Kerr-McGee Makes Back-to-Back Deepwater Discoveries

Kerr-McGee has made another discovery in the deepwater Gulf of Mexico at the Caesar prospect. The Caesar #1 well, located in Green Canyon block 683 was drilled to a total depth of 29,721 feet and encountered quality oil pay. The Caesar discovery follows Kerr-McGee's recent announcement of a natural gas discovery at the deepwater Claymore prospect in Atwater Valley block 140.

"The Caesar discovery, on the heels of our recent discovery at Claymore, validates the successful transition of our deepwater exploratory program into the subsalt play," said David A. Hager, Kerr-McGee chief operating officer. "With the success of these first two wells, we are very excited about the enviable inventory of high-impact targets that our exploration team has assembled. Our extensive inventory of low-risk development projects in the U.S. onshore enables us to consistently replace production, while our exploratory program provides meaningful opportunities to grow our resource base. The success to date of this balanced strategy shows we have the right people, the right projects and the rigs under contract to execute our program and deliver increasing value for our stockholders."

Caesar is located in approximately 4,500 feet of water, approximately 160 miles south of Houma, La. Kerr-McGee operates Caesar with a 20% working interest. Shell Exploration and Production Company holds a 62.5% working interest and Plains Exploration & Production Company holds the remaining 17.5% working interest.

"We plan to immediately core the productive interval, then side-track the well approximately 4,000 feet to the north of the discovery to better determine the potential resources," added Hager. "Development options will be evaluated and could include a subsea tieback to our 100%-owned Constitution spar, just nine miles to the west in Green Canyon block 680."

Following the Caesar operation, Kerr-McGee will move the rig to the Mission Deep prospect in Green Canyon 955.

Kerr-McGee also continues the appraisal work at Claymore, which Kerr-McGee operates with a 33.5% working interest. The company currently is drilling a side-track well approximately 4,600 feet to the northeast of the discovery well to determine the areal extent of the reservoir. Once the rig finishes the appraisal well, it is expected to move to the Norman prospect located in Garden Banks block 434. Kerr-McGee operates Norman with a 35% working interest.

The company also is drilling the Grand Cayman prospect located in Garden Banks blocks 517, 518, 561 and 562. Grand Cayman is a 32,000-foot Miocene test operated by Kerr-McGee with a 35% working interest.