<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KERR MCGEE CORPORATION
(Name of Registrant as Specified In Its charter)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it is determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statements number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
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(4) Date Filed:
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<PAGE> 2
[KERR McGEE LOGO]
KERR-MCGEE REPORTS 1998 RESULTS
OKLAHOMA CITY (Jan. 28, 1999) -- Kerr-McGee Corp. (NYSE: KMG) reports net
income for the year 1998 was $50 million ($1.06 per share), compared with $194
million ($4.04 per share) in 1997. Excluding $277 million of income from
discontinued operations and net special charges of $264 million, 1998 after-tax
income was $37 million (77 cents per share), compared with $151 million ($3.15
per share) in 1997. These amounts include $3 million of after-tax foreign
currency losses in both years.
For the 1998 fourth quarter, a net loss of $246 million ($5.17 per share)
was recorded, compared with 1997 fourth-quarter net income of $45 million (95
cents per share). Excluding $250 million of asset write-downs, 1998
fourth-quarter income from continuing operations was $4 million (9 cents per
share), compared with $34 million (73 cents per share) in the prior year's
period. These amounts include after-tax foreign currency gains of $5 million in
the 1998 quarter and foreign currency losses of $7 million in the 1997 quarter.
"In 1998, Kerr-McGee moved forward with its strategic plan for long-term
growth," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer.
"However, lower oil and gas prices negatively impacted 1998 earnings by
approximately $100 million. In 1997, Kerr-McGee announced its intent to focus on
two core businesses, the exploration and production of oil and gas and the
production and marketing of titanium dioxide pigment. As part of this strategy,
the company announced four major transactions last year."
"In January 1998, Kerr-McGee announced its intent to exit the coal business
and completed the sale of those operations in July. In March, Kerr-McGee
acquired 80% of Bayer AG's European titanium dioxide pigment business. This
acquisition, along with the expansion of our Hamilton pigment facility in
<PAGE> 3
Mississippi, increased our annual production capacity by approximately 80%.
Kerr-McGee enhanced its oil and gas portfolio by purchasing the United Kingdom
North Sea assets of Gulf Canada Resources Limited effective March 31, and in
October, announced plans to merge with Oryx Energy Company. Kerr-McGee is taking
advantage of the current market environments to make strategic acquisitions in
our two core businesses to build long-term value for stockholders," Corbett
said.
FOURTH-QUARTER SPECIAL ITEMS
The 1998 quarter included an after-tax, noncash write-down of $250 million
related to the impairment of certain oil and gas assets and noncore chemical
operations, which results from the current outlook for weak pricing of oil and
gas and certain chemical products. Other special items aggregated less than $1
million.
FOURTH-QUARTER RESULTS EXCLUDING SPECIAL ITEMS
Operating profit for the quarter was $16 million. Exploration and
production incurred an $11 million loss, compared with a $44 million profit in
the 1997 quarter. Declines of 40% and 29% in average oil and gas sales prices,
respectively, negatively impacted the 1998 operating results by about $55
million. Higher sales volumes of both oil and gas were not sufficient to offset
these declines and higher exploration expenses.
Chemical operating profit rose to $27 million from $22 million in the 1997
quarter, primarily due to higher titanium dioxide pigment prices and the sales
volume from European pigment operations acquired in March 1998.
Nonoperating expense decreased $6 million from the 1997 quarter. This
change resulted primarily from $7 million in foreign currency gains and $3
million in equity earnings for the 1998 quarter, contrasted with $7 million of
foreign currency losses and $9 million of equity income in the prior year's
quarter. Net
2
<PAGE> 4
interest expense increased $2 million from the prior year due to increased
borrowings for the company's acquisitions during 1998.
1998 RESULTS EXCLUDING SPECIAL ITEMS
Exploration and production's operating profit was $13 million, a decline
from $178 million in 1997. The decrease was primarily caused by declines of 36%
and 15% in average crude oil and natural gas prices, respectively, and higher
exploration costs, partially offset by higher oil and gas sales volumes.
