OCCIDENTAL PETROLEUM CORP DE

Occidental’s oil and gas segment focuses on long-term value creation and leadership in sustainability, health, safety and the environment. In each core operating area, Occidental’s operations benefit from scale, technical expertise, decades of high-margin inventory, environmental and safety leadership and commercial and governmental collaboration. These attributes allow Occidental to bring additional production quickly to market, extend the life of older fields at lower costs and provide low-cost returns-driven growth opportunities with advanced technology.

Occidental is one of the largest U.S. producers of liquids, which includes oil and NGL, allowing Occidental to maximize cash margins on a per barrel basis. The advantages that Occidental’s portfolio provides, coupled with its advanced subsurface characterization ability and the proven ability to execute, position Occidental for full-cycle success in the years ahead. The oil and gas segment maximizes efficiencies to deliver lower breakeven costs and generate excess free cash flow. The oil and gas segment strives to achieve low development and operating costs to maximize full-cycle value of the assets.

The oil and gas business implements Occidental’s strategy primarily by:

■Operating and developing areas where reserves are known to exist and optimizing capital intensity in core areas, primarily in the Permian Basin, DJ Basin, Gulf of Mexico, UAE, Oman and Algeria;

■Maintaining a disciplined and prudent approach to capital expenditures with a focus on high-return, short and mid-cycle, cash-flow-generating opportunities and an emphasis on creating value and further enhancing Occidental’s existing positions;

■Focusing Occidental’s subsurface characterization and technical activities on both conventional and unconventional resources in the Permian Basin, Rockies, Gulf of Mexico and International;

■Using secondary and tertiary recovery techniques in mature fields; and

■Focusing on cost-reduction efficiencies and innovative technologies to reduce carbon emissions.

In 2023, oil and gas capital expenditures were approximately $5.0 billion and primarily focused on Occidental’s assets in the Permian Basin, DJ Basin, Gulf of Mexico and Oman. In 2024, Occidental plans to spend $4.8 billion to $5.0 billion to develop its oil and gas assets, excluding amounts associated with the CrownRock Acquisition.

MANAGEMENT’S DISCUSSION AND ANALYSIS

In December 2023, Occidental entered into an agreement to purchase CrownRock L.P. for total consideration of $12.0 billion. Occidental intends to finance the purchase with the issuance of $9.1 billion of new debt, the issuance of approximately $1.7 billion of common equity and the assumption of CrownRock’s $1.2 billion of existing debt. Occidental believes the CrownRock Acquisition will deliver immediate and significant free cash flow accretion and improve scale in the Midland Basin, along with a unique opportunity to add to Occidental’s high-grade U.S. onshore asset portfolio. This free cash flow accretion will also enable Occidental to increase its dividend in the near term, and provides high-margin inventory that will support the sustainable growth over time.

On January 19, 2024, Occidental and the Sellers each received a Second Request from the FTC in connection with the FTC’s review of the CrownRock Acquisition. A Second Request extends the waiting period imposed by the HSR Act until 30 days after each of Occidental and the Sellers have substantially complied with the Second Request issued to them, unless that period is extended voluntarily by Occidental and the Sellers or terminated sooner by the FTC. Occidental and the Sellers continue to work constructively with the FTC in its review of the CrownRock Acquisition, which Occidental expects will close in the second half of 2024.

OIL AND GAS PRICE ENVIRONMENT

Oil and gas prices are the major variables that drive the industry’s financial performance. The following table presents the average daily WTI and Brent prices for oil and NYMEX natural gas prices for 2023 and 2022:

The following table presents Occidental’s average realized prices for continuing operations as a percentage of WTI, Brent and NYMEX for 2023 and 2022:

Prices and differentials can vary significantly, even on a short-term basis, making it difficult to predict realized prices with a reliable degree of certainty.

