Kerr-McGee Issues Earnings Report

Kerr-McGee Corp. announced Thursday that income from continuing operations for the 2006 second quarter of $306 million ($1.33 per diluted common share) compared with $256 million ($.90 per share) for the 2005 second quarter.

The company's 2006 second-quarter adjusted after-tax income was $299 million ($1.30 per diluted share), compared with $247 million ($.87 per share) for the second quarter of 2005. Adjusted after-tax income is determined by excluding asset impairments and gains/losses on property sales from income from continuing operations, and adjusting results of commodity derivative activities to reflect only actual net realized gains/losses associated with the current period. The increase in adjusted after-tax income for the 2006 second quarter is primarily due to higher oil and gas sales revenues partially offset by higher commodity derivative losses. Lifting costs increased in the second quarter of 2006 as compared to last year, but that increase was more than offset by lower depreciation, depletion and amortization, exploration expense and interest.

Adjusted after-tax income and the related measure per diluted share exclude items that management deems to not be reflective of the company's core operations or represent timing differences between periods. Management believes that these non-GAAP financial measures provide valuable insight into the company's core earnings from continuing operations and enable investors and analysts to better compare core operating results with those of other companies by eliminating items that may be unique to the company. Other companies may define these items differently, and the company cannot assure that adjusted after-tax income and the related measure per diluted share are comparable with similarly titled amounts for other companies.

Revenues and Capital Expenditures

Second-quarter 2006 revenues from continuing operations were $1.3 billion, compared with $1.2 billion for the 2005 period. Cash capital expenditures from continuing operations, including dry-hole costs, totaled $489 million for the 2006 second quarter, compared with $414 million for the 2005 period.

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.