Ocean Energy and Kerr-McGee Enter Exploration Agreement

Ocean Energy, Inc. announced that it has entered into a Gulf of Mexico deepwater exploration agreement with Kerr-McGee Oil & Gas Corp., a wholly owned subsidiary of Kerr-McGee Corp. The agreement calls for the two companies to jointly explore and develop oil and gas prospects on 181 undeveloped deepwater blocks in the Gulf of Mexico located within several proven trends.

The exploration venture will encompass more than a million gross acres with Ocean holding an average working interest of approximately 43 percent in the blocks. The partnership has already identified various drilling opportunities of differing risk and size for 2001 and early 2002 with the first well from the venture expected to spud in the second quarter. Ocean will serve as operator for at least 25 percent of the first 15 exploratory wells in the multi-year drilling program.

"This venture strengthens our position as one of the leading independents in terms of deepwater leaseholdings in the Gulf of Mexico," said James T. Hackett, Ocean Energy chairman, president and chief executive officer. "As partners, our companies have already established a proven track record of deepwater success. With this new and expanded partnership, we leverage the economics and risks associated with a program of this magnitude and take advantage of the combined technical and operational resources of the two companies. We will fund the expected joint venture drilling program from projected cash flows and the reallocation of previously planned capital programs in 2001."

Since 1999, Ocean and Kerr-McGee have been developing their Nansen and Boomvang deepwater discoveries in the East Breaks area of the Gulf of Mexico. Together, estimated gross reserves for the two fields range from 190 to 260 million barrels of oil equivalent. The production sites will feature the world's first truss spars with a combined production capacity of up to 80,000 barrels of oil and 400 million cubic feet of gas. Production is anticipated to begin from the Nansen field in the fourth quarter of this year and the Boomvang field in the first quarter of 2002.

Including the new joint venture, Ocean will hold interests in approximately 1.5 million gross acres of Gulf of Mexico deepwater leasehold, covering 274 blocks. During 2001, the company will participate in one of the industry's most active worldwide exploratory and development deepwater drilling programs, with 24 to 30 wells scheduled to be drilled.