Occidental Petroleum Corporation (OXY, NYSE)
Industry: Oil & Gas E&P
Annual report, fiscal year 2009


## Proven
Performer

Occidental Petroleum Corporation

2009 Annual Report

## OXY



## Our targeted global reach

Core Geographic Regions

United States

58%

of worldwide production

377,000 BOEPD

2.07 billion
BOE proved reserves

No. 1 oil producer in Texas and New Mexico

Elk Hills and other

Long Beach

Midcontinent Gas

Middle East/North Africa

29%

of worldwide production

185,000 BOEPD

924 million

BOE proved reserves

70% increase in proved oil reserves, 2007-2009

Permian

Libya
Yemen
Oman

Latin America

13%

of worldwide production

83,000 BOEPD

229 million

BOE proved reserves





Colombia
Bolivia
Argentina





Occidental Petroleum Corporation (NYSE:OXY) is a leading international oil and gas exploration and production company, as well as a major North American chemical manufacturer.

The fourth-largest U.S. oil and gas company, based on equity market capitalization, Oxy is an industry leader in applying advanced technology to boost production from mature fields and access hard-to-reach reserves. With more than 10,000 employees, Oxy is committed to respecting the environment, protecting safety and upholding high standards of social responsibility throughout its worldwide operations.



<table><tr><td colspan="6">Dollar amounts in millions, except per-share amounts</td></tr><tr><td>As of and for the years ended December 31,</td><td>2009</td><td>2008</td><td>2007</td><td>2006</td><td>2005</td></tr><tr><td>Results of Operations(a)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net sales</td><td>$ 15,403</td><td>$ 24,217</td><td>$ 18,784</td><td>$ 17,175</td><td>$ 14,153</td></tr><tr><td>Income from continuing operations(b)</td><td>$ 2,927</td><td>$ 6,839</td><td>$ 5,078</td><td>$ 4,202</td><td>$ 4,838</td></tr><tr><td>Net income attributable to common stock</td><td>$ 2,915</td><td>$ 6,857</td><td>$ 5,400</td><td>$ 4,191</td><td>$ 5,293</td></tr><tr><td>Basic earnings per common share from continuing operations(c)</td><td>$ 3.60</td><td>$ 8.35</td><td>$ 6.06</td><td>$ 4.91(d)</td><td>$ 5.97(d)</td></tr><tr><td>Basic earnings per common share(c)</td><td>$ 3.59</td><td>$ 8.37</td><td>$ 6.45</td><td>$ 4.90(d)</td><td>$ 6.53(d)</td></tr><tr><td>Diluted earnings per common share(c)</td><td>$ 3.58</td><td>$ 8.34</td><td>$ 6.42</td><td>$ 4.86(d)</td><td>$ 6.45(d)</td></tr><tr><td>Financial Position(a)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total assets</td><td>$ 44,229</td><td>$ 41,537</td><td>$ 36,519</td><td>$ 32,431</td><td>$ 26,170</td></tr><tr><td>Long-term debt, net</td><td>$ 2,557</td><td>$ 2,049</td><td>$ 1,741</td><td>$ 2,619</td><td>$ 2,873</td></tr><tr><td>Stockholders&#x27; equity</td><td>$ 29,159</td><td>$ 27,325</td><td>$ 22,858</td><td>$ 19,604</td><td>$ 15,442</td></tr><tr><td>Market Capitalization(e)</td><td>$ 66,050</td><td>$ 48,607</td><td>$ 63,573</td><td>$ 41,013</td><td>$ 32,121</td></tr><tr><td>Cash Flow</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash provided by operating activities</td><td>$ 5,813</td><td>$ 10,652</td><td>$ 6,798</td><td>$ 6,353</td><td>$ 5,337</td></tr><tr><td>Capital expenditures</td><td>$ (3,581)</td><td>$ (4,664)</td><td>$ (3,360)</td><td>$ (2,857)</td><td>$ (2,200)</td></tr><tr><td>Cash (used) provided by all other investing activities, net</td><td>$ (1,746)</td><td>$ (4,665)</td><td>$ 285</td><td>$ (1,433)</td><td>$ (906)</td></tr><tr><td>Cash dividends paid</td><td>$ (1,063)</td><td>$ (940)</td><td>$ (765)</td><td>$ (646)</td><td>$ (483)</td></tr><tr><td>Cash (used) provided by all other financing activities, net</td><td>$ 30</td><td>$ (570)</td><td>$ (2,333)</td><td>$ (2,266)</td><td>$ (759)</td></tr><tr><td>Dividends Per Common Share</td><td>$ 1.31</td><td>$ 1.21</td><td>$ 0.94</td><td>$ 0.80(d)</td><td>$ 0.645(d)</td></tr><tr><td>Weighted Average Basic Shares Outstanding (thousands)</td><td>811,305</td><td>817,635</td><td>834,932</td><td>852,550(d)</td><td>806,600(d)</td></tr></table>

(a) See the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of this report and the Notes to Consolidated Financial Statements for information regarding acquisitions and dispositions, discontinued operations and other items affecting comparability.

