Higher Prices Fuel Kerr-McGee Profits
David Page Managing Editor, THE JOURNAL RECORD
Higher oil and gas prices, lower exploration costs and a strong performance by the coal unit led Kerr-McGee Corp. to the highest annual earnings in the history of the Oklahoma City company.
Kerr-McGee had record net income of $220.1 million, or $4.43 per share, for 1996, compared with a net loss of $31.2 million, or 60 cents a share, for 1995.
Income from continuing operations before unusual items for 1996 was $229.8 million, or $4.63 per share, up 68 percent from $136.9 million, or $2.63 per share, for 1995. Net income for the fourth quarter totaled $59.2 million, or $1.21 per share, up sharply from $29.5 million, or 57 cents per share, a year earlier. Excluding unusual items, net income for the fourth quarter was $77.8 million, or $1.59 per share, up 111 percent from $36.8 million, or 70 cents per share, in the fourth quarter of 1995. "We were able to capitalize on the higher oil and gas prices with new production offshore China and in the Gulf of Mexico," said Frank A. McPherson, chairman and chief executive officer. "In the Gulf, fast-track development brought several fields on stream in 1996, less than a year after discovery." Kerr-McGee had sales for the fourth quarter of $518.5 million, up 25 percent from $415.6 million in the same period of 1995. Sales for the year totaled $1.9 billion, up 10 percent from $1.7 billion. Net unusual charges on an after-tax basis for 1996 totaled $10 million, compared with $161 million for 1995. After-tax charges for 1996 consisted primarily of reserves for litigation of $21 million, net environmental provisions related to abandoned sites of $28 million, a noncash impairment provision of $14 million, $7 million for the relocation of the exploration and production unit from Oklahoma City to Houston, $4 million for discontinuing refining and marketing activities and $3 million for the closure of a crosstie treatment plant. Charges for 1996 were offset in part by insurance settlements of $44 million, gains on the sale of equity securities of $15 million, and gains on the divestiture of nonstrategic and marginal oil and gas properties of $8 million. Average daily oil production for the fourth quarter was 70,300 barrels of oil per day, about the same as for the fourth quarter of 1995. Oil production for the year averaged 68,600 barrels per day, down 3 percent from 70,400 for 1995. Oil prices for the fourth quarter averaged $21.75 per barrel, up from $15.63 for the fourth quarter of 1995. Average oil prices for 1996 were $19.16, up from $15.99 for 1995. Kerr-McGee's average daily natural gas sales increased 12 percent to 311 million cubic feet for the fourth quarter of 1996 from 278 million cubic feet a year earlier. Average daily natural gas sales for 1996 totaled 281 million cubic feet, down 3 percent from 291 million cubic feet a year earlier. Natural gas sales averaged $2.77 per thousand cubic feet in the fourth quarter, down 56 percent from $1. …