paid out of any particular assets of the Company and its Affiliates; provided, however, that nothing herein shall be construed to prevent a transfer of funds to a grantor trust for the purpose of paying benefits or any part thereof as directed by the Committee under the Plan. The amount payable shall not be in addition to any benefit payable under any supplement to the Plan.
ARTICLE V    
AMOUNT OF BENEFITS
5.01    Restored Defined Benefit Plan Benefits. If the amount payable to the Participant from the Defined Benefit Plan is subject to the Limits of the Code, and any subsequent modifications thereto, the amount by which such benefit is so limited shall be provided for such Participant under the Plan. The amount payable shall not be in addition to any benefit payable under any supplement to the Plan. In calculating the amounts payable under the Plan, such calculation shall be made under the terms of the Defined Benefit Plan without the Limits of the Code; provided, however, that the Restored Defined Benefit Plan Benefits of a Participant who has a Personal Wealth Account shall be based upon such Participant’s Retirement Choice Accrued Benefit (if any, and only to the extent such Participant has not previously received a benefit under the Plan that relates to such Participant’s Retirement Choice Accrued Benefit) and such Participant’s Accrued Benefit under the Twenty-Eighth Supplement to the Defined Benefit Plan. Further, the Restored Defined Benefit Plan Benefits based upon the Participant’s Accrued Benefit under the Twenty-Eighth Supplement to the Defined Benefit Plan shall be calculated as the difference between the balance that would have been in the Participant’s Personal Wealth Account determined without reduction to comply with the Limits of the Code and his Accrued Benefit under the Twenty-Eighth Supplement to the Defined Benefit Plan. However, for the purposes of the Plan, amounts deferred by the Participant under the Kerr-McGee Corporation Executive Deferred Compensation Plan that would have been included in “covered compensation” under the Defined Benefit Plan had such amounts been paid to the Participant will be includable in compensation in calculations to determine Restored Defined Benefit Plan Benefits. Notwithstanding any provision in the Plan to the contrary, if a Participant has received a payment under the Plan with respect to a Restored Defined Benefit Plan Benefit and such Participant subsequently accrues an additional Restored Defined Benefit Plan Benefit, then such additional Restored Defined Benefit Plan Benefit shall be reduced to the extent necessary to eliminate any duplication of benefits with respect to the payment such Participant previously received under the Plan.
5.02    Restored Benefits. Regardless whether a Participant’s Basic Defined Benefit Plan Benefit is subject to Limits of the Code, such Participant shall still be entitled to receive the excess of the Basic Defined Benefit Plan Benefit as provided under Section 8.04 over the amount, if any, payable under the Defined Benefit Plan. Notwithstanding anything to the contrary, benefits payable under this Section shall be deemed to constitute Restored Defined Benefit Plan Benefits.
5.03    Payment to Beneficiary. In the event any benefit payable upon a Participant’s death to a Beneficiary under the Defined Benefit Plan prior to commencement of the Basic Defined Benefit Plan Benefit thereunder is subject to the Limits of the Code, the amount by which such benefit is so limited shall be payable to the Participant’s Beneficiary pursuant to the terms and conditions of Section 6.01 herein.
5.04    Supplement to the Plan. The Supplement which is attached hereto shall be a part of the Plan for all purposes, and, unless specifically stated to the contrary in the Supplement, the terms of the Plan shall control and provide the basis for administration of the Supplement.
ARTICLE VI    
PAYMENT OF BENEFITS
6.01    Payment of Restored Defined Benefit Plan Benefit. Subject to Sections 6.02 and 6.03, the form of the benefit payable under Article V shall be a cash lump sum payment that is made within 90 days after the date of the Participant’s Separation from Service. The lump sum payment described in the preceding sentence shall be defined as the sum of the following amounts to the extent applicable to the Participant: (a) the Tax-Equalized Lump Sum (as defined below); and (b) the lump sum payment amount of the Restored Defined Benefit Plan Benefits with respect to the Participant’s Accrued Benefit under the Twenty-Eighth Supplement to the Defined Benefit Plan. The Tax-Equalized Lump Sum shall be equal to “A” divided by “B”, where:
“A” equals a single lump sum amount that is the actuarial equivalent (determined using (i) the 30-year Treasury Rate for the September preceding the first day of the calendar year in which the lump sum amount under this Section 6.01 is paid and (ii) the mortality table specified in IRS Revenue Ruling 2001-62) of a monthly annuity for the life of the Participant equal to (A) the Net Restoration Benefit, multiplied by (B) the Tax Factor, divided by (C) the Adjustment Factor (all as defined below); and
“B” equals the product of (i) 100% minus the maximum marginal federal income tax rate for married individuals filing joint returns for the calendar year during which the lump sum amount under this Section 6.01 is paid and (ii) 100% minus the maximum marginal state income tax rate, if any, for married individuals filing joint returns in the state of the Participant’s residence for the calendar year during which the lump sum amount under this Section 6.01 is paid.
For purposes of “A” above, the following terms shall have the following meanings:
“Adjustment Factor” means the sum of (i) the percentage of each monthly payment of the Net Restoration Benefit multiplied by the Tax Factor that would not be taxable as a return of principal determined based on the tax exclusion ratio rules promulgated by the Internal Revenue Service (the “Tax Exclusion Ratio”) and (ii) the product of (A) 100% minus the Tax Exclusion Ratio and (B) the Tax Factor;
“Net Restoration Benefit” means the Participant’s Restored Defined Benefit Plan Benefits with respect to the Participant’s Accrued Benefit under the Defined Benefit Plan (other than the Twenty-Eighth Supplement to the Defined Benefit Plan) determined on a monthly basis for the life of the Participant; and
“Tax Factor” means the product of (i) 100% minus the second highest marginal federal income tax rate for married individuals filing joint returns for the calendar year during which the lump sum amount under this Section 6.01 is paid and (ii) 100% minus the maximum marginal state income tax rate, if any, for married individuals filing joint returns in the state of the Participant’s residence for the calendar year during which the lump sum amount under this Section 6.01 is paid.