(b) Represent amounts attributable to common stock after deducting noncontrolling interest amounts of $51 million in 2009, $116 million in 2008, $75 million in 2007, $111 million in 2006 and $74 million in 2005.

(c) Represent amounts attributable to common stock after deducting noncontrolling interest amounts.

(d) Amounts have been adjusted to reflect a two-for-one stock split in the form of a stock dividend to stockholders on August 1, 2006.

(e) Market capitalization is calculated by multiplying the year-end total shares of common stock outstanding, net of shares held as treasury stock, by the year-end closing stock price.

Portions of this report, including Items 1 and 2 and the information appearing under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including the information under the sub captions “Strategy,” “Oil and Gas Segment—Industry Outlook,” “Chemical Segment—Industry Outlook,” “Midstream, Marketing and Other Segment—Industry Outlook,” “Liquidity and Capital Resources,” “Lawsuits, Claims, Contingencies and Related Matters,” “Environmental Liabilities and Expenditures,” and “Derivative Activities and Market Risk” contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Words such as “estimate,” “project,” “predict,” “will,” “would,” “should,” “could,” “may,” “might,” “anticipate,” “plan,” “intend,” “believe,” “expect” or similar expressions that convey the uncertainty of future events or outcomes generally identify 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.

ON THE COVER: Wet gas pipelines in Kern County, California, where in 2009 Oxy made one of the largest oil and gas discoveries in its 90-year history. INSIDE FRONT COVER: United States: Oxy's Elk Hills operation, near Bakersfield, California. Middle East/North Africa: Oxy's Safah field operation in northern Oman. Latin America: Oxy's operation in the San Jorge Basin of southern Argentina.




Ray R. Irani
Chairman and
Chief Executive Officer



## A proven performer

We believe that in 2009, a year that tested strategic and execution capabilities across the oil and gas business, Oxy passed the test with an A+.
In a challenging business environment, we achieved solid results across the key financial metrics that define success in our industry.

Last year, we delivered the highest production volume in Oxy’s history, increasing worldwide production by 7 percent to a company-record 645,000 barrels of oil equivalent per day (BOEPD). In addition, we replaced 206 percent of our production at a finding and development (F&D) cost of $7.90 per BOE \( ^{3} \) , which we believe continues to rank Oxy among the top performers in our industry. Notably, we accomplished this while reducing per-barrel oil and gas production costs by 15 percent and maintaining our low debt-to-capitalization ratio.

We ended the year with net income \( ^{1} $  of 2.9 billion and one of the strongest balance sheets in the industry. This result demonstrates that Oxy is well positioned to succeed, even amid a difficult economy and the particularly volatile commodity prices of the last two years.
In accordance with our long-term financial strategy, we maintain low-risk, low-leverage assets and a focus on building stockholder value. We insist on strict financial discipline, astute capital allocation, anticipatory risk management and prudent cash management. As a result, Oxy has had the financial flexibility to succeed — in times of economic downturn or growth.

Adherence to our financial strategy helped Oxy achieve solid results last year on key metrics watched by the financial community. Our year-end 2009 closing stock price of $81.35 was the highest year-end price in the company’s history. Our stockholders’ equity increased by 7 percent in 2009. Reflecting the strength of our balance sheet, we exited the year with cash on hand of $1.2 billion and low debt, and we maintained our “A” debt ratings by all major ratings services.

Also in the past 12 months, we capitalized on several key opportunities to strengthen Oxy’s position in our core geographic regions, and we made strategic acquisitions intended to expand other areas of our core business.

Amid the many challenges confronting the oil and gas industry and the global economy in 2009, Oxy again delivered upper-tier results and peer-leading growth.

## 2009 Financial Performance

At Oxy we continually strive to deliver outstanding performance, relative to our industry peers, on closely watched financial metrics such as total return to stockholders, return on equity (ROE), return on capital employed (ROCE) and other segment-specific measurements. I am gratified to report that in 2009 Oxy continued to deliver superior growth and value.

For the 12 months of 2009, we achieved net income of $2.9 billion ($3.58 per diluted share), with progressive increases from the first to the fourth quarter.



RETURN ON EQUITY (ROE)
Stated as percent



We continue to be among the most profitable companies in the S&P 500. In 2009, we achieved ROE of 10.3 percent and ROCE of 9.6 percent. For the three-year period of 2007 to 2009, Oxy’s annual average ROE was 20.4 percent and our annual average ROCE over the three-year period was 18.8 percent.

