occidental petroleum 2007 Annual Report to Stockholders
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  • 1. Corporate headquarters Oil and gas10889 Wilshire Boulevard Occidental Oil and Gas CorporationLos Angeles, California 90024-4201 10889 Wilshire Boulevard(310) 208-8800 Los Angeles, California 90024-4201www.oxy.com (310) 208-8800Investor relations Occidental Energy Marketing, Inc.1230 Avenue of the Americas 5 Greenway Plaza8th Floor, Suite 800 Houston, Texas 77046-0506New York, New York 10020-1508 P.O. Box 27570(212) 603-8111 Houston, Texas 77227-7570investorrelations@oxy.com (713) 215-7000Government relations Occidental Middle East1717 Pennsylvania Avenue, NW Crescent Towers, Zayed The First Street,Suite 400 KhalidyahWashington, D.C. 20006-4614 P.O. Box 73243(202) 857-3000 Abu Dhabi, United Arab Emirates +971 2 691 7200 Chemicals Occidental Petroleum Corporation Occidental Chemical Corporation Occidental Tower 5005 LBJ Freeway Dallas, Texas 75244-6119 P.O. Box 809050 Dallas, Texas 75380-9050 (972) 404-3800 Occidental Petroleum Corporation Annual Report 2007 Annual Report 2007
  • 2. Selected Financial DataDollar amounts in millions, except per-share amountsFor the years ended December 31, 2007 2006 2005 2004 2003Results of Operations (a) Net sales $ 18,784 $ 17,175 $ 14,153 $ 10,400 $ 8,598 Income from continuing operations $ 5,078 $ 4,202 $ 4,838 $ 2,197 $ 1,410 Net income $ 5,400 $ 4,191 $ 5,293 $ 2,574 $ 1,537 Basic earnings per common share from continuing operations $ 6.08 $ 4.93 $ 6.00 $ 2.78 $ 1.84 Basic earnings per common share $ 6.47 $ 4.92 $ 6.56 $ 3.25 $ 2.00 Diluted earnings per common share $ 6.44 $ 4.87 $ 6.47 $ 3.21 $ 1.98Financial Position(a) Total assets $ 36,519 $ 32,431 $ 26,170 $ 21,440 $ 18,210 Long-term debt, net $ 1,741 $ 2,619 $ 2,873 $ 3,345 $ 4,446 Stockholders’ equity $ 22,823 $ 19,252 $ 15,091 $ 10,597 $ 7,970Market Capitalization(b) $ 63,573 $ 41,013 $ 32,121 $ 23,153 $ 16,349Cash Flow Cash provided by operating activities $ 6,798 $ 6,353 $ 5,337 $ 3,878 $ 3,074 Capital expenditures $ 3,497 $ 2,987 $ 2,295 $ 1,703 $ 1,481 Cash provided (used) by all other investing activities, net $ 369 $ (1,396) $ (866) $ (725) $ (650)Dividends Per Common Share $ 0.94 $ 0.80 $ 0.645 $ 0.55 $ 0.52Basic Shares Outstanding (thousands) 834,932 852,550 806,600 791,159 767,887(a)  the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section See of this report and the “Notes to Consolidated Financial Statements” for information regarding accounting changes, asset acquisitions and dispositions, discontinued operations, environmental remediation, other costs and other items affecting comparability.(b) Market capitalization is calculated by multiplying the year-end total shares of common stock outstanding, net of shares held in treasury stock, by the year-end closing stock price.Portions of this report contain forward-looking statements and involve risks and uncertainties that could materially affectexpected results of operations, liquidity, cash flows and business prospects. Words such as “estimate,” “project,” “predict,”“believe,” “will,” “would,” “could,” “may,” “might,” “anticipate,” “plan,” “intend” and “expect” or similar expressions that conveythe uncertainty of future events or outcomes generally identify forward-looking statements. You should not place undue reli-ance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Occidentaldoes not undertake any obligation to update any forward-looking statements as a result of new information, future eventsor otherwise. The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in theirfilings with the SEC, to disclose only proved reserves demonstrated by actual production or conclusive formation tests to beeconomically producible under existing economic and operating conditions. We use certain terms in this report, such as grossoil reserves, estimated proved reserves, probable, possible and recoverable reserves and oil in place, that the SEC’s guidelinesstrictly prohibit us from using in filings with the SEC. Additionally, the SEC requires oil and natural gas companies, in theirfilings, to disclose non-financial statistical information about their consolidated entities separately from such informationabout their equity holdings and not to show combined totals. Certain information in this report is shown on a combinedbasis; however, the information is disclosed separately in the “Notes to the Consolidated Financial Statements” included inthe 2007 Annual Report on Form 10-K included in this report.Cover: Workers at Oxy’s Idd El Shargi North Dome Field, offshore Qatar, cross a bridge connectingthe operational platforms. Inset top: A pumping unit at Oxy’s Permian Basin Hobbs, New Mexico,location. Inset middle: Seismic trucks in Libya, where Oxy is the largest net holder of oil and gasacreage. Inset bottom: A well in Argentina where Oxy drilled 153 wells in 2007.
