Occid

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nnual Report 2007

Corporate headquarters

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

Investor relations

1230 Avenue of the Americas 8th 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 Crescent Towers, Zayed The First Street, Khalidyah 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

Annual Report 2007

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Selected Financial Data

Dollar amounts in millions, except per-share amounts

For the years ended December 31, 2007 2006 2005 2004 2003

Results 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 $ 1.98

Financial 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 $ 7,970

Market Capitalization(b) $ 63,573 $ 41,013 $ 32,121 $ 23,153 $ 16,349

Cash 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 $ 0.52

Basic Shares Outstanding (thousands) 834,932 852,550 806,600 791,159 767,887

(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 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 affect expected 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 convey the 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, Occidental does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise. The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in their filings with the SEC, to disclose only proved reserves demonstrated by actual production or conclusive formation tests to be economically producible under existing economic and operating conditions. We use certain terms in this report, such as gross oil reserves, estimated proved reserves, probable, possible and recoverable reserves and oil in place, that the SEC’s guidelines strictly prohibit us from using in filings with the SEC. Additionally, the SEC requires oil and natural gas companies, in their filings, to disclose non-financial statistical information about their consolidated entities separately from such information about their equity holdings and not to show combined totals. Certain information in this report is shown on a combined basis; however, the information is disclosed separately in the “Notes to the Consolidated Financial Statements” included in the 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 connecting the 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 gas acreage. Inset bottom: A well in Argentina where Oxy drilled 153 wells in 2007.

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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.

Oxy in brief

United States1. Elk Hills2. Long Beach3. Hugoton/ Piceance Basin4. Permian Basin

Middle East/ North Africa 1. Libya2. Yemen3. Oman4. United Arab Emirates5. Qatar

Latin America1. Colombia2. Bolivia3. Argentina

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45

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It’s a story of solid

Dr. Ray R. IraniChairman and

Chief Executive Officer

Occidental achieved exceptional financial performance in 2007, surpassing even our strong success of recent years.

Notably, net income of $5.4 billion was the highest in Oxy’s 87-year history.

We achieved top-tier results relative to our industry peers on the key metrics which in our view best measure com-parative financial performance. These include total return to stockholders, return on equity (ROE) and return on capital employed (ROCE) and demon-strate our ability to generate significant long-term value for Oxy stockholders.

These accomplishments underscore the effectiveness of the business strategy we have employed over the past decade. Strict financial discipline and a focus on high-potential, long-lived oil and gas assets have positioned the company for sustainable growth and profitability — and our stockholders continue to enjoy the benefits.

Our disciplined business strategy affords Oxy a distinct advantage. While high commodity prices boosted earnings

throughout the industry in 2007, Oxy was ideally positioned to capitalize on the robust energy market. Oxy continues to outperform our major competitors in capturing the value from higher oil and gas prices and delivering it to the bottom line by being one of the industry’s most efficient producers on an equivalent barrel basis.

2007 market performance

Oxy’s year-end closing stock price of $76.99 per share was the highest year-end price in our history, increasing 58 percent from the 2006 year-end record of $48.83 per share. Our 60-percent stockholder return, based on stock price appreciation plus dividend reinvestment, also repre-sented a new high mark for the company.

Cumulative total return to stockholders over the past five years has significantly outpaced Oxy’s peer companies, as well as the Standard & Poor’s 500 Stock Index.

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Oxy continues to outperform our major competitors in capturing the value from higher oil and gas prices and delivering it to the bottom line…

A $100 investment in Oxy stock at year-end 2002 would have grown to $599 by year-end 2007. The same $100 invested in Oxy’s peer group — a representative sampling of the oil and gas companies against which Oxy competes for major global projects — would have been worth only $283 after the same five years. And $100 invested in the S&P 500 Index for that period would have been worth just $183.

2007 financial performance

Oxy achieved strong results in 2007 across the range of financial metrics most watched by the investment community.

Consolidated net income reached a new company record of $5.4 billion, 29 percent higher than the $4.2 billion Oxy achieved in 2006. From our operat-ing cash flow of $6.8 billion, we spent $3.5 billion to fund capital expenditures, $765 million to pay dividends and

$1.1 billion to repurchase 20.6 million shares of Oxy common stock.

