Kerr-McGee Corp. on Friday announced that it has agreed with the U.S. Department of the Interior to undertake efforts to mediate the disagreement over royalty relief under the Deep Water Royalty Relief Act of 1995. Kerr- McGee and the Interior Department have agreed to ask the Court to postpone the entry of a scheduling order while the mediation is under way.

In March 2006, Kerr-McGee brought suit in federal court in Louisiana challenging an order from the department to pay royalties on natural gas and oil produced from leases issued between 1996 and 2000 under the relief provisions of the act. The suit concerns whether the department is authorized to limit royalty relief for those leases if the price of natural gas or oil exceeds certain "threshold" levels.

"Kerr-McGee has previously sought to resolve this issue, and we welcome the department's recent invitation for lessees to discuss renegotiation of their deepwater leases," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer.

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.