  • 3. Oxy in brief 3 1United States1. Elk Hills2. Long Beach 1 23. Hugoton/ 2 Piceance Basin 44. Permian Basin 1 3Middle East/North Africa1. Libya 5 42. Yemen3. Oman 3 Latin America4. United Arab 2 1. Colombia Emirates 2. Bolivia5. Qatar 3. 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 market capitalization of more than $60 billion, Oxy engages in oil and gas exploration and production in three core regions: the United States, the Middle East/North Africa and Latin America. OxyChem, a wholly owned subsidiary, manufactures and markets chlor-alkali products and vinyls, and is the nation’s largest merchant marketer of chlorine and caustic soda. Oxy’s U.S. operations in the Permian Basin of southwest Texas and southeast New Mexico, Mid-Continent and California account for more than 60 percent of the company’s total worldwide oil and gas production. Oxy is the largest oil producer in Texas, the second-largest in New Mexico and the third-largest in California, where it also is the largest producer of natural gas. In the increasingly important Middle East/North Africa region, Oxy currently has operations in Libya, Oman, Qatar, United Arab Emirates and Yemen, which collec- tively account for approximately one-quarter of the company’s total worldwide production. Oxy is also a partner in the transborder Dolphin Project that supplies natural gas from Qatar to markets in the United Arab Emirates and Oman. Oxy’s Latin America operations in Argentina, Bolivia and Colombia account for approximately 13 percent of total production. Oxy is an industry leader in applying advanced technology to boost production from mature oil and gas fields and access hard-to-reach reserves. With more than 9,000 employees, Oxy is committed to respecting the environment, protecting safety and upholding high standards of social responsibility throughout its worldwide operations. 1
  • 4. Occidental achieved exceptional financial Dr. Ray R. Irani performance in 2007, surpassing even our Chairman and Chief Executive Officer strong success of recent years. It’s a story of solid Notably, net income of $5.4 billion was throughout the industry in 2007, Oxy the highest in Oxy’s 87-year history. was ideally positioned to capitalize on the robust energy market. Oxy continues We achieved top-tier results relative to to outperform our major competitors in our industry peers on the key metrics capturing the value from higher oil and which in our view best measure com- gas prices and delivering it to the bottom parative financial performance. These line by being one of the industry’s most include total return to stockholders, efficient producers on an equivalent return on equity (ROE) and return on barrel basis. capital employed (ROCE) and demon- strate our ability to generate significant 2007 market performance long-term value for Oxy stockholders. Oxy’s year-end closing stock price of These accomplishments underscore $76.99 per share was the highest year-end the effectiveness of the business strategy price in our history, increasing 58 percent we have employed over the past decade. from the 2006 year-end record of $48.83 Strict financial discipline and a focus per share. Our 60-percent stockholder on high-potential, long-lived oil and return, based on stock price appreciation gas assets have positioned the company plus dividend reinvestment, also repre- for sustainable growth and profitability sented a new high mark for the company. — and our stockholders continue to enjoy the benefits. Cumulative total return to stockholders over the past five years has significantly Our disciplined business strategy affords outpaced Oxy’s peer companies, as well Oxy a distinct advantage. While high as the Standard & Poor’s 500 Stock Index. commodity prices boosted earnings2
  • 5. Net income Return on capital employed (ROCE)* Debt-to-capitalization ratio$ in billions Stated as percent Stated as percent2003 1.5 2003 15 2003 362004 2.6 2004 20 2004 272005 5.3 2005 33 2005 172006 4.2 2006 21 2006 132007 5.4 2007 24 2007 7Return on equity (ROE) Total debt Stockholders’ equityStated as percent $ in billions $ in billions2003 22 2003 4.6 2003 8.02004 28 2004 3.9 2004 10.62005 41 2005 3.0 2005 15.12006 24 2006 2.9 2006 19.32007 26 2007 1.8 2007 22.8performanceA $100 investment in Oxy stock at Oxy continues to — double the 50 cents per share paid inyear-end 2002 would have grown 2002. This was the sixth dividend increaseto $599 by year-end 2007. The same outperform our since 2002, resulting in a compound$100 invested in Oxy’s peer group major competitors in annual dividend growth rate of 13— a representative sampling of the oil percent over the most recent five-yearand gas companies against which Oxy capturing the value period. Dividend increases reflect thecompetes for major global projects confidence of Oxy’s management and from higher oil and gas— would have been worth only $283 the Board of Directors in the company’safter the same five years. And $100 prices and delivering financial and operating performance.invested in the S&P 500 Index for that The Board will continue its ongoingperiod would have been worth just $183. it to the bottom line… evaluation of dividends to generate top-quartile returns to stockholders.2007 financial performance $1.1 billion to repurchase 20.6 million Our 2007 ROE and ROCE* were a strongOxy achieved strong results in 2007 shares of Oxy common stock. 