Occidental Petroleum Corporatio 8K Occidental Petroleum Announces Fourth Quarter and 12-Month 2009 Results | OXY 28 Jan 10

Fourth Quarter 2009

Earnings Conference Call

January 28, 2010

Fourth Quarter 2009 Earnings - Highlights

• Core Results - $1.1 Billion vs. $957 Million in 4Q08

– Core EPS $1.30 (diluted) vs. $1.18 in 4Q08.

• Net Income - $938 Million vs. $443 Million in 4Q08

– EPS $1.15 (diluted) vs. $0.55 in 4Q08.

– 4Q09 net income includes after-tax non-core charges
mostly consisting of a $115 mm impairment of certain
Argentine producing properties.

($ in millions)

4Q 08

Sales Price

Sales

Volume

Exploration

Expense

All Others*

4Q 09

$996

$1,813

$746

$83

$35

$47

*All Others include: Lower FX gains and higher DD&A rate partially offset by lower operating costs.

Fourth Quarter 2009 Earnings - Oil & Gas
Segment Variance Analysis - 4Q09 vs. 4Q08

• Core Results for 4Q09 of $1.8 B vs. $1.0 B in 4Q08

– The increase was due to higher crude oil prices and sales volumes and lower
operating expenses.

4Q09 4Q08

Reported Segment Earnings ($ mm) $1,643 $339

WTI Oil Price ($/bbl) $76.19 $58.73

NYMEX Gas Price ($/mcf) $4.29 $6.97

Oxy’s Realized Prices

Worldwide Oil ($/bbl) $69.39 $53.52

US Natural Gas ($/mcf) $4.37 $4.67

Fourth Quarter 2009 Earnings -
Oil & Gas Segment

Fourth Quarter 2009 Earnings -
Oil & Gas Segment - Production

4Q09 ; 4Q08

• Oil and Gas Sales Volumes (mboe/d) 650 620

– + 4.8% year-over-year or 30 mboe/d.

• Year-over-year sales volume increase includes:

– + 23 mboe/d from Oman and Bahrain;

– + 6 mboe/d from Argentina, and;

– + 13 mboe/d from California operations, excluding Long Beach;

– partially offset by - - 7 mboe/d of volumes in the Middle East caused
by higher oil prices affecting our PSCs.

Fourth Quarter 2009 Earnings -
Oil & Gas Segment - Production

4Q09 ; 3Q09

• Oil and Gas Sales Volumes (mboe/d) 650 628

– + 3.5% quarter-over-quarter or 22 mboe/d.

• Sequential sales volume increase includes:

– Bahrain production and development activities began on 12/1/09;

– Argentina volumes increased by 8 mboe/d. 3Q09 included a 9
mboe/d loss due to the Santa Cruz strike;

– California volumes, excluding Long Beach, increased by 3 mboe/d;

– Oman volumes increased by 4 mboe/d from the Mukhaizna field.

• Exploration expense was $99 million in 4Q09.

4Q 08

Sales

Volume / Mix

All Others

Operations/

Manufacturing*

Sales Price

4Q 09

$217

$33

$27

$42

$35

$288

($ in millions)

*Lower energy costs.

Fourth Quarter 2009 Earnings - Chemical
Segment Variance Analysis - 4Q09 vs. 4Q08

• Core Results for 4Q09 of $33 mm vs. $217 mm in 4Q08

– Reflects the continued weakness in most domestic markets, but in particular U.S.
housing, durable goods and agricultural sectors.

4Q 08

Marketing

Gas

Processing

Power

Generation

All

Others

4Q 09

$170

$81

$132

$18

($ in millions)

$18

Dolphin

Pipeline

Fourth Quarter 2009 Earnings - Midstream
Segment Variance Analysis - 4Q09 vs. 4Q08

• Core Results for 4Q09 of $81 mm vs. $170 mm in 4Q08

– The decrease was due to lower year-over-year margins in the marketing
business, partially offset by improved NGL margins resulting from lower
maintenance expenses, energy costs and property taxes in the gas processing
business and higher income from the Dolphin Pipeline.