Chemical operating profit rose 38% to $115 million, primarily as a result
of higher titanium dioxide pigment prices and the March 1998 purchase of 80% of
Bayer AG's European pigment operations. This was partially offset by higher
per-unit production costs for pigment.
Nonoperating results for the year were adversely impacted by lower equity
earnings. In addition, net interest expense increased by $9 million, due to
higher borrowings.
CRUDE OIL, NATURAL GAS PRODUCTION AND PRICES
Kerr-McGee's average daily proprietary oil production for the 1998 fourth
quarter was 69,500 barrels, up 22% from 56,800 barrels a year ago. For the year,
production averaged 66,800 barrels of oil per day, up from 56,900 barrels in
1997. The increase in oil production resulted from the acquisition of the North
Sea assets of Gulf Canada Resources Limited, which was effective March 31, 1998.
Fourth-quarter oil prices averaged $10.74 per barrel, down from $18.05 in
the 1997 period. For the year, average oil prices were $11.88 per barrel,
compared with $18.51 in 1997.
Fourth-quarter daily proprietary natural gas sales averaged 193 million
cubic feet, up 18% from 163 million cubic feet in the 1997 fourth quarter. For
the year, natural gas sales volumes totaled 198 million cubic feet per day,
compared with 184 million cubic feet in 1997.
3
<PAGE> 5
Natural gas sales prices averaged $2.06 per thousand cubic feet in the
fourth quarter, down from $2.90 in the 1997 period, and $2.18 per thousand cubic
feet for the year, compared with $2.56 in 1997.
SALES AND CAPITAL EXPENDITURES
Fourth-quarter sales were $351 million, compared with $345 million in the
1997 fourth quarter. Sales for the full-year totaled $1.4 billion in both 1998
and 1997.
Fourth-quarter 1998 cash capital expenditures were $137 million, compared
with $88 million in the 1997 period. For the year, cash capital expenditures
(excluding acquisitions) were $550 million.
Kerr-McGee is an energy and chemical company with worldwide operations and
$3.3 billion in assets. Consummation of the merger with Oryx remains subject to
the approval of stockholders of each company, along with customary closing
conditions. The transaction is anticipated to close in the first quarter of
1999. The issuance of Kerr-McGee stock in the merger will be made only by means
of prospectus.
(Forward-looking statements in this news release depend on certain events, risks
and uncertainties that may be outside the company's control, such as the success
of the oil and gas exploration and production program, acceptance of consumer
products for which Kerr-McGee's chemical business supplies raw materials,
general economic conditions and other risks discussed in the company's Form 10-K
and other filings with the SEC. Actual results and developments may differ from
those expressed or implied in this news release.)