Except as specifically provided otherwise herein, any actuarial adjustment to a Restored Defined Benefit Plan Benefit hereunder shall be computed using the same actuarial assumptions used on the corresponding Basic Defined Benefit Plan Benefit.
6.02    Payment Under Defined Benefit Plan Before 2009. If a Participant (a) incurred a Separation from Service after December 31, 2004 and (b) received or commenced receipt of any pension benefits payment under the Defined Benefit Plan at any time before January 1, 2009, such Participant (or his Beneficiary) received his benefits under the Plan in a cash lump sum payment that was made within 90 days after the date that benefits were paid, or commenced to be paid, under the terms of the Defined Benefit Plan. If a Participant (a) incurred a Separation from Service after December 31, 2004 and (b) did not receive or commence receipt of any pension benefits payment under the Defined Benefit Plan at any time before January 1, 2009, such Participant (or his Beneficiary) received his benefits under the Plan in a cash lump sum payment that was made within 90 days after December 31, 2008. If a Participant incurred a Separation from Service before January 1, 2005, such Participant (or his Beneficiary) shall receive his benefits under the Plan in a cash lump sum payment within 90 days after the date that benefits are paid, or commence to be paid, under the terms of the Defined Benefit Plan, regardless of whether or not such benefits are paid, or commence to be paid, under the Defined Benefit Plan before January 1, 2009.
6.03    Specified Employees. Notwithstanding anything in the Plan to the contrary, if the payment of any benefit under this Article VI would be subject to taxation under Code Section 409A because the timing of such payment is not delayed to the extent required under Code Section 409A for a Specified Employee upon his Separation from Service, then if the Participant is a Specified Employee, any such payment that the Participant would otherwise be entitled to receive during the first six months following his Separation from Service shall be accumulated and paid, within 90 days after the date that is six months following the date of his Separation from Service, or such earlier date upon which such amount can be paid or provided under Code Section 409A without being subject to such additional taxes and interest such as, for example, due to the death of Participant.
ARTICLE VII    
ADMINISTRATION
7.01    Administration by Committee. The Committee shall be the plan administrator, except that for all matters (including, without limitation, interpretation of the Plan) directly relating to participation, claims or benefits associated with individuals who are then Section 16 Officers, the Committee shall be the Executive Compensation Committee of the Occidental Petroleum Corporation.
7.02    Rules of Conduct. The Committee shall adopt such rules for the conduct of its business and the administration of the Plan as it considers desirable, provided they do not conflict with the provisions of the Plan.
7.03    Legal, Accounting, Clerical and Other Services. The Committee may authorize one or more if its members or any agent to act on its behalf and may contract for legal, accounting, clerical and other services to carry out the Plan. The Company shall pay all expenses of the Committee.
7.04    Records of Administration. The Committee shall keep records reflecting the administration of the Plan which shall be subject to audit by the Company.
7.05    Expenses. The expenses of administering the Plan shall be borne by the Company.
7.06    Indemnification. The officers and directors of the Company, members of the Committee, and any employees of the Company who administer the Plan (including in-house counsel who interprets the Plan) shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability, or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by them in settlement with the Company’s written approval or paid by them in satisfaction of a judgment in any such action, suit, or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability, or expense is due to such person’s fraud or willful misconduct.
7.07    Liability. No member of the Board of Directors or of the Committee shall be liable for any act or action, whether of commission or omission, taken by any other member, or by any officer, agent, or employee of the Company or of any such body, nor, except in circumstances involving his bad faith, for anything done or omitted to be done by himself.
7.08    Claims Review Procedures.
(a)
Filing a Claim. A Participant or his authorized representative may file a claim for benefits under the Plan (hereafter, referred to as a “Claimant”). Any claim must be in writing and submitted to the Committee at such address as may be specified from time to time. Claimants will be notified in writing of approved claims, which will be processed as claimed. A claim is considered approved only if its approval is communicated in writing to the Claimant.
(b)
Denial of Claim. In the case of the denial of a claim respecting benefits paid or payable with respect to a Participant, a written notice will be furnished to the Claimant within 90 days of the date on which the claim is received by the Committee. If special circumstances (such as for a hearing) require a longer period, the Claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time; provided, however, that no extensions will be permitted beyond 90 days after the expiration of the initial 90-day period.
(c)
Reasons for Denial. A denial or partial denial of a claim will be dated and signed by the Committee and will clearly set forth:
(1)
the specific reason or reasons for the denial;
(2)
specific reference to pertinent Plan provisions on which the denial is based;
(3)
a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and
(4)
an explanation of the procedure for review of the denied or partially denied claim set forth below, including the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
(d)
Review of Denial. Upon denial of a claim, in whole or in part, the Claimant or his duly authorized representative will have the right to submit a written request to the Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Committee within 60 days of the receipt by the Claimant of written notice of the denial of the claim. A Claimant or the Claimant’s authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other