Our 7-percent debt-to-capitalization ratio at the close of 2007 was Oxy’s lowest in more than 40 years. Total debt at year-end was $1.8 billion, represent-ing a $1.1-billion reduction from the $2.9-billion balance at the end of 2006.

Oxy increased the dividend to stock-holders by 14 percent in 2007, from an annualized rate of 88 cents to $1.00

— double the 50 cents per share paid in 2002. This was the sixth dividend increase since 2002, resulting in a compound annual dividend growth rate of 13 percent over the most recent five-year period. Dividend increases reflect the confidence of Oxy’s management and the Board of Directors in the company’s financial and operating performance. The Board will continue its ongoing evaluation of dividends to generate top-quartile returns to stockholders.

Our 2007 ROE and ROCE* were a strong 26 percent and 24 percent, respectively. For the three years of 2005 through 2007, we achieved an average ROE of 29 percent and an average ROCE of 26 percent. Stockholders’ equity grew by 18 percent during 2007, from $19.3 billion to $22.8 billion, and more than doubled over the past three years, from $10.6 billion to $22.8 billion.

performance

2003 1.5

2004 2.6

2005 5.3

2006 4.2

2007 5.4

Net income

$ in billions

2003 15

2004 20

2005 33

2006 21

2007 24

Return on capital employed (ROCE)*

Stated as percent

2003 36

2004 27

2005 17

2006 13

2007 7

Debt-to-capitalization ratio

Stated as percent

2003 22

2004 28

2005 41

2006 24

2007 26

Return on equity (ROE) Stated as percent

2003 4.6

2004 3.9

2005 3.0

2006 2.9

2007 1.8

Total debt $ in billions

2003 8.0

2004 10.6

2005 15.1

2006 19.3

2007 22.8

Stockholders’ equity

$ in billions

* ROCE is earnings before interest expense and tax effect of interest expense over stockholders’ equity plus average total debt.

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$8.3 billion in incomeRecord-setting income for Oxy Oil and Gas — four years running

570,000 BOE/dayOxy’s worldwide oil and gas production up 4.6% over 2006

242 million BOE replacedA 116% reserve replacement rate in 2007

Strategy for steady growthOxy’s consistently strong financial performance over the past 15 years reflects our disciplined business strategy

Oil and gas

We consistently replace and expand our reserves through improved recovery, strategic acquisitions and focused exploration.

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 increased oil and gas production, mainly contributed to these record results. Our average realized crude 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.

The robust performance by the oil and gas segment in recent years is another reflection of Oxy’s effective business strategy.

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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 production

Thousand BOE/day

U.S. International Total

Oil & natural gas proved reserves

Million BOE

U.S. International Total

2003 1,777 530 2,307

2004 1,816 560 2,376

2005 2,003 566 2,569

2006 2,064 799 2,863

2007 2,152 712 2,864

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U.S. production: 63%Production averaged 360,000 BOE/day from all U.S. assets

Dolphin fully operational In February 2008 the Dolphin Project, in which Oxy has a 24.5% interest, became fully operational

Largest acreage in LibyaOxy is the largest holder of exploration acreage in Libya

177 million BOEProved reserves from our assets in Argentina

Oil and gas

At year-end 2007, the U.S. accounted for 75 percent of Oxy’s proved reserves, the Middle East/North Africa 16 percent and Latin America 9 percent.

Oxy’s excellent oil and gas assets are well positioned to provide us continued success and growth.

United States

Sixty-three percent of Oxy’s 2007 production — approximately 360,000 BOE per day — was generated from assets in the United States, including the Permian Basin of southwest Texas and southeast New Mexico, one of the largest and most active oil basins in the country. Oxy continues to be the leading producer in the Permian, where our 2007 production averaged 198,000 BOE per day, representing 35 percent of the company’s daily worldwide production.

In 2007, we completed several asset exchanges with BP, acquiring strategic properties that complement our existing operations. Oxy purchased BP’s West Texas Pipeline System, with 1,550 miles of active pipelines and the capacity to transport approximately 190,000 barrels of crude oil per day from the Permian Basin to the market center in Cushing, Oklahoma. Combined with our existing area assets, this created a system with a throughput capacity of 350,000 barrels per day and a 5-million-barrel storage capability. Oxy also secured from BP additional Permian Basin oil and gas assets adjacent to our existing operations.