26 percent and 24 percent, respectively.across the range of financial metrics most Our 7-percent debt-to-capitalization For the three years of 2005 throughwatched by the investment community. ratio at the close of 2007 was Oxy’s 2007, we achieved an average ROE ofConsolidated net income reached a lowest in more than 40 years. Total debt 29 percent and an average ROCE ofnew company record of $5.4 billion, at year-end was $1.8 billion, represent- 26 percent. Stockholders’ equity grew29 percent higher than the $4.2 billion ing a $1.1-billion reduction from the by 18 percent during 2007, from $19.3Oxy achieved in 2006. From our operat- $2.9-billion balance at the end of 2006. billion to $22.8 billion, and more thaning cash flow of $6.8 billion, we spent doubled over the past three years, from Oxy increased the dividend to stock-$3.5 billion to fund capital expenditures, $10.6 billion to $22.8 billion. holders by 14 percent in 2007, from an$765 million to pay dividends and annualized rate of 88 cents to $1.00*  OCE is earnings before interest expense and tax effect of interest expense over stockholders’ equity plus average total debt. R 3
  • 6. Oil $8.3 billion in income Record-setting income for Oxy Oil and Gas — four years runningand gas 570,000 BOE/day Oxy’s worldwide oil and gas production up 4.6% over 2006 242 million BOE replaced A 116% reserve replacement rate in 2007 Strategy for steady growth Oxy’s consistently strong financial performance over the past 15 years reflects our disciplined business strategy The robust performance by the oil and gas segment in recent years is another reflection of Oxy’s effective business strategy. We focus on large, long-lived “legacy” oil and gas assets where Oxy can enhance production, and we invest only in projects we believe will generate above-cost-of- capital returns throughout the business cycle. We continued to strengthen our asset base in 2007 within each of our core geographic regions: the United States, the Middle East/North Africa and Latin America. Earnings from our oil and gas segment in 2007 set a new company record for the fourth consecutive year. Oil and gas earnings from worldwide operations totaled $8.3 billion, an increase of more than 20 percent from the previous record of $6.9 billion earned by this segment in 2006. Higher oil prices, along with We consistently replace and expand our increased oil and gas production, mainly contributed to these record reserves through improved recovery, strategic results. Our average realized crude acquisitions and focused exploration. oil price for 2007 was $64.77 per barrel, $6.96 above 2006. Worldwide oil and natural gas production averaged 570,000 barrels of oil equivalent (BOE) per day, an increase of 4.6 percent over the 545,000 BOE per day produced in 2006. Oxy is a worldwide industry leader in applying advanced technology to boost production from mature oil and gas fields and access hard-to-reach reserves. Furthermore, we consistently replace and expand our reserves through improved recovery, strategic acquisitions and focused exploration. Consolidated proved reserve additions from all sources totaled 242 million BOE in 2007, compared to production of 209 million BOE, for a production replacement rate of 116 percent. For the three-year period 2005 through 2007, Oxy’s consolidated proved reserve additions totaled 1.125 billion BOE and total production equaled 580 million BOE, for a reserve replacement rate of 194 percent. More than 90 percent of the net additions in 2007 were in the United States, primarily in the Permian Basin in Texas and New Mexico, the Elk Hills field in California and the Rocky Mountains.4
  • 7. A pumping unit in the Permian Basin is silhouetted at Oxy’s Denver City, Texas facility. Oxy is the largest oil producer in the Permian Basin, which extends through southwest Texas and south- east New Mexico.Oil & natural gas proved reserves Oil & natural gas productionMillion BOE Thousand BOE/day U.S. International Total U.S. International Total2003 1,777 530 2,3072004 1,816 560 2,3762005 2,003 566 2,5692006 2,064 799 2,8632007 2,152 712 2,864 5