The strength of our balance sheet also continues to earn plaudits from the financial community. We ended 2009 with less than $1.6 billion in net debt after cash, and our debt-to-capitalization ratio of 9 percent was among the lowest of the major oil and gas companies. Since year-end 2005, Oxy’s debt-to-capitalization ratio has decreased nearly 44 percent to rank among the lowest in our peer group — clear evidence of our success in minimizing leverage risk while delivering strong returns.

Primarily from our 2009 operating cash flow of $5.8 billion, we spent $3.6 billion to fund capital expenditures and $1.8 billion for acquisitions and foreign contract commitments, and we used $1.1 billion to pay dividends.

Oxy has paid dividends every year since 1975. In 2009, we increased the dividend to stockholders from an annualized rate of $1.28 per share to $1.32 per share. This was Oxy’s eighth dividend increase since

DEBT-TO-CAPITALIZATION
RATIO
Stated as percent



2002, bringing the compounded annual dividend growth rate to 14.3 percent over the period.

Dividend increases reflect management’s confidence in the company’s strong financial condition and likelihood of ongoing solid performance. The Board of Directors will continue to evaluate dividends as part of our commitment to generate top-quartile returns to stockholders.

Another positive outcome of our constant focus on financial strength and flexibility has been consistently higher debt ratings, which are particularly helpful as we compete in today’s volatile capital markets. In 2009, Oxy maintained its “A” ratings from DBRS, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s Ratings Services.

2009 Market Performance
Oxy’s 2009 year-end closing stock price of $81.35 per share was 36 percent higher than the closing price at year-end 2008 — and the highest year-end price since the company’s stock was first publicly traded in 1964. Our total stockholder return in 2009, based on stock price appreciation plus dividend reinvestment, was 38 percent.

We have led our peer group in total stockholder return during the past three- and five-year periods. In addition, our total stockholder return has exceeded that of the Standard & Poor’s 500 (S&P 500) Index as well as the S&P 500 Integrated Oil & Gas and S&P Oil and Gas Exploration indexes.

This strong performance is illustrated by a simple comparison: A $100 investment in the S&P 500 index on December 31, 2004, would have been worth $102 on December 31, 2009 — just a $2 return. The same $100 invested for this five-year period in Oxy’s peer group — the eight oil and gas companies we compete against globally for major projects — would have grown to $148. But, $100 invested in Oxy stock for those five years would have more than tripled, to $304 — a $204 return.

Another example of Oxy’s strong performance is the nearly 36-percent increase in our market capitalization over the past year, from $48.6 billion at the close of 2008 to $66 billion at the close of 2009. Our ranking within the S&P 500, based on market capitalization, has risen consistently for more than a decade, from No. 297 in 1998 to No. 31 at year-end 2009, paralleling Oxy’s growth from the 12th-largest U.S. oil and gas company to the 4th-largest today. The compounded average annual growth rate of Oxy’s market capitalization from year-end 1999 to year-end 2009 is 23.6 percent.




Oxy's Goldsmith field, near Midland, Texas, in the Permian Basin. Oxy is the top producer in the Permian Basin, one of the largest and most active oil basins in the contiguous 48 states. At year-end 2009, Oxy's Permian properties had 1.1 billion barrels of oil equivalent in proved reserves.



## A record year for worldwide production

OIL AND GAS PERFORMANCE

Even in the volatile market environment of 2009, Oxy’s oil and gas segment delivered solid results while setting a new company record for worldwide production.

Our worldwide oil and natural gas production increased 7 percent year-over-year to reach 645,000 BOEPD — the highest annual production volume in Oxy’s history.

Equally significant was the growth in our oil and natural gas reserves. I am proud to report that we replaced 206 percent of our production in 2009, with finding and development (F&D) costs of $7.90 per BOE — down from our three-year F&D cost average of $15.10 per BOE. Notably, we were able to grow both production and reserves while reducing production costs, maintaining our low debt-to-capitalization ratio and achieving exemplary safety and environmental performance.

Proved reserve additions from all sources in 2009 totaled 483 million BOE. The reserve additions came largely through improved recovery, which reflects the company’s enhanced oil recovery (EOR) activities, as well as purchases, extensions and discoveries.

Oxy is a leader among its industry peers on the key metric of reserves replacement. Over the past three years, we have added a total of 1.1 billion BOE to our proved reserves for an average annual replacement rate of 160 percent.

OIL AND NATURAL GAS
PROVED RESERVES



OIL AND NATURAL GAS SALES VOLUMES






Our proved reserves at year-end 2009 totaled 3.23 billion BOE, an increase of 8 percent compared to 2.98 billion BOE in 2008. Year-end 2009 proved reserves consisted of 73 percent oil and 27 percent natural gas. We have 64 percent of our worldwide proved reserves in North American assets, 29 percent in the Middle East/North Africa region and 7 percent in Latin America.