In the first quarter of 2008, we completed the purchase of 50 percent of Plains Exploration & Production’s working interests

in oil and gas properties in the Permian Basin and in the Piceance Basin of Colorado, which we announced in the fourth quarter 2007. The Piceance assets complement our existing Colorado holdings, while the additional Permian assets expand our industry-leading position there. Together, these acquisitions are expected to increase our net proved reserves in the U.S. by 92 million BOE, a figure we believe will substantially increase over time.

Production from Oxy’s California assets averaged 131,000 BOE per day, or 23 percent of our worldwide total. In 2007 we made four complementary acquisitions for our California business unit, for approximately $300 million, which will further enhance our production in the state.

Middle East/ North Africa

The increasingly important Middle East/North Africa region provided 24 percent of our 2007 production.

The start-up of production from the giant Dolphin Project, the premier transborder natural gas project in the Middle East, contributed to our robust regional growth. Oxy has a 24.5- percent interest in the Dolphin Project, in which natural gas is produced from wells offshore Qatar. The gas is processed at an onshore gas processing and compression plant in Ras Laffan, Qatar, and then flows through a 48-inch, 230-mile-long subsea export pipeline — one of the longest and largest in the Middle East — to markets in the United Arab Emirates and Oman.

Most of the facilities within the original scope of the Dolphin Project were completed by the end of 2007, including three of the four trains in the onshore processing plant in Ras Laffan.

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.

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The fourth and final train was completed and fully operational by the end of February 2008. Dolphin exited 2007 producing 43,000 BOE per day net to Oxy.

Oxy acquired Anadarko Petroleum Corporation’s 92.5-percent interest in an exploration and production sharing agreement covering two properties located offshore Qatar in October 2007. Proved reserves for all of Oxy’s Qatar properties, except the Dolphin Project, totaled 128 million BOE at year-end.

At the Mukhaizna oil field in Oman, more than 170 new wells were drilled by year-end 2007, and we are implementing a major steam flood project for enhanced oil recovery. The 2007 gross daily production exit rate was nearly triple that of September 2005, when Oxy assumed operations of this field. Over the next several years we plan to steadily increase gross production to 150,000 BOE per day.

We announced significant new agreements in November 2007 with the Libya National Oil Corporation for major field redevelopment and exploration in the prolific Sirte Basin. The new 30-year agreements will further expand our industry-leading position in Libya, where Oxy is the largest holder of exploration acreage. Signing of the new agreements will give Oxy a 75-percent working interest in the new Libya projects, and with our partner, Oxy will receive 10 to 12 percent of the gross production on an after-tax basis, depending on the specific field.

Oxy and our partners expect to develop gross oil reserves in Libya of approximately 2.5 billion barrels for an anticipated overall capital investment of $5 billion over the next five years, of which Oxy’s portion will be approximately $1.9 billion. As a

result, oil production is projected to triple from the current gross production of approximately 100,000 barrels per day to around 300,000 barrels per day.

Additionally, in late 2007 Oxy was awarded two offshore exploration blocks in Bahrain adjacent to major producing fields in Qatar, where we have begun a study phase and technical assessment.

Latin America

Our Latin America operations accounted for 13 percent of Oxy’s worldwide production in 2007.

Oxy’s Colombia operations include four fields within the Llanos Norte Basin and another in the Middle-Magdalena Basin, the LaCira-Infantes (LCI) field. Oxy holds a 48-percent interest in LCI, an enhanced oil recovery project with large remaining reserves, which has now entered the commercial phase of development and production and is tracking to our production plans. Our share of 2007 production from these operations was 37,000 BOE per day and proved reserves totaled 57 million BOE at year-end.

Our share of production from our assets in Argentina averaged 36,000 BOE per day in 2007. Proved reserves amounted to 177 million BOE at year-end 2007. We expect to significantly increase production in Argentina over the next five years through aggressive drilling, waterflooding and enhanced oil recovery projects. In 2008, Oxy plans to drill 220 wells, com-plete eight waterflood projects initiated in 2007 and implement a number of new waterflood projects.

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.

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Chemicals

Corporate social 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 efficient

Earnings from our chemical segment decreased in 2007 due to the weakness in the United States housing market and continued high feedstock costs, which led to lower margins in the polyvinyl chloride (PVC) business. Overall chemical segment earnings for 2007 were $601 million, compared with $906 million for 2006.