  • 8. Oil U.S. production: 63% Production averaged 360,000 BOE/day from all U.S. assetsand gas Dolphin fully operational In February 2008 the Dolphin Project, in which Oxy has a 24.5% interest, became fully operational Largest acreage in Libya Oxy is the largest holder of exploration acreage in Libya 177 million BOE Proved reserves from our assets in Argentina Right: Oxy’s new Elk Hills Consolidated Control Facility provides a cost- efficient central location for field management. Middle: Oxy’s Visualization Center in Doha, Qatar, features state-of-the-art 3-D visualization technol- ogy for scientific collaboration. Far Right: Rig workers prepare a drilling rig at the San Jorge Basin in southern Argentina.At year-end 2007, the U.S. accounted for 75 percent of Oxy’s in oil and gas properties in the Permian Basin and in theproved reserves, the Middle East/North Africa 16 percent and Piceance Basin of Colorado, which we announced in theLatin America 9 percent. fourth quarter 2007. The Piceance assets complement our existing Colorado holdings, while the additional PermianOxy’s excellent oil and gas assets are well positioned to provide assets expand our industry-leading position there. Together,us continued success and growth. these acquisitions are expected to increase our net proved reserves in the U.S. by 92 million BOE, a figure we believeUnited States will substantially increase over time.Sixty-three percent of Oxy’s 2007 production — approximately360,000 BOE per day — was generated from assets in the United Production from Oxy’s California assets averaged 131,000States, including the Permian Basin of southwest Texas and BOE per day, or 23 percent of our worldwide total. In 2007southeast New Mexico, one of the largest and most active oil we made four complementary acquisitions for our Californiabasins in the country. Oxy continues to be the leading producer business unit, for approximately $300 million, which willin the Permian, where our 2007 production averaged 198,000 further enhance our production in the state.BOE per day, representing 35 percent of the company’s dailyworldwide production. Middle East/ North Africa The increasingly important Middle East/North Africa regionIn 2007, we completed several asset exchanges with BP, provided 24 percent of our 2007 production.acquiring strategic properties that complement our existingoperations. Oxy purchased BP’s West Texas Pipeline System, The start-up of production from the giant Dolphin Project,with 1,550 miles of active pipelines and the capacity to transport the premier transborder natural gas project in the Middle East,approximately 190,000 barrels of crude oil per day from the contributed to our robust regional growth. Oxy has a 24.5-Permian Basin to the market center in Cushing, Oklahoma. percent interest in the Dolphin Project, in which natural gas isCombined with our existing area assets, this created a system produced from wells offshore Qatar. The gas is processed at anwith a throughput capacity of 350,000 barrels per day and a onshore gas processing and compression plant in Ras Laffan,5-million-barrel storage capability. Oxy also secured from BP Qatar, and then flows through a 48-inch, 230-mile-long subseaadditional Permian Basin oil and gas assets adjacent to our export pipeline — one of the longest and largest in the Middleexisting operations. East — to markets in the United Arab Emirates and Oman.In the first quarter of 2008, we completed the purchase of 50 Most of the facilities within the original scope of the Dolphinpercent of Plains Exploration & Production’s working interests Project were completed by the end of 2007, including three of the four trains in the onshore processing plant in Ras Laffan.6
  • 9. Above: Natural gas from the Dolphin Project is processed and compressed at this plant in Ras Laffan, Qatar, before flowing through a 48-inch, 230-mile-long subsea export pipeline to markets in the United Arab Emirates and Oman.The fourth and final train was completed and fully operational result, oil production is projected to triple from the currentby the end of February 2008. Dolphin exited 2007 producing gross production of approximately 100,000 barrels per day43,000 BOE per day net to Oxy. to around 300,000 barrels per day.Oxy acquired Anadarko Petroleum Corporation’s 92.5-percent Additionally, in late 2007 Oxy was awarded two offshoreinterest in an exploration and production sharing agreement exploration blocks in Bahrain adjacent to major producingcovering two properties located offshore Qatar in October 2007. fields in Qatar, where we have begun a study phase andProved reserves for all of Oxy’s Qatar properties, except the technical assessment.Dolphin Project, totaled 128 million BOE at year-end. Latin America At the Mukhaizna oil field in Oman, more than 170 new wellswere drilled by year-end 2007, and we are implementing a major Our Latin America operations accounted for 13 percent ofsteam flood project for enhanced oil recovery. The 2007 gross Oxy’s worldwide production in 2007.daily production exit rate was nearly triple that of September Oxy’s Colombia operations include four fields within the2005, when Oxy assumed operations of this field. Over the next Llanos Norte Basin and another in the Middle-Magdalenaseveral years we plan to steadily increase gross production to Basin, the LaCira-Infantes (LCI) field. Oxy holds a 48-percent150,000 BOE per day. interest in LCI, an enhanced oil recovery project with largeWe announced