DOMESTIC INTERESTS

Occidental conducts its domestic operations through land leases, subsurface mineral rights it owns, or a combination of both. Occidental’s domestic oil and gas leases have a primary term ranging from one to 10 years, which is extended through the end of production once it commences. Occidental has leasehold and mineral interests in 9.3 million net acres, of which approximately 51% is leased, 48% is owned subsurface mineral rights and 1% is owned land with mineral rights. Approximately $4.1 billion to $4.3 billion of Occidental’s worldwide capital budget is expected to be allocated to its domestic operations in 2024, before the impact of the CrownRock Acquisition.

MANAGEMENT’S DISCUSSION AND ANALYSIS

DOMESTIC ASSETS(a)

1. Powder River Basin2. DJ Basin3. Permian Basin4. Gulf of Mexico

(a)Map represents geographic outlines of the respective basins.

The Permian Basin

The Permian Basin extends throughout West Texas and Southeast New Mexico and is one of the largest and most active oil basins in the United States, accounting for more than 45% of total United States oil production in 2023. Overall in 2023, Occidental’s production in the Permian Basin was approximately 584 Mboe/d.

Occidental manages its Permian Basin operations through two businesses: Permian Resources, which includes unconventional opportunities, and Permian EOR, which utilizes secondary and tertiary recovery techniques. Occidental had a leading position in the Permian Basin, producing approximately 9% of the total oil in the basin in 2023. By exploiting the natural synergies between Permian Resources and Permian EOR, Occidental is able to deliver unique short- and long-term advantages, efficiencies and expertise across its Permian Basin operations.

The Permian Resources unconventional business is focused on developing and producing unconventional reservoir targets using horizontal drilling technology. The development programs are designed to create long-term value from primary development by maximizing the recovery of oil, utilizing sustainable practices and providing strong financial returns. Occidental’s unconventional oil and gas operations in Permian Resources include approximately 1.4 million net acres. In 2023, Occidental’s activities were focused in the core development areas with emphasis on maintaining the industry leading capital intensity through optimized surface infrastructure and customized well designs. Overall, in 2023, Permian Resources produced from approximately 4,520 gross wells and added 265 MMboe to Occidental’s proved reserves through infill development projects and extensions of proved areas.

The Permian Basin’s concentration of large conventional reservoirs, strong CO 2 flooding performance and the expansive CO 2 transportation and processing infrastructure has resulted in decades of high-value enhanced oil production. With 34 active CO 2 floods and over 50 years of experience, Occidental is the industry leader in Permian Basin CO 2 flooding, which can increase ultimate oil recovery by 10% to 25%. Technology improvements, such as the recent trend toward vertical expansion of the CO 2 flooded interval into residual oil zone targets, continue to yield more recovery from existing projects. Significant opportunities also remain to gain additional recovery by expanding Occidental’s existing CO 2 projects into new portions of reservoirs that have only been waterflooded. Permian EOR has 1.4 million net acres with a large inventory of future CO 2 projects, which could be developed over the next 20 years or accelerated, depending on market conditions. Permian EOR produced from approximately 13,000 gross wells in 2023. In 2023, Occidental spent approximately $2.8 billion of capital in the Permian Basin, of which 88% was spent on Permian Resources assets.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Rockies and Other Domestic

In 2023, Occidental produced approximately 271 Mboe/d net and spent capital of approximately $0.7 billion in the Rockies and Other Domestic locations. Production in the DJ Basin is derived from approximately 4,050 wells primarily focused in the Niobrara and Codell formations. The DJ Basin, including the North DJ Basin, comprises approximately 0.7 million total net acres and provides competitive economics, low breakeven costs and free cash flow generation through Occidental’s contiguous acreage position and royalty uplift.

