Occidental Petroleum Announces Fourth Quarter 2008 Results

LOS ANGELES--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced net income of $443 million ($0.55 per diluted share) for the fourth quarter of 2008, compared with $1.452 billion ($1.74 per diluted share) for the fourth quarter of 2007. Core results for the fourth quarter of 2008 were $957 million ($1.18 per diluted share), compared with $1.464 billion ($1.76 per diluted share) for the fourth quarter of 2007. Core results for 2008 excluded after-tax charges of $514 million ($0.63 per diluted share).

Net income for the twelve months of 2008 was $6.857 billion ($8.35 per diluted share), compared with $5.400 billion ($6.44 per diluted share) for the twelve months of 2007. Core results were $7.348 billion ($8.95 per diluted share) for the twelve months of 2008, compared with $4.405 billion ($5.25 per diluted share) for 2007. See the attached schedule for a reconciliation of net income to core results.

In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "In spite of a difficult fourth quarter, 2008 was a very strong year for Occidental with full year earnings being the highest in Oxy's history. In addition, our production grew by 5.4 percent from 2007 reaching 601,000 BOE per day.

"We are investing for the future growth of the company, despite volatile commodity prices, while maintaining a discipline of investing only in projects that we believe give us good return on capital employed. In the fourth quarter, we completed the acquisition of the remainder of Plains Exploration's interests in the Permian and Piceance Basins. We announced the signing of a preliminary agreement to develop the Jarn Yaphour and Ramhan oil and gas fields in the Emirate of Abu Dhabi and the signing of an exploration and production sharing agreement to develop existing gas fields in Northern Oman. Additionally, earlier this month we were selected from among several international companies to develop oil and gas reserves in the Kingdom of Bahrain.

"The current oil and gas industry cost structure is higher than what the current product prices can support. In order to protect our returns, we are announcing a 2009 capital program of $3.5 billion. We believe that with this level of capital, we will achieve our targeted returns in the current price environment as well as grow our production volumes in 2009, 2010 and beyond."

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $339 million for the fourth quarter of 2008, compared with $2.461 billion for the same period in 2007. The fourth quarter of 2008 core results were $996 million after excluding pre-tax losses of $599 million relating to the impairment of assets and $58 million for rig termination costs. The $1.465 billion decrease in the fourth quarter of 2008 core results was due to lower crude oil and natural gas prices, higher operating expenses, DD&A rates and exploration expense.

For the fourth quarter of 2008, daily oil and gas sales volumes averaged 620,000 barrels of oil equivalent (BOE), compared with 590,000 BOE per day in the fourth quarter of 2007. The increase includes 22,000 BOE per day from the Dolphin Project, 14,000 BOE per day domestically and 6,000 BOE per day from Oman, offset by 12,000 BOE per day lower production in Libya as a result of the new contract terms.

Oxy's realized price for worldwide crude oil was $53.52 per barrel for the fourth quarter of 2008, compared with $80.30 per barrel for the fourth quarter of 2007. Domestic realized gas prices dropped from $6.77 per MCF in the fourth quarter of 2007 to $4.67 per MCF for the fourth quarter of 2008.

Chemicals

Chemical segment earnings for the fourth quarter of 2008 were $127 million, compared with $94 million for the same period in 2007. The fourth quarter of 2008 core results were $217 million after excluding a $90 million pre-tax loss related to plant closure and impairments. The improvement in the fourth quarter of 2008 results reflect higher caustic soda margins, partially offset by lower volumes for chlorine, caustic soda and polyvinyl chloride.

Midstream, Marketing and Other

Midstream segment earnings were $170 million for the fourth quarter of 2008, compared with $138 million for the fourth quarter of 2007. Earnings for the fourth quarter of 2008 reflect higher margins in crude oil marketing, higher pipeline income from Dolphin and lower NGL margins in gas processing.

