FOCUS, DISCIPLINE, PERFORMANCE. Occidental Petroleum Corporation 2015 Annual Report

Transcription

1 FOCUS, DISCIPLINE, PERFORMANCE Occidental Petroleum Corporation 2015 Annual Report

2 Selected Financial Data (in millions, except per-share amounts) As of and for the years ended December 31, RESULTS OF OPERATIONS (a) Net sales $ 12,480 $ 19,312 $ 20,170 $ 20,100 $ 20,001 Income (loss) from continuing operations $ (8,146) $ (130) $ 4,932 $ 3,829 $ 5,527 Net income (loss) attributable to common stock $ (7,829) $ 616 $ 5,903 $ 4,598 $ 6,771 Basic earnings (loss) per common share from continuing operations $ (10.64) $ (0.18) $ 6.12 $ 4.72 $ 6.79 Basic earnings (loss) per common share $ (10.23) $ 0.79 $ 7.33 $ 5.67 $ 8.32 Diluted earnings (loss) per common share $ (10.23) $ 0.79 $ 7.32 $ 5.67 $ 8.32 FINANCIAL POSITION (a) Total assets $ 43,437 $ 56,259 $ 69,443 $ 64,210 $ 60,044 Long-term debt, net $ 6,883 $ 6,838 $ 6,939 $ 7,023 $ 5,871 Stockholders equity $ 24,350 $ 34,959 $ 43,372 $ 40,048 $ 37,620 MARKET CAPITALIZATION (b) $ 51,632 $ 62,119 $ 75,699 $ 61,710 $ 75,992 CASH FLOW FROM CONTINUING OPERATIONS Operating: Cash flow from operations $ 3,254 $ 8,871 $ 10,229 $ 9,050 $ 9,740 Investing: Capital expenditures $ (5,272) $ (8,930) $ (7,357) $ (7,874) $ (5,354) Cash provided (used) by all other investing activities, net $ (151) $ 2,686 $ 1,040 $ (1,989) $ (3,530) Financing: Cash dividends paid $ (2,264) $ (2,210) (c) $ (1,553) (c) $ (2,128) $ (1,436) Purchases of treasury stock $ (593) $ (2,500) $ (943) $ (583) $ (274) Cash provided (used) by all other financing activities, net $ 4,341 $ 2,384 $ (437) $ 1,865 $ 535 DIVIDENDS PER COMMON SHARE $ 2.97 $ 2.88 $ 2.56 $ 2.16 $ 1.84 WEIGHTED AVERAGE BASIC SHARES OUTSTANDING (MILLIONS) Note: Argentine operations were sold in February 2011 and are presented as discontinued operations. The statements of income and cash flows related to California Resources have been treated as discontinued operations for all periods presented. The assets and liabilities of California Resources were removed from Occidental s consolidated balance sheet as of November 30, (a) See the MD&A section of this report and the Notes to Consolidated Financial Statements for information regarding acquisitions and dispositions, discontinued operations 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 as treasury stock, by the year-end closing stock price. (c) The 2012 amount includes an accelerated fourth quarter dividend payment, which normally would have been accrued as of year-end 2012 and paid in the first quarter of ON THE COVER: Occidental s Permian Basin operations, Martin County, Texas

3 Partner of Choice At Occidental, what we do is important and how we do it is even more so. Our mission is to develop energy safely, responsibly and profitably to maximize shareholder value and remain a partner of choice for our stakeholders. Occidental Petroleum Corporation (NYSE: OXY) is an international oil and gas exploration and production company with operations in the United States, Middle East region and Latin America. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental s businesses. The company s wholly owned subsidiary OxyChem manufactures and markets basic chemicals 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 throughout its worldwide operations. UNITED STATES 48% of worldwide production 312,000 BOEPD of production billion BOE proved reserves INTERNATIONAL 52% of worldwide production 340,000 BOEPD of production billion BOE proved reserves Excludes Williston production Occidental pumping unit in Gaines County, Texas, in the Permian Basin Occidental 2015 Annual Report 1

4 Focus, Discipline, Performance From the Chief Executive Officer 2 Occidental Permian Basin operations near Midland, Texas