Operations in the DJ Basin are subject to regulations that impose siting requirements, or “setback,” on certain oil and gas drilling locations based on the distance of a proposed well pad to occupied structures. Occidental has dedicated stakeholder relations team that conducts regulatory and community outreach with respect to its permit applications and operations in Colorado with a focus on building trust and fostering open communication with those that live and work near its operations. Through thoughtful planning, Occidental has established a steady cadence of permit approvals through various agencies, local governments and the ECMC through the demonstration of best-in-class operations mitigations, robust community outreach and protective site selection. In 2023, Occidental submitted Oil and Gas Development Plans comprising over 200 wells to the ECMC. Additionally, during the third quarter of 2022, Occidental became the first oil and gas operator in Colorado to obtain ECMC approval for the first Comprehensive Area Plan under the new ECMC rules. This comprehensive plan will support nine well pads (approximately 140 new wells) and will provide for substantial future development in a geographically remote are on Colorado’s eastern plains. It is anticipated that the first Oil and Gas Development Plan associated with the comprehensive plan will be heard by the ECMC Professional Commission during the first quarter of 2024. As of December 31, 2023, Occidental was permitted, or had submitted permit applications to applicable regulatory agencies, for nearly all planned 2024 drilling and completions activity in the DJ Basin. Occidental continues to gain efficiencies in the permitting process and will continue to look for additional opportunities to do so in the year ahead.

Occidental has interest in over 0.3 million net acres in the Powder River Basin, mainly located in Converse County and Campbell County, Wyoming. The field contains the Turner, Niobrara, Mowry and Parkman formations that hold both liquids and natural gas.

Occidental holds approximately 4.6 million net acres in other domestic locations, which consist of acreage and fee minerals outside of Occidental’s core operated areas including parts of Arkansas, Colorado, Louisiana, Texas, West Virginia and Wyoming.

OFFSHORE DOMESTIC ASSETS

Gulf of Mexico

Occidental is the fourth-largest oil and gas producer in the deep-water Gulf of Mexico, operating 10 strategically located deep-water floating platforms, the highest number among all the deep water operators, and producing from 18 active fields while owning a working interest across 261 blocks, including approximately 0.9 million net acres.

Occidental further operates two marine shore-bases in Galveston, Texas, and Port Fourchon, Louisiana, as well as two helicopter bases in Louisiana, providing back-up and redundancy to support its Gulf operations. A central logistics base and an integrated training center is located in Broussard, Louisiana, and Gulf of Mexico operations and development are managed and supported with engineering and technical staff located in The Woodlands, Texas.

Development projects continued with the strategy of accelerated delivery at Horn Mountain, Lucius, and Holstein facilities. Drilling and well services also ramped up activities, using one floating drill ship, one platform rig and several service rigs, with a second drillship being contracted in the last two months of the year, initially for well workovers. The Marco Polo K2 Subsea Pumping project was successfully started up four months ahead of schedule, enabling increased production and future well development. In 2023, Occidental spent $400 million of capital on development projects.

OBN seismic projects were further expanded in 2023, including at the K2 field, setting up a runway of future development opportunities. Asset development switched to a focus of assessing growth potential from all of its current inventory using secondary recovery techniques and expects to propose new development opportunities beginning around 2025.

In 2023, Occidental increased net production to 145 Mboe/d from 85 gross wells. Occidental focused base production management and artificial lift projects, which successfully reduced reservoir declines. Operational excellence and efficiency continued as a core objective in 2023. Occidental’s Gulf of Mexico Production Operations and Asset Integrity teams continued achieving world class platform operating efficiencies and major equipment uptime in 2023, with major platform and equipment uptimes increasing from 90% to 98%. Multiple platform seasonal shut-ins were planned and executed safely and efficiently in 2023 delivering a 40% reduction in numbers of shut-in days as compared to 2019 and steering on course to implement planned shut-ins only once each two years for each facility. In the fourth quarter of 2023, at the request of the Main Pass Oil Gathering system operator, Occidental temporarily halted certain operations in the eastern Gulf of Mexico. These operations are expected to be restarted in early 2024.

During 2023, all necessary regulatory permits for new wells and existing operations were obtained timely without any operational delays. Occidental was further awarded 11 new leases from BOEM’s Lease Sale 259. Occidental participated in Lease Sale 261, held on December 20, 2023 and was the apparent high bidder on 49 of 57 total blocks.