TWELVE-MONTH RESULTS

Oil and Gas

Oil and gas segment earnings were $10.651 billion for the twelve months of 2008, compared with $7.957 billion for the same period of 2007. Oil and gas core results were $11.308 billion for the twelve months of 2008 after excluding the fourth quarter impairments and rig termination costs described above, compared to 2007 core results of $7.369 billion. The $3.939 billion increase in the 2008 core results reflected $3.980 billion from higher crude oil and natural gas prices and $639 million from increased oil and gas production, offset by higher operating expenses and increased DD&A rates.

Daily oil and gas sales volumes for the year were 601,000 BOE per day for 2008, compared with 570,000 BOE per day for the same 2007 period. The 5.4 percent increase was largely the result of 39,000 BOE per day from the Dolphin project, offset by a reduction of 7,000 BOE per day in Libya, as a result of the new contract.

Oxy's realized price for worldwide crude oil was $88.26 per barrel for the twelve months of 2008, compared with $64.77 per barrel for the twelve months of 2007. Domestic realized gas prices increased from $6.53 per MCF in the twelve months of 2007 to $8.03 per MCF in the twelve months of 2008.

Chemicals

Chemical segment earnings were $669 million for the twelve months of 2008 compared with $601 million in 2007. The 2008 core results were $759 million after excluding the fourth quarter charge for the plant closure and impairments mentioned above. The improvement in 2008 is due primarily to higher caustic soda margins, partially offset by lower volumes in chlorine, caustic soda and polyvinyl chloride.

Midstream, Marketing and Other

Midstream segment earnings were $520 million for the twelve months of 2008, compared with $367 million for the same period in 2007. The improvement in 2008 reflected higher pipeline income from Dolphin and higher margins in gas processing.

About Oxy

Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization. Oxy's wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali products and vinyls. Occidental is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company's worldwide operations.

Forward-Looking Statements

Statements in this release that contain words such as "will," "expect" or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause actual results to differ materially include, but are not limited to: global commodity price fluctuations and supply/demand considerations for oil, gas and chemicals; exploration risks, such as drilling of unsuccessful wells; higher-than-expected costs; political risk; operational interruptions; changes in tax rates and not successfully completing (or any material delay in) any expansions, capital projects, acquisitions, or dispositions. You should not place undue reliance on these forward-looking statements which speak only as of the date of this release. 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. U.S. investors are urged to consider carefully the disclosures in our Form 10-K, available through the following toll-free telephone number, 1-888-OXYPETE (1-888-699-7383) or on the Internet at http://www.oxy.com. You also can obtain a copy from the SEC by calling 1-800-SEC-0330.

For further analysis of Occidental's quarterly performance, please visit the web site: www.oxy.com