Fourth Quarter 2009 Earnings -
Full Year 2009 Results

YTD2009 YTD2008

• Net Income ($ mm) $2,915 $6,857

EPS (diluted) $3.58 $8.34

• Core Results ($ mm) $3,083 $7,348

EPS (diluted) $3.78 $8.94

• Oil and Gas Sales Volumes (mboe/d) 645 601

– +7.3% year-over-year

• Oil and gas cash production costs, excluding production and property taxes, were
$10.37 p/boe for 2009, a 15% decline from 2008 full year costs of $12.13 p/boe.

• Taxes - other than on income were $1.77 p/boe for 2009 compared to $2.62 p/boe
for all of 2008. These costs, which are sensitive to product prices, reflect lower
crude oil and gas prices in 2009.

• Capex for 2009 was $3.6 billion.

– Capital expenditures by segment were 79% in Oil and Gas, 6% in Chemical and 15% in
Midstream.

– The Oil and Gas expenditures were 56% in foreign operations and 44% domestically.

$7,600

$40

$1,065

$1,750

$1,230

Available

Cash

Capex

Net Debt

Issuance

Dividends

Acquisitions

& Foreign

Bonuses

Ending Cash

Balance

12/31/09

Cash

Flow From

Operations

$5,800

($ in millions)

Beginning

Cash

$1,800

12/31/08

$3,600

Other

Debt

Issuance

$740

Debt

Reduction

$700

Fourth Quarter 2009 Earnings -
Full Year 2009 Cash Flow

Fourth Quarter 2009 Earnings -
Shares Outstanding, Debt and Returns

Shares Outstanding (mm) 2009 12/31/09

Weighted Average Basic 811.3

Weighted Average Diluted 813.8

Basic Shares Outstanding 812.0

Diluted Shares Outstanding 814.4

2009

Debt/Capital 9%

ROE 10.3%

ROCE 9.6%

Fourth Quarter 2009 Earnings -
2010 Reporting Changes

• Beginning in 2010, we are making three reporting changes
which will impact comparability between years.

• #1 — Historically, our production volumes have been reported
as a mix of pre-tax and after tax volumes while our revenues
have reflected only pre-tax sales.

– Difference is caused by our PSCs in the Middle East and North Africa
where production is immediately taken and sold to pay the local income
tax.

– We have treated this as additional revenues but not additional
production.

– To simplify our reporting and to conform with industry practice, our
production and our revenues will now be tied.

– Beginning this year we will refer to production on this more accurate and
consistent basis.

– All references to growth and volume comparisons will be against these
reformatted production volumes.

– For example, the production from last year will be referred to as 714
mboe/d rather than 645 mboe/d for the year.

– This change will have no effect on the company's financial statements.

Fourth Quarter 2009 Earnings -
2010 Reporting Changes

• #2 — We have combined most of our gas production in the mid
-continental regions of the US into a single business unit called
Midcontinent Gas.

– This was done in order to take advantage of common development
methods and production optimization opportunities.

– This business unit will include:

• the Hugoton field;

• the Piceance basin;

• and the bulk of the Permian basin non-associated gas assets, which had
been reported as part of the Permian business unit through the end of 2009.

– Starting in 2010, these assets will be reported in Midcontinent Gas.

– As a result, Midcontinent Gas unit's production will be approximately
75% gas and 25% liquids.

– Permian's production will go from 84% liquids and 16% gas, to 89%
liquids and 11%, mostly associated, gas.

Fourth Quarter 2009 Earnings -
2010 Reporting Changes

• #3 — Capitalized CO2

– Oxy's policy regarding tertiary recovery is to capitalize costs, such as
CO2, when they support development of proved reserves and generally
expense these costs when they support current production.

– In 2009, we capitalized approximately 50% of the CO2 injected in the
Permian basin.

– As the CO2 program matures, a larger portion of the injected gas
supports current production.

– Beginning in 2010, we will be expensing 100% of the CO2 injected, in
order to simplify the process of determining the portion that should be
capitalized versus expensed.