5 For more than 20 years I have been a part of Occidental s senior management, and therefore bear considerable responsibility for decisions made throughout my tenure. Some turned out well, some poorly, and many were neither. During that period, our goals and priorities have remained very much the same. We believe that doing a few things well is better than doing many things average. We take significant risks, including product price fluctuations and development execution. We avoid exploration and financial risks. Our cash flow priorities are first to safely and responsibly maintain the business. Our second priority is shareholder dividends. Dividends provide discipline to ensure that share issuances and investments are truly accretive. Our next priority is growing and strengthening the business. Decisions to increase drilling, make acquisitions, repurchase shares or reduce debt depend on the relative value created by each choice. Our goal in every case is to invest to earn returns well above our cost of capital. When I joined the company in 1994, Occidental looked very different. Production was sourced from more than a dozen nations, and we had over 40 active exploration programs in 25 foreign countries. Nearly two-thirds of the company s cash flow was generated by our chemical segment and a gas pipeline business. Due to this lack of focus, we couldn t compete effectively across our portfolio to provide long-term, higher returns for our shareholders. While conventional wisdom in the industry at the time encouraged the global pursuit of new fields in less proven acreage, we worked to streamline our portfolio, acquiring large, legacy oil and gas assets with long-term growth potential. This included acquiring mature fields in the United States, such as in the Permian Basin, one of the premier producing regions in the world. consistently profitable performer, generating high financial returns and providing free cash flow to the corporation. Declining and volatile commodity prices made 2015 a difficult year for Occidental and the oil and gas industry will continue to be challenging. In this environment, we will need to both manage our cost structure as well as look for ways to grow the business. In adversity there is often opportunity. During industry downturns, situations may arise to invest in overlooked assets. I am pleased with the appointment of my colleague Vicki Hollub to succeed me as chief executive officer. She takes the helm of a streamlined and more focused company with a strong balance sheet that is a formidable industry competitor positioned to exploit opportunities that may present themselves. Vicki s outstanding track record of efficiently and profitably growing our oil and gas business, combined with her extensive operational and leadership experience, make her the right person to lead our organization today and meet the challenges facing our industry going forward. I appreciate the many co-workers I ve had the privilege to work with since joining the company in I am grateful for the support of Occidental s investors and other stakeholders through the years. Occidental is in a strong position with quality assets, modest debt and sound leadership. It has been an honor to serve as the CEO for such a dynamic company in this vital, global industry. Stephen I. Chazen Chief Executive Officer We continue to hold a dominant position in the Permian Basin that provides economies of scale and oil development potential through our high-growth unconventional resources business and low-cost enhanced oil recovery operations. Our midstream assets are complementary to, and support, our upstream operations in the region, where we operate an integrated business from the point of production to the point of sale. Internationally, we are regarded as a premier partner in world-class projects in Oman, Qatar, and the United Arab Emirates in the Middle East, as well as in Colombia. We have been an active investor in these areas for more than four decades. This portfolio generates free cash flow while providing modest volume growth. Our chemical business, OxyChem, produces basic chemicals and vinyls and is first or second in the United States for the principal products it manufactures and markets. The company is a safety leader in its industry and a Occidental 2015 Annual Report 3

6 From the President and Chief Operating Officer Occidental is well placed for continued growth when commodity prices recover. Our company is uniquely situated, in terms of size and scale, between the peer groups of large integrated oil majors and the independent exploration and production companies making it an attractive investment alternative that combines the positive elements of both groups. Through focus, discipline and performance, we continued Occidental s transformation during We successfully accomplished many of the goals set out in the strategic review announced in 2013, streamlining and focusing operations in order to better execute the company s long-term strategy and enhance value for shareholders. Our portfolio is concentrated in areas where we have depth and scale. Last year we sold assets in the Williston Basin, and we reached agreements to sell our Piceance assets and exit non-core Middle East operations in Iraq and Yemen, while reducing our exposure in Bahrain and Libya. We applied greater discipline throughout our worldwide operations, resulting in an adjusted cost structure that allows us to compete more effectively in a lower commodity price environment and positions us for greater profitability when prices recover. Understanding that cost savings alone will not lead us to prosperity, we also improved our productivity, finding new ways to operate more efficiently. We also substantially grew our oil and gas production, achieving a new level of performance for the company. Total daily worldwide production increased by 14 percent over the prior year, averaging 652,000 1 barrels of oil equivalent per day. This was accomplished while reducing our capital spending 36 percent compared with Approximately 64 percent of our 2015 production was oil, reflecting our continued focus on growing oil volumes. Production growth was driven by a disciplined development program in the Permian Basin, resilient base production, and the startup of operations at Al Hosn, a joint venture with the Abu Dhabi National Oil Company (ADNOC). 1. Excludes Williston Basin (sold in November 2015) average daily production volumes of 16 MBOE in

7 We are primarily an oil producer. Our core U.S. operations are in the Permian Basin of West Texas and southeast New Mexico. Internationally, our core focus areas are Oman, Qatar, and the United Arab Emirates in the Middle East region as well as Colombia in Latin America. We also have complementary midstream and world-class chemical businesses. We exited 2015 with a cash balance of $4.4 billion. The priorities for using our cash flow have not changed. They are in order of priority: maintenance capital, dividends, growth capital, share repurchases, and asset acquisitions. For the 13th consecutive year Occidental increased its dividend. We returned $2.3 billion to our shareholders in the form of dividends during 2015, which is part of our commitment to maximize shareholder value. In February 2016, Occidental s Board of Directors affirmed the annualized dividend rate of $3.00 per share. We expect to continue funding our dividend, as our base oil business, new projects, and production growth support distributable cash flow. Commodity businesses are inherently volatile. Our overall strategy is to invest in projects that generate long-term value, achieving returns well above our cost of capital while maintaining a conservative balance sheet. We will invest our capital prudently and maintain flexibility as we maneuver through the current low-price cycle. For 2016, our capital budget is expected to be between $2.8 and $3 billion, which will allow us to achieve production growth of 2 to 4 percent from our ongoing operations. This represents about a 50 percent reduction in capital spending from the prior year. The Permian Basin is our top priority for capital allocation for the foreseeable future, where our competitive advantage includes extensive infrastructure around our midstream business, economies of scale, and a large, multiyear inventory of drilling locations. Improved operating efficiencies and captured price savings from suppliers will allow us to do more with less. Our commitment to safety remains a constant throughout our global operations. Based on the U.S. Department of Labor s Injury and Illness Incidence Rates, our employees and contractors achieved the company s highest-rated workplace safety record in While we are pleased with this achievement, we are not satisfied with this result, as our intention is to prevent incidents altogether. Reflecting the high regard Occidental is held in the industry, Occidental ranked No. 1 in Fortune magazine s 2015 survey of the World s Most Admired Companies in the Mining, Crude-Oil Production category, and Corporate Responsibility Magazine ranked Occidental among the 100 Best Corporate Citizens for Occidental is well placed for continued growth when commodity prices recover. Our company is uniquely situated, in terms of size and scale, between the peer groups of large integrated oil majors and the independent exploration and production companies making it an attractive investment alternative that combines the positive elements of both groups. Thanks to the leadership and vision of Steve Chazen, Occidental has a terrific portfolio of assets and topnotch people. His efforts have radically transformed this company into a more focused, financially sound business that s positioned to better execute its long-term strategy and enhance value for shareholders. I am proud and honored to be given the responsibility by Occidental s Board of Directors to lead this great company as his successor. I will work tirelessly to earn and keep the respect of the Board, my fellow employees, investors, and other stakeholders as we strive to be the best company in our industry. Vicki A. Hollub President and Chief Operating Officer Further demonstrating the company s commitment to the Permian and the ongoing investment in our employees, we opened Oxy Permian Plaza last year, a state-of-theart office complex featuring the latest technologies for sharing knowledge, pursuing innovations and conducting our business more efficiently. Occidental 2015 Annual Report 5

