Oxy Reports Lower Earnings for Q4, 2006

Occidental Petroleum Corporation announced that core earnings were a record $4.349 billion ($5.05 per diluted share) for the twelve months of 2006, compared with $3.732 billion ($4.56 per diluted share) for the same period in 2005. For the twelve months of 2006, net income was $4.182 billion ($4.86 per diluted share), compared with $5.281 billion ($6.45 per diluted share) for the twelve months of 2005.

Net income for the fourth quarter 2006 was $928 million ($1.09 per diluted share), compared with $1.152 billion ($1.40 per diluted share) for the fourth quarter 2005. Core earnings for the fourth quarter 2006 were $835 million ($0.98 per diluted share), compared with $1.116 billion ($1.36 per diluted share) for the same period in 2005. See the attached schedule for a reconciliation of net income to core earnings.

In announcing the results, Dr. Ray R. Irani, chairman, president and chief executive officer, said, ``Oil and gas production averaged 616,000 barrels of oil equivalent per day for the quarter and a record high for the year of 601,000 equivalent barrels per day. Strong production growth and higher energy prices helped propel Oil and Gas 2006 segment earnings for the year to a historic annual record high. In addition, our Chemical segment's annual earnings were the highest in more than a decade.''

The fourth quarter 2006 core income of $835 million excludes an $89 million after-tax gain for litigation settlements, a $57 million after-tax gain resulting from the sale of 10 million shares of our investment in Lyondell Chemical Company, a $20 million after-tax charge for the purchase of debt on the open market, and a $40 million non-cash tax charge resulting from changes in compensation programs.

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.499 billion for the fourth quarter 2006, a 17-percent decrease from the $1.796 billion segment earnings for the fourth quarter 2005. The decline in the fourth quarter 2006 earnings reflected a $276 million decrease from lower natural gas prices, higher operating expenses and increased DD&A rates, partially offset by higher production.

The average price for West Texas Intermediate crude oil in the fourth quarter 2006 was $60.20 per barrel compared to $60.02 per barrel in the fourth quarter 2005. Occidental's realized price for worldwide crude oil was $51.18 per barrel for the fourth quarter 2006, compared with $51.87 per barrel for the fourth quarter 2005. The average price for NYMEX gas in the fourth quarter 2006 was $6.27 per MCF, compared with $11.66 per MCF in the fourth quarter 2005. Domestic realized gas prices decreased from $9.81 per MCF in the fourth quarter 2005 to $5.64 per MCF for the fourth quarter 2006.

Production

For the fourth quarter, daily oil and gas production from continuing operations averaged 616,000 barrels of oil equivalent (BOE), a 70,000 BOE increase over the 546,000 equivalent barrels per day produced in the fourth quarter 2005. The acquisitions of Vintage and certain properties from Plains accounted for 56,000 and 6,000 BOE, respectively, of this fourth quarter increase with Oman and Colombia providing the balance.

Chemicals

Chemical fourth quarter 2006 segment earnings were $156 million, compared with fourth quarter 2005 segment earnings of $165 million. The fourth quarter 2006 decline resulted from lower volumes.

TWELVE-MONTH RESULTS

Oil and Gas

Oil and gas segment earnings were $7.239 billion for the twelve months of 2006, a 21-percent increase over the $5.968 billion segment earnings for the twelve months of 2005. The improvement in the twelve-month 2006 earnings was due to record crude oil prices and higher production, partially offset by higher operating expenses, increased DD&A rates, and lower natural gas prices.

The average price for West Texas Intermediate crude oil in the twelve months of 2006 was $66.23 per barrel compared to $56.56 per barrel in the twelve months of 2005. Occidental's realized price for worldwide crude oil was $56.57 per barrel for the twelve months of 2006, compared with $49.18 per barrel for the same period in 2005. The average price for NYMEX gas in the twelve months of 2006 was $7.82 per MCF, compared with $8.11 per MCF in the twelve months of 2005. Domestic realized gas prices decreased from $7.11 per MCF in the twelve months of 2005 to $6.51 per MCF for the twelve months of 2006.

Production

Worldwide daily production from continuing operations for the twelve months of 2006 averaged 601,000 BOE, compared with 526,000 BOE for the twelve months of 2005. The increase included eleven months of Vintage production at 58,000 BOE per day, which added 53,000 BOE per day to Occidental's total year production and a Libyan increase of 15,000 BOE per day, which reflects twelve months of production in 2006, compared with four months in 2005.

Chemicals

Chemical core earnings for the twelve months of 2006 were $901 million, compared with $777 million for the same period of 2005, after excluding charges for the write-off of plants and hurricane related insurance charges. See the attached schedule for a reconciliation of segment earnings to core earnings. The improvement in the twelve month 2006 results was due to higher margins in chlorine, caustic soda and polyvinyl chloride. Chemical segment earnings were $901 million for the twelve months of 2006, compared with $607 million for the same 2005 period.

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