Exhibit 99.1
Kerr-McGee's Third Quarter Earnings Set Company Record
------------------------------------------------------
OKLAHOMA CITY (Oct. 25, 2000) -- Kerr-McGee Corp. (NYSE: KMG) reports a
record $266 million ($2.58 per diluted share) of net income before special items
for the 2000 third quarter, more than double the $104 million ($1.20 per share)
in the same 1999 quarter. This represents the eighth consecutive quarter of
increases. Including after-tax special charges relating to transition costs for
acquisitions, net income was $265 million ($2.57 per share), up from $98 million
($1.13 per share) a year ago.
For the nine months ended Sept. 30, net income excluding special items
was $664 million ($6.63 per share), compared with $166 million ($1.91 per share)
of net income excluding special items and before accounting changes in the same
1999 period. Including after-tax special items of $104 million, net income was
$560 million ($5.62 per share) for the first nine months of 2000 and compares
with $32 million (37 cents per share) in 1999.
"Record operating profit in both of our core businesses -- oil and gas
exploration and production and titanium dioxide pigment -- provided the
foundation for yet another increase in quarterly earnings," said Luke R.
Corbett, Kerr-McGee chairman and chief executive officer. "We generated
substantial cash flow during the quarter and repaid more than $250 million in
debt, reducing net debt as a percent of total capitalization to 50%. In
addition, continued success with the drill bit has resulted in development
approval for our 100%-owned Leadon field in the North Sea. The development of
Leadon, along with developments underway at the North Sea Skene field and the
Nansen and Boomvang fields in the deepwater Gulf of Mexico, provides the base
for future production growth."
Third-quarter operating profit was $461 million compared with $241
million in the 1999 quarter. Exploration and production operating profit rose to
$406 million, almost double the $211 million in the year-ago quarter. Sharp
increases in both crude oil and natural gas prices were the primary reason for
the increase. The price increases were partially offset by slightly lower sales
volumes of crude oil and natural gas, higher operating expenses and production
taxes, and higher expenses for the company's expanding exploration program.
Chemical's operating profit was $56 million, up $26 million from the
1999 quarter. The primary reason for the increase was a 62% growth in titanium
dioxide pigment sales volume from the 1999 quarter as a result of the
full-quarter impact of the company's plant acquisitions in Savannah, Ga., and
Botlek, Netherlands, and additional production from debottlenecking at the
company's flagship facility in Hamilton, Miss. Lower unit costs at each of the
company's pigment plants also boosted earnings, and average pigment sales
realizations were up 3% from the prior-year quarter.
Third-quarter nonoperating items include foreign currency gains of $7
million, compared with foreign currency losses of $7 million in the 1999
quarter. Net interest expense declined to $44 million, reflecting the company's
decreased debt levels.
Daily oil production averaged 201,000 barrels, slightly less than the
203,100 barrels in the prior-year quarter. Oil realizations averaged $29.04 per
barrel, an increase of $9.47 per barrel from the 1999 quarter.
Daily natural gas sales averaged 527 million cubic feet, down 7% from
the prior-year quarter. The average price of $4.13 per thousand cubic feet was
$1.49 higher than the 1999 quarter.
Sales for the third quarter were $1.1 billion, up 45% from $753 million
a year ago. For the nine months ended Sept. 30, sales were $3 billion, up from
$1.9 billion in the 1999 period.
Cash capital expenditures for the third quarter were $202 million,
compared with $113 million in the previous year's third quarter. For the first
nine months, cash capital expenditures, excluding acquisitions, were $457
million, compared with $388 million in the 1999 period.
Kerr-McGee will conduct a conference call today at 10 a.m. CDT to
discuss the results of operations for the third quarter and expectations for the
future. Interested parties may listen to the call via Kerr-McGee's website at
www.kerr-mcgee.com or by calling 212-896-6011.
Kerr-McGee is an Oklahoma City-based energy and inorganic chemical
company with worldwide operations and $7.3 billion in assets.
(Statements in this news release regarding the company or management's
intentions, beliefs or expectations are "forward-looking statements" within the
meaning of the Securities Litigation Reform Act. Future results and developments
discussed in these statements may be affected by numerous factors and risks such
as the accuracy of the assumptions that underlie the statements, the success of
the oil and gas exploration and production program, drilling risks, the market
value of Kerr-McGee's products, uncertainties in interpreting engineering data,
demand for consumer products for which Kerr-McGee's businesses supply raw
materials, general economic conditions, and other factors and risks discussed in
the company's SEC filings. Actual results and developments may differ materially
from those expressed or implied in this news release.)