8 2015 Financial & Operational Review Al Hosn Gas in Abu Dhabi, United Arab Emirates Focusing on Capital and Operating Efficiencies Occidental achieved another year of strong operational performance in While lower oil prices impacted financial performance during the year, the company s oil and gas segment operated well in all of its core assets, the chemical segment contributed consistent cash flow throughout the year, with midstream supporting these businesses. We continue to identify opportunities for improving our overall performance, generating stockholder value, and delivering sustainable, long-term growth Financial Performance Core income 1 for 2015 was $91 million ($0.12 per diluted share), compared with $3.8 billion ($4.83 per diluted share) in Net income for 2015 was a loss of $7.8 billion ($10.23 per diluted share), compared with net income attributable to common stock of $616 million ($0.79 per diluted share) for As a result of a thorough portfolio review, we have reduced the carrying value of the assets in areas where we are exiting or minimizing development activity. This resulted in after-tax impairment and related charges of $8.2 billion. Operating cash flow before working capital changes was $4.8 billion in 2015, and the company spent $5.6 billion for capital expenditures. We returned $2.3 billion of cash to our shareholders in the form of dividends and repurchased nearly $600 million of company stock. We exited 2015 with a cash balance of $4.4 billion. Standard & Poor s and Moody s rating services recently rated Occidental wit an A and A3, respectively, both with a stable outlook. Superior debt ratings give Occidental enhanced financial liquidity Market Performance Occidental s closing stock price at the end of 2015 was $67.61 per share. The company s market capitalization at year-end was approximately $51.6 billion, and our ranking within the S&P 500, which is based on market capitalization, was No. 89 at the close of Oil and Gas Performance Worldwide oil and gas production volumes averaged 652,000 2 barrels of oil equivalent (BOE) per day for 2015, up from 571,000 3 BOE per day in the prior year. Our worldwide realized crude oil price for 2015 averaged $47.10 per barrel, a 48 percent decrease compared with $90.13 per barrel in Worldwide prices for natural gas liquids decreased 57 percent to $15.96 per barrel in 2015, and domestic natural gas prices decreased 46 percent to $2.15 per MCF. The company reported worldwide estimated proved reserves of 2.2 billion BOE at year-end 2015, keeping proved producing reserves essentially flat in the year. Our total Permian business replaced 115 percent of production, and Permian Resources replaced 214 percent through the drilling program, excluding net sales and revisions. We estimate that 79 percent of our total proved reserves at year-end 2015 are proved developed, up from 71 percent last year; and 74 percent of proved reserves were liquids. Occidental s oil and gas segment achieved core earnings 1 of $437 million in 2015, compared with $5.7 billion in The decrease in oil and gas results was due primarily to the decline in commodity prices, partially offset by higher volumes and lower operating costs. UNITED STATES OIL AND GAS OPERATIONS Our U.S. assets produced 312,000 2 BOE per day in 2015, which represents a 7 percent increase over the prior year and 6 1. Core results reflect Occidental s 2015 income shown on page 42 of the Form 10-K after removing the effect of Significant Items Affecting Earnings described on page 22 of the Form 10-K. 2. Excludes Williston Basin (sold in November 2015) average daily production volumes of 16 MBOE in Excludes Williston Basin (sold in November 2015) average daily production volumes of 20 MBOE in 2014 and Hugoton (sold in April 2014) average daily volumes of 6 MBOE.

