LEASE COMMITMENTS

12 Months Ended

Dec. 31, 2021


NOTE 7 - LEASE COMMITMENTS

Occidental identifies leases through its accounts payable and contract monitoring processes. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease assets include the lease liability, upfront payments and costs incurred to execute the lease and are amortized on a straight-line basis over the lease term. Occidental assesses the likelihood of exercising renewal, termination and purchase options to determine the lease term. Occidental uses its incremental borrowing rate at commencement date to determine the present value of lease payments. The incremental borrowing rate is the rate of interest that Occidental would pay to borrow an amount equal to the lease payments over a similar term on a collateralized basis in a similar economic environment. Certain leases include variable lease payments based on the underlying asset’s operations that are not included in the lease asset and liability.

Occidental has operating leases for oil and gas exploration and development equipment, including offshore and onshore drilling rigs of $32 million, compressors of $62 million, storage facilities of $52 million, office space of $386 million and other field equipment of $32 million. Operating lease terms generally range from one to eight years. Operating leases also include pipelines, rail cars, easements, aircraft and real estate of $207 million. These operating leases have contract expiration terms ranging from one to 10 years.

Occidental’s finance leases include a gas treating and processing plant, oil and gas exploration and development equipment, compressors, real estate offices and field equipment of approximately $589 million.

The following table presents lease balances and their classification on the Consolidated Balance Sheets as of December 31:


millions	Balance sheet classification	2021		2020
Assets:
Operating	Operating lease assets	$	726	$	1,062
Finance	Property, plant and equipment	581		365
Total lease assets		$	1,307	$	1,427

Liabilities:
Current
Operating	Current operating lease liabilities	$	186	$	473
Finance	Current maturities of long-term debt	85		42
Non-current
Operating	Deferred credits and other liabilities - Operating lease liabilities	585		641
Finance	Long-term debt, net	504		316
Total lease liabilities		$	1,360	$	1,472

As of December 31, 2021, Occidental will make the following lease payments:


millions	Operating Leases (a)		Finance Leases (b)		Total
2022	$	183	$	85	$	268
2023	128		84		212
2024	99		82		181
2025	78		68		146
2026	94		57		151
Thereafter	302		300		602
Total lease payments	884		676		1,560
Less: Interest	(113)		(87)		(200)
Total lease liabilities	$	771	$	589	$	1,360

(a)The weighted-average remaining lease term is 7.3 years and the weighted-average discount rate is 3.40%.

(b)The weighted-average remaining lease term is 9.2 years and the weighted-average discount rate is 2.91%.

The following tables present Occidental’s total lease cost classifications and cash paid for operating and finance lease liabilities for the years ended December 31:


millions
Lease cost classification (a)	2021		2020
Operating lease costs (b)
Property, plant and equipment, net	$	222	$	197
Operating expense and cost of sales	487		557
Selling, general and administrative expenses	109		107
Finance lease cost
Amortization of ROU assets	39		29
Interest on lease liabilities	13		14
Total lease cost	$	870	$	904

(a)Amounts reflected are gross before joint-interest recoveries. Lease payments are reduced by joint-interest recoveries on the income statement through the joint-interest billing process.

(b)Included short-term lease cost of $238 million and $207 million and variable lease cost of $120 million and $95 million for the years ended December 31, 2021 and 2020, respectively.



millions	2021		2020
Operating cash flows	$	401	$	506
Investing cash flows	$	73	$	89
Financing cash flows	$	39	$	29

LEASE COMMITMENTS


NOTE 7 - LEASE COMMITMENTS