# # #
CONTACT: Debbie Schramm
(405) 270-2877
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
September 30, September 30,
--------------------------- -----------------------------
(Millions of dollars, except 2000 1999 2000 1999
per share amounts) ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Consolidated Statement of Income
--------------------------------
Sales $ 1,089.3 $ 752.5 $ 2,959.6 $ 1,895.6
------------- ----------- ------------- -------------
Costs and Expenses -
Costs and operating expenses 348.8 279.5 973.2 773.0
General and administrative expenses 46.4 53.4 153.9 168.6
Depreciation and depletion 171.5 159.2 510.2 447.5
Exploration, including dry holes and
amortization of undeveloped leases 49.1 24.7 137.9 94.1
Taxes, other than income taxes 30.9 21.9 89.3 54.5
Provision for environmental remediation
and restoration of former plant sites,
net of reimbursements - - 90.0 -
Purchased in-process research and development - - 32.5 -
Merger costs - - - 155.1
Interest and debt expense 49.1 50.4 162.4 140.9
------------- ----------- ------------- -------------
Total Costs and Expenses 695.8 589.1 2,149.4 1,833.7
------------- ----------- ------------- -------------
393.5 163.4 810.2 61.9
Other Income 11.6 (1.9) 53.7 26.1
------------- ----------- ------------- -------------
Income before Income Taxes 405.1 161.5 863.9 88.0
Taxes on Income (140.5) (63.8) (304.2) (51.5)
------------- ----------- ------------- -------------
Income before Change in Accounting Principle 264.6 97.7 559.7 36.5
Cumulative Effect of Change in Accounting
Principle, net of taxes - - - (4.1)
------------- ----------- ------------- -------------
Net Income $ 264.6 $ 97.7 $ 559.7 $ 32.4
============= =========== ============= =============
Net Income per Common Share -
Basic -
Income before accounting change
excluding special items $ 2.83 $ 1.20 $ 7.13 $ 1.91
Income before accounting change 2.81 1.13 6.01 0.42
Accounting change - - - (0.05)
Net income 2.81 1.13 6.01 0.37
Diluted -
Income before accounting change
excluding special items 2.58 1.20 6.63 1.91
Income before accounting change 2.57 1.13 5.62 0.42
Accounting change - - - (0.05)
Net income $ 2.57 $ 1.13 $ 5.62 $ 0.37
Thousands of Common Shares Outstanding -
End of period 94,328 86,463
Average 94,263 86,431 93,058 86,394
Average - including dilution 105,995 86,624 103,269 86,444
Foreign Currency Gains (Losses) before Taxes $ 7.3 $ (6.9) $ 35.9 $ 6.3
Selected Balance Sheet Information
----------------------------------
Cash 174.8 184.4
Current Assets 1,299.3 1,096.7
Total Assets 7,321.0 5,873.7
Current Liabilities 1,221.9 826.8
Total Debt 2,579.0 2,602.6
Stockholders' Equity 2,356.6 1,444.2
Selected Cash Flow Information
------------------------------
Cash Provided by Operating Activities 565.4 258.3 1,237.1 333.1
Depreciation, Depletion and Amortization 183.7 168.5 548.4 478.4
Dividends Paid 42.3 38.9 123.6 99.5
Cash Capital Expenditures (including cash
dry hole expense) -
Exploration and production 168.5 92.2 389.4 321.3
Chemicals - Pigment 27.4 16.8 51.6 54.5
Chemicals - Other 5.4 2.3 11.3 7.5
------------- ----------- ------------- -------------
201.3 111.3 452.3 383.3
All other 0.9 2.0 4.2 4.3
------------- ----------- ------------- -------------
Total $ 202.2 $ 113.3 $ 456.5 $ 387.6
============= =========== ============= =============
</TABLE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
September 30, September 30,
--------------------------- -----------------------------
(Millions of dollars) 2000 1999 2000 1999
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Segment Information Excluding Special Items
-------------------------------------------
Sales
Exploration and production $ 745.4 $ 510.2 $ 2,047.7 $ 1,215.8
Chemicals - Pigment 286.2 184.3 747.0 509.9
Chemicals - Other 57.5 58.0 164.6 169.7
------------- ----------- ------------- -------------
1,089.1 752.5 2,959.3 1,895.4
All other 0.2 - 0.3 0.2
------------- ----------- ------------- -------------
Total $ 1,089.3 $ 752.5 $ 2,959.6 $ 1,895.6
============= =========== ============= =============
Operating Profit
Exploration and production -
