Kerr-McGee Completes Acquisition of HS Resources

Kerr-McGee Corp. has completed the acquisition of HS Resources, Inc. The transaction was completed following the approval of the acquisition by the stockholders of HS Resources at a special meeting held today. Under the terms of the merger agreement, HS Resources stockholders will receive election forms that will allow them to choose to receive either $66 in cash or .9404 shares of Kerr-McGee common stock for each share of HS Resources common stock they hold, subject to proration. The aggregate merger consideration consists of approximately 70% cash and 30% Kerr-McGee common stock, with maximum cash consideration of $833 million. Election forms must be returned by 5 p.m. Eastern Daylight Time, Aug. 29, 2001.

Through this transaction, Kerr-McGee will acquire proved reserves of 1.3 trillion cubic feet of natural gas equivalent, at a cost of approximately $1.10 per thousand cubic feet of proved gas equivalent, and gas gathering systems, undeveloped acreage and other assets valued at approximately $300 million. The acquired reserves, which are predominately natural gas located in the Denver-Julesburg Basin of northeastern Colorado, will increase Kerr-McGee's proved U.S. natural gas reserves by 77% and increase the company's reserve life for U.S. natural gas by about two years. Kerr-McGee's total proved reserves will increase by 20% and total daily production volumes are expected to increase about 15%, with daily production of U.S. natural gas increasing more than 45%. The company expects the transaction to be immediately accretive to both earnings and cash flow per share. HS Resources common stock will cease trading on the New York Stock Exchange at close of market today.


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