LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES
We, or certain of our subsidiaries, are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies 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.
We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Reserve balances at December 31, 2025 and 2024 were not material to our consolidated balance sheets as of such dates. We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters. We believe that reasonably possible losses that we could incur in excess of reserves cannot be accurately determined.
In October 2020, Signal Hill Services, Inc. defaulted on its decommissioning obligations associated with two offshore platforms. The Bureau of Safety and Environmental Enforcement (BSEE) determined that former lessees, including our former parent, Occidental Petroleum Corporation (Oxy) with a 37.5% share, are responsible for accrued decommissioning obligations associated with these offshore platforms. Oxy sold its interest in the platforms approximately 30 years ago and it is our understanding that Oxy has not had any connection to the operations since that time and challenged BSEE's order. Oxy notified us of the claim under the indemnification provisions of the Separation and Distribution Agreement between us and Oxy. In September 2021, we accepted the indemnification claim from Oxy and are challenging the order from BSEE. In March 2024, we entered into a cost sharing agreement with former lessees to share in ongoing maintenance costs during the pendency of the challenge to the BSEE order. In September 2025, the parties amended the cost sharing agreement to include well abandonment work. As of December 31, 2025, we recognized a liability of $12 million, included in accrued liabilities in our consolidated balance sheet related to this abandonment work. For the year ended December 31, 2025 and 2024, other operating expenses, net on our consolidated statements of operations includes $19 million and $5 million, respectively, for our ongoing share of maintenance costs and well abandonment work. We continue to challenge the BSEE order.
In 2023 and 2024, the California Geologic Energy Management Division (CalGEM) plugged and abandoned approximately 120 "orphaned" oil and gas wells located in Cat Canyon, Santa Barbara County, at an aggregate cost of $25 million. These wells had previously been operated by us prior to being sold to their current operators. CalGEM is seeking to recover these costs from us due to our prior operatorship of the wells, and we are disputing these claims. In connection with this dispute, we were required to remit $25 million to CalGEM under protest pending the outcome of this matter. For the year ended December 31, 2025, other operating expenses, net on our consolidated statement of operations includes $25 million related to this matter.
We have certain commitments under contracts, including drilling commitments of $8 million in 2026 and $9 million in 2027 and purchase commitments for goods and services used in the normal course of business such as pipeline capacity, easements, obligations under long-term service agreements and field equipment.
At December 31, 2025, total purchase obligations on a discounted basis were as follows:
| | | | | |
| December 31, 2025 |
| (in millions) |
| 2026 | $ | 69 | |
| 2027 | 36 | |
| 2028 | 22 | |
| 2029 | 21 | |
| 2030 | 27 | |
| Thereafter | 26 | |
| Total | 201 | |
| Less: Interest | (42) | |
| Present value of purchase obligations | $ | 159 | |