Kerr-McGee Expands Deepwater GoM Projects in Swap With BP

Kerr-McGee has executed an exchange agreement with BP under which Kerr-McGee will acquire BP's 37.5% working interest in the Blind Faith discovery in the deepwater Gulf of Mexico plus additional cash consideration in exchange for Kerr-McGee's interests in various oil and gas assets in the Arkoma basin of Southeast Oklahoma.

"We view this property exchange as a win-win for both Kerr-McGee and BP," said Dave Hager, Kerr-McGee's senior vice president responsible for oil and gas exploration and production. "Upon closing, this will add another significant development to our deepwater Gulf of Mexico portfolio, while BP will acquire additional working interests in their operated and non-operated Arkoma basin production. The transaction is consistent with Kerr-McGee's strategic plan of concentrating assets in core operating areas where we have critical mass and operating expertise. Recent successful appraisal drilling shows Blind Faith will be a high-impact development creating another value- adding, growth opportunity for our company. We look forward to working with ChevronTexaco on this development."

Blind Faith is located in 7,000 feet of water, about 175 miles southeast of New Orleans, on Mississippi Canyon blocks 695 and 696. The discovery well was drilled in June 2001 and encountered more than 200 feet of net pay in Miocene sands from 20,900 feet to 24,300 feet. A successful appraisal well was drilled earlier this year. The discovery has an estimated gross resource potential exceeding 100 million barrels of oil equivalent.

ChevronTexaco operates Blind Faith with a 62.5% working interest. Development options currently are being evaluated and sanction is expected in 2005 with first production in 2007.

The exchange will be effective Nov. 1, 2004, with closing anticipated during the first quarter of 2005. As a result of this transaction, Kerr-McGee has adjusted its production guidance for 2005 to reflect the disposition of the Arkoma assets.