9 48 percent of Occidental s worldwide production. Daily U.S. oil production increased 25,000 barrels over the prior year, averaging 187,000 barrels per day. Our domestic oil business is focused in the Permian Basin of West Texas and southeast New Mexico. Occidental is the largest operator and oil producer in the basin. The company s 2015 Permian production of approximately 255,000 BOE per day represents nearly 39 percent of our total worldwide production and approximately 13 percent net share of the Permian Basin s total oil production. Occidental manages operations in the Permian Basin through two businesses: Permian Enhanced Oil Recovery (EOR) and Permian Resources. Nearly three-quarters of our Permian EOR production is from fields that actively employ carbon dioxide (CO 2 ) flooding, making Occidental the largest CO 2 injector in the Permian and a world leader in applying this technology. Permian EOR produced 145,000 BOE per day in Permian Resources is among our fastest-growing assets. The business is developing unconventional reservoirs across approximately 2.5 million net acres, including acreage with prospective resource potential. Permian Resources produced an average of 110,000 BOE per day in 2015, a 47 percent increase from 75,000 BOE per day in MIDDLE EAST OIL AND GAS OPERATIONS Occidental s key focus areas in the Middle East region are Oman, Qatar and the United Arab Emirates (UAE). Our goal in the Middle East region is to operate a targeted business and generate free cash flow while providing modest volume growth. It represented approximately 46 percent of 2015 total worldwide production, or 303,000 BOE per day. Occidental is the largest independent oil producer in Oman. Our major operations are located in northern Oman, primarily at the Safah Field, and at the Mukhaizna Field in the south. In 2015, our share of production from Oman was approximately 89,000 BOE per day. In Qatar, Occidental is the second-largest oil producer offshore, where we operate developments at Idd El Shargi North Dome (ISND), Idd El Shargi South Dome (ISSD) and Al Rayyan. Occidental also participates in the Dolphin Gas Project, the premier transborder natural gas project in the Middle East, where it delivers gas from Qatar s North Field to customers in the UAE and Oman. Occidental s total 2015 share of production from Qatar was approximately 107,000 BOE per day. In the UAE, Occidental has partnered with Abu Dhabi National Oil Company (ADNOC) on Al Hosn, one of the largest natural gas developments in the Middle East. Volumes of gas and liquids ramped up throughout the year, with Occidental s share at 60,000 BOE per day at full run-rate production. In 2015, Occidental s net share of production from the UAE was 35,000 BOE per day. LATIN AMERICA OIL AND GAS OPERATIONS Our Latin America operations, primarily focused in Colombia, provided 37,000 BOE per day in 2015, representing about 6 percent of the company s worldwide production. Our Colombian assets continue to generate very high returns and substantial free cash flow Midstream and Marketing Performance Occidental s midstream and marketing segment gathers, processes, transports, stores, purchases, and markets hydrocarbons and other commodities primarily in support of Occidental s upstream businesses. Midstream segment core earnings 1 were $65 million for 2015, compared with $549 million in The decrease in earnings compared to the prior year reflects lower marketing margins due to the narrowing of the Midland to Gulf Coast differentials Chemical Performance Occidental Chemical Corporation (OxyChem), a wholly owned subsidiary, mainly manufactures and markets chlor-alkali products and vinyls used in water treatment, paper production, pharmaceuticals, construction, automobile manufacturing, soaps and disinfecting products, among numerous other beneficial applications. The company generates high financial returns and consistently provides free cash flow to the corporation. Chemical segment core earnings 1 for 2015 were $565 million, compared with $569 million in Cash flow after capital spending was $315 million in Social Responsibility Occidental is committed to providing safe, healthy and secure workplaces; protecting the environment; maintaining high ethical standards; upholding and promoting human rights; and respecting cultural norms and values, everywhere we operate. The safety of our operations, workforce and neighbors is our highest priority. Occidental s 2015 employee and contractor Injury and Illness Incidence Rate (IIR) of 0.30 is almost one-tenth of the current U.S. private industry average IIR of 3.2 published by the U.S. Bureau of Labor Statistics. Our core values of investment, integrity and innovation are essential to our success, to operating responsibly and building our global reputation as a Partner of Choice. Occidental 2015 Annual Report 7

10 Board of Directors AS OF DECEMBER 31, Member of the Audit Committee 2 Member of the Executive Compensation Committee 3 Member of the Corporate Governance, Nominating and Social Responsibility Committee 4 Member of the Environmental, Health and Safety Committee 5 Member of the Finance and Risk Management Committee 6 Member of the Management Succession and Talent Development Committee EUGENE L. BATCHELDER 3 Former Senior Vice President and Chief Administrative Officer, ConocoPhillips STEPHEN I. CHAZEN Chief Executive Officer, Occidental Petroleum Corporation 1, 2, 4, 5 JOHN E. FEICK Chairman, Matrix Solutions Inc. 1, 3, 4, 6 MARGARET M. FORAN Chief Governance Officer, Senior Vice President and Corporate Secretary, Prudential Financial, Inc. 2, 3, 5, 6 CARLOS M. GUTIERREZ Co-Chair, Albright Stonebridge Group; Former U.S. Secretary of Commerce; Former President and Chairman, Kellogg Company Management CHIEF EXECUTIVE OFFICER, PRESIDENT AND CHIEF OPERATING OFFICER Stephen I. Chazen Chief Executive Officer Vicki A. Hollub President and Chief Operating Officer EXECUTIVE AND SENIOR VICE PRESIDENTS Edward A. (Sandy) Lowe Executive Vice President, President, Oxy Oil & Gas International Marcia E. Backus Senior Vice President, General Counsel and Corporate Secretary Christopher G. Stavros Senior Vice President and Chief Financial Officer Glenn M. Vangolen Senior Vice President, Business Support Cynthia L. Walker Senior Vice President, Marketing and Midstream Operations & Development 8