Oxy achieves reserve growth in three primary ways: by increasing the productivity of mature fields through application of improved oil recovery (IOR) and EOR techniques; through focused exploration; and through strategic acquisitions, favoring large, long-lived oil and gas assets with long-term growth potential. We apply strict criteria in evaluating potential acquisitions, pursuing only those opportunities we believe meet our standards for return on investment and will increase stockholder value.

The substantial fluctuation of oil prices during the year had an industrywide impact. Our consistent financial strategy proved advantageous as oil prices rebounded from the steep decline in the last half of 2008, which resulted in significantly lower average prices in the first half of 2009 to steadily increasing prices in the second half of the year.

Our average realized crude oil price for 2009 was $55.97 per barrel, compared to $88.26 in 2008, reflective of the oil price boom in early 2008. Our domestic realized natural gas price decreased 57 property taxes, to $10.37 per barrel for the 12 months of 2009, down from $12.13 per barrel in 2008.

United States Performance
The United States accounted for approximately 58 percent of Oxy’s 2009 production — 377,000 BOEPD — primarily from assets in Texas, California

## In 2009, Oxy’s talented exploration team made what is believed to be California’s largest oil and gas discovery in 35 years.

percent, from an average price of $8.03 per thousand cubic feet (Mcf) in 2008 to $3.46 per Mcf in 2009. Earnings from our worldwide oil and gas operations totaled $4.7 billion in 2009 after a record $10.7 billion in 2008.

We aggressively managed our oil and gas production costs to compete effectively in the year’s changing commodity price environment. As a result, we achieved a 15-percent reduction in these costs on a BOE basis, excluding production and and New Mexico. We are the No. 1 oil producer in both Texas and New Mexico, as well as the No. 1 natural gas producer and No. 2 oil producer in California.

Oxy maintains a higher percentage of its proved reserves in U.S. assets — 64 percent — than any other major oil and gas company, with more than 2 billion BOE in proved U.S. reserves at the close of 2009. We strengthened our domestic holdings during the year with numerous acquisitions of properties adjacent to our key operations in Texas and California.



Oxy’s operations at the giant Mukhaizna oilfield in south-central Oman. Mukhaizna oilfield gross daily production at the close of 2009 was over 10 times higher than the production rate in September 2005, when Oxy assumed operations of the field.



Our 2009 growth was most evident in California, where our talented exploration team made what is believed to be the state’s largest oil and gas discovery in 35 years. As announced in the third quarter, we estimate the discovery area — located in Kern County, near our Elk Hills operations — to contain between 150 million and 250 million gross BOE of reserves primarily in conventional oil and gas bearing formations, with approximately two-thirds of the discovery believed to be natural gas. The magnitude of the discovery makes it one of the largest finds in Oxy’s 90-year history. Moreover, we believe it is probable that there are additional reserves outside the defined discovery area, and possible that structures of this type exist elsewhere among our California properties.

cubic feet (Bcf) of gas and 1.5 million barrels of liquids. Our total California production was approximately 135,000 BOEPD in 2009, with 780 million BOE in proved reserves.

Oxy’s most extensive U.S. operations are in the Permian Basin of southwest Texas and southeast New Mexico, where our total share of oil and gas production was approximately 201,000 BOEPD in 2009. At year-end, our Permian properties held 1.1 billion BOE in proved reserves.

Approximately 58 percent of Oxy’s Permian oil production is from fields that actively employ the advanced EOR technique of carbon dioxide (CO \( _{2} \) ) flooding. Oxy is a global leader in applying this technology, in which CO \( _{2} \)  is Also in 2009, construction continued on the Century Plant, a new gas processing plant and related pipeline infrastructure in Pecos County, West Texas, that we expect will enable us to expand our Permian EOR operations with a major new source of CO \( _{2} \) .

The Century Plant will process high- \( CO_{2} \)  inlet gases from local sources, yielding natural gas ready for the marketplace, as well as a steady, economical supply of  \( CO_{2} \)  for Oxy. Once the plant begins its operation, expected in late 2010 with completion in 2011, this new  \( CO_{2} \)  stream is expected to increase our Permian production by up to 50,000 BOEPD within five years. In addition, we expect that the Century Plant will enable us to develop significant reserves, at an attractive cost, from assets we currently own.

# Oxy's MENA region proved oil reserves are 70 percent higher than just three years ago and natural gas proved reserves are up 97 percent during the same period.

Oxy has long believed that our home base of California offers significant untapped potential, and over the years we have grown our position in the state to 1.3 million net leasehold acres, including the prolific Elk Hills field, operations in Long Beach and properties in the Ventura, San Joaquin and Sacramento basins.

The new Kern County discovery reinforces the wisdom of our California strategy. At the end of 2009, Oxy was producing approximately 32,000 gross BOEPD from 15 wells in the new multi-pay-zone discovery area, and cumulative gross production through December 31, 2009, was 19.4 billion injected into oil reservoirs, causing trapped oil to flow more easily and efficiently.