Occidental’s Gulf of Mexico assets continued to be among the lowest carbon emissions operations in the industry with zero routine flaring and zero cold venting. Occidental’s Gulf of Mexico operations were also recognized by the Center of Offshore Safety for its industry award winning 2023 Heat Stress Program and its continued dedication to improving HSE.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table shows key areas of ongoing development in the Gulf of Mexico, along with the corresponding working interest in those areas.

In 2024, Occidental expects to commence new expansions using advanced recovery techniques as well as continuing development of its existing assets across the Gulf of Mexico that deliver some of the highest margin production in its portfolio. Occidental plans to conduct development and exploration activities in 2024 using two floating drill ships and several other well service vessels and continue to optimize its extensive portfolio of lease working interests.

INTERNATIONAL INTERESTS

Occidental conducts its ongoing international operations in two sub-regions: the Middle East and North Africa. Its activities include oil, NGL and natural gas production through direct working-interests, PSAs and PSCs. Under the PSCs, Occidental records a share of production and reserves to recover certain development and production costs and an additional share for profit. These contracts do not transfer any right of ownership to Occidental and reserves reported from these arrangements are based on Occidental’s economic interest as defined in the contracts. Occidental’s share of production and reserves from these contracts decreases when product prices rise and increases when prices decline. Overall, Occidental’s net economic benefit from these contracts is greater when product prices are higher. Approximately $0.5 billion of Occidental’s worldwide capital budget is expected to be allocated to its international operations in 2024.

MIDDLE EAST / NORTH AFRICA ASSETS

1.Algeria2.Oman3.Qatar4.UAE

MANAGEMENT’S DISCUSSION AND ANALYSIS

Algeria

Occidental’s interest in Algeria involves development and production rights in 18 fields within Blocks 404a and 208, which are located in the Berkine Basin in Algeria’s Sahara Desert and are governed by an agreement amongst Occidental, Sonatrach and other partners. Occidental is responsible for 35% of the development and production costs. The El Merk central processing facility in Block 208 processes produced oil, NGL and natural gas, while the Hassi Berkine South and Ourhoud central processing facilities in Block 404a process produced oil. The rights to produce from the Block 404a and Block 208 fields under the new development agreement commenced May 3, 2023 and will continue until 2048.

In 2023, net production in Algeria was 32 Mboe/d, two gross development wells were drilled and annual net capital expenditures were $30 million.

Oman

In Oman, Occidental is the operator of Block 9, Block 27, Block 53 (Mukhaizna Field), Block 62 and Block 65 and has additional interests in Blocks 30, 51 and 72, which are under the Exploration phase. The working interest and contract expiration year for each of the respective blocks are shown in the table below. Occidental holds 6.0 million gross acres and has 10,000 potential well inventory locations. In 2023, Occidental’s share of production was 66 Mboe/d.

Occidental has produced over 789 million gross barrels from Block 9 since the beginning of its operation through successful exploration, continuous drilling improvements and EOR projects. The Mukhaizna Field in Block 53 is a major pattern steam flood project for EOR that utilizes some of the largest mechanical vapor compressors ever built. Since assuming operations in the Mukhaizna Field in 2005, Occidental has drilled close to 3,600 new wells and has produced over 607 million gross barrels. In 2023, Occidental invested capital of $374 million across all of the Oman blocks to drill 97 wells and execute facilities projects to support development and EOR activities.

In 2024, Occidental will continue to enhance production by adding extended and dual laterals, stimulating wells with the OXY JETTINGTM wellbore stimulation system, and expanding thermal conformance. Occidental will also continue to execute projects in Oman targeting emissions reductions.

Qatar

In Qatar, Occidental partners in the Dolphin Energy Project, an investment that is comprised of two separate economic interests. Occidental has a 24.5% interest in the upstream operations to develop and produce NGL, natural gas and condensate from Qatar’s North Field through mid-2032. Occidental also has a 24.5% interest in DEL, which operates a pipeline and is discussed further in the midstream and marketing segment section in this Form 10-K under Pipeline. In 2023, Occidental’s net share of production from Dolphin was 39 Mboe/d.

