Kerr-McGee Makes Deepwater Gas Discovery in the Gulf of Mexico

Kerr-McGee has made a natural gas discovery in the deepwater Gulf of Mexico at the Claymore prospect located in Atwater Valley block 140. The Claymore #1 well was drilled to a total depth of approximately 25,000 feet and encountered more than 150 feet of net pay in multiple zones.

"We are encouraged by the Claymore discovery," said David A. Hager, Kerr- McGee chief operating officer. "This is the first well in our 2006 subsalt program in the deepwater Gulf of Mexico, and this discovery provides momentum as we execute our exploration program that includes four to five additional high-impact subsalt targets this year.

"The initial data indicates this reservoir contains dry gas with very high rock quality," added Hager. "We plan to finalize the evaluation of this well, and immediately drill a side-track appraisal well to define the aerial extent and potential resources."

Claymore is located in approximately 3,700 feet of water, 150 miles southeast of New Orleans, La. Kerr-McGee operates Claymore with a 33.5% working interest. Partners in the discovery include Dominion Exploration & Production, Inc. (31.5% working interest), Statoil Gulf of Mexico LLC (25% working interest) and Woodside Energy (USA) Inc. (10% working interest).

Diamond Offshore's semisub, Ocean Star, will remain on location and begin drilling the side-track appraisal well, approximately 4,600 feet to the northeast of the discovery well to test the down-dip limit of the reservoir.

The company also is drilling the Caesar prospect located in Green Canyon block 683. The well currently is at approximately 29,000 feet. Kerr-McGee operates the subsalt Miocene prospect with a 20% working interest. Partners in Caesar include Shell (62.5% working interest) and Plains Exploration & Production Company (17.5% working interest).

Kerr-McGee also spud the Grand Cayman prospect located in Garden Banks blocks 517, 518, 561 and 562. The company operates Grand Cayman with a 35% working interest. Partners include Plains Exploration & Production Company (30% working interest), Statoil Gulf of Mexico LLC (25% working interest) and Newfield Exploration Company (10% working interest).

Immediate appraisal of Claymore will delay the planned spud of the Norman prospect located in Garden Banks block 434. Once the appraisal work is complete at Claymore, the rig is expected to move to Norman.

"Our deepwater exploration team has put together an extremely attractive portfolio of prospects in the deepwater Gulf of Mexico. This inventory continues to grow and we have the rigs under contract to execute our program," added Hager.

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.

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