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UPDATE 1-'We are the rightful owners' of Anadarko, Occidental CEO tells shareholders

Jennifer Hiller

shareholders@ (Adds comments, vote from meeting)

HOUSTON, May 10 (Reuters) - Occidental Petroleum Chief Executive Vicki Hollub on Friday touted her $38 billion deal for Anadarko Petroleum Corp, calling her company the deserved victor and defending the pricy deal with Berkshire Hathaway Inc that paved the way for the merger agreement.

Hollub, 59, challenged larger rival Chevron Corp with a long-shot bid that some of her own investors say is risky because it saddles Occidental with $46 billion in new debt. By deftly lining up allies and cash, she put together a strategy that on Thursday prompted Chevron to withdraw.

"We can operate this better than anybody else. We are the rightful owners," Hollub said at the company's annual general meeting.

Occidental shares were down nearly 3 percent at $54.69 in late morning trading.

Shareholders showed displeasure with the deal by withholding votes for Occidental's board. Directors were reelected with between 70 percent and 82 percent of votes cast, below the average 97 percent that directors received a year ago.

There were no questions asked at the meeting, which took place with fewer than 100 people in attendance and lasted less than an hour. Occidental's shares on Friday traded at a 10-year low of $55.05, down from $62.35 the day before Occidental disclosed its offer for Anadarko.

Several big holders have criticized Hollub's decision to secure Anadarko by increasing the cash portion of the $76-per-share offer to a point where a shareholder vote is no longer needed.

Hollub said it took just an hour and a half to reach an agreement with Berkshire's Warren Buffett on the $10 billion investment. "The timing was critical for us to close these funds," she said.

Despite investor criticism the Berkshire investment's 8 percent dividend was too high, she said Occidental took the premium into account when calculating returns on the Anadarko purchase.

Unless another suitor appears, the $38 billion, mostly cash deal would cement Occidental's status as the largest oil producer in the Permian Basin, the top U.S. shale field. Occidental's global production would double to 1.4 million barrels of oil and gas per day.

Hollub has promised to quickly shed most of Anadarko's non-U.S. oil properties to focus on shale. Occidental also must absorb or sell Anadarko's U.S. Gulf of Mexico offshore production.

With Anadarko's nearly quarter million acres in the Permian Basin, Occidental would command 1.64 million acres of prime land in the Permian and gain access to growing shale fields in Colorado and Wyoming.

The deal's financial and operating risks have soured some big Occidental holders, including T. Rowe Price and Matrix Asset Management.

"On paper, at $65-per-barrel oil, the deal could be executed well. That sort of is turning a blind eye to the fact that they're in a cyclical industry," said David Katz, president of Matrix.

Rating firm Moody's Investors Service said Wednesday it likely would downgrade Occidental if it prevails due to the added debt that will make it harder for the company to confront a downturn in oil prices.

"If you do this you have a strained balance sheet, period," said Christian Ledoux, investment chief at Occidental shareholder South Texas Money Management.

T. Rowe Price, which holds about 21.1 million Occidental shares, said it will withhold votes for Occidental directors due to the lack of a shareholder vote on the deal.

Hollub, who has sought to buy Anadarko for two years, proved her ability to sweep away hurdles by quickly pulling in powerful allies. She convinced Berkshire Hathaway Inc's Warren Buffett to invest $10 billion in Occidental stock to help close the deal.

France's Total SA separately agreed to buy all of Anadarkos oil-and-gas producing assets outside the United States, including its biggest future expense, a multibillion-dollar liquefied natural gas project in Mozambique, for $8.8 billion.

(Reporting by Jennifer Hiller and Erwin Seba; writing by Gary McWilliams; Editing by Cynthia Osterman)