CONTACT: Debbie Schramm
(405) 270-2877
4
<PAGE> 6
KERR-MCGEE CORPORATION AND SUBSIDIARY COMPANIES
(UNAUDITED)
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
------------------ % INC ------------------- % INC
1998 1997(*) (DEC) 1998 1997(*) (DEC)
-------- ------- ----- -------- -------- -----
(MILLIONS OF DOLLARS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
Sales..................................................... $ 350.7 $345.1 2 $1,395.7 $1,388.3 1
-------- ------- -------- --------
Costs and Expenses
Costs and operating expenses............................ 218.4 178.2 23 816.8 738.9 11
Selling, general and administrative expenses............ 74.6 29.8 150 176.2 137.4 28
Depreciation and depletion.............................. 63.0 59.4 6 269.1 238.7 13
Asset impairment........................................ 370.0 -- NM 370.0 -- NM
Exploration, including dry holes and amortization of
undeveloped leases.................................... 27.6 23.0 20 84.1 64.7 30
Taxes, other than income taxes.......................... 3.0 4.5 (33) 17.9 20.5 (13)
Interest and debt expense............................... 14.9 12.9 16 58.3 46.4 26
-------- ------- -------- --------
Total Costs and Expenses.......................... 771.5 307.8 151 1,792.4 1,246.6 44
-------- ------- -------- --------
(420.8) 37.3 NM (396.7) 141.7 NM
Other Income.............................................. 23.6 11.5 105 21.7 90.4 (76)
-------- ------- -------- --------
Income (Loss) from Continuing Operations before
Income Taxes............................................ (397.2) 48.8 NM (375.0) 232.1 NM
Provision (Benefit) for Income Taxes...................... (150.9) 13.8 NM (147.8) 71.0 NM
-------- ------- -------- --------
Income (Loss) from Continuing Operations.................. (246.3) 35.0 NM (227.2) 161.1 NM
Income from Discontinued Operations, Net of Income
Taxes................................................... -- 10.2 NM 277.4 32.7 NM
-------- ------- -------- --------
Net Income (Loss)......................................... $ (246.3) $ 45.2 NM $ 50.2 $ 193.8 (74)
======== ======= ======== ========
Earnings (Loss) per Share
Diluted
Continuing Operations Excl. Special Items............. $ 0.09 $ 0.73 (88) $ 0.77 $ 3.15 (76)
Continuing Operations................................. (5.18) 0.74 NM (4.78) 3.36 NM
Total................................................. (5.17) 0.95 NM 1.06 4.04 (74)
Basic
Continuing Operations Excl. Special Items............. 0.09 0.73 (88) 0.77 3.17 (76)
Continuing Operations................................. (5.18) 0.74 NM (4.78) 3.38 NM
Total................................................. $ (5.17) $ 0.95 NM $ 1.06 $ 4.06 (74)
Average Shares Outstanding (thousands).................... 47,166 47,679 (1) 47,504 47,808 (1)
Shares Outstanding at End of Period (thousands)........... 47,167 47,686 (1)
Foreign Currency Gains (Losses)........................... $ 7.3 $ (6.5) NM $ (1.4) $ (2.7) (48)
SELECTED BALANCE SHEET INFORMATION
Cash...................................................... 114.0 182.6 (38)
Current Assets............................................ 751.1 688.5 9
Total Assets.............................................. 3,343.7 3,096.1 8
Current Liabilities....................................... 536.1 523.0 3
Short-Term Debt........................................... 34.6 26.6 30
Long-Term Debt............................................ 901.3 552.0 63
Stockholders' Equity...................................... 1,336.1 1,440.0 (7)
SELECTED CASH FLOW INFORMATION
Cash Provided (Used) by Operating Activities.............. (9.0) 141.9 NM 104.3 569.1 (82)
Depreciation, Depletion and Amortization.................. 68.0 68.7 (1) 297.8 270.5 10
Dividends Paid............................................ 21.3 21.5 (1) 85.7 84.5 1
Cash Capital Expenditures
Exploration and production.............................. 110.6 60.6 83 439.5 213.1 106
Chemicals............................................... 25.1 18.4 36 92.1 90.5 2
-------- ------- -------- --------
135.7 79.0 72 531.6 303.6 75
All other............................................... 1.5 2.0 (25) 8.0 10.6 (25)
Discontinued operations................................. -- 7.0 NM 10.3 26.9 (62)
-------- ------- -------- --------
Total............................................. $ 137.2 $ 88.0 56 $ 549.9 $ 341.1 61
======== ======= ======== ========
</TABLE>
- ---------------
(*) Certain prior year amounts have been reclassified to conform with the
current year's presentation.