CO \( _{2} \)  injection can increase ultimate oil recovery by 15 to 25 percent from mature oilfields. As hydrocarbons are produced, CO \( _{2} \)  contained in the oil is separated in an enclosed system and reinjected back into the oil reservoir. Over time, virtually all of the CO \( _{2} \)  becomes permanently and safely trapped in the underground formation. Underground storage of CO \( _{2} \)  in oil reservoirs and other geologic formations is viewed by many government agencies and researchers as an important method to reduce future CO \( _{2} \)  emissions to the atmosphere. Oxy conducted development activity on six CO \( _{2} \)  projects during 2009.
Middle East/North Africa Performance
Oxy has been an active investor in the Middle East and North Africa (MENA) for more than four decades, with significant growth in the last 10 years. We continue to grow in this key region, where Oxy is well regarded for its strong performance record, technical expertise and effective working relationships with strategic partners. In 2009 we were the No. 2 oil producer in Oman and offshore Qatar.

Production at our operations in Qatar, Oman, Yemen, Libya and Bahrain was 185,000 BOEPD in 2009, representing 29 percent of Oxy’s worldwide oil and gas production. Oxy’s MENA region reserves have grown substantially in recent years, with our proved oil reserves 70 percent higher than just three years ago and our natural gas proved reserves up 97 percent during the same period. Oxy’s MENA proved reserves at year-end 2009 were 924 million BOE, 29 percent of our worldwide total.



In 2009 there were several significant, positive developments in our Middle East core operations.

In Bahrain, we are partnering with Mubadala of Abu Dhabi on a project to redevelop the long-producing Bahrain field, site of the first oilfield discovery in an Arab Gulf state in 1932. Field operations began on December 1, 2009. Working closely with Bapco, Bahrain’s national oil company, we expect to approximately triple oil production from the Bahrain field to reach more than 100,000 barrels of oil per day (BOPD) over a span of seven years. We also expect to increase gas production by more than 65 percent to over 2.5 Bcf per day.

Partnering with a consortium led by Eni, Oxy was awarded a license for development of the giant Zubair oilfield in southern Iraq in the fourth quarter of 2009. The signing of the contract with the Iraqi government took place in January 2010, making Oxy the first of only two American companies on the ground floor of exciting new investment opportunities in Iraq. We expect Zubair, one of the largest discovered oilfields in the world, to reach gross production of approximately 1.2 million BOPD within the next six years, which represents a projected increase of over 1 million BOPD.

We are a partner in the giant Dolphin Project, the premier transborder natural gas project in the Middle East and one of the region’s largest energy initiatives. Dolphin supplies natural gas — produced offshore Qatar, processed at Ras Laffan and transported through a 230-mile-long subsea export pipeline — to markets in the United Arab Emirates and Oman. Oxy also operates three offshore projects in Qatar, Idd El Sharqi North Dome (ISND), Idd El Sharqi South Dome (ISSD) and Al Rayyan (Block 12).
Oxy’s 2009 share of production from all of our operations in Qatar, including Dolphin, was approximately 105,000 BOEPD.

Solid production growth continues at the giant Mukhaizna oilfield in south-central Oman, where we have a major steam flood project for EOR. Gross daily production at the close of 2009 was over 10 times higher than the production rate in September 2005, when Oxy assumed operations of the field. We plan to steadily increase production through continued expansion of the steam flood project.

Oxy’s share of production from the Oman properties was approximately 43,000 BOEPD in 2009 and proved reserves totaled 173 million BOE as of year-end. Our Colombia operations include the giant Caño Limón field, a 1983 Oxy discovery in the Llanos Norte Basin; and La Cira-Infantas (LCI) field, an IOR project with large remaining reserves, located in the Middle-Magdalena Basin. LCI is operated in partnership with the Colombian national oil company, Ecopetrol. Oxy’s share of 2009 production from Colombia was approximately 39,000 BOEPD.

## Midstream, Marketing and Other Performance

The Midstream, Marketing and Other segment provides low-cost services to other Oxy business segments as well as to third parties and operates gas plants, oil, gas and  \( CO_{2} \)  pipeline systems and storage facilities. In addition, the marketing and trading

## Our Latin America operations in Argentina, Colombia and Bolivia collectively provided approximately 13 percent of Oxy's 2009 production.

## Latin America Performance

Our Latin America operations in Argentina, Colombia and Bolivia collectively provided approximately 13 percent of Oxy’s 2009 production, with 83,000 BOEPD. At year-end, proved reserves for this region totaled 229 million BOE — 7 percent of Oxy’s worldwide total.

In Argentina, we operate in the San Jorge Basin in the southern part of the country, and in the Cuyo and Neuquén basins in the west. We drilled 107 new wells and performed a number of recompletions and well repairs in 2009. Our share of 2009 production from Argentina was approximately 42,000 BOEPD. We plan to increase 2010 production through drilling, waterflooding and EOR projects.
group markets Oxy’s and third-party oil and gas, trades around the midstream and marketing segment assets and engages in commodities and securities trading.