1



information relevant to the Claimant’s claim for benefits and may submit issues and comments in writing. The review will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
If the Claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the Claimant precluded from reasserting it. If the Claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.
(e)
Decision Upon Review. The Committee will provide a prompt written decision on review to the Claimant. If the claim is denied on review, the decision shall set forth:
(1)
the specific reason or reasons for the adverse determination;
(2)
specific reference to pertinent Plan provisions on which the adverse determination is based;
(3)
a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and
(4)
a statement describing any voluntary appeal procedures offered by the Plan and the Claimant’s right to obtain the information about such procedures, as well as a statement of the Claimant’s right to bring an action under ERISA Section 502(a).
A decision will be rendered no more than 60 days after the Committee’s receipt of the request for review, except that such period may be extended for an additional 60 days if the Committee determines that special circumstances (such as for a hearing) require such extension. If an extension of time is required, written notice of the extension will be furnished to the Claimant before the end of the initial 60-day period.
To the extent of its responsibility to review the denial of benefit claims, the Committee will have full authority to interpret and apply in its discretion the provisions of the Plan. The decision of the Committee will be final and binding upon any and all Claimants, including, but not limited to, the Participant and any other individual making a claim through him.
(f)
Other Procedures. Notwithstanding the foregoing, the Committee, in its discretion, may adopt different procedures for different claims