11 VICKI A. HOLLUB President and Chief Operating Officer, Occidental Petroleum Corporation 2, 3, 4, 6 SPENCER ABRAHAM Chairman and Chief Executive Officer, The Abraham Group LLC; Former U.S. Secretary of Energy 1, 5, 6 HOWARD I. ATKINS Former Senior Executive Vice President and Chief Financial Officer, Wells Fargo & Company 2, 5, 6 WILLIAM R. KLESSE Former Chairman and Chief Executive Officer, Valero Energy Corporation 1, 2, 5 AVEDICK B. POLADIAN Executive Vice President and Chief Operating Officer, Lowe Enterprises, Inc. 1, 4, 6 ELISSE B. WALTER Former Chairman, U.S. Securities and Exchange Commission VICE PRESIDENTS AND KEY DIVISIONAL EXECUTIVES Ioannis A. Charalambous Vice President and Chief Information Officer Gary L. Daugherty Vice President, Internal Audit Ian M. Davis Vice President, Government Relations Joseph C. Elliott Vice President President, Domestic Oxy Oil & Gas Ben F. Figlock Vice President and Treasurer Harold E. Heide Vice President, Health, Environment and Safety Jennifer M. Kirk Vice President, Controller and Principal Accounting Officer Darin S. Moss Vice President, Human Resources Robert L. Peterson President, Occidental Chemical Corporation Anita M. Powers Vice President, Executive Vice President, Worldwide Exploration, Oxy Oil & Gas Melissa E. Schoeb Vice President, Communications and Public Affairs Michael S. Stutts Vice President, Tax Ronald K. Takeuchi President, Oxy Energy Services Michael P. Ure Vice President, Mergers and Acquisitions Occidental 2015 Annual Report 9

12 Occidental by the Numbers 1 Excludes Argentina, California, Hugoton and Williston 10 Occidental s Centurion Pipeline operations in Midland, Texas

13 2015 Form 10-K

14 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Form 10-K Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2015 For the transition period from to Commission File Number Occidental Petroleum Corporation (Exact name of registrant as specified in its charter) State or other jurisdiction of incorporation or organization Delaware I.R.S. Employer Identification No Address of principal executive offices 5 Greenway Plaza, Suite 110, Houston, Texas Zip Code Registrant's telephone number, including area code (713) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered 9 1/4% Senior Debentures due 2019 New York Stock Exchange Common Stock, $0.20 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: (Note: Checking the box will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections). Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period as the registrant was required to submit and post files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act). No Large Accelerated Filer Non-Accelerated Filer Accelerated Filer Smaller Reporting Company Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes No The aggregate market value of the voting common stock held by nonaffiliates of the registrant was approximately $59.2 billion, computed by reference to the closing price on the New York Stock Exchange composite tape of $77.77 per share of Common Stock on June 30, Shares of Common Stock held by each executive officer and director have been excluded from this computation in that such persons may be deemed to be affiliates. This determination of potential affiliate status is not a conclusive determination for other purposes. At January 31, 2016, there were 763,845,316 shares of Common Stock outstanding, par value $0.20 per share. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant s definitive Proxy Statement, relating to its April 29, 2016 Annual Meeting of Stockholders, are incorporated by reference into Part III.

15 Part I Items 1 and 2 Item 1A Item 1B Item 3 Item 4 Part II Item 5 Item 6 Item 7 Item 7A Item 8 Item 9 Item 9A Item 9B Part III Item 10 Item 11 Item 12 Item 13 Item 14 Part IV Item 15 TABLE OF CONTENTS Business and Properties... General... Oil and Gas Operations... Chemical Operations... Midstream and Marketing Operations... Capital Expenditures... Employees... Environmental Regulation... Available Information... Risk Factors... Unresolved Staff Comments... Legal Proceedings... Mine Safety Disclosures... Executive Officers... Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities... Selected Financial Data... Management s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)... Strategy... Oil and Gas Segment... Chemical Segment... Midstream and Marketing Segment... Segment Results of Operations and Significant Items Affecting Earnings... Taxes... Consolidated Results of Operations... Consolidated Analysis of Financial Position... Liquidity and Capital Resources... Off-Balance-Sheet Arrangements... Contractual Obligations... Lawsuits, Claims and Contingencies... Environmental Liabilities and Expenditures... Foreign Investments... Critical Accounting Policies and Estimates... Significant Accounting and Disclosure Changes... Safe Harbor Discussion Regarding Outlook and Other Forward-Looking Data... Quantitative and Qualitative Disclosures About Market Risk... Financial Statements and Supplementary Data... Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements... Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting... Consolidated Balance Sheets... Consolidated Statements of Operations... Consolidated Statements of Comprehensive Income... Consolidated Statements of Stockholders' Equity... Consolidated Statements of Cash Flows... Notes to Consolidated Financial Statements... Quarterly Financial Data (Unaudited)... Supplemental Oil and Gas Information (Unaudited)... Financial Statement Schedule: Schedule II Valuation and Qualifying Accounts... Changes in and Disagreements with Accountants on Accounting and Financial Disclosure... Controls and Procedures... Management's Annual Assessment of and Report on Internal Control Over Financial Reporting... Disclosure Controls and Procedures... Other Information... Directors, Executive Officers and Corporate Governance... Executive Compensation... Security Ownership of Certain Beneficial Owners and Management Matters... Certain Relationships and Related Transactions and Director Independence... Principal Accounting Fees and Services... Exhibits and Financial Statement Schedules... Page

