Industry News

Kerr-McGee Announces 2004 Second-Quarter Earnings Increase 59%

Published on 2004-07-29. Author : SpecialChem


Oklahoma City-- Kerr-McGee Corp. (NYSE: KMG) reports net income for the 2004 second quarter of $110.6 million ($1.01 per diluted common share), up 59% from the 2003 second-quarter net income of $69.6 million (68 cents per share). The company's adjusted after-tax net income from continuing operations was $119.8 million ($1.09 per share), compared with $113.0 million ($1.07 per share) for the 2003 second quarter. Adjusted after-tax net income from continuing operations is determined by excluding from net income results from discontinued operations and the effect of special items.

"During the second quarter, we met our production projections, continued to controlcosts and experienced improving performance by our chemical operations, while completing the merger with Westport Resources, which adds significant depth, breadth and balance to our oil and gas exploration and production program," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer.

"We expect total oil and gas volumes to increase by more than 25% in the third quarter, as we ramp up production from new developments in the deepwater Gulf of Mexico at the Red Hawk and Gunnison fields and our new core area in Bohai Bay, China; bring on additional volumes from our successful exploitation programs; and realize the full impact of the merger with Westport Resources."

Operating Profit

Operating profit for the second quarter 2004 was $275.2 million, up from $250.2 million in the second quarter 2003. Exploration and production operating income for the 2004period was $263 million, compared with $272.8 million for the prior-year quarter. At June 30, 2004, the cost of exploratory wells drilling, which if completed and determined to be
noncommercial prior to the filing of the company's financial statements with the U.S.Securities and Exchange Commission, exposes the company to additional second-quarter 2004 after-tax expense of up to $6.4 million.

Operating profit for the chemical operations was $12.2 million in the 2004 secondquarter, compared with a loss of $22.6 million for the 2003 quarter. The second-quarter 2003 loss was primarily due to costs related to chemical plant shutdowns.

Debt to Total Capitalization

Debt to total capitalization at June 30, 2004 decreased to 46%, compared with 58% atDec. 31, 2003. At June 30, 2004, debt was $4.4 billion, compared with $3.7 billion at Dec. 31, 2003. Kerr-McGee assumed approximately $1 billion in debt on June 25, 2004 upon completion of the merger with Westport Resources.

Oil and Gas Volumes and Prices

Kerr-McGee's daily oil production from continuing operations averaged 140,500 barrelsin the 2004 second quarter, down 9% from 154,800 barrels per day in the 2003 period.Including the effect of the company's hedging program, the per-barrel sales price for oilfrom continuing operations averaged $26.97 for the 2004 second quarter, compared with$25.28 for the 2003 second quarter. Natural gas sales averaged 740 million cubic feet per day for the 2004 second quarter, up 6% from the 2003 second quarter. The average natural gas sales price, including the effects of the company's hedging program, was $4.70 per thousand cubic feet, a 10% increase over the 2003 second quarter.

Revenues and Capital Expenditures

Revenues of $1.1 billion in the 2004 second quarter were up slightly from the 2003period. Capital expenditures were $289.2 million, compared with $340.1 million for the 2003 second quarter.


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