UAE

Occidental has a 40% participating interest in the Shah gas field (Al Hosn Gas), joining with the Abu Dhabi National Oil Company, which expires in 2041. In 2023, Occidental’s net share of production from Al Hosn Gas was 267 MMcf/d of natural gas and 38 Mbbl/d of NGL and condensate. Al Hosn Gas includes gas processing facilities which are discussed further in the midstream and marketing segment section in this Form 10-K under Gas Processing, Gathering and CO 2. In 2023, Occidental completed an expansion project that commenced in 2022 to increase the production capacity of the Al Hosn Gas processing facilities from 1.28 Bcf/d to 1.45 Bcf/d.

In 2019 and 2020, Occidental acquired 9-year exploration concessions and, subject to a declaration of commerciality, 35-year production concessions for Onshore Block 3 and Block 5, which cover an area approximately 1.5 million acres and 1.0 million acres, respectively, and are adjacent to Al Hosn Gas. In 2023, Occidental commenced first oil production in Onshore Block 3. In 2024, Occidental will continue further exploration and appraisal activities in Onshore Block 3 and Block 5.

PROVED RESERVES

Proved oil, NGL and natural gas reserves were estimated using the unweighted arithmetic average of the first-day-of-the-month price for each month within the year, unless prices were defined by contractual arrangements. Oil, NGL and

MANAGEMENT’S DISCUSSION AND ANALYSIS

natural gas prices used for this purpose were based on posted benchmark prices and adjusted for price differentials including gravity, quality and transportation costs.

The following table shows the 2023, 2022 and 2021 calculated first-day-of-the-month average prices for both WTI and Brent oil prices, as well as the Henry Hub gas prices:

Occidental had proved reserves from continuing operations at year-end 2023 of 3,982 MMboe, compared to the year-end 2022 amount of 3,817 MMboe. Proved developed reserves represented approximately 69% and 71% of Occidental’s total proved reserves at year-end 2023 and 2022, respectively. The following table shows the breakout of Occidental’s proved reserves from continuing operations by commodity as a percentage of total proved reserves:

Occidental does not have any reserves from non-traditional sources. For further information regarding Occidental’s proved reserves, see the Supplemental Oil and Gas Information section in Item 8 of this Form 10-K.

CHANGES IN PROVED RESERVES

Changes in Occidental’s 2023 reserves were as follows:

Occidental’s ability to add reserves, other than through purchases, depends on the success of infill development, extension, discovery and improved recovery projects, each of which depends on reservoir characteristics, technology improvements and oil and natural gas prices, as well as capital and operating costs. Many of these factors are outside management’s control and may negatively or positively affect Occidental’s reserves.

Revisions of Previous Estimates

Revisions can include upward or downward changes to previous proved reserve estimates for existing fields due to the evaluation or interpretation of geologic, production decline or operating performance data. In addition, product price changes affect proved reserves recorded by Occidental. For example, lower prices may decrease the economically recoverable reserves, particularly for domestic properties, because the reduced margin limits the expected life of the operations. Offsetting this effect, lower prices increase Occidental’s share of proved reserves under PSCs because more oil is required to recover costs. Conversely, when prices rise, Occidental’s share of proved reserves decreases for PSCs and economically recoverable reserves may increase for other operations. Reserve estimation rules require that estimated ultimate recoveries be much more likely to increase or remain constant than to decrease, as changes are made due to increased availability of technical data.

In 2023, Occidental’s revisions of previous estimates of proved reserves were positive 406 MMboe. These revisions were primarily due to 303 MMboe of positive revisions related to additions associated with infill development projects, mainly in the DJ Basin (138 MMboe), the Permian Basin (132 MMboe) and Algeria (26 MMboe). Further positive revisions of 192 MMboe were primarily associated with updates based on operating cost models (120 MMboe), reservoir performance (47

MANAGEMENT’S DISCUSSION AND ANALYSIS

MMboe), and the Algeria contract extension (44 MMboe). The positive revisions were partially offset by negative revisions associated with management changes in development plans and interest related revisions (16 MMboe).