16 Part I ITEMS 1 AND 2 BUSINESS AND PROPERTIES In this report, "Occidental" means Occidental Petroleum Corporation, a Delaware corporation (OPC) incorporated in 1986, or OPC and one or more entities in which it owns a controlling interest (subsidiaries). Occidental conducts its operations through various subsidiaries and affiliates. Occidental s executive offices are located at 5 Greenway Plaza, Suite 110, Houston, Texas 77046; telephone (713) GENERAL Occidental s principal businesses consist of three segments. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The chemical segment (OxyChem) mainly manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO 2 ) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. For information regarding Occidental's segments, geographic areas of operation and current developments, including its ongoing strategic review and actions related thereto, see the information in the "Management s Discussion and Analysis of Financial Condition and Results of Operations" (MD&A) section of this report and Note 16 to the Consolidated Financial Statements. OIL AND GAS OPERATIONS General Occidental s domestic upstream oil and gas operations are located in New Mexico and Texas. International operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE). Proved Reserves and Sales Volumes The table below shows Occidental s total oil, NGLs and natural gas proved reserves and sales volumes in 2015, 2014 and See "MD&A Oil and Gas Segment," and the information under the caption "Supplemental Oil and Gas Information" for certain details regarding Occidental s proved reserves, the reserves estimation process, sales and production volumes, production costs and other reserves-related data. Comparative Oil and Gas Proved Reserves and Sales Volumes Oil, which includes condensate, and NGLs are in millions of barrels; natural gas is in billions of cubic feet (Bcf); barrels of oil equivalent (BOE) are in millions Proved Reserves Oil NGLs Gas BOE (a) Oil NGLs Gas BOE (a) Oil NGLs Gas BOE (a) United States (b) ,019 1,271 1, ,714 1,781 1, ,012 1,670 International , ,413 1, ,711 1,068 Total 1, ,368 2,200 1, ,127 2,819 1, ,723 2,738 Sales Volumes United States (b) International Total Note: The detailed proved reserves information presented in accordance with Item 1202(a)(2) to Regulation S-K under the Securities Exchange Act of 1934 (Exchange Act) is provided under the heading "Supplemental Oil and Gas Information". Proved reserves are stated on a net basis after applicable royalties. (a) Natural gas volumes are converted to BOE at six thousand cubic feet (Mcf) of gas per one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2015, the average prices of West Texas Intermediate (WTI) oil and New York Mercantile Exchange (NYMEX) natural gas were $48.80 per barrel and $2.75 per Mcf, respectively, resulting in an oil to gas ratio of 18 to 1. (b) Excludes proved reserves and sales volumes for Occidental's California oil and gas operations, which were transferred to California Resources Corporation (California Resources) in November 2014, and has been treated as discontinued operations. 3

17 Competition As a producer of oil and condensate, NGLs and natural gas, Occidental competes with numerous other domestic and foreign private and government producers. Oil, NGLs and natural gas are commodities that are sensitive to prevailing global and local, current and anticipated market conditions. Occidental competes for transportation capacity and infrastructure for the delivery of its products. They are sold at current market prices or on a forward basis to refiners and other market participants. Occidental s competitive strategy relies on increasing production through developing conventional and unconventional fields, utilizing primary and enhanced oil recovery (EOR) techniques and strategic acquisitions in areas where Occidental has a competitive advantage as a result of its current successful operations or investments in shared infrastructure. Occidental also competes to develop and produce its worldwide oil and gas reserves cost-effectively, maintain a skilled workforce and obtain quality services. CHEMICAL OPERATIONS General OxyChem owns and operates manufacturing plants at 23 domestic sites in Alabama, Georgia, Illinois, Kansas, Louisiana, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee and Texas and at two international sites in Canada and Chile. In early 2014, OxyChem, through a 50/50 joint venture with Mexichem S.A.B. de C.V., broke ground on a 1.2 billion pound-peryear ethylene cracker at the OxyChem Ingleside facility. The cracker remains on budget and schedule and is expected to begin operating in early Competition OxyChem competes with numerous other domestic and foreign chemical producers. OxyChem s market position was first or second in the United States in 2015 for the principal products it manufactures and markets. OxyChem s competitive strategy is to be a low-cost producer of its products in order to compete on price. OxyChem produces the following products: Principal Products Major Uses Annual Capacity Basic Chemicals Chlorine Raw material for ethylene dichloride (EDC), water treatment and pharmaceuticals 3.8 million tons Caustic soda Pulp, paper and aluminum production 4.0 million tons Chlorinated organics Refrigerants, silicones and pharmaceuticals 0.9 billion pounds Potassium chemicals Fertilizers, batteries, soaps, detergents and specialty glass 0.4 million tons EDC Raw material for vinyl chloride monomer (VCM) 2.1 billion pounds Chlorinated isocyanurates Swimming pool sanitation and disinfecting products 131 million pounds Sodium silicates Catalysts, soaps, detergents and paint pigments 0.6 million tons Calcium chloride Ice melting, dust control, road stabilization and oil field services 0.7 million tons Vinyls VCM Precursor for polyvinyl chloride (PVC) 6.2 billion pounds PVC Piping, building materials and automotive and medical products 3.7 billion pounds Other Chemicals Resorcinol Tire manufacture, wood adhesives and flame retardant synergist 50 million pounds 4

