Newspaper article THE JOURNAL RECORD

Kerr-McGee: Growth Focus on Deepwater Opportunities

Newspaper article THE JOURNAL RECORD

Kerr-McGee: Growth Focus on Deepwater Opportunities

Article excerpt

OKLAHOMA CITY (JR) -- Kerr-McGee's growth strategy will focus on deepwater opportunity, company officials told an analyst meeting Wednesday.

Drilling plans for 2000 include 25 to 30 exploratory wells concentrated in the deepwater of the Gulf of Mexico, the North Sea and other international areas.

Kerr-McGee Chairman and Chief Executive Officer Luke R. Corbett and the company's senior management team conducted the presentation to discuss accomplishments for 1999 and plans for 2000.

"Creating value for our company and shareholders and performing in the top quartile of our industries will continue to be our focus," said Corbett.

"We will work to improve our operating performance, while we continue to grow our two core businesses, oil and gas exploration and production and the production and marketing of titanium dioxide."

In 2000, the company's daily production is expected to increase to about 200,000 barrels of oil per day and 600 million cubic feet of gas per day, with total production of 300,000 barrels of oil equivalent per day.

Kerr-McGee has more than 40 million gross undeveloped acres worldwide and a drillable prospect inventory to support drilling about 30 to 35 wells per year for the next five years, with reserve exposures ranging from 100 million to 1 billion equivalent barrels.

"Kerr-McGee continued with success and growth throughout 1999 and met our commitment to increase volumes, lower unit operating costs and create additional value for our shareholders," said Corbett.

"While the energy industry experienced extremes in commodity prices this year, Kerr-McGee focused on what we can control, the operating performance of our business units."

He told the analysts that the market has responded favorably to Kerr-McGee's performance, with stock value increasing by more than 42 percent in the past 11 months.

During 1999, Kerr-McGee completed the largest transaction in its history, merging with Oryx Energy.

"We have successfully incorporated the assets, staffs and operations of the two companies and met the projected annualized level of $100 million of pretax synergy savings," Corbett said.

"Last week, we announced the agreement to purchase Repsol's United Kingdom North Sea operations for $555 million, which we believe further enhances our oil and gas operations," he said.

During 1999, Kerr-McGee's average oil production volumes increased, unit operating costs decreased, and the company began to see the benefits from its portfolio of deepwater exploratory prospects.

Kerr-McGee expects 1999 daily production to average 195,000 barrels of oil and 580 million cubic feet of gas, an 8 percent increase from 1998.

Reserves of 108 million barrels of oil equivalent have been added so far this year, giving Kerr-McGee 100 percent production replacement based on total projected production for 1999 of 107 million barrels of oil equivalent, resulting in a finding and development cost of about $6 per barrel of oil equivalent. …

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