This was partially offset by 89 MMboe of negative price revisions. The negative price revisions were primarily associated with the Permian Basin (91 MMboe) and the DJ Basin (5 MMboe), which were partially offset by positive price revisions of 13 MMboe on international PSCs.

Improved Recovery

In 2023, Occidental added proved reserves of 23 MMboe related to improved recovery in Oman (14 MMboe) and Permian EOR (9 MMboe). These properties comprise conventional projects, which are characterized by the deployment of EOR development methods, largely employing application of CO 2 flood, waterflood or steam flood. These types of conventional EOR development methods can be applied through existing wells, though additional drilling is frequently required to fully optimize the development configuration. Waterflooding is the technique of injecting water into the formation to displace the oil to the offsetting oil production wells. The use of either CO 2 or steam flooding depends on the geology of the formation, the evaluation of engineering data, availability and cost of either CO 2 or steam and other economic factors. Both techniques work similarly to lower viscosity causing the oil to move more easily to the producing wells.

Extensions and Discoveries

Occidental also added proved reserves from extensions and discoveries, which are dependent on successful exploration and exploitation programs. In 2023, extensions and discoveries added 153 MMboe primarily related to the recognition of proved reserves in the Permian Basin (133 MMboe) and Gulf of Mexico (11 MMboe).

Purchases of Proved Reserves

In 2023, Occidental purchased proved reserves of 31 MMboe primarily consisting of proved reserves in the DJ Basin.

Sales of Proved Reserves

In 2023, Occidental sold 2 MMboe in proved reserves related to the divestitures of certain non-strategic assets in the Permian Basin.

Proved Undeveloped Reserves

Occidental had PUD reserves at year-end 2023 of 1,232 MMboe, compared to the year-end 2022 amount of 1,119 MMboe.

Changes in PUD reserves were as follows:

Revisions of previous estimates were a positive 242 MMboe. Approximately 275 MMboe of the positive revisions were related to additions associated with infill development projects located primarily in the DJ Basin (125 MMboe), the Permian Basin (119 MMboe) and Algeria (25 MMboe). The positive revisions were partially offset by negative other revisions associated primarily with management changes in development plans and the Algeria contract extension (19 MMboe). Additionally, the revisions included negative price revisions of 14 MMboe. The negative price revisions were primarily associated with the Permian Basin.

Extensions and discoveries added 96 MMboe primarily related to the recognition of proved reserves in the Permian Basin (80 MMboe) and Gulf of Mexico (10 MMboe). Total improved recovery additions of 8 MMboe were the result of implementing secondary and tertiary projects in international assets. The 2023 additions to PUD reserves were partially offset by transfers to proved developed reserves of 258 MMboe. The transfers were primarily associated with the Permian Basin (151 MMboe), the DJ Basin (62 MMboe) and UAE (29 MMboe).

In 2023, Occidental incurred approximately $1.6 billion to convert PUD reserves to proved developed reserves, and in 2023 Occidental converted approximately 23% of its PUD reserves to proved developed, when adjusted for revisions and sales. As of December 31, 2023, Occidental had 1,232 MMboe of PUD reserves of which 75% were associated with domestic onshore, 5% with Gulf of Mexico and 20% with international assets. Occidental’s most active development areas are located in the Permian Basin, which represented 50% of the PUD reserves as of December 31, 2023. Occidental’s total

MANAGEMENT’S DISCUSSION AND ANALYSIS

planned 2024 capital expenditures for oil and gas are between $4.8 billion and $5.0 billion. Overall, Occidental plans to spend approximately $5.5 billion over the next five years to develop its PUD reserves in the Permian Basin.

PUD reserves are supported by a five-year detailed field-level development plan, which includes the timing, location and capital commitment of the wells to be drilled. Only PUD reserves which are reasonably certain to be drilled within five years of booking and are supported by a final investment decision to drill them are included in the development plan. A portion of the PUD reserves are expected to be developed beyond the five years and are tied to approved long-term development projects.