– In 2009, $69 million of CO2 costs were capitalized.

Fourth Quarter 2009 Earnings - 1Q10 Outlook

• We expect oil and gas sales volumes to increase from the
reformatted 4Q09 amount of 722 mboe/d to about 730 to 740
mboe/d in 1Q10 at about current oil prices.

– Production increases will come from California, Bahrain and Oman.

• Commodity Price Sensitivity - Earnings

– At current market prices, a $1.00 per barrel change in oil prices impacts oil
and gas quarterly earnings before income taxes by about $36 mm;

– A swing of $0.50 per mm BTU in domestic gas prices has a $24 mm impact
on quarterly earnings before income taxes;

• We expect 1Q10 exploration expense to be about $75 mm
for seismic and drilling for our exploration programs.

Fourth Quarter 2009 Earnings - 1Q10 Outlook

• For the Chemical segment:

– The international markets remain solid;

– In the U.S., we have a competitive advantage against foreign
products; however, the housing and construction markets remain
weak, which will limit improvement in sales volumes and margins.

– Chemical earnings for 1Q10 are expected to be in the range of $30
mm to $50 mm.

• We expect our combined worldwide tax rate in 1Q10 to be in
the range of 42 to 43 percent depending on the split between
domestic and foreign sourced income.

Fourth Quarter 2009 Earnings -
2010 Capital Spending and DD&A

• We expect capital spending for the total year of 2010 to be
about $4.3 billion.

– Our capital program will continue to focus on ensuring that our returns
remain well above our cost of capital.

– The additional capital from 2009's $3.6 billion level will be allocated to
the Oil and Gas segment.

– Of this increase:

• about a quarter each will go to California and Iraq;

• about 15% to Bahrain and 10% to Midcontinent Gas.

– As a result, the capital allocation will be approximately 82% in Oil and
Gas with the remainder being spent in Midstream and Chemical.

• Our Oil and Gas DD&A expense for 2010 should be
approximately $10.75 p/boe.

• Depreciation for the other two segments should be
approximately $450 million.

Fourth Quarter 2009 Earnings -
California Exploration

• Excluding the Kern County
discovery:

– Over the course of a couple of
years, we have drilled 39 exploration
wells seeking non-traditional
hydrocarbon bearing zones in
California.

– Of these wells, 12 are commercial
and 10 are currently being
evaluated;

– Oxy holds 1.3 mm acres of net fee
minerals and leasehold in CA, which
have been acquired in the last few
years to exploit these opportunities.
Discoveries similar to the Kern
County discovery are possible in this
net acre position.

– Additionally, we continue to pursue
shale production which is expected
to produce oil on this acreage.

*Production and producing wells as of each of the quarterly earnings disclosure dates.

Fourth Quarter 2009 Earnings -
California Exploration - Kern County Discovery

KERN COUNTY DISCOVERY AREA

The discovery, which is near Elk Hills, is not below any
producing zones.

4Q09 3Q09 2Q09 1Q09

Gross Production*

– Natural Gas (mmcf/d) 145 105 74 28

– Liquids (mb/d) 7.5 8.5 5 3

– Total mboe/d 31.7 26.0 17.3 7.7

Number of producing wells* 15 10 6 4

San Joaquin

Valley

OXY Producing Properties

Exploration Acreage

Elk Hills

Long Beach

& Tidelands

San

Francisco

Sacramento

Bakersfield

Los Angeles

Sacramento

Valley

Fourth Quarter 2009 Earnings -
California Exploration - Kern County Discovery

• Cumulative gross production
since the start of production
through 12/31/09 has been 19.4
bcf of gas and 1.5 mm barrels of
liquids;

• We expect to drill 8 wells in the
first half of 2010 focusing on oil
drilling and exploring the limits of
the field;

• We also expect to add skid
mounted gas processing facilities
by 2Q10;

• We expect to add to our gas
production once these facilities
are installed.

Occidental Petroleum Corporatio (OXY) 8-KOccidental Petroleum Announces Fourth Quarter and 12-Month 2009 Results