5
<PAGE> 7
KERR-MCGEE CORPORATION AND SUBSIDIARY COMPANIES
(UNAUDITED)
<TABLE>
<CAPTION>
FOURTH QUARTER
ENDED TWELVE MONTHS ENDED
DECEMBER 31, % DECEMBER 31, %
----------------- INC ------------------- INC
1998 1997(*) (DEC) 1998 1997(*) (DEC)
------- ------- ----- -------- -------- -----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
SEGMENT INFORMATION
SALES
Exploration and production............... $ 112.3 $149.6 (25) $ 462.8 $ 628.0 (26)
Chemicals................................ 238.3 195.4 22 932.6 760.0 23
------- ------ -------- --------
350.6 345.0 2 1,395.4 1,388.0 1
All other................................ 0.1 0.1 -- 0.3 0.3 --
------- ------ -------- --------
Total............................ $ 350.7 $345.1 2 $1,395.7 $1,388.3 1
======= ====== ======== ========
OPERATING PROFIT (LOSS)
Exploration and production............... $(324.4) $ 43.3 NM $ (301.5) $ 175.2 NM
Chemicals................................ (29.8) 19.3 NM 56.0 81.1 (31)
------- ------ -------- --------
Total............................ (354.2) 62.6 NM (245.5) 256.3 NM
Net Interest Expense....................... (4.6) (9.3) (51) (24.0) (34.4) (30)
Income (Loss) from Equity Affiliates....... 1.0 9.2 (89) (11.6) 32.0 NM
Other Expense.............................. (39.4) (13.7) 188 (93.9) (21.8) NM
Taxes on Income............................ 150.9 (13.8) NM 147.8 (71.0) NM
------- ------ -------- --------
Income (Loss) from Continuing Operations... (246.3) 35.0 NM (227.2) 161.1 NM
Income from Discontinued Operations, Net of
Income Taxes............................. -- 10.2 NM 277.4 32.7 NM
------- ------ -------- --------
Net Income (Loss).......................... $(246.3) $ 45.2 NM $ 50.2 $ 193.8 (74)
======= ====== ======== ========
NET OPERATING PROFIT (LOSS)
Exploration and production............... $(217.7) $ 26.4 NM $ (205.0) $ 107.1 NM
Chemicals................................ (18.8) 12.5 NM 35.4 52.1 (32)
------- ------ -------- --------
Total............................ (236.5) 38.9 NM (169.6) 159.2 NM
Net Interest Expense....................... (3.1) (5.6) (45) (14.8) (24.0) (38)
Income (Loss) from Equity Affiliates....... 1.0 9.2 (89) (11.6) 32.0 NM
Other Expense.............................. (7.7) (7.5) 3 (31.2) (6.1) NM
Income from Discontinued Operations, Net of
Income Taxes............................. -- 10.2 NM 277.4 32.7 NM
------- ------ -------- --------
Net Income (Loss).......................... $(246.3) $ 45.2 NM $ 50.2 $ 193.8 (74)
======= ====== ======== ========
SPECIAL ITEMS, NET OF INCOME TAXES
Income tax settlement...................... $ 22.0 $ -- NM $ 41.2 $ -- NM
Settlements with insurance carriers........ 1.6 -- NM 8.0 7.9 1
Effect of tax rate change -- U.K........... 1.3 -- NM 7.8 -- NM
Asset impairment........................... (250.0) -- NM (250.0) (0.4) NM
Noncash charge by equity affiliate......... -- -- NM (27.1) -- NM
Environmental provisions, net.............. (26.3) -- NM (26.5) (12.7) 109
Gain (loss) on the sale of assets.......... -- 4.0 NM (12.1) 0.4 NM
Restructuring accrual...................... -- -- NM (4.2) -- NM
Gain on the sale of equity securities...... -- -- NM -- 12.0 NM
Other...................................... 0.7 (3.4) NM (0.9) 3.0 NM
------- ------ -------- --------
Total............................ $(250.7) $ 0.6 NM $ (263.8) $ 10.2 NM
======= ====== ======== ========
</TABLE>
- ---------------
(*) Certain prior year amounts have been reclassified to conform with the
current year's presentation.