SUMMARY OF SEGMENT NET SALES AND EARNINGS
	Fourth Quarter										Twelve Months
(Millions, except
per-share amounts)		2008					2007					2008					2007
SEGMENT NET SALES
Oil and Gas	$	2,746				$	4,122				$	18,187				$	13,304
Chemical		1,005					1,134					5,112					4,664
Midstream, Marketing and Other		394					413					1,598					1,388
Eliminations and other		(124	)				(152	)				(680	)				(572	)
Net sales	$	4,021				$	5,517				$	24,217				$	18,784
SEGMENT EARNINGS
Oil and Gas (a)	$	339				$	2,461				$	10,651				$	7,957
Chemical (b)		127					94					669					601
Midstream, Marketing and Other		170					138					520					367
		636					2,693					11,840					8,925
Unallocated Corporate Items
Interest expense, net (c)		(16	)				(13	)				(26	)				(199	)
Income taxes		(118	)				(1,057	)				(4,629	)				(3,507	)
Other (d)		(54	)				(175	)				(346	)				(141	)
Income from Continuing Operations		448					1,448					6,839					5,078
Discontinued operations, net (e)		(5	)			4						18					322
NET INCOME	$	443				$	1,452				$	6,857				$	5,400
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations	$	0.55				$	1.75				$	8.37				$	6.08
Discontinued operations, net (e)		--					--					0.02					0.39
	$	0.55				$	1.75				$	8.39				$	6.47
DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations	$	0.55				$	1.74				$	8.33				$	6.05
Discontinued operations, net (e)		--					--					0.02					0.39
	$	0.55				$	1.74				$	8.35				$	6.44
AVERAGE COMMON SHARES OUTSTANDING
BASIC		810.3					828.4					817.6					834.9
DILUTED		811.6					833.1					820.8					839.1
a)  (a) Oil and Gas - The fourth quarter of 2008 includes $599 million charges for asset impairments and a $58 million charge for the termination of rig contracts. The twelve months of 2007 included a gain of $412 million from the sale of Occidental's Russian joint venture interests, a $112 million gain resulting from the resolution of certain legal disputes, a $103 million gain on the sale of exploration properties, partially offset by $74 million in charges for exploration impairments, and a $35 million gain from the sale of oil and gas interest.
(b) Chemical - The fourth quarter of 2008 includes a $90 million charge for plant closure and impairments.
(c) Interest Expense, net - The twelve months of 2007 included $167 million of interest charges for the purchase of various debt issues in the open market.
(d) Unallocated Corporate Items - Other - The twelve months of 2007 included a $326 million gain from the sale of Lyondell shares, a $47 million charge for plant closure and related environmental remediation reserve, and a $25 million severance accrual.
(e) Discontinued Operations, net - In 2008, Occidental received payment from Ecuador for tax refunds. In 2007, Occidental completed an exchange of oil and gas interests in Horn Mountain with BP p.l.c. (BP) for oil and gas interests in the Permian Basin and a gas processing plant in Texas. Occidental also sold its oil and gas interests in Pakistan to BP.

SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
			Fourth Quarter								Twelve Months
($ millions)				2008				2007				2008				2007
CAPITAL EXPENDITURES			$	1,594			$	946			$	4,664			$	3,360
DEPRECIATION, DEPLETION
AND AMORTIZATION
OF ASSETS			$	753			$	639			$	2,710			$	2,379
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Income/(Expense)			Fourth Quarter								Twelve Months
($ millions)				2008				2007				2008				2007
Foreign exchange gains and
(losses)*			$	88			$	5			$	91			$	(18	)
*Amounts shown after tax.

SUMMARY OF OPERATING STATISTICS - SALES
			Fourth Quarter								Twelve Months
			2008				2007				2008				2007
NET OIL, GAS AND LIQUIDS
SALES PER DAY
United States
Crude Oil and Liquids (MBBL)
California			97				88				89				89
Permian			167				170				168				167
Midcontinent and Rockies			9				4				6				4
Total			273				262				263				260
Natural Gas (MMCF)
California			221				250				235				254
Permian			188				180				181				186
Midcontinent and Rockies			187				148				171				153
Total			596				578				587				593
Latin America
Crude Oil (MBBL)
Argentina			32				31				32				32
Colombia			45				41				43				42
Total			77				72				75				74
Natural Gas (MMCF)
Argentina			24				19				21				22
Bolivia			21				22				21				18
Total			45				41				42				40
Middle East/North Africa
Crude Oil and Liquids (MBBL)
Oman			27				20				23				20
Dolphin			23				14				21				4
Qatar			48				52				47				48
Yemen			20				22				21				25
Libya			10				22				15				22
Total			128				130				127				119
Natural Gas (MMCF)
Oman			23				30				24				30
Dolphin			209				133				184				51
Total			232				163				208				81
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries			624				594				605				573
Colombia-minority interest			(6	)			(6	)			(6	)			(5	)
Yemen-Occidental net interest			2				2				2				2
Total Worldwide Sales - MBOE			620				590				601				570