As of December 31, 2023, Occidental had 212 MMboe of pre-2019 PUD reserves that remained undeveloped. These PUD reserves relate to approved long-term development plans, 165 MMboe of which are primarily associated with international development projects with physical limitations in existing gas processing capacity and 47 MMboe of which are related to approved long-term development plans for Permian EOR projects, also with physical limitations in existing gas processing capacity. Occidental remains committed to these projects and continues to actively progress the development of these volumes. In addition to the above, Occidental has 29 MMboe of PUD reserves that are scheduled to be developed more than five years from their initial date of booking. These PUD reserves are related to approved long-term development plans, 18 MMboe of which are associated with international development projects and 11 MMboe with the Gulf of Mexico projects.

RESERVES EVALUATION AND REVIEW PROCESS

Occidental’s estimates of proved reserves and associated future net cash flows as of December 31, 2023, were made by Occidental’s technical personnel and are the responsibility of management. The estimation of proved reserves is based on the requirement of reasonable certainty of economic producibility and funding commitments by Occidental to develop the reserves. This process involves reservoir engineers, geoscientists, planning engineers and financial analysts. As part of the proved reserves estimation process, all reserve volumes are estimated by a forecast of production rates, operating costs and capital expenditures. Price differentials between benchmark prices (the unweighted arithmetic average of the first-day-of-the-month price for each month within the year) and realized prices and specifics of each operating agreement are then used to estimate the net reserves. Production rate forecasts are derived by a number of methods, including estimates from decline curve analysis, type well profile analysis, computer simulation of the reservoir performance, volumetric analysis and material balance calculations that take into account the volumes of substances replacing the volumes produced and associated reservoir pressure changes supported by various technologies including seismic analysis. These reliable field-tested technologies have demonstrated reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. Operating and capital costs are forecast using the current cost environment applied to expectations of future operating and development activities.

Net proved developed reserves are those volumes that are expected to be recovered through existing wells with existing equipment and operating methods for which the incremental cost of any additional required investment is relatively minor.

Net PUD reserves are those volumes that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. PUD reserves are supported by a five-year, detailed, field-level development plan, which includes the timing, location and capital commitment of the wells to be drilled. The development plan is reviewed and approved annually by senior management and technical personnel. Annually, a detailed review is performed by Occidental’s Corporate Reserves Group and its technical personnel on a lease-by-lease basis to assess whether PUD reserves are being converted on a timely basis within five years from the initial disclosure date. Any leases not showing timely transfers from PUD reserves to proved developed reserves are reviewed by senior management to determine if the remaining reserves will be developed in a timely manner and have sufficient capital committed in the development plan. Only PUD reserves that are reasonably certain to be drilled within five years of booking and are supported by a final investment decision to drill them are included in the development plan. A portion of the PUD reserves associated with international operations are expected to be developed beyond the five years and are tied to approved long-term development plans.

The current Senior Vice President, Reserves for Oxy Oil and Gas is responsible for overseeing the preparation of reserve estimates, in compliance with SEC rules and regulations, including the internal audit and review of Occidental’s oil and gas reserves data. He has over 40 years of experience in the upstream sector of the exploration and production business and has held various assignments in North America, Asia and Europe. He is a three-time past Chair of the Society of Petroleum Engineers Oil and Gas Reserves Committee. He is an AAPG Certified Petroleum Geologist and currently serves on the AAPG Committee on Resource Evaluation. He is a member of the Society of Petroleum Evaluation Engineers, the Colorado School of Mines Potential Gas Committee and the United Nations Economic Commission for Europe Expert Group on Resource Management. He has Bachelor of Science and Master of Science degrees in geology from Emory University in Atlanta.

Occidental has a Reserves Committee, consisting of senior corporate officers, to review and approve Occidental’s oil and gas reserves. The Reserves Committee reports to the Audit Committee of Occidental’s Board of Directors during the year. Since 2003, Occidental has retained Ryder Scott, independent petroleum engineering consultants, to review its annual oil and gas reserve estimation processes. For additional reserves information, see Supplemental Oil and Gas Information under Item 8 of this Form 10-K.