6
<PAGE> 8
KERR-MCGEE CORPORATION AND SUBSIDIARY COMPANIES
(UNAUDITED)
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
----------------- % INC ----------------- % INC
1998 1997(*) (DEC) 1998 1997(*) (DEC)
------- ------- ----- ------- ------- -----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
SEGMENT INFORMATION EXCLUDING SPECIAL ITEMS
OPERATING PROFIT (LOSS)
Exploration and production................................ $ (11.4) $ 43.8 NM $ 12.8 $177.8 (93)
Chemicals................................................. 27.2 21.6 26 115.1 83.7 38
------- ------ ------- ------
Total............................................... 15.8 65.4 (76) 127.9 261.5 (51)
Net Interest Expense........................................ (11.1) (9.3) 19 (43.1) (34.4) 25
Income from Equity Affiliates............................... 3.0 9.2 (67) 17.5 32.0 (45)
Other Expense............................................... (3.0) (17.5) (83) (42.8) (42.7) --
Taxes on Income............................................. (0.3) (13.4) (98) (22.9) (65.5) (65)
------- ------ ------- ------
Income from Continuing Operations Excluding Special Items... 4.4 34.4 (87) 36.6 150.9 (76)
Special Items, Net of Income Taxes.......................... (250.7) 0.6 NM (263.8) 10.2 NM
Income from Discontinued Operations, Net of Income Taxes.... -- 10.2 NM 277.4 32.7 NM
------- ------ ------- ------
NET INCOME (LOSS)........................................... $(246.3) $ 45.2 NM $ 50.2 $193.8 (74)
======= ====== ======= ======
NET OPERATING PROFIT (LOSS)
Exploration and production................................ $ (7.7) $ 26.7 NM $ (0.7) $108.8 NM
Chemicals................................................. 18.3 14.0 31 73.9 53.8 37
------- ------ ------- ------
Total............................................... 10.6 40.7 (74) 73.2 162.6 (55)
Net Interest Expense........................................ (7.3) (5.6) 30 (27.1) (24.0) 13
Income from Equity Affiliates............................... 3.0 9.2 (67) 17.5 32.0 (45)
Other Expense............................................... (1.9) (9.9) (81) (27.0) (19.7) 37
Special Items, Net of Income Taxes.......................... (250.7) 0.6 NM (263.8) 10.2 NM
Income from Discontinued Operations, Net of Income Taxes.... -- 10.2 NM 277.4 32.7 NM
------- ------ ------- ------
NET INCOME (LOSS)........................................... $(246.3) $ 45.2 NM $ 50.2 $193.8 (74)
======= ====== ======= ======
</TABLE>
- ---------------
(*) Certain prior year amounts have been reclassified to conform with the
current year's presentation.
7
<PAGE> 9
KERR-MCGEE CORPORATION AND SUBSIDIARY COMPANIES
(UNAUDITED)
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
--------------- % INC --------------- % INC
1998 1997 (DEC) 1998 1997 (DEC)
------ ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Crude oil & condensate production (thousands of bbls/day)
United States............................................. 22.0 23.1 (5) 22.2 24.2 (8)
North Sea................................................. 39.3 23.2 69 34.4 23.4 47
China..................................................... 6.1 8.8 (31) 7.6 8.8 (14)
Other..................................................... 2.1 1.7 24 2.6 0.5 NM
------ ------ ------ ------
Total proprietary production........................ 69.5 56.8 22 66.8 56.9 17
Proportionate interest in equity affiliate's production... 7.3 7.4 (1) 7.8 7.3 7
------ ------ ------ ------
Total............................................... 76.8 64.2 20 74.6 64.2 16
====== ====== ====== ======
Average price of crude oil sold (per bbl.)