18 MIDSTREAM AND MARKETING OPERATIONS General Occidental's midstream and marketing operations primarily support and enhance its oil and gas and chemicals businesses and also provide similar services for third parties. Competition Occidental's midstream and marketing businesses operate in competitive and highly regulated markets. Occidental's domestic pipeline business competes with other midstream transportation companies to provide transportation services. The competitive strategy of Occidental's domestic pipeline business is to ensure that its pipeline and gathering systems connect various production areas to multiple market locations. Transportation rates are regulated and tariff-based. Occidental maximizes the value of its transportation and storage assets by marketing its own and third-party production in the oil and gas business. Other midstream and marketing operations also support Occidental's domestic and international oil and gas and chemical operations. Occidental's marketing business competes with other market participants on exchange platforms and through other bilateral transactions with direct counterparties. The midstream and marketing operations are conducted in the locations described below: Location Description Capacity Gas Plants Texas, New Mexico and Colorado United Arab Emirates Pipelines Texas, New Mexico, and Oklahoma Texas, New Mexico and Colorado Dolphin Pipeline - Qatar and United Arab Emirates Western and Southern United States and Canada Marketing and Trading Texas and Singapore Power Generation Texas and Louisiana Occidental- and third-party-operated natural gas gathering, compression and processing systems, and CO 2 processing Natural gas processing facilities for the Al Hosn gas project. Common carrier oil pipeline and storage system CO 2 fields and pipeline systems transporting CO 2 to oil and gas producing locations Equity investment in a natural gas pipeline Equity investment in entity involved in pipeline transportation, storage, terminalling and marketing of oil, gas and related petroleum products Trades around its assets, including transportation and storage capacity, and purchases, markets and trades oil, NGLs, natural gas and power Occidental-operated power and steam generation facilities 2.4 billion cubic feet per day 1.0 billion cubic feet per day 720,000 barrels of oil per day 7 million barrels of oil storage 2,900 miles of pipeline 2.4 billion cubic feet per day 3.2 billion cubic feet of natural gas per day (a) 19,200 miles of pipeline and gathering systems (b) Storage for 135 million barrels of oil and other petroleum products and 97 billion cubic feet of natural gas (b) Not applicable 1,200 megawatts per hour and 1.6 million pounds of steam per hour (a) (b) Pipeline currently transports 2.3 Bcf per day. Additional customer contracts and gas supply are required to reach capacity. Amounts are gross, including interests held by third parties. 5

19 CAPITAL EXPENDITURES For information on capital expenditures, see the information under the heading "Liquidity and Capital Resources in the MD&A section of this report. EMPLOYEES Occidental employed approximately 11,100 people at December 31, 2015, 7,100 of whom were located in the United States. Occidental employed approximately 7,100 people in the oil and gas and midstream and marketing segments and 3,000 people in the chemical segment. An additional 1,000 people were employed in administrative and headquarters functions. Approximately 700 U.S.- based employees and 1,000 foreign-based employees are represented by labor unions. ENVIRONMENTAL REGULATION For environmental regulation information, including associated costs, see the information under the heading "Environmental Liabilities and Expenditures" in the MD&A section of this report and "Risk Factors." AVAILABLE INFORMATION Occidental makes the following information available free of charge on its website at Forms 10-K, 10-Q, 8-K and amendments to these forms as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC); Other SEC filings, including Forms 3, 4 and 5; and Corporate governance information, including its Corporate Governance Policies, board-committee charters and Code of Business Conduct. Information contained on Occidental's website is not part of this report. ITEM 1A RISK FACTORS Volatile global and local commodity pricing strongly affect Occidental s results of operations. Occidental's financial results correlate closely to the prices it obtains for its products, particularly oil and, to a lesser extent, natural gas and NGLs, and its chemical products. Prices for crude oil, natural gas and NGLs fluctuate widely. Historically, the markets for crude oil, natural gas, NGLs and refined products have been volatile and may continue to be volatile in the future. Prolonged or further declines in crude oil, natural gas and NGLs prices would continue to reduce Occidental's operating results and cash flows, and could impact its future rate of growth and further impact the recoverability of the carrying value of its assets. Prices are set by global and local market forces which are not in Occidental's control. These factors include, among others: Worldwide and domestic supplies of, and demand for, crude oil, natural gas, NGLs and refined products. The cost of exploring for, developing, producing, refining and marketing crude oil, natural gas, NGLs and refined products. Operational impacts such as production disruptions, technological advances and regional market conditions, including available transportation capacity and infrastructure constraints in producing areas. Changes in weather patterns and climatic changes. The impacts of the members of OPEC and other producing nations that may agree to and maintain production levels. The worldwide military and political environment, uncertainty or instability resulting from an escalation or outbreak of armed hostilities or acts of terrorism in the United States, or elsewhere. The price and availability of alternative and competing fuels. Domestic and foreign governmental regulations and taxes. Additional or increased nationalization and expropriation activities by foreign governments. General economic conditions worldwide. The long-term effects of these and other conditions on the prices of crude oil, natural gas, NGLs and refined products are uncertain. Generally, Occidental's practice is to remain exposed to market prices of commodities; however, management may elect to hedge the price risk of crude oil, natural gas, NGLs and refined products in the future. Recent global economic and political conditions have driven oil and gas prices down significantly. These conditions may continue for an extended period. Continued reductions in commodity prices could require Occidental to further reduce capital spending, share repurchases and impair the carrying value of assets. The prices obtained for Occidental s chemical products correlate strongly to the health of the United States and global economies, as well as chemical industry expansion and contraction cycles. Occidental also depends on feedstocks and energy to produce chemicals, which are commodities subject to significant price fluctuations. Occidental's restructuring activities may affect its stock price. Occidental has performed a strategic review of its operations, which has resulted in the restructuring and the separation or divestiture of various assets. This activity and further implementation of the strategic review may affect the market value of Occidental's common stock. For example, Occidental may take different actions than expected, receive less proceeds or retain more liabilities than anticipated in connection with any divestitures. Occidental may experience delays, cost overruns, losses or other unrealized expectations in development efforts and exploration activities. Occidental bears the risks of equipment failures, construction delays, escalating costs or competition for services, materials, supplies or labor, property or border disputes, disappointing drilling results or reservoir performance and other associated risks that may affect its 6