Domestic demand for PVC in 2007 declined 5 percent from the previous year as a result of the housing slump. This was partially offset by increased demand for U.S. products in export markets, aided by expanding international economies

along with favorable foreign currency exchange rates. OxyChem’s PVC facilities saw an average operating rate of 78 percent for 2007, compared to the North American industry average of 85 percent.

Pricing for liquid caustic soda started the year strong and increased in every quarter of 2007, aided by unplanned global supply disruptions and a strong export market. OxyChem’s chlor-alkali operating rate for 2007 was 92 percent, comparable with the industry average.

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Exemplary safety recordOxy’s employee IIR is one-fourth that of the oil and gas extractive industry average

Strong HES programsResults are regularly reviewed by senior management and the Board of Directors

Responsible practicesOxy recognizes that responsible social and HES practices link to strong financial performance

cogeneration facilities to supply power and steam to Oxy’s oil and gas and chemicals operations; implementing new maintenance and operating practices; installing energy- efficient equipment; electrifying well field operations that formerly utilized gas or diesel engines; and using solar- powered lighting in remote areas.

Oxy recognizes that responsible social, environmental and safety practices link to strong financial performance. We have adopted a unified approach that integrates social responsibility (SR) into our comprehensive HES management systems to enable us to apply a defined and measurable SR standard around the globe.

We expanded the scope and depth of our extensive corporate social responsibility programs in 2007, promoting awareness and integration of our Human Rights Policy and its underlying 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 employees throughout our international operations. In addition, as required by our policy, we conduct social impact assessments in new work areas outside the U.S. We will continue to build upon our commitment to the Voluntary Principles on Security and Human Rights as an integral aspect of our business practices.

At Oxy, social responsibility is everyone’s business. It is a hallmark of good management and an integral part of our success. By systematizing our approach to SR, we are helping to ensure that wherever Oxy does business and engages with communities, we are the partner of choice, the employer of choice and the neighbor of choice.

Employee recordable injury and illness trend

Oxy Employee IIR Average IIR of all U.S. industries*

1998 0.68 6.7

1999 0.65 6.3

2000 0.83 6.1

2001 0.69 5.7

2002 0.62 5.3

2003 0.68 5.0

2004 0.34 4.8

2005 0.47 4.6

2006 0.47 4.4

2007 0.50 **

Above: A rig worker performs maintenance on a rig at Oxy’s THUMS operations at Long Beach Harbor in Southern California. Oxy employees and contractors are required to wear appropri-ate safety gear and to meet all applicable government and Oxy safety requirements.

* Source: U.S. Bureau of Labor Statistics** Not available

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Looking ahead

Oxy’s performance in 2007 again ranked among the strongest in the oil and gas industry.

620,000 – 630,000 BOE/dayExpected oil and gas production in 2008

New Middle East opportunitiesThe Middle East and North Africa will be an important source

of Oxy’s future growth

$3.6 billion capital spendingExpected total oil and gas capital spending for 2008

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.

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Above: Oil field worker operating in Argentina, where Oxy anticipates increasing production through aggressive drilling, waterflooding and 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 PS1 platform, where new processing facilities have increased gas compres-sion, water injection and separation capacity.

We are continually focused on optimizing profits and free cash flow per BOE, keeping costs competitive, and growing our oil and gas reserves at a rate well in excess of production.

Oxy’s consistently strong financial performance over the past 15 years reflects this disciplined business strategy, as well as our focus on operational excellence and our ability to work effectively in diverse cultural environments. We believe these strengths will keep Oxy at the forefront of our industry and will continue to be instrumental in enhancing stockholder value.

I want to acknowledge and commend the superb efforts of Oxy’s employees, talented management team and the Board of Directors, whose stewardship is invaluable. The company’s achievements in 2007 and over the past decade-and-a-half are a tribute to their dedication and hard work. Together, we will continue to meet the highest expectations of our stockholders and all those for whom Oxy is synonymous with success.

Dr. Ray R. Irani Chairman and Chief Executive Officer

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Dr. Ray R. Irani1,8

Chairman and Chief Executive Officer, Occidental Petroleum Corporation

Spencer Abraham3,4,7

Chairman and Chief Executive Officer, The Abraham Group, LLC; former U.S. Secretary of Energy

Ronald W. Burkle8

Managing Partner, The Yucaipa Companies

John S. Chalsty1,2,3,5,8

Principal, Muirfield Capital Management LLC; former Chairman, Donaldson, Lufkin & Jenrette, Inc.