significant new agreements in November 2007 remaining reserves, which has now entered the commercialwith the Libya National Oil Corporation for major field phase of development and production and is tracking toredevelopment and exploration in the prolific Sirte Basin. The our production plans. Our share of 2007 production fromnew 30-year agreements will further expand our industry- these operations was 37,000 BOE per day and proved reservesleading position in Libya, where Oxy is the largest holder of totaled 57 million BOE at year-end.exploration acreage. Signing of the new agreements will give Our share of production from our assets in Argentina averagedOxy a 75-percent working interest in the new Libya projects, and 36,000 BOE per day in 2007. Proved reserves amounted towith our partner, Oxy will receive 10 to 12 percent of the gross 177 million BOE at year-end 2007. We expect to significantlyproduction on an after-tax basis, depending on the specific field. increase production in Argentina over the next five yearsOxy and our partners expect to develop gross oil reserves in through aggressive drilling, waterflooding and enhanced oilLibya of approximately 2.5 billion barrels for an anticipated recovery projects. In 2008, Oxy plans to drill 220 wells, com-overall capital investment of $5 billion over the next five years, plete eight waterflood projects initiated in 2007 and implementof which Oxy’s portion will be approximately $1.9 billion. As a a number of new waterflood projects. 7
  • 10. ChemicalsEarnings from our chemical segment decreased in 2007 due along with favorable foreign currency exchange rates.to the weakness in the United States housing market and OxyChem’s PVC facilities saw an average operating ratecontinued high feedstock costs, which led to lower margins of 78 percent for 2007, compared to the North Americanin the polyvinyl chloride (PVC) business. Overall chemical industry average of 85 percent.segment earnings for 2007 were $601 million, compared with Pricing for liquid caustic soda started the year strong and$906 million for 2006. increased in every quarter of 2007, aided by unplanned globalDomestic demand for PVC in 2007 declined 5 percent from supply disruptions and a strong export market. OxyChem’sthe previous year as a result of the housing slump. This was chlor-alkali operating rate for 2007 was 92 percent, comparablepartially offset by increased demand for U.S. products in with the industry average.export markets, aided by expanding international economiesCorporatesocial responsibility The health and safety of our employees, contractors, neighbors and customers, as well as sound and sensitive environmental practices, are key priorities for Oxy. Oxy’s health, environment and safety (HES) management systems continually evolve to meet the changing needs of our growing business. We work diligently to implement progressive health, environmental, safety, process risk and security standards at all new and ongoing operations. Incidents are thoroughly investigated and their causes promptly identified and corrected. Oxy continues to maintain a strong HES risk management program, the results of which are regularly reviewed by senior management and the Board of Directors. We take pride in Oxy’s superior employee Injury and Illness Incidence Rate (IIR), which measures recordable injuries and illnesses per 100 full-time workers per year. Oxy’s IIR is one-fourth that of the oil and gas extractive industry overall, which puts us ahead even of such professions as legal services and dentists for employee safety, according to the most recent figures from the U.S. Bureau of Labor Statistics. Our 2007 IIR was 0.5, virtually the same as the previous year. And it is merely one indicator of the company’s excellent safety record. We constantly work to save costs while enhancing energy efficiency in our operations, thereby reducing greenhouse gas (GHG) emissions. Oxy voluntarily reports on GHG emissions and actively participates in trade association efforts to discuss a wide spectrum of environmental issues. In addition, we are utilizing several highly efficient8
  • 11. Exemplary safety recordOxy’s employee IIR is one-fourth that of the oil and gasextractive industry averageStrong HES programsResults are regularly reviewed by senior management andthe Board of DirectorsResponsible practicesOxy recognizes that responsible social and HES practiceslink to strong financial performance Above: A rig worker performs maintenance onEmployee recordable injury and illness trend a rig at Oxy’s THUMS operations at Long Beach Harbor in Southern California. Oxy employees Oxy Employee IIR Average IIR of all U.S. industries* and contractors are required to wear appropri- ate safety gear and to meet all applicable1998 0.68 6.7 government and Oxy safety requirements.1999 0.65 6.32000 0.83 6.12001 0.69 5.72002 0.62 5.32003 0.68 5.02004 0.34 4.8 We expanded the scope and depth of our extensive corporate2005 0.47 4.6 social responsibility programs in 