"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.
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