At year-end 2009, we acquired the commodities investment company Phibro from Citigroup for approximately net asset value. Now a business unit in our Midstream segment, Phibro complements our existing trading operations.

Segment earnings for Midstream, Marketing and Other decreased to $235 million in 2009 from $520 million in 2008, reflecting lower marketing income and gas processing margins.



# For every product it makes, OxyChem's market position is No. 1 or No. 2 in the U.S. and No. 1, 2 or 3 in the world.

## Chemicals Performance

Producing key industrial products essential to public health and modern life, OxyChem is a reliable and profitable performer and an industry leader. In fact, for every product it makes, OxyChem’s market position is No. 1 or No. 2 in the U.S. and No. 1, 2 or 3 in the world.

OxyChem manufactures and markets basic chemicals, vinyls and other chemicals used in water treatment, paper production, pharmaceuticals, construction, automobile manufacturing, soaps and disinfecting products, among many others. It aims to be a low-cost producer in order to maximize its cash-flow generation.

In 2009, we acquired Dow Chemical Company’s calcium chloride operations, the world’s largest. Calcium chloride is a premium salt with a variety of uses, including ice control on roads and sidewalks. The acquisition gives OxyChem’s product line an approximately 65-percent share of the North American calcium chloride market.

Chemical segment earnings were $389 million in 2009, down from $669 million in 2008. The decrease reflects continued weakness in the U.S. housing, automotive and durable goods sectors, which contributed to lower volumes and prices for chlorine, caustic soda, polyvinyl chloride and vinyl chloride monomer, partially offset by lower feedstock and energy costs.

## Social Responsibility Performance

At Oxy, social responsibility is a key value and an integral part of our business — a companywide commitment that is core to the way we conduct business.

To sustain our success as a respected producer of oil and gas and chemicals, we continually strive to maintain high ethical standards, provide safe, healthy and secure workplaces, protect the environment, uphold and promote human rights and respect cultural norms and values throughout our worldwide operations. We recognize Oxy’s important role in supplying reliable, cost-effective products that are essential to society and the communities where we operate.

We have incorporated our social responsibility programs directly into Oxy’s health, environment and safety management system to ensure consistent, strong focus on this vital component of our daily enterprise.

A point of pride for our company is Oxy’s status as one of America’s safest employers — in any business sector. Our worldwide safety performance continues to be exemplary, as reflected in our employee Injury and Illness Incidence Rate (IIR), a key metric that indicates recordable injuries and illnesses per 100 full-time workers per year.



OxyChem’s plant in Niagara Falls, New York, which produces key ingredients for products essential to public health and modern life, including water treatment chemicals, pharmaceuticals and construction materials.



Oxy’s 2009 worldwide employee IIR was 0.41 — an almost 9-percent improvement over 2008 and the second-best result in Oxy’s history, comparing extremely well to the average IIR of 3.9 for all U.S. businesses. Our employee IIR has now been less than 1.0 for 14 consecutive years and 0.50 or less for six consecutive years. In 2009, we also excelled in contractor safety; our worldwide contractor IIR of 0.67 was Oxy’s best result to date and a 20-percent improvement over the previous company record set in 2008. These results demonstrate the success of our strategy of applying Oxy’s high standards throughout our supply chain.

Our strong commitment to responsible environmental stewardship takes many forms. One of these is cost-effectively reducing emissions at our facilities and, where feasible, capturing, recycling, reusing or marketing methane and  \( CO_{2} \)  that otherwise would be emitted. This stewardship is exemplified by our industry-leading use of  \( CO_{2} \)  injection for EOR.

In addition, we work hard to reduce costs while enhancing energy efficiency and reliability in our operations, through actions such as improved maintenance and operating practices and the use of highly efficient cogeneration facilities to supply power and steam to our oil and gas and chemical operations. Our significant efforts to reduce methane emissions have been recognized by the U.S. Environmental Protection Agency, which selected Oxy as a Natural Gas STAR Continuing Excellence (5 Years) award winner in 2009.

We regularly engage with our many stakeholders around the world — including governments and local communities — to ensure that Oxy is an effective and responsive partner, neighbor and employer. Before launching a new project, we first assess what our presence will mean for the local community and the surrounding region, and we participate actively in addressing any concerns that may emerge.

Providing employment and training opportunities in our worldwide business locations is a key way in which Oxy contributes to economic growth. We make it a priority to build the capacity of national workforces through the transfer of skills and technology, and to promote the advancement of local workers at all operations. In the Middle East, for example, we are recognized for employing among the highest percentage of nationals working for international oil companies in the countries where we operate.

