Kerr-McGee to Sell Gulf of Mexico Shelf Properties for $1.34 Billion

Kerr-McGee Corp. has signed an agreement with W&T Offshore, Inc. for all of Kerr-McGee's interest in oil and natural gas properties on the Gulf of Mexico shelf for gross proceeds of approximately $1.34 billion in cash, subject to certain adjustments. In addition, W&T Offshore, Inc. will assume responsibility for abandonment liabilities, which Kerr-McGee had recorded at approximately $135 million at Dec. 31, 2005. The transaction will be effective Oct. 1, 2005. It is subject to customary closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. It is expected to close in the first half of 2006. Kerr-McGee expects the net after-tax cash proceeds of approximately $925 million, subject to certain adjustments, to be added to its existing excess cash position, from which funds will be used for general corporate purposes, including partially funding the recently announced stock repurchase program and reducing debt as it matures.

"The sale of the shelf assets is the final step in our announced strategy to divest of lower-growth, shorter-lived properties and focus on higher-impact opportunities," said Dave Hager, Kerr-McGee chief operating officer. "Our remaining oil and natural gas portfolio is weighted toward longer-life, less capital-intensive properties where we have a growing inventory of low-risk development projects. Upon completion of this transaction, Kerr-McGee's property portfolio will be well positioned to deliver consistent, repeatable per-share growth from our assets, which include two large natural gas resource plays in the Rockies, attractive infrastructure in the deepwater gulf and a growing inventory of high-potential exploratory prospects."

The divested properties are located in the Gulf of Mexico in waters that are typically less than 1,000 feet deep, spanning from near Corpus Christi, Texas, on the west to Mobile, Ala. on the east. Net production from the divestiture properties, which remains restricted as a result of hurricanes Katrina and Rita, currently approximates 25,000 barrels of oil equivalent (BOE) per day, which represents approximately 10% of the company's overall daily production. There are approximately 500 wells and approximately 100 fields included in this sale.
For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit