Occidental Petroleum 2006 Annual Report Download - page 6


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.

Occidental makes the following information available free of charge through its web site at www.oxy.com:
ØForms 10-K, 10-Q, 8-K and amendments to these forms as soon as reasonably practicable after they are filed electronically with the Securities
and Exchange Commission (SEC);
ØOther SEC filings, including Forms 3, 4 and 5; and
ØCorporate governance information, including its corporate governance guidelines, board-committee charters and Code of Business Conduct.
(See Part III Item 10 of this report for further information.)
ITEM 1A RISK FACTORS

Occidental’s financial results typically correlate closely to the volatile prices it obtains for its commodities. Drilling and exploration activity
levels, inventory levels, production disruptions, the actions of OPEC (influencing prices or limiting Occidental's production), competing fuel
prices, price speculation, changes in consumption patterns, weather and geophysical and technical limitations affect the supply of oil and gas and
contribute to price volatility.
Demand, and consequently, the price obtained, for Occidental’s chemical products correlate strongly to the health of the global economy, as
well as industry expansion cycles. Occidental also depends on feedstocks and energy to produce chemicals, both of which are commodities subject
to significant price fluctuations.


Occidental’s future oil and gas production and its results of operations depend, in part, on its ability to profitably acquire, develop or find
additional reserves. Over the past several years Occidental increasingly has replaced reserves through acquisitions. Occidental has many
competitors, some of which are larger and better funded, may be willing to accept greater risks or have special competencies. Industry competition
for reserves may influence Occidental to:
Øshift toward higher risk exploration activity;
Øpay more for reinvestment opportunities;
Øpurchase lesser quality properties; or
Ødelay expected reserve replacement efforts.
In addition, rising exploration and development activity in the industry generally increases the competition for and costs of, and delays access
to, services needed to increase production.

Occidental’s domestic and foreign oil and gas business is subject to the decisions of many governments and political interests. As a result,
Occidental faces risks of:
Øchanges in laws and regulations, including those related to taxes, royalty rates, permitted production rates, import, export and use of
products, environmental protection and climate change, all of which may increase costs;
Øexpropriation or reduction of entitlements to produce hydrocarbons; and
Ørefusal to extend exploration, production or development contracts.
Occidental may experience adverse consequences, such as risk of loss or production limitations, because certain of its foreign operations are
located in countries occasionally affected by political instability, armed conflict, terrorism, insurgency, civil unrest, security problems, restrictions
on production equipment imports and sanctions that prevent continued operations. Exposure to such risks may increase as a greater percentage of
Occidental’s future oil and gas production comes from foreign sources.

The occurrence of natural disasters, such as earthquakes, hurricanes and floods, in locations where Occidental operates and events such as
well blowouts, oilfield fires, and industrial accidents may affect Occidental’s businesses. Third-party insurance may not provide adequate coverage
or Occidental may be self-insured with respect to the related losses.

Calculations of reserves depend on estimates concerning reservoir characteristics and recoverability, as well as oil and gas prices, capital costs
and operating costs. If Occidental were required to make unanticipated significant negative reserve revisions, its prospects and stock price may be
adversely affected.

Occidental may misinterpret geologic or engineering data, encounter unexpected geologic conditions or find reserves of disappointing quality
or quantity, which may result in significant losses on exploration or development efforts. Occidental bears the risks of project delays and cost
overruns due to escalating costs for materials and labor, equipment failures, approval delays, construction delays, border disputes and other
associated risks.