In 2009, we received high governance and sustainability index ratings from several entities, including GovernanceMetrics International (GMI), which placed Oxy in the top 1 percent of all companies it rates, and commended us for maintaining “best in class corporate governance standards.” Oxy was also selected for the 2009 Dow Jones Sustainability North America Index, based on an evaluation of Oxy’s governance and sustainability performance.

We were pleased to be included in Fortune magazine’s list of the World’s Most Admired Companies, ranking as the No. 1 company overall in Mining and Crude-Oil Production. In addition, Oxy is one of the two highest-ranked oil and gas companies on Corporate Responsibility Magazine’s 2010 list of 100 Best Corporate Citizens.

We will continue to make social responsibility both a corporate and an individual priority. Every Oxy employee is an ambassador on behalf of our company, protecting and strengthening Oxy’s



Wildlife graze in the Permian Basin in southeast New Mexico. Oxy was selected for the 2009 Dow Jones Sustainability North America Index, based on an evaluation of Oxy’s governance and sustainability performance.

EMPLOYEE RECORDABLE
INJURY AND ILLNESS TREND






reputation as the employer, neighbor and partner of choice.

## Looking Ahead

Our 2009 results confirm that Oxy is very well positioned to succeed, even in times of global economic turbulence. We plan to maintain a low-risk, low-leverage profile and a consistent focus on building stockholder value.

We are confident that our production increases of about 5 to 8 percent annually over the last five years will again be an achievable target for the next five years.

Our capital program will continue to be focused on ensuring that our returns remain well above our cost of capital. In 2010, we plan to increase capital spending by approximately 19 percent, from the $3.6 billion spent in 2009 to about $4.3 billion, for projects to stimulate Oxy’s continued growth while maintaining our targeted financial returns. We anticipate that the 2010 capital allocation will be approximately 82 percent in Oil and Gas — with large portions of the increase going to California, Iraq, Bahrain and Midcontinent Gas.

We also will continue to manage production costs in 2010 while focusing on operational efficiency throughout the company, keeping a firm hand on key cost areas and taking other appropriate steps to further strengthen our overall performance.

I want to thank and commend our management team and talented workforce around the world for their superb, ongoing efforts and dedication. I also want to thank the Board of Directors for their invaluable stewardship. Oxy’s success in the current volatile business climate is a tribute to their collective ingenuity, hard work and commitment. Despite average lower commodities prices in 2009, we delivered strong results, increasing both production and reserves while reducing costs, enhancing operational efficiency and maintaining an impressive safety record. With our concentration on core areas, growth in production and reserves, highly efficient operations and a strong balance sheet, Oxy is a proven performer. I am confident in our ability to continue achieving sustained growth and delivering solid profitability in 2010 and beyond.



Ray R. Irani
Chairman and
Chief Executive Officer



Oxy’s Middle East/North Africa region includes the Safah field operation in northern Oman. In 2009, the Middle East/North Africa region accounted for 29 percent of Oxy’s worldwide oil and gas production and 29 percent of the company’s total worldwide proved reserves.



## Board of Directors

Aziz D. Syriani \( ^{1,2,5,6,8} \) 
President and Chief Executive Officer,
The Olayan Group

Dr. Ray R. Irani \( ^{1,8} \) 
Chairman and Chief Executive Officer,
Occidental Petroleum Corporation

Rosemary Tomich \( ^{1,2,3,4,5,7} \) 
Owner, Hope Cattle Company and
A.S. Tomich Construction Company;
Chairman and Chief Executive Officer,
Livestock Clearing, Inc.

Spencer Abraham \( ^{2,4,7} \) 
Chairman and Chief Executive Officer,
The Abraham Group, LLC;
Former U.S. Secretary of Energy





John E. Feick \( ^{1,2,4,8,9} \) 
Chairman, Matrix Solutions Inc.

Irvin W. Maloney \( ^{1,2,7} \) 
Retired President and
Chief Executive Officer,
Dataproducts Corporation

Edward P. Djerejian \( ^{4,5,7} \) 
Director, James A. Baker III Institute
for Public Policy; Former
U.S. Ambassador

Walter L. Weisman \( ^{2,4,5,8,9} \) 
Private investor; Former Chairman and
Chief Executive Officer, American
Medical International, Inc.

Avedick B. Poladian \( ^{2,3,9} \) 
Executive Vice President and
Chief Operating Officer,
Lowe Enterprises, Inc.

Carlos M. Gutierrez \( ^{2,9,1} \) 
Founding member and Chairman,
Global Political Strategies;
Former U.S. Secretary of Commerce;
Former President and Chairman,
Kellogg Company

Ronald W. Burkle \( ^{8} \) 
Managing Partner,
The Yucaipa Companies

Rodolfo Segovia \( ^{13,4,5,7,9} \) 
Director and member of the Executive Committee of Inversiones Sanford;
Former President, Ecopetrol — Colombian national oil company

John S. Chalsty \( ^{1,2,3,5,8,9} \) 
Principal and Chairman of Muirfield
Capital Management LLC; Former Chairman,
Donaldson, Lufkin & Jenrette, Inc.