2



without being bound by past actions. Any procedures adopted, however, shall be designed to afford a Claimant a full and fair review of his claim and shall comply with applicable regulations under ERISA.
(g)
Finality of Determinations: Exhaustion of Remedies. To the extent permitted by law, decisions reached under the claims procedures set forth in this Section 7.08 shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the Claimant has exhausted his remedies under this Section. In any such legal action, the Claimant may only present evidence and theories which the Claimant presented during the claims procedure. Any claims which the Claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a Claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the Claimant presented during the claims procedure. Any suit or legal action initiated by a Claimant under the Plan must be brought by the Claimant no later than one year following a final decision on the claim for benefits by the Committee. The one-year limitation on suits for benefits will apply in any forum where a Claimant initiates such suit or legal action.
(h)
Effect of Committee Action. The Plan shall be interpreted by the Committee in accordance with the terms of the Plan and their intended meanings. However, the Committee shall have the discretion to make any findings of fact needed in the administration of the Plan, and shall have the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any fashion they deem to be appropriate in their sole judgment. The validity of any such finding of fact, interpretation, construction or decision shall not be given de novo review if challenged in court, by arbitration or in any other forum, and shall be upheld unless clearly arbitrary or capricious. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Committee in its sole and exclusive judgment, the provision shall be considered ambiguous and shall be interpreted by the Committee in a fashion consistent with its intent, as determined by the Committee in its sole discretion. The Committee may amend the Plan retroactively to cure any such ambiguity. This Section 7.08(h) may not be invoked by any