2007, promoting awareness2006 0.47 4.4 and integration of our Human Rights Policy and its underlying2007 0.50 ** principles, building on the program adopted by the Board of Directors in 2004. Human rights training is mandatory for all Oxy managers, security staff, contractors and new employeescogeneration facilities to supply power and steam to Oxy’s throughout our international operations. In addition, asoil and gas and chemicals operations; implementing new required by our policy, we conduct social impact assessments inmaintenance and operating practices; installing energy- new work areas outside the U.S. We will continue to build uponefficient equipment; electrifying well field operations that our commitment to the Voluntary Principles on Security andformerly utilized gas or diesel engines; and using solar- Human Rights as an integral aspect of our business practices.powered lighting in remote areas. At Oxy, social responsibility is everyone’s business. It is aOxy recognizes that responsible social, environmental and hallmark of good management and an integral part of oursafety practices link to strong financial performance. We have success. By systematizing our approach to SR, we are helpingadopted a unified approach that integrates social responsibility to ensure that wherever Oxy does business and engages with(SR) into our comprehensive HES management systems to communities, we are the partner of choice, the employer ofenable us to apply a defined and measurable SR standard choice and the neighbor of choice.around the globe.*  Source: U.S. Bureau of Labor Statistics**  ot available N 9
  • 12. Looking 620,000 – 630,000 BOE/day Expected oil and gas production in 2008ahead New Middle East opportunities The Middle East and North Africa will be an important source of Oxy’s future growth $3.6 billion capital spending Expected total oil and gas capital spending for 2008 Oxy’s performance in 2007 again ranked among the strongest in the oil and gas industry. While these results are gratifying, we are focused on the future in order to build on this success in 2008 and beyond. Adhering to our program of disciplined financial management, we will continue to pursue top-quartile results and enhanced value for Oxy stockholders. With the excellent recent additions to Oxy’s asset portfolio, ongoing solid production perfor- mance and promising projects in the pipeline, along with continued strong energy prices, we fully expect 2008 to be another standout year for the company. We expect oil and gas production for the full year of 2008 to increase to approximately 620,000 to 630,000 BOE per day, based on $80 per barrel average West Texas Intermediate (WTI) prices, as compared to our 2007 rate of 570,000 BOE per day. We anticipate this increase will include the Dolphin Project’s full-year operations and increased production from the Mukhaizna oil field in Oman, as well as our Argentina and Colombia assets. We expect our total oil and gas capital spending for 2008 to be approximately $3.6 billion, including increased capital spending in our Argentina, Colombia, Libya and California operations. We believe new opportunities in the Middle East and North Africa, where we are actively pursuing and negotiating several projects, will be an important source of Oxy’s future growth. We also will continue to grow through additional attractive acquisitions in each of our core regions. However, as always, we will only enter into agreements that we expect to meet our stringent standards for financial return. Oxy takes pride in applying expertise and experience to help meet the world’s energy needs and fuel economic growth. Our success is built on technical know-how, business acumen, strong partnerships and proven ability to deliver superior results.10
  • 13. Above: Oil field worker operating in Argentina, where Oxy anticipatesincreasing production through aggressive drilling, waterfloodingand enhanced oil recovery projects.Right: Oxy Libya’s technical team monitors and analyzes producing fields.Far Right: Technician surveys equipment on Oxy Qatar’s offshore PS1platform, where new processing facilities have increased gas compres-sion, water injection and separation capacity.We are continually focused on optimizing profits and free I want to acknowledge and commend the superb efforts ofcash flow per BOE, keeping costs competitive, and growing Oxy’s employees, talented management team and the Boardour oil and gas reserves at a rate well in excess of production. of Directors, whose stewardship is invaluable. The company’s achievements in 2007 and over the past decade-and-a-half areOxy’s consistently strong financial performance over the a tribute to their dedication and hard work. Together, we willpast 15 years reflects this disciplined business strategy, as continue to meet the highest expectations of our stockholderswell as our focus on operational excellence and our ability and all those for whom Oxy is synonymous with success.to work effectively in diverse cultural environments. Webelieve these strengths will keep Oxy at the forefront of ourindustry and will continue to be instrumental in enhancing Dr. Ray R. Iranistockholder value. Chairman and Chief Executive Officer 11