## Officers

Dr. Ray R. Irani
Chairman and Chief Executive Officer

Stephen I. Chazen
President and Chief Financial Officer

## EXECUTIVE VICE PRESIDENTS

Martin A. Cozyn
Executive Vice President — Human Resources

Donald P. de Brier
Executive Vice President,
General Counsel and Secretary

James M. Lienert
Executive Vice President — Finance and Planning

## VICE PRESIDENTS AND
KEY EXECUTIVES

William E. Albrecht
Vice President; President, Oxy Oil and Gas — U.S.A.

B. Chuck Anderson
President, Occidental Chemical Corporation

Gary L. Daugherty
Vice President — Internal Audit

Ian M. Davis
Vice President — Government Relations

Richard S. Kline
Vice President — Communications and Public Affairs

Edward A. Lowe
Vice President; President, Oxy Oil and Gas —
International Production

Donald L. Moore, Jr.
Vice President and Chief Information Officer

Roy Pineci
Vice President, Controller and Principal Accounting Officer

Anita M. Powers
Vice President; Executive Vice President,
Oxy Oil and Gas — Worldwide Exploration

Christopher G. Stavros
Vice President — Investor Relations

Todd A. Stevens
Vice President — Acquisitions and Corporate Finance;
Vice President, Oxy Oil and Gas — California Operations

Michael S. Stutts
Vice President — Tax

Charles F. Weiss
Vice President — Health, Environment and Safety

Robert J. Williams
Vice President and Treasurer

John M. Winterman
Executive Vice President — Oxy Oil and Gas

As of December 31, 2009
1 Member of the Executive Committee
2 Member of the Audit Committee
3 Member of the Executive Compensation and Human Resources Committee
4 Member of the Environmental, Health and Safety Committee
5 Member of the Corporate Governance, Nominating and Social Responsibility Committee
6 Lead Independent Director
7 Member of the Charitable Contributions Committee
8 Member of the Dividend Committee
9 Member of the Finance and Risk Management Committee
† Member of the Finance and Risk Management Committee as of January 1, 2010



Auditors
KPMG LLP
Los Angeles, California

Transfer agent and registrar
BNY Mellon Shareowner Services
Newport Office Center VII
480 Washington Boulevard
Jersey City, New Jersey 07310
(800) 622-9231
www.bnymellon.com/shareowner

Stock exchange listing
Oxy’s common stock is listed on the
New York Stock Exchange (NYSE).
The symbol is “OXY.”

## Dividend reinvestment plan

Occidental stockholders owning 25 or more shares of common or preferred stock registered in their name are eligible to purchase additional shares of common stock under the Dividend Reinvestment Plan by investing dividends on a minimum of 25 shares and optional cash payments of up to $10,000 per month. Information may be obtained from: BNY Mellon Shareowner Services at www.bnymellon.com/shareowner.

## Annual certifications

Occidental has filed the certifications of the chief executive officer and chief financial officer required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 to its 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission. In addition, in 2009, Occidental submitted to the NYSE a certificate of the chief executive officer stating that he is not aware of any violation by the company of the NYSE corporate governance listing standards.

## Current news and general information

Information about Occidental, including news releases, is available on the Internet at www.oxy.com. In addition, our investor package is available by calling toll-free 1-888-OXPETE (1-888-699-7383).

This annual report is printed on Forest Stewardship Council (FSC)-Certified paper that contains wood from well-managed forests, controlled sources and recycled wood or fiber.



Dedicated partner, employer, neighbor



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Since 1920

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OXY



CORPORATE HEADQUARTERS
10889 Wilshire Boulevard
Los Angeles, California 90024-4201
(310) 208-8800
www.oxy.com

INVESTOR RELATIONS
1230 Avenue of the Americas
8 \( ^{TH} \)  Floor, Suite 800
New York, New York 10020-1508
(212) 603-8111
investorrelations@oxy.com

GOVERNMENT RELATIONS
1717 Pennsylvania Avenue, NW
Suite 400
Washington, D.C. 20006-4614
(202) 857-3000
OIL AND GAS
Occidental Oil and Gas Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024-4201
(310) 208-8800

Occidental Energy Marketing, Inc.
5 Greenway Plaza
Houston, Texas 77046-0506
P.O. Box 27570
Houston, Texas 77227-7570
(713) 215-7000

Occidental Middle East
Development Company
Occidental Tower, 4 \( ^{th} \)  Street, Muroror
P.O. Box 73243
Abu Dhabi, United Arab Emirates
+971 2 691 7200

## CHEMICALS

Occidental Chemical Corporation
Occidental Tower
5005 LBJ Freeway
Dallas, Texas 75244-6119
P.O. Box 809050
Dallas, Texas 75380-9050
(972) 404-3800