3



person to require the Plan to be interpreted in a manner which is inconsistent with its interpretation by the Committee. All actions taken and all determinations made in good faith by the Committee shall be final and binding upon all persons claiming any interest in or under the Plan.
ARTICLE VIII    
GENERAL PROVISIONS
8.01    Plan Amendment, Suspension and/or Termination. The Board of Directors may, by resolution, in its absolute discretion, from time to time, amend, suspend or terminate in whole or in part, and if terminated, reinstate any or all of the provisions of the Plan, except that no amendment, suspension or termination may apply so as to decrease the payment to any Participant (or Beneficiary) of any benefit under the Plan accrued prior to the effective date of such amendment, suspension or termination. Upon termination of the Plan, distribution of benefits shall be made to Participants and Beneficiaries in the manner and at the time described in the Plan, unless one of the following termination events occurs, in which case, all such amounts shall be distributed in a lump sum upon termination, or upon the earliest date allowable under Code Section 409A: (1) the Company’s termination and liquidation of the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court; (2) the Company’s termination and liquidation of the Plan pursuant to irrevocable action taken by the Company within the 30 days preceding or 12 months following a change in control event (within the meaning of Code Section 409A), provided that all agreements, methods, programs, and other arrangements sponsored by the Company that arc aggregated under Code Section 409A are terminated and liquidated with respect to each Participant that experiences the change in control event; or (3) the Company’s termination and liquidation of the Plan, provided that (a) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company, (b) the Company terminates and liquidates all agreements, methods, programs, and other arrangements sponsored by the Company that would be aggregated under Code Section 409A if the same Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements sponsored by the Company that are terminated and liquidated, (c) no payments in liquidation of the Plan arc made within 12 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would have been payable absent the termination and liquidation, (d) all payments are made within 24 months after the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan and (e) the Company does not adopt a new plan that would be aggregated with any terminated and liquidated plan under Code Section 409A if the same Participant participated in both plans, at any time within three years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan.
The Board of Directors may delegate to an officer of the Company or Occidental Petroleum Corporation, the authority to execute an amendment to the Plan that has been approved by the Board of Directors.
8.02    Plan Not an Employment Contract. The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a contract between the Company or its Affiliates and any Eligible Employee, or consideration for, or an inducement or condition of, the employment of an Eligible Employee. Nothing contained in the Plan shall give any Eligible Employee the right to be retained in the service of the Company or its Affiliates or to interfere with or restrict the right of the Company or its Affiliates, which is hereby expressly reserved, to discharge or retire any Eligible Employee at any time for any reason not prohibited by statute, without the Company or its Affiliates being required to show cause for the termination. Inclusion under the Plan will not give any Eligible Employee any right or claim to any benefit hereunder except to the extent such right has specifically become fixed under the terms of the Plan. The doctrine of substantial performance shall have no application to Eligible Employees, Participants or Beneficiaries. Each condition and provision, including numerical items, has been carefully considered and constitutes the minimum limit on performance which will give rise to the applicable right.
8.03    Non-alienation of Benefits. Except as provided in this Section and to the extent permitted by law, benefits payable under the Plan shall not, without Committee consent, be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary. An unauthorized attempt to charge or otherwise dispose of any right to benefits payable shall be subject to seizure by legal process resulting from any attempt by creditors of or claimants against any Participant (or Beneficiary), or any person claiming under or through the foregoing, to attach his interest under the Plan. The anti-alienation restrictions of this Section 8.03 shall not apply to a “qualified domestic relations order” as described in Code Section 414(p). The Committee shall establish procedures to determine whether domestic relations orders are “qualified domestic relation orders” and to administer distributions under such qualified domestic relation orders. From and after the KMG Change of Control, the Company and its Affiliates shall not withhold from amounts payable to a Participant or his Beneficiary under the Plan any amount the Participant may owe the Company or its Affiliates.
8.04    Provisions relating to the KMG Change of Control. Notwithstanding anything to the contrary, following the KMG Change of Control, each Senior Executive Group Member who was entitled prior to the KMG Change of Control to participate in the Plan shall upon termination of employment following the KMG Change of Control have a nonforfeitable right to benefits under the Plan. For purposes of computing such benefits under Article V, each such Senior Executive Group Member shall be credited with five additional years of service. For purposes of computing such Senior Executive Group Member’s age for determining when the payment of benefits commences under Article VI of the Plan, each such Senior Executive Group Member’s age shall be determined by adding additional years equal to the lesser of (i) five years or (ii) the number of years necessary to bring such Senior Executive Group Member to age 65.
8.05    Special Payment Situations.
(a)
Missing Participant or Beneficiary. Payment of benefits to the person entitled thereto may be sent by first class mail, address correction requested, to the last known address on file with the Committee. If, within two months from the date of issuance of the payment, the payment letter cannot be delivered to the person entitled thereto or the payment has not been negotiated, the payment shall be treated as forfeited. However, if the person to whom the benefit became payable subsequently appears and identifies himself to the satisfaction of the Committee, the amount forfeited (without earnings thereon) shall be distributed to the person entitled thereto. The right of any person to restoration of a benefit which was forfeited pursuant to this Section shall cease upon termination of the Plan.
(b)
Private Investigators. If the Committee retains a private investigator or other person or service to assist in locating a missing person, all costs incurred for such services shall be charged against the benefit to which the missing person was believed to be entitled and the benefit shall be reduced by the amount of the costs incurred, except as the Committee may otherwise direct.
(c)
Delayed Payment. Payments to Participants or Beneficiaries may be postponed by the Committee until any anticipated taxes, expenses or amounts to be paid under a qualified domestic relations order have been paid in full or until it is determined that such charges will not be imposed. A payment to a Participant or Beneficiary may also be delayed in the event payment might defeat an adverse potential or asserted claim by some other person to the payment. The cost incurred by the Company in dealing with any such adverse claim shall be charged against the benefit to which the claim relates, except as the Committee otherwise directs. No delay may be made under this Section 8.05(c) if such delay would result in taxation to the Participant under Code Section 409A.
8.06    Termination of Employment.
(a)
General Rule. A Participant’s employment with the Company or its Affiliates shall terminate upon the first to occur of his resignation from or discharge by the Company or its Affiliates (except as provided in subsection (c) with respect to business dispositions) or his death or retirement. A Participant’s employment shall not terminate on account of an authorized leave of absence, disability leave, sick leave, vacation, on account of a military leave described in subsection (b), or transfers between the Company and its Affiliates. However, failure to return to work upon expiration of any leave of absence, sick leave, disability leave, or vacation shall be considered a resignation effective as of the expiration of such leave of absence, sick leave, disability leave, or vacation.
(b)
Military Leaves. Any Participant who leaves the Company or its Affiliates directly to perform service in the Armed Forces of the United States or in the United States Public Health Service under conditions entitling the Participant to reemployment rights, as provided in the laws of the United States, shall be on military leave. A Participant’s military leave shall expire if the Participant voluntarily resigns from the Company or its Affiliates during the leave or if he fails to make application for reemployment within the period specified by such law for the preservation of reemployment rights. In such event, the individual’s employment shall be deemed to terminate by resignation on the date the military leave expired.
(c)
Spinoffs. Except to the extent otherwise provided by Code Section 409A, if a Participant ceases to be employed by the Company or its Affiliates because of the disposition by the Company or its Affiliates of its interest in a subsidiary, plant, facility or other business unit or if an entity which employs a Participant ceases to be an Affiliate, such Participant’s employment shall be considered terminated for all Plan purposes. This Section 8.06(c) shall not apply to the extent it is overridden by any contrary or inconsistent provision in applicable sales documents or any related documents, whether adopted before or after the sale and any such contrary or inconsistent provision shall instead apply and is hereby incorporated in the Plan by this reference.
8.07    Duty to Provide Data.
(a)
Data Requests. Every person with an interest in the Plan or claiming benefits under the Plan shall furnish the Committee on a timely and accurate basis with such documents, evidence or information as it considers necessary or desirable for the purpose of administering the Plan. The Committee may postpone payment of benefits (without accrual of interest) until such information and such documents have been furnished.