United States............................................. $10.03 $17.91 (44) $11.70 $18.53 (37)
North Sea................................................. 11.01 18.42 (40) 11.97 18.77 (36)
China..................................................... 11.11 17.35 (36) 11.79 17.71 (33)
Other..................................................... 11.52 18.74 (39) 12.40 18.59 (33)
Average............................................. $10.74 $18.05 (40) $11.88 $18.51 (36)
Natural gas sold (MMCF/day)
United States............................................. 163 137 19 165 155 6
North Sea................................................. 30 26 15 33 29 14
------ ------ ------ ------
Total proprietary sales............................. 193 163 18 198 184 8
Proportionate interest in equity affiliate's sales........ 73 58 26 75 59 27
------ ------ ------ ------
Total............................................... 266 221 20 273 243 12
====== ====== ====== ======
Average price of natural gas sold (per MCF)
United States............................................. $ 1.99 $ 2.98 (33) $ 2.12 $ 2.57 (18)
North Sea................................................. 2.48 2.49 -- 2.49 2.52 (1)
Average............................................. $ 2.06 $ 2.90 (29) $ 2.18 $ 2.56 (15)
Industrial and specialty chemical sales (thousands of
tons)..................................................... 149 132 13 530 488 9
Heavy minerals sales (thousands of tons).................... 24 16 50 76 51 49
Treated forest product sales (millions of board feet)....... 44 46 (4) 225 218 3
</TABLE>
8
<PAGE> 10
[ORYX LOGO]
NYSE:ORX FOR IMMEDIATE RELEASE
JANUARY 28, 1999
ORYX ENERGY REPORTS RESULTS FOR
FOURTH QUARTER AND YEAR 1998
Oryx Energy reported a net loss of $71 million, or $.67 per share, for the
quarter ended December 31, 1998, compared to net income of $39 million, or $.37
per share, for the same quarter last year. Revenues for the 1998 fourth quarter
were $190 million versus $301 million for 1997.
Net loss for 1998 was $95 million, or $.90 per share compared to net income
of $170 million, or $1.61 per share for 1997. Revenues generated in 1998 were
$820 million compared to $1,197 million in 1997.
"Our fourth quarter revenues were significantly lower, particularly hard
hit by oil prices that averaged 34 percent below the prior year," said Robert L.
Keiser, chairman and CEO.
The 1998 fourth quarter net loss of $71 million includes a $49 million
after-tax non-cash asset write-down in accordance with FAS 121 primarily due to
low oil and gas prices, a $5 million net charge for employee terminations, a $1
million gain on sale of assets and a $2 million benefit from the remeasurement
of foreign deferred taxes. By comparison, the 1997 fourth quarter net income of
$39 million includes a $1 million charge from remeasurement of foreign deferred
taxes and a $2 million extraordinary loss from the early renewal of a revolving
credit agreement.
Compared to the same quarter last year, worldwide oil prices decreased by
$6.08 per barrel, or 34 percent, and U.S. natural gas prices decreased by $.44
per mcf, or 17 percent. Crude oil volumes decreased by 13 mb/d and natural gas
volumes decreased by 107 mmcf/d.
9
<PAGE> 11
Comparing 1998 to 1997, worldwide oil prices decreased by $5.36 per barrel,
or 29 percent and U.S. gas prices decreased $.30 per mcf, or 13 percent. Crude
oil volumes decreased 9 mb/d and natural gas volumes decreased by 117 mmcf/d.
Discretionary cash flow for the fourth quarter was $118 million, or $1.11
per share, compared to $169 million, or $1.60 per share, in the 1997 fourth
quarter. For the full year, discretionary cash flow was $416 million, or $3.92
per share versus $606 million, or $5.74 per share in 1997.
For the year, the company reported replacing 100 percent of its 1998
production at a cost of $8.23 per equivalent barrel. 1998 reserve additions
resulted primarily from the Yuralpa discovery at Block 21 in Ecuador and the
extension of the Conger field at Garden Banks 215 in the Gulf of Mexico.
Year-end reserves were reported at 614 million equivalent barrels. Year-end debt
was reported at $1,306 million.