Edward P. Djerejian4,5,7

Director, James A. Baker III Institute for Public Policy; former U.S. Ambassador

R. Chad Dreier2,3

Chairman, President and Chief Executive Officer, The Ryland Group, Inc.

John E. Feick1,2,4,8

Chairman, Matrix Solutions Inc.

Irvin W. Maloney1,2,3,7

Retired Chairman and Chief Executive Officer, Dataproducts Corporation

Rodolfo Segovia1,3,4,5,7

Member of the Executive Committee, Inversiones Sanford; former President, Ecopetrol — Colombian national oil company

Aziz D. Syriani1,2,5,6,8

President and Chief Executive Officer, The Olayan Group

Rosemary Tomich1,2,3,4,5,7

Owner, Hope Cattle Company and A.S. Tomich Construction Company; Chairman and Chief Executive Officer, Livestock Clearing, Inc.

Walter L. Weisman4,5,8

Private investor; former Chairman and Chief Executive Officer, American Medical International, Inc.

1 Member of the Executive Committee 2 Member of the Audit Committee 3 Member of the Executive Compensation

and Human Resources Committee4 Member of the Environmental, Health

and Safety Committee5 Member of the Corporate Governance, Nominating and

Social Responsibility Committee6 Lead Independent Director7 Member of the Charitable Contributions Committee8 Member of the Dividend Committee

From 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.

Vice Presidents and Key Executives

B. Chuck AndersonPresident, OxyChem

Gary L. DaughertyVice President — Internal Audit

Ian M. DavisVice President — Government Relations

James R. HavertVice President and Treasurer

Richard S. KlineVice President — Communications and Public Affairs

Jim A. LeonardVice President and Controller

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

Roy PineciSenior Vice President, Finance — Oil and Gas

Officers

Dr. Ray R. IraniChairman and Chief Executive Officer

Stephen I. ChazenPresident and Chief Financial Officer

Executive Vice Presidents

Donald P. de BrierExecutive Vice President, General Counsel and Secretary

Richard W. HallockExecutive Vice President — Human Resources

James M. LienertExecutive Vice President — Finance and Planning

John W. MorganExecutive Vice President; President, Oxy Oil and Gas — Western Hemisphere

R. Casey OlsonExecutive Vice President; President, Oxy Oil and Gas — Eastern Hemisphere

Board of Directors

Christopher G. StavrosVice President — Investor Relations

Todd A. StevensVice President — Acquisitions and Corporate Finance

Michael S. StuttsVice President — Tax

Charles F. WeissVice President — Health, Environment and Safety

As of December 31, 2007

Selected Financial Data

Dollar amounts in millions, except per-share amounts

For the years ended December 31, 2007 2006 2005 2004 2003

Results 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 $ 1.98

Financial 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 $ 7,970

Market Capitalization(b) $ 63,573 $ 41,013 $ 32,121 $ 23,153 $ 16,349

Cash 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 $ 0.52

Basic Shares Outstanding (thousands) 834,932 852,550 806,600 791,159 767,887

(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 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 affect expected 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 convey the 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, Occidental does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise. The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in their filings with the SEC, to disclose only proved reserves demonstrated by actual production or conclusive formation tests to be economically producible under existing economic and operating conditions. We use certain terms in this report, such as gross oil reserves, estimated proved reserves, probable, possible and recoverable reserves and oil in place, that the SEC’s guidelines strictly prohibit us from using in filings with the SEC. Additionally, the SEC requires oil and natural gas companies, in their filings, to disclose non-financial statistical information about their consolidated entities separately from such information about their equity holdings and not to show combined totals. Certain information in this report is shown on a combined basis; however, the information is disclosed separately in the “Notes to the Consolidated Financial Statements” included in the 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 connecting the 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 gas acreage. Inset bottom: A well in Argentina where Oxy drilled 153 wells in 2007.

Cert no. SCS-COC-00949

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.melloninvestor.com

Stock exchange listing

Common Stock New York Stock Exchange (NYSE)

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.melloninvestor.com.

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 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission. In addition, in 2007, 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-OXYPETE; (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.

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 Oxy Corporate Governance Principles.

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Corporate headquarters

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

Investor relations

1230 Avenue of the Americas 8th 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 Crescent Towers, Zayed The First Street, Khalidyah 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

Annual Report 2007

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