4



(b)
Addresses. Every person claiming a benefit under the Plan shall give written notice to the Committee of his post office address and each change of post office address. Any communication, statement or notice addressed to such a person at his latest post office address as filed with the Committee will, on deposit in the United States mail with postage prepaid, be as binding upon such person for all purposes of the Plan as if it had been received, whether actually received or not. If a person fails to give notice of his correct address, the Committee, the Company and its Affiliates and Plan fiduciaries shall not be obliged to search for, or to ascertain, his whereabouts.
(c)
Failure to Comply. If benefits which are otherwise currently payable cannot be paid to the person entitled to the benefits because the individual has failed to comply with this Section or other Plan provisions relating to claims for benefits, any unpaid past due amount shall be forfeited on the individual’s death or presumed death.
8.08    Tax Consequences Not Guaranteed. The Company does not warrant that the Plan will have any particular tax consequences for Participants or Beneficiaries and shall not be liable to them if tax consequences they anticipate do not actually occur. The Company shall have no obligation to indemnify a Participant or Beneficiary for lost tax benefits (or other damage or loss) in the event benefits are cancelled as permitted under Section 8.01, accelerated, or because of change in Plan design or funding; e.g., establishment of a “secular trust.”
8.09    Tax Withholding. The Company or other payor may withhold from a benefit payment under the Plan any Federal, state or local taxes required by law to be withheld with respect to such payment and may withhold such sum as the payor may reasonably estimate as necessary to cover any taxes for which the Company may be liable and which may be assessed with regard to such payment.
8.10    Beneficiary Designations. The Beneficiary designation for a Participant shall be the same as his Beneficiary designation under the Defined Benefit Plan. If no valid Beneficiary designation exists at the time of the Participant’s death under the Defined Benefit Plan, then the designation of a Beneficiary will follow the default provisions of the Defined Benefit Plan if the Participant is a participant in the Defined Benefit Plan at the time of his death.
In the event an Eligible Employee, upon becoming a Participant, is not a participant in the Defined Benefit Plan, he may file with the Committee (or its delegate) a designation of one or more Beneficiaries to whom benefits otherwise payable to the Participant shall be made prior to the complete distribution of his benefits under the Plan. Such a Beneficiary designation shall be on the form prescribed by the Committee and shall be effective when received and accepted by the Committee. A Participant who is not a participant in the Defined Benefit Plan may, from time to time, revoke or change his Beneficiary designation by filing a new designation form with the Committee. The last valid designation received by the Committee shall be controlling; provided, however, that no Beneficiary designation, or change or revocation thereof, shall be effective unless received prior to the Participant’s death, and shall not be effective as of a date prior to its receipt or if the Participant is a participant in the Defined Benefit Plan at the time of his death.
If no valid Beneficiary designation exists at the time of the Participant’s death under the foregoing provisions of this Section 8.10 or if no designated Beneficiary under this Plan survives the Participant, or if such designation conflicts with applicable law, benefits shall be paid to the Participant’s surviving lawful spouse, if any. If there is no surviving spouse, then payment of benefits shall be made to the executor or administrator of the Participant’s estate, or if there is no administration on Participant’s estate, in accordance with the laws of descent and distribution. If the Committee is in doubt as to the right of any person to receive such amount, it may direct that the amount be paid into any court of competent jurisdiction in an interpleader action, and such payment shall be a full and complete discharge of any liability or obligation under the Plan to the full extent of such payment.
8.11    Incompetency. Any person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent until the date on which the Committee receives a written notice, in an acceptable form and manner, that such person is incompetent and a guardian or other person legally vested with the care of his estate has been appointed. If the Committee finds that any person to whom a benefit is payable under the Plan is unable to care for his affairs because of any disability or infirmity and no legal guardian of such person’s estate has been appointed, any payment due may be paid to the spouse, a child, a parent, a sibling, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment. Any such payment so made shall be a complete discharge of any liability therefore under the Plan. If a guardian of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, benefit payments shall be made to such guardian, provided proper proof of appointment and continuing qualification is furnished in the form and manner acceptable to the Committee. Any such payment so made shall be a complete discharge of any liability therefore under the Plan.
8.12    Severability. If any provision of the Plan is held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had never been contained therein.
The Company shall have the privilege and opportunity to correct and remedy such questions of illegality or invalidity by amendment.
8.13    Governing Law. The Plan is subject to ERISA, but is exempt from most parts of ERISA since a part of the Plan is an excess benefit plan and the balance of the Plan is an unfunded deferred compensation plan maintained for a select group of management or highly compensated employees. In no event shall any references to ERISA in the Plan be construed to mean that the Plan is subject to any particular provisions of ERISA. The Plan shall be governed and construed in accordance with federal law and the laws of the State of Texas, without regard to its conflicts of law provisions, except to the extent such laws are preempted by ERISA.
[Signature on the following page.]



