Okla. City-Based Kerr-McGee Budgets $1.9 Billion for Capital Expenditures

By Record, Journal | THE JOURNAL RECORD, November 17, 2004 | Go to article overview

Okla. City-Based Kerr-McGee Budgets $1.9 Billion for Capital Expenditures


Record, Journal, THE JOURNAL RECORD


Kerr-McGee Corp. plans to spend $1.9 billion for capital expenditures in 2005 and an additional $380 million for exploration expenses.

The 2005 budget will allow us to capitalize on the potential from our strategic acquisition of Westport Resources, which was completed in June and added depth, breadth and balance to our oil and gas operations, including thousands of identified exploitation opportunities, said Luke R. Corbett, Kerr-McGee chairman and CEO.

In 2005, we plan to continue to ramp up exploitation drilling on these properties, while continuing our successful development and exploration programs.

The $2.3 billion merger of Denver-based Westport into Kerr-McGee increased Kerr-McGee's proved reserves by 30 percent with a majority of the new assets located in the Rocky Mountain, Mid-Continent and Gulf Coast areas of the United States.

Oklahoma City-based Kerr-McGee also reported that oil and natural gas production for 2005 is expected to increase 15 percent to 19 percent from 2004 to 355,000 to 370,000 barrels of oil equivalent per day. Production for 2005 is projected to be 55 percent natural gas and approximately 45 percent liquids.

The capital budget for 2005 oil and gas operations is $1.7 billion with $660 million allocated to U.S. onshore, $645 million to the Gulf of Mexico, $270 million to the North Sea and $160 million to new ventures and other international projects.

From our large inventory of quality projects, we expect to drill approximately 800 exploitation and development wells next year, achieving very attractive returns, said Dave Hager, Kerr-McGee's senior vice president responsible for oil and gas exploration and production. The program will hasten the movement of identified probable and possible resources into the proved category and accelerate the development of proved but currently undeveloped reserves.

The program was designed to yield organic production growth targets of 3 percent to 6 percent over five years.

More than half of the exploitation wells are planned in the Rocky Mountain Division of its U.S. Onshore Region.

Kerr-McGee expects to expand activity by more than 40 percent in the Greater Natural Buttes area, in the Uinta basin of Utah, by drilling more than 200 wells. …

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