Kerr-McGee Corporation and Oryx Energy Company recently announced a
strategic merger that will create the fourth largest proven reserve base among
independent, non-integrated oil and gas exploration and production companies
based in the U.S. Cost savings and synergies are estimated to be in excess of
$100 million per year. The transaction is subject to the approval by the
shareholders of both companies, along with other customary closing conditions
and is anticipated to close in the first quarter. The issuance of Kerr-McGee
stock in the merger will be made only by means of a prospectus.
Dallas-headquartered Oryx Energy Company is one of the largest independent
oil and gas companies and trades on the New York Stock Exchange with the symbol
"ORX". Oryx Energy conducts its domestic business through Sun Energy Partners,
L.P., which trades with the symbol "SLP". Copies of this release may be obtained
on the Oryx home page at www.oryx.com.
10
<PAGE> 12
<TABLE>
<CAPTION>
QUARTER ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
------------------ --------------------
1998 1997 1998 1997
------ ------ ------ ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Revenues
Oil and gas............................................. $ 184 $ 301 $ 798 $1,213
Other................................................... 6 -- 22 (16)
------ ------ ------ ------
190 301 820 1,197
------ ------ ------ ------
Costs and Expenses
Operating costs......................................... 59 59 226 255
Production taxes........................................ 8 40 50 161
Exploration costs....................................... 38 31 133 80
DD&A.................................................... 149 80 374 311
G&A..................................................... 12 14 52 58
Interest and debt expense............................... 29 28 115 111
Interest capitalized.................................... (1) (4) (16) (16)
Provision for restructuring............................. 8 -- 33 --
------ ------ ------ ------
302 248 967 960
------ ------ ------ ------
(112) 53 (147) 237
Provision (Benefit) for Income Tax........................ (39) 11 (52) 68
Remeasurement of Foreign Deferred Tax..................... (2) 1 -- (3)
------ ------ ------ ------
Income (Loss) Before Extraordinary Item................... (71) 41 (95) 172
Extraordinary Item........................................ -- (2) -- (2)
------ ------ ------ ------
Net Income (Loss)......................................... $ (71) $ 39 $ (95) $ 170
------ ------ ------ ------
Basic Net Income (Loss) Per Share*
Before extraordinary item............................... $ (.67) $ .39 $ (.90) $ 1.63
Extraordinary item...................................... -- (.02) -- (.02)
------ ------ ------ ------
Net income (loss)....................................... $ (.57) $ .37 $ (.90) $ 1.61
------ ------ ------ ------
Basic Common Shares (in millions)......................... 106.2 105.8 106.1 105.6
Discretionary Cash Flow................................... $ 118 $ 169 $ 416 $ 606
DCF Per Share............................................. $ 1.11 $ 1.60 $ 3.92 $ 5.74
ED&A Outlays.............................................. $ 67 $ 121 $ 530 $ 547
Average Daily Net Production
Crude and Condensate (MBbl)
United States......................................... 43 50 44 46
United Kingdom........................................ 50 56 53 60
Other Foreign......................................... 8 8 9 9
------ ------ ------ ------
Worldwide............................................. 101 114 106 115
Natural Gas (MMcf)
United States......................................... 365 467 375 490
United Kingdom........................................ 8 13 10 12
------ ------ ------ ------
Worldwide............................................. 373 480 385 502
Average Price
Crude and Condensate ($ per Bbl)........................
United States......................................... 12.51 18.21 13.58 18.75
United Kingdom........................................ 12.36 18.57 13.55 19.00
Other Foreign......................................... 6.11 12.54 7.24 12.88
Worldwide............................................. 11.91 17.99 13.07 18.43
Natural Gas ($ per Mcf)
United States......................................... 2.11 2.55 2.10 2.40
United Kingdom........................................ 2.70 2.09 2.34 2.26
Worldwide............................................. 2.13 2.53 2.10 2.39
</TABLE>
- ---------------
* Diluted earnings per share were the same as basic earnings per share for each
quarter and for the 1998 twelve months and one cent less than basic for the
1997 twelve months.