5



IN WITNESS WHEREOF, Anadarko Petroleum Corporation has caused the Plan (as amended and restated) to be duly adopted and executed effective as of the Effective Date.
ANADARKO PETROLEUM CORPORATION
By:    /s/ Marcia E. Backus    
Name:    Marcia E. Backus    
Title:    
Senior Vice President    



6



FIRST SUPPLEMENT TO THE KERR-McGEE CORPORATION BENEFITS
RESTORATION PLAN
AS AMENDED AND RESTATED EFFECTIVE MAY 1, 1999
(As it applies to Participants who were Participants in the
Oryx Energy Company Pension Restoration Plan
As of December 31, 1999)
(A)    Applicability of First Supplement
(1)
This First Supplement to the Kerr-McGee Corporation Benefits Restoration Plan (the “First Supplement”) forms a part of the Kerr-McGee Corporation Benefits Restoration Plan as in effect on and after May 1, 1999 (the “Plan”). The provisions of this First Supplement shall apply only to those Participants who were Participants in the Oryx Energy Company Pension Restoration Plan (the “Oryx Plan”) as of December 31, 1999 (“Former Oryx Participants”) who became Participants in the Plan effective January 1, 2000 (hereinafter referred to as “First Supplement Participants”).
(2)
There shall be no duplication of benefits provided under the Plan and this First Supplement, and the actuarially equivalent benefits payable under one shall be inclusive of the actuarially equivalent benefits payable under the other unless specifically provided otherwise in the provisions of the Plan or this First Supplement.
(3)
All terms used in this First Supplement shall have the meanings assigned to them in the provisions of the Plan, unless a different meaning is plainly required by the context.
(B)    Merger of Oryx Plan into the Plan Effective January 1, 2000
(1)
The Oryx Plan had previously been sponsored by Oryx Energy Company (“Oryx”). Oryx was merged with Kerr-McGee Corporation (“KMG”) effective February 26, 1999 (the “Merger”). Due to the Merger, KMG assumed the Oryx Plan and obligations thereunder including those to the Former Oryx Participants.
(2)
KMG believed that it would be in the best interest of the Oryx Plan, the Plan and the Participants therein that the Oryx Plan be merged and continued in the Plan effective January 1, 2000.
(3)
The effective date of the merger of the Oryx Plan into the Plan shall be January 1, 2000.
(4)
Upon merger of the Oryx Plan into the Plan effective January 1, 2000, there shall be no further benefit accruals pursuant to the terms of the Oryx Plan, and benefits for all First Supplement Participants shall accrue thereafter in accordance with the terms of the Plan. Following the merger, all benefits earned under the Oryx Plan prior to January 1, 2000, and benefits earned pursuant to the Plan from and after

