Engineering News

Kerr-McGee Executes Strategic Plan to Become Pure Play; Completes Chemical IPO; Repays $4.25 Billion of Term Loans
Monday November 28, 3:15 pm ET

OKLAHOMA CITY, Nov. 28 /PRNewswire-FirstCall/ -- Kerr-McGee Corp. announced that it has completed a significant step in its transition to a pure-play oil and natural gas exploration and production company following today's closing of the initial public offering (IPO) of Tronox Incorporated Class A common stock. In addition, the company has high graded its portfolio of oil and gas assets through the sales of its North Sea assets and select U.S. onshore properties. Kerr-McGee used the net proceeds from the IPO, concurrent debt issuances by Tronox and various asset sales to pay off the $4.25 billion term loans that were issued in connection with the company's modified "Dutch Auction" tender offer completed in May 2005. Pro forma for repayment of the term loans and maturities of other debt in the fourth quarter, and excluding $550 million of Tronox debt, Kerr-McGee's debt has been reduced to approximately $2.6 billion, and debt less cash of approximately $870 million as a percent of total capitalization has been reduced to approximately 33%.

"We have been quickly and efficiently executing our strategic plan to transition the company into a pure-play oil and natural gas exploration and production company that is positioned to deliver consistent, repeatable per-share growth," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. "Through the separation of the chemical business and by capitalizing on high commodity prices through divesting our shorter-life, lower-growth properties, we have created a financially strong entity with an enviable mix of sustainable U.S. onshore development assets and high-potential exploration opportunities worldwide. As we move forward as a pure-play exploration and production company, we are committed to remain disciplined with our capital while we diligently work to have the true value of these assets recognized."

Kerr-McGee has received a distribution of approximately $800 million from the completion of the IPO of Tronox's Class A common stock and related Tronox debt financing transactions. Kerr-McGee continues to control Tronox through ownership of Tronox's Class B common stock and will consolidate the results of Tronox, including Tronox's debt of $550 million, in its financial statements, until the expected distribution of the remaining Tronox shares to Kerr-McGee shareholders in 2006 through a spin off or split off.

"We believe the implied value of the chemical business through an IPO to be superior to the value of a direct sale of this entity," said Corbett. "In addition, the ultimate distribution of the remaining shares will allow Kerr- McGee stockholders to participate in the upside opportunities of Tronox."

Kerr-McGee continues to evaluate bids relating to the sale of its Gulf of Mexico shelf properties. Following divestment of these properties, more than 95% of Kerr-McGee's oil and natural gas reserves will be located in the U.S. and approximately 60% will be natural gas. The company has an inventory of more than 12,000 identified low-risk development projects within its two large resource plays at the Wattenberg field in Colorado's Denver-Julesburg Basin and in the Greater Natural Buttes area in Utah's Uinta Basin. From these projects and the ongoing development of major deepwater fields in the Gulf of Mexico, the company expects to increase production at a compound annual growth rate in the range of 5% to 9% through 2007.

Kerr-McGee is an Oklahoma City-based oil and natural gas exploration and production company focused in the U.S. onshore, deepwater Gulf of Mexico and select proven world-class hydrocarbon basins. In 2006, Kerr-McGee will celebrate 50 years listed on the NYSE under the symbol KMG. For more information on the company, visit .

Statements in this news release regarding the company's or management's intentions, beliefs or expectations, or that otherwise speak to future events, are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include those statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates," "projects," "target," "budget," "goal," "plans," "objective," "outlook," "should," "will" or similar words. In addition, any statements regarding possible commerciality, development plans, capacity expansions, drilling of new wells, ultimate recoverability of reserves, future production rates, cash flows and changes in any of the foregoing are forward-looking statements. Future results and developments discussed in these statements may be affected by numerous factors and risks, such as the accuracy of the assumptions that underlie the statements, the success of the oil and gas exploration and production program, the price of oil and gas, drilling risks, uncertainties in interpreting engineering data, demand for consumer products for which Kerr- McGee's oil and gas business supplies raw materials, the financial resources of competitors, changes in laws and regulations, the ability to respond to challenges in international markets (including changes in currency exchange rates), political or economic conditions in areas where Kerr-McGee operates, trade and regulatory matters, general economic conditions, and other factors and risks identified in the Risk Factors section of the company's Annual Report on Form 10-K and other U.S. Securities and Exchange Commission (SEC) filings. Actual results and developments may differ materially from those expressed or implied in this news release.

Source: Kerr-McGee Corp.

Engineering News Archive


Applicant Procedures
Job Seekers
Resume Help
Professional Organizations
Engineering Career Information
Engineering Colleges

Recruiters for
Professionals in the Chemical
& Pharmaceutical Industries
We recruit exclusively for Engineers and Operations/Maintenance Management Personnel in the following areas:
Specialty chemicals
Bulk chemicals
Commodity Chemicals
Fine chemicals
Industrial gases
Career Center | FAQs | Privacy
SESI Corporate Headquarters (954)755-3121 ext 109
© Search Enterprises, Inc. All rights reserved.
Industry News Career Center FAQs Submit a Job About Search Enterprises Submit a Resume Candidates Job Opportunities Search Enterprises Home