  • 14. Board of DirectorsFrom left: R. Chad Dreier, Walter L. Weisman, Rodolfo Segovia, John E. Feick, Spencer Abraham, Aziz D. Syriani, Dr. Ray R. Irani,Rosemary Tomich, Irvin W. Maloney, Ronald W. Burkle, Edward P. Djerejian, John S. Chalsty.Dr. Ray R. Irani1,8 R. Chad Dreier2,3 Rosemary Tomich1,2,3,4,5,7Chairman and Chief Executive Officer, Chairman, President and Chief Executive Officer, Owner, Hope Cattle Company and A.S. TomichOccidental Petroleum Corporation The Ryland Group, Inc. Construction Company; Chairman and Chief Executive Officer, Livestock Clearing, Inc.Spencer Abraham3,4,7 John E. Feick1,2,4,8Chairman and Chief Executive Officer, Chairman, Matrix Solutions Inc. Walter L. Weisman4,5,8The Abraham Group, LLC; Private investor; former Chairman and Chief Executiveformer U.S. Secretary of Energy Irvin W. Maloney 1,2,3,7 Officer, American Medical International, Inc. Retired Chairman and Chief Executive Officer,Ronald W. Burkle 8 Dataproducts Corporation 1 Member of the Executive CommitteeManaging Partner, The Yucaipa Companies 2 Member of the Audit Committee Rodolfo Segovia 1,3,4,5,7 3 M  ember of the Executive CompensationJohn S. Chalsty1,2,3,5,8 Member of the Executive Committee, Inversiones and Human Resources CommitteePrincipal, Muirfield Capital Management LLC; Sanford; former President, Ecopetrol — Colombian 4 M  ember of the Environmental, Healthformer Chairman, Donaldson, Lufkin & Jenrette, Inc. national oil company and Safety Committee 5 M  ember of the Corporate Governance, Nominating andEdward P. Djerejian4,5,7 Aziz D. Syriani1,2,5,6,8 Social Responsibility CommitteeDirector, James A. Baker III Institute for Public Policy; President and Chief Executive Officer, 6 Lead Independent Directorformer U.S. Ambassador The Olayan Group 7 Member of the Charitable Contributions Committee 8 Member of the Dividend CommitteeOfficers Vice Presidents and Key ExecutivesDr. Ray R. Irani B. Chuck Anderson Christopher G. StavrosChairman and Chief Executive Officer President, OxyChem Vice President — Investor RelationsStephen I. Chazen Gary L. Daugherty Todd A. StevensPresident and Chief Financial Officer Vice President — Internal Audit Vice President — Acquisitions and Corporate Finance Ian M. Davis Michael S. StuttsExecutive Vice Presidents Vice President — Government Relations Vice President — TaxDonald P. de Brier James R. Havert Charles F. WeissExecutive Vice President, General Counsel and Secretary Vice President and Treasurer Vice President — Health, Environment and SafetyRichard W. Hallock Richard S. KlineExecutive Vice President — Human Resources Vice President — Communications and Public Affairs As of December 31, 2007James M. Lienert Jim A. LeonardExecutive Vice President — Finance and Planning Vice President and ControllerJohn W. Morgan Donald L. Moore, Jr.Executive Vice President; Vice President and Chief Information OfficerPresident, Oxy Oil and Gas — Western Hemisphere Roy PineciR. Casey Olson Senior Vice President, Finance — Oil and GasExecutive Vice President;President, Oxy Oil and Gas — Eastern Hemisphere12
  • 15. Selected Financial Data Auditors KPMG LLP Annual certifications Occidental has filed the certifications Los Angeles, California of the chief executive officer and chief financial officer required by Section 302Dollar amounts in millions, except per-share amounts Transfer agent and registrar of the Sarbanes-Oxley Act of 2002 as BNY Mellon Exhibits 31.1 and 31.2 to its 2007 AnnualFor the years ended December 31, 2007 2006 2005 2004 2003 Shareowner Services Report on Form 10-K filed with the Newport Office Center VII Securities and Exchange Commission.Results of Operations (a) 480 Washington Boulevard In addition, in 2007, Occidental submitted Jersey City, New Jersey 07310 to the NYSE a certificate of the chief Net sales $ 18,784 $ 17,175 $ 14,153 $ 10,400 $ 8,598 (800) 622-9231 executive officer stating that he is not Income from continuing operations $ 5,078 $ 4,202 $ 4,838 $ 2,197 $ 1,410 www.melloninvestor.com aware of any violation by the company Net income $ 5,400 $ 4,191 $ 5,293 $ 2,574 $ 1,537 of the NYSE corporate governance Basic earnings per common share Stock exchange listing listing standards. from continuing operations $ 6.08 $ 4.93 $ 6.00 $ 2.78 $ 1.84 Common Stock Basic earnings per common share $ 6.47 $ 4.92 $ 6.56 $ 3.25 $ 2.00 New York Stock Exchange (NYSE) Current news and general information Diluted earnings per common share $ 6.44 $ 4.87 $ 6.47 $ 3.21 $ 1.98 Information about Occidental, includingFinancial Position(a) Dividend reinvestment plan news releases, is available on the Internet Occidental stockholders owning 25 or more at www.oxy.com. In addition, our investor Total assets $ 36,519 $ 32,431 $ 26,170 $ 21,440 $ 18,210 package is available by calling