Domestic $ 253.2 $ 129.6 $ 604.3 $ 246.5
North Sea 176.2 99.7 500.1 180.3
Other International 25.4 6.6 57.5 12.8
------------- ----------- ------------- -------------
Total Production Operations 454.8 235.9 1,161.9 439.6
Exploration Expense (49.1) (24.6) (137.9) (93.8)
------------- ----------- ------------- -------------
405.7 211.3 1,024.0 345.8
------------- ----------- ------------- -------------
Chemicals -
Pigment 50.0 25.1 125.8 81.8
Other 5.7 4.5 13.2 10.6
------------- ----------- ------------- -------------
55.7 29.6 139.0 92.4
------------- ----------- ------------- -------------
Total 461.4 240.9 1,163.0 438.2
Net Interest Expense (44.2) (47.5) (141.7) (132.4)
Income from Equity Affiliates 6.3 4.1 19.8 11.2
Other Expense (15.7) (26.0) (19.9) (45.5)
Taxes on Income (141.4) (67.2) (357.4) (106.0)
------------- ----------- ------------- -------------
Income before Special Items and Change
in Accounting Principle 266.4 104.3 663.8 165.5
Special Items, net of taxes (1.8) (6.6) (104.1) (129.0)
Cumulative Effect of Change in Accounting
Principle, net of taxes - - - (4.1)
------------- ----------- ------------- -------------
Net Income $ 264.6 $ 97.7 $ 559.7 $ 32.4
============= =========== ============= =============
Net Operating Profit
Exploration and production $ 258.6 $ 134.5 $ 655.2 $ 216.8
Chemicals - Pigment 33.0 16.4 78.7 52.4
Chemicals - Other 3.7 2.9 8.6 6.8
------------- ----------- ------------- -------------
Total 295.3 153.8 742.5 276.0
Net Interest Expense (27.0) (32.4) (93.2) (88.9)
Income from Equity Affiliates 4.1 2.6 13.0 7.3
Other Income (Expense) (6.0) (19.7) 1.5 (28.9)
Special Items, net of taxes (1.8) (6.6) (104.1) (129.0)
Cumulative Effect of Change in Accounting
Principle, net of taxes - - - (4.1)
------------- ----------- ------------- -------------
Net Income $ 264.6 $ 97.7 $ 559.7 $ 32.4
============= =========== ============= =============
Selected Exploration and
Production Information
------------------------
Depreciation and depletion $ 142.8 $ 141.8 $ 437.1 $ 395.6
Dry hole expense 16.9 1.2 53.1 24.0
Production costs -
Lease operating expense 95.7 86.2 288.5 242.1
Abandonment 9.3 10.7 28.7 31.4
Production taxes 23.5 10.1 66.2 19.6
------------- ----------- ------------- -------------
Total $ 128.5 $ 107.0 $ 383.4 $ 293.1
============= =========== ============= =============
Special Items, Net of Income Taxes
----------------------------------
Environmental expenses related to former
operations $ - $ - $ (58.5) $ -
Purchased in-process research and
development - - (32.5) -
Costs related to plant closings and
product line discontinuation - - (13.3) -
Merger costs - - - (110.5)
Other (1.8) (6.6) 0.2 (18.5)
------------- ----------- ------------- -------------
Total $ (1.8) $ (6.6) $ (104.1) $ (129.0)
============= =========== ============= =============
</TABLE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
(Unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
September 30, September 30,
--------------------------- -----------------------------
2000 1999 2000 1999
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Crude oil & condensate production
(thousands of bbls/day)
Domestic -
Offshore 57.1 63.4 57.4 58.4
Onshore 16.5 18.5 16.9 18.6
North Sea 111.6 106.7 117.8 104.4
Other International 15.8 14.5 14.8 15.5
------------- ----------- ------------- -------------
Total 201.0 203.1 206.9 196.9
============= =========== ============= =============
Average price of crude oil sold (per bbl)
Domestic -
Offshore $ 28.15 $ 18.21 $ 26.36 $ 14.31
Onshore 30.39 20.25 28.61 15.80
North Sea 29.73 20.51 27.47 15.92
Other International 26.02 16.03 25.10 12.55
Average $ 29.04 $ 19.57 $ 27.09 $ 15.28
Natural gas sold (MMCF/day)
Domestic -
Offshore 291 345 294 356
Onshore 173 171 173 167
North Sea 63 50 68 50
------------- ----------- ------------- -------------
Total 527 566 535 573
============= =========== ============= =============
Average price of natural gas sold (per MCF)
Domestic -
Offshore $ 4.38 $ 2.63 $ 3.51 $ 2.16
Onshore 4.46 2.69 3.68 2.17
North Sea 2.09 1.70 2.03 2.18
Average $ 4.13 $ 2.64 $ 3.38 $ 2.28
</TABLE>