First Supplement - 1



such date will be paid in accordance with the terms of the Plan and this First Supplement.
(C)    Benefits Applicable to First Supplement Participants
(1)
The term “Defined Benefit Plan” as applicable for a First Supplement Participant means the Kerr-McGee Corporation Retirement Plan or its successor plan or the Oryx Energy Company Retirement Plan prior to its merger with the Kerr-McGee Corporation Retirement Plan on January 1, 2000.
(2)
The Restored Defined Benefit Plan Benefit under the Plan accrued by a First Supplement Participant under Section 7 of the Oryx Plan as of January 1, 2000, immediately prior to the merger of the Oryx Plan with the Plan (hereinafter referred to as the “Oryx Plan Restored Benefit”) will be paid at the same time as the benefits under the Defined Benefit Plan and in the form of a lump sum, subject to offset pursuant to Section 9 of the Oryx Plan, if applicable, regardless of the form of payment of the benefit under the Defined Benefit Plan. The amount of such lump sum will be determined as the actuarial equivalent of the Oryx Plan Restored Benefit. Such actuarial equivalency will be determined in the same manner as and on the same basis as the actuarial assumptions provided in the Defined Benefit Plan. The provisions of Section 6.01 of the Plan are not applicable to the Oryx Plan Restored Benefit of a First Supplement Participant.
(3)
Effective January 1, 2000, that portion, if any, of the Restored Defined Benefit Plan Benefit under the Plan payable to a First Supplement Participant that is in excess of the Participant’s Oryx Plan Restored Benefit will be payable in accordance with Section 6.01 of the Plan.
(4)
Former Oryx Participants who were receiving or who were eligible to receive benefits from the Sun Company, Inc. Pension Restoration Plan and who were transferred to the Oryx Plan as of November 1, 1988, shall continue to receive or be eligible to receive their benefits under the Plan.
(D)    Right to Amend or Terminate First Supplement
The provisions of Section 8.01 of the Plan with respect to amendment and termination thereof shall apply with equal force to this First Supplement.

First Supplement - 2


EXHIBIT 31.1
RULE 13a – 14(a) / 15d – 14(a)
CERTIFICATION
PURSUANT TO §302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vicki Hollub, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Occidental Petroleum Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:  November 4, 2019

 
/s/ Vicki Hollub
 
 
Vicki Hollub
 
 
President and Chief Executive Officer
 




EXHIBIT 31.2
RULE 13a – 14(a) / 15d – 14(a)
CERTIFICATION
PURSUANT TO §302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cedric W. Burgher, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Occidental Petroleum Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:  November 4, 2019

 
/s/ Cedric W. Burgher
 
 
Cedric W. Burgher
 
 
Senior Vice President and Chief Financial Officer




EXHIBIT 32.1
CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
§ 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Occidental Petroleum Corporation (the “Company”) for the fiscal period ended September 30, 2019, as filed with the Securities and Exchange Commission on November 4, 2019 (the “Report”), Vicki Hollub, as Chief Executive Officer of the Company, and Cedric W. Burgher, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her or his knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Vicki Hollub
 
Name:
Vicki Hollub
 
Title:
President and Chief Executive Officer
Date:
November 4, 2019
 



/s/ Cedric W. Burgher
 
Name:
Cedric W. Burgher
 
Title:
Senior Vice President and Chief Financial Officer
Date:
November 4, 2019
 



A signed original of this written statement required by Section 906 has been provided to Occidental Petroleum Corporation and will be retained by Occidental Petroleum Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.