toll-free shares of common or preferred stock registered Long-term debt, net $ 1,741 $ 2,619 $ 2,873 $ 3,345 $ 4,446 1-888-OXYPETE; (1-888-699-7383). in their name are eligible to purchase additional Stockholders’ equity $ 22,823 $ 19,252 $ 15,091 $ 10,597 $ 7,970 shares of common stock under the DividendMarket Capitalization(b) $ 63,573 $ 41,013 $ 32,121 $ 23,153 $ 16,349 Reinvestment Plan by investing dividendsCash Flow on a minimum of 25 shares and optional Cash provided by operating activities $ 6,798 $ 6,353 $ 5,337 $ 3,878 $ 3,074 cash payments of up to $10,000 per month. Capital expenditures $ 3,497 $ 2,987 $ 2,295 $ 1,703 $ 1,481 Information may be obtained from: Cash provided (used) by all other BNY Mellon, Shareowner Services at investing activities, net $ 369 $ (1,396) $ (866) $ (725) $ (650) www.melloninvestor.com.Dividends Per Common Share $ 0.94 $ 0.80 $ 0.645 $ 0.55 $ 0.52Basic Shares Outstanding (thousands) 834,932 852,550 806,600 791,159 767,887 Available to stockholders The following publications are available by writing to Occidental corporate headquarters and at www.oxy.com: Oxy Social Responsibility Report, Oxy Today: Middle East and North Africa, Oxy Corporate Snapshot and(a)  the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section See Oxy Corporate Governance Principles. of this report and the “Notes to Consolidated Financial Statements” for information regarding accounting changes, asset acquisitions and dispositions, discontinued operations, environmental remediation, other costs and other items affecting comparability.(b) Market capitalization is calculated by multiplying the year-end total shares of common stock outstanding, net of shares held in treasury stock, by the year-end closing stock price.Portions of this report contain forward-looking statements and involve risks and uncertainties that could materially affectexpected results of operations, liquidity, cash flows and business prospects. Words such as “estimate,” “project,” “predict,”“believe,” “will,” “would,” “could,” “may,” “might,” “anticipate,” “plan,” “intend” and “expect” or similar expressions that conveythe uncertainty of future events or outcomes generally identify forward-looking statements. You should not place undue reli-ance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Occidentaldoes not undertake any obligation to update any forward-looking statements as a result of new information, future eventsor otherwise. The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in theirfilings with the SEC, to disclose only proved reserves demonstrated by actual production or conclusive formation tests to beeconomically producible under existing economic and operating conditions. We use certain terms in this report, such as grossoil reserves, estimated proved reserves, probable, possible and recoverable reserves and oil in place, that the SEC’s guidelines This annual report is printed on Foreststrictly prohibit us from using in filings with the SEC. Additionally, the SEC requires oil and natural gas companies, in their Stewardship Council (FSC)-Certifiedfilings, to disclose non-financial statistical information about their consolidated entities separately from such information paper that contains wood from well-about their equity holdings and not to show combined totals. Certain information in this report is shown on a combined managed forests, controlled sourcesbasis; however, the information is disclosed separately in the “Notes to the Consolidated Financial Statements” included in and recycled wood or fiber.the 2007 Annual Report on Form 10-K included in this report. Cert no. SCS-COC-00949Cover: Workers at Oxy’s Idd El Shargi North Dome Field, offshore Qatar, cross a bridge connectingthe operational platforms. Inset top: A pumping unit at Oxy’s Permian Basin Hobbs, New Mexico,location. Inset middle: Seismic trucks in Libya, where Oxy is the largest net holder of oil and gasacreage. Inset bottom: A well in Argentina where Oxy drilled 153 wells in 2007.
  • 16. Corporate headquarters Oil and gas10889 Wilshire Boulevard Occidental Oil and Gas CorporationLos Angeles, California 90024-4201 10889 Wilshire Boulevard(310) 208-8800 Los Angeles, California 90024-4201www.oxy.com (310) 208-8800Investor relations Occidental Energy Marketing, Inc.1230 Avenue of the Americas 5 Greenway Plaza8th Floor, Suite 800 Houston, Texas 77046-0506New York, New York 10020-1508 P.O. Box 27570(212) 603-8111 Houston, Texas 77227-7570investorrelations@oxy.com (713) 215-7000Government relations Occidental Middle East1717 Pennsylvania Avenue, NW Crescent Towers, Zayed The First Street,Suite 400 KhalidyahWashington, D.C. 20006-4614 P.O. Box 73243(202) 857-3000 Abu Dhabi, United Arab Emirates +971 2 691 7200 Chemicals Occidental Petroleum Corporation Occidental Chemical Corporation Occidental Tower 5005 LBJ Freeway Dallas, Texas 75244-6119 P.O. Box 809050 Dallas, Texas 75380-9050 (972) 404-3800 Occidental Petroleum Corporation Annual Report 2007 Annual Report 2007