MANAGEMENT’S DISCUSSION AND ANALYSIS

In 2023, Ryder Scott conducted a process review of the methods and analytical procedures utilized by Occidental’s engineering and geological staff for estimating the proved reserves volumes, preparing the economic evaluations and determining the reserves classifications as of December 31, 2023, in accordance with SEC regulatory standards. Ryder Scott reviewed the specific application of such methods and procedures for selected oil and gas properties considered to be a valid representation of Occidental’s 2023 year-end total proved reserves portfolio. In 2023, Ryder Scott reviewed approximately 44% of Occidental’s proved oil and gas reserves. Since being engaged in 2003, Ryder Scott has reviewed the specific application of Occidental’s reserve estimation methods and procedures for approximately 97% of Occidental’s existing proved oil and gas reserves.

Management retained Ryder Scott to provide objective third-party input on its methods and procedures and to gather industry information applicable to Occidental’s reserve estimation and reporting process. Ryder Scott has not been engaged to render an opinion as to the reasonableness of reserves quantities reported by Occidental. Occidental has filed Ryder Scott’s independent report as an exhibit to this Form 10-K.

Based on its reviews, including the data, technical processes and interpretations presented by Occidental, Ryder Scott has concluded that the overall procedures and methodologies Occidental utilized in estimating the proved reserves volumes, preparing the economic evaluations and determining the reserves classifications for the reviewed properties are appropriate for the purpose thereof and comply with current SEC regulations.

OUTLOOK

The oil and gas exploration and production industry is highly competitive, is subject to significant volatility due to various market conditions and operations are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices. Oil prices decreased in 2023. In 2023, as compared to 2022, the average annual price per barrel of WTI crude decreased to $77.64 from $94.23, the average annual Brent price per barrel decreased to $82.25 from $98.83 and the average annual NYMEX natural gas price per mmcf decreased to $2.94 from $6.35.

Oil prices will continue to be affected by: (i) global supply and demand, which are generally a function of global economic conditions, inventory levels, production or supply chain disruptions, technological advances, regional market conditions and the actions of OPEC, other significant producers and governments; (ii) transportation capacity, infrastructure constraints, and costs in producing areas; (iii) currency exchange rates and inflation rates; and (iv) the effect of changes in these variables on market perceptions. It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks, the ongoing global impact of the Russia-Ukraine war and conflicts in the Middle East, the evolving macro-economic environment and supply activity from OPEC and non-OPEC oil producing countries and the Biden Administration’s releases from the U.S, Strategic Petroleum Reserve. Occidental does not operate or own assets in either Russia or Ukraine, or in the immediate vicinity of ongoing conflicts in the Middle East.

NGL prices are related to the supply and demand for the components of products making up these liquids. Some of them more typically correlate to the price of oil while others are affected by natural gas prices as well as the demand for certain chemical products for which they are used as feedstock. In addition, infrastructure constraints magnify the pricing volatility from region to region.

Domestic natural gas prices and local differentials are strongly affected by local supply and demand fundamentals, as well as government regulations, global LNG demand and availability of transportation capacity from producing areas.

These and other factors make it difficult to predict the future direction of oil, NGL and domestic gas prices reliably. For purposes of the current capital plan, Occidental will continue to focus on allocating capital to high return assets with the flexibility to adjust based on fluctuations in commodity prices. International gas prices are generally fixed under long-term contracts. Occidental continues to adjust capital expenditures in line with current economic conditions, such as supply chain constraints, rising interest rates, global logistics and high inflation, which has continued to disrupt global supply and demand balances, with the goal of keeping returns well above its cost of capital.

The timing, process and ultimate cost to transition to a less carbon-intensive economy remains largely unknown; various industry forecasts indicate a growing demand for hydrocarbons for the remainder of the current decade. Occidental believes its operational flexibility to achieve low development and operating costs to maximize full-cycle value of its assets and its knowledge and experience in CO 2 separation, transportation, use, recycling and storage position its oil and gas segment to support Occidental’s transition to net zero as well as create opportunities in a low-carbon future.