(Millions of dollars, except per share amounts) Six Months Ended Second Quarter June 30 2004 2003 2004 2003 Net Income $110.6 $69.6 $262.8 $139.5 (Income) Loss from Discontinued Operations --- .2 --- (.2) Change in Accounting Principle (FAS 143) --- --- --- 34.7 Income from Continuing Operations $110.6 $69.8 $262.8 $174.0 Add Special Items (A) 9.2 43.2 16.4 66.3 Adjusted After-Tax Income $119.8 $113.0 $279.2 $240.3 Diluted Earnings Per Share Net Income $1.01 $.68 $2.42 $1.36 Discontinued Operations --- --- --- --- Change in Accounting Principle --- --- --- .31 Continuing Operations $1.01 $.68 $2.42 $1.67 Adjusted After-Tax Income $1.09 $1.07 $2.56 $2.27 (A) Items included in "Special Items" are listed in the following tables as "Other Information, Net of Income Taxes."
Adjusted after-tax income excludes items that management deems to not be reflective of the company's core operations. This measure is a non-GAAP financial measure. Management believes that this measure provides valuable insight into the company's core earnings from operations and enables investors and analysts to better compare core operating results with those of other companies by eliminating items that may be unique to the company. Other companies may define special items differently, and the company cannot assure that adjusted after-tax income is comparable with similarly titled amounts for other companies.
"During the second quarter, we met our production projections, continued to control costs 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 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 2004 period 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 second quarter, 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% at Dec. 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 barrels in 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 oil from 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 2003 period.
Capital expenditures were $289.2 million, compared with $340.1 million for the 2003 second quarter.
Most Popular Articles