SUMMARY OF OPERATING STATISTICS - PRODUCTION
			Fourth Quarter								Twelve Months
			2008				2007				2008				2007
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude Oil and Liquids (MBBL)			273				262				263				260
Natural Gas (MMCF)			596				578				587				593
Latin America
Crude Oil (MBBL)
Argentina			38				32				34				33
Colombia			45				41				44				42
Total			83				73				78				75
Natural Gas (MMCF)			45				41				42				40
Middle East/North Africa
Crude Oil and Liquids (MBBL)
Oman			28				20				23				19
Dolphin			22				14				20				5
Qatar			48				51				47				47
Yemen			20				22				21				25
Libya			8				20				15				21
Total			126				127				126				117
Natural Gas (MMCF)			232				163				208				81
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries			627				592				607				571
Colombia-minority interest			(6	)			(6	)			(6	)			(6	)
Yemen-Occidental net interest			2				2				2				2
Total Worldwide Production -
MBOE			623				588				603				567

SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS

Occidental's results of operations often include the effects of significant transactions and events affecting earnings that vary widely and unpredictably in nature, timing and amount. Therefore, management uses a measure called "core results," which excludes those items. This non-GAAP measure is not meant to disassociate those items from management's performance, but rather is meant to provide useful information to investors interested in comparing Occidental's earnings performance between periods. Reported earnings are considered representative of management's performance over the long term. Core results is not considered to be an alternative to operating income in accordance with generally accepted accounting principles.

SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
		Fourth Quarter
($ millions, except						Diluted								Diluted
per-share amounts)			2008			EPS					2007			EPS
TOTAL REPORTED EARNINGS		$	443			$	0.55			$	1,452			$	1.74
Oil and Gas
Segment Earnings		$	339							$	2,461
Add:
Asset impairments			599								--
Rig contract terminations			58								--
Segment Core Results			996								2,461
Chemicals
Segment Earnings			127								94
Add:
Plant closure and
Impairments			90								--
Segment Core Results			217								94
Midstream, Marketing and Other
Segment Earnings			170								138
Add:
No significant items
affecting earnings			--								--
Segment Core Results			170								138
Total Segment Core Results			1,383								2,693
Corporate
Corporate Results --
Non Segment*			(193)								(1,241)
Add:
Severance Accrual			--								25
Tax effect of pre-tax adjustments		(238)									(9)
Discontinued operations, net**		5									(4)
Corporate Core Results --
Non Segment			(426)								(1,229)
TOTAL CORE RESULTS		$	957			$	1.18			$	1,464			$	1.76
*Interest expense, income taxes, G&A expense and other.
**Amounts shown after tax.

SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
		Twelve Months
($ millions, except							Diluted									Diluted
per-share amounts)			2008				EPS					2007				EPS
TOTAL REPORTED EARNINGS		$	6,857				$	8.35			$	5,400				$	6.44
Oil and Gas
Segment Earnings		$	10,651								$	7,957
Add:
Russia joint venture**			--									(412	)
Legal settlements**			--									(112	)
Asset impairments			599									74
Gain on sale of oil and gas
interests												(35	)
Sale of exploration properties			--									(103	)
Rig contract terminations			58									--
Segment Core Results			11,308									7,369
Chemicals
Segment Earnings			669									601
Add:
Plant closure and
Impairments			90									--
Segment Core Results			759									601
Midstream, Marketing and Other
Segment Earnings			520									367
Add:
No significant items
affecting earnings			--									--
Segment Core Results			520									367
Total Segment Core Results			12,587									8,337
Corporate
Corporate Results --
Non Segment*			(4,983	)								(3,525	)
Add:
Debt purchase expense			--									167
Facility closure			--									47
Gain on sale of Lyondell shares			--									(326	)
Severance accrual			--									25
Tax effect of pre-tax adjustments		(238		)							2
Discontinued operations, net**			(18	)								(322	)
Corporate Core Results --
Non Segment			(5,239	)								(3,932	)
TOTAL CORE RESULTS		$	7,348				$	8.95			$	4,405				$	5.25
*Interest expense, income taxes,G&A expense and other.
**Amounts shown after tax.