20 ability to profitably grow production, replace reserves and achieve its targeted returns. Exploration is inherently risky and is subject to delays, misinterpretation of geologic or engineering data, unexpected geologic conditions or finding reserves of disappointing quality or quantity, which may result in significant losses. Governmental actions and political instability may affect Occidental s results of operations. Occidental s businesses are subject to the decisions of many federal, state, local and foreign governments and political interests. As a result, Occidental faces risks of: New or amended laws and regulations, or interpretations of such laws and regulations, including those related to drilling, manufacturing or production processes (including well stimulation techniques such as hydraulic fracturing and acidization), labor and employment, taxes, royalty rates, permitted production rates, entitlements, import, export and use of raw materials, equipment or products, use or increased use of land, water and other natural resources, safety, security and environmental protection, all of which may restrict or prohibit activities of Occidental or its contractors, increase Occidental's costs or reduce demand for Occidental's products. Refusal of, or delay in, the extension or grant of exploration, development or production contracts. Development delays and cost overruns due to approval delays for, or denial of, drilling and other permits and authorizations. In addition, Occidental has and may continue to experience adverse consequences, such as risk of loss or production limitations, because certain of its international operations are located in countries affected by political instability, nationalizations, corruption, armed conflict, terrorism, insurgency, civil unrest, security problems, labor unrest, OPEC production restrictions, equipment import restrictions and sanctions. Exposure to such risks may increase if a greater percentage of Occidental s future oil and gas production or revenue comes from international sources. Occidental's oil and gas business operates in highly competitive environments, which affect, among other things, its ability to make acquisitions to grow production and replace reserves. Results of operations, reserves replacement and growth in oil and gas production depend, in part, on Occidental s ability to profitably acquire additional reserves. Occidental has many competitors (including national oil companies), some of which: (i) are larger and better funded, (ii) may be willing to accept greater risks or (iii) have special competencies. Competition for reserves may make it more difficult to find attractive investment opportunities or require delay of reserve replacement efforts. In addition, during periods of low product prices, any cash conservation efforts may delay production growth and reserve replacement efforts. Occidental s acquisition activities also carry risks that it may: (i) not fully realize anticipated benefits due to lessthan-expected reserves or production or changed circumstances, such as the deterioration of natural gas prices in recent years and the more recent significant decline in crude oil prices; (ii) bear unexpected integration costs or experience other integration difficulties; (iii) experience share price declines based on the market s evaluation of the activity; or (iv) assume liabilities that are greater than anticipated. Occidental s oil and gas reserves are estimates based on professional judgments and may be subject to revision. Reported oil and gas reserves are an estimate based on periodic review of reservoir characteristics and recoverability, including production decline rates, operating performance and economic feasibility at the prevailing commodity prices, assumptions concerning future crude oil and natural gas prices, future operating costs and capital expenditures, as well as assumed effects of regulation by governmental agencies. The procedures and methods for estimating the reserves by our internal engineers were reviewed by independent petroleum consultants; however, there are inherent uncertainties in estimating reserves. Actual production, revenues, and expenditures with respect to our reserves may vary from estimates, and the variance may be material. If Occidental were required to make significant negative reserve revisions, its results of operations and stock price could be adversely affected. In addition, the discounted cash flows included in this Form 10-K should not be construed as the fair value of the reserves attributable to our properties. The estimated discounted future net cash flows from proved reserves are based on an unweighted 12-month average first-day-of-themonth prices in accordance with SEC regulations. Actual future prices and costs may differ materially from SEC regulation-compliant prices used for purposes of estimating future discounted net cash flows from proved reserves. Concerns about climate change and other air quality issues may affect Occidental s operations or results. The adoption of legislation or regulatory programs to reduce emissions of greenhouse gases could require Occidental to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or comply with new regulatory or reporting requirements, or they could promote the use of alternative sources of energy and thereby decrease demand for products that Occidental s businesses produce. Any such legislation or regulatory programs could also increase the cost of consuming, and thereby reduce demand for products produced by Occidental s businesses. Consequently, legislation and regulatory programs designed to reduce emissions of greenhouse gases could have an adverse effect on Occidental s business, financial condition and results of operations. However, the certainty and timing of these potential effects are unknown. 7