UPDATE 2-Occidental earnings slide, but top estimates

* EPS ex-items of 50 cents beats forecast of 37 cents

* Steep oil price decline weighs, net sales cut in half

* Shares down slightly

* Drilling 20 exploration wells in California this year (Adds CEO quote, outlook, changes dateline from NEW YORK)

By Braden Reddall

SAN FRANCISCO, April 23 (Reuters) - Occidental Petroleum Corp (OXY.N: Quote, Profile, Research), the fourth-largest U.S. oil company, said on Thursday that first-quarter profits fell sharply as weak energy prices offset its growing production.

Executives forecast second-quarter production of 640,000 to 660,000 barrels of oil equivalent per day, in the upper half of its forecast for 2009, reflecting growth in Oman and Qatar.

Occidental sees potential for more Middle East development, particularly in Iraq, although Chief Executive Ray Irani could not say what sort of role it will play in the country, given the security problems and many competitors.

"Iraq is one of the key areas that offer opportunities for international oil companies to participate," Irani said. "This is going to be a bigger gold rush than happened in Libya, with everybody under the sun wanting to get a piece of the action."