September 30, 

December 31, 

(Millions of dollars)

              2000 

              1999 

ASSETS

Current Assets

  Cash

$   174.8 

$   266.6 

  Notes and accounts receivable

673.1 

500.9 

  Inventories

342.8 

280.9 

  Deposits and prepaid expenses

     108.6 

     112.2 

        Total Current Assets

  1,299.3 

  1,160.6 

Property, Plant and Equipment

12,321.4 

11,049.3 

  Less reserves for depreciation,

    depletion and amortization

  7,240.3 

  6,964.4 

  5,081.1 

  4,084.9 

Investments and Other Assets

     940.6 

     653.7 

$7,321.0 

$5,899.2 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

  Short-term borrowings

$      4.1 

$      9.0 

  Accounts payable

387.4 

403.7 

  Long-term debt due within one year

175.2 

20.1 

  Other current liabilities

     655.2 

     407.3 

        Total Current Liabilities

  1,221.9 

     840.1 

Long-Term Debt

  2,399.7 

  2,496.0 

Deferred Credits and Reserves

  1,342.8 

  1,070.7 

Stockholders' Equity

  Common stock, par value $1 - 300,000,000

    shares authorized, 101,259,590 shares issued at

    9-30-00 and 93,494,186 shares issued at 12-31-99

101.3 

93.5 

  Capital in excess of par value

1,647.3 

1,284.0 

  Preferred stock purchase rights

.9 

.5 

  Restricted stock

5.0 

.2 

  Retained earnings

992.3 

576.0 

  Accumulated other comprehensive income

89.2 

45.4 

  Common shares in treasury, at cost - 6,931,990

    shares at 9-30-00 and 7,010,790 at 12-31-99

(383.4)

(387.8)

  Deferred compensation

     (96.0)

   (119.4)

        Total Stockholders' Equity

  2,356.6 

  1,492.4 

$7,321.0 

$5,899.2 

Nine Months Ended

September 30,

(Millions of dollars)

     2000 

    1999 

Operating Activities

Net income

$  559.7 

$  32.4 

Adjustments to reconcile net income to net cash

  provided by operating activities -

    Depreciation, depletion and amortization

548.4 

478.4 

    Dry hole costs

53.1 

24.0 

    Deferred income taxes

(73.0)

21.2 

    Purchased in-process research and development

32.5 

- 

    Provision for environmental remediation and

      restoration of inactive sites, net of reimbursement

90.0 

- 

    (Gain) loss on sale and retirement of assets

4.1 

(3.4)

    Noncash items affecting net income

37.0 

166.0 

    Other net cash used in operating activities

    (14.7)

 (385.5)

        Net Cash Provided by Operating Activities

 1,237.1 

  333.1 

Investing Activities

Capital expenditures

(456.5)

(387.6)

Acquisitions

(999.4)

(65.9)

Other investing activities

        7.3 

     (6.3)

        Net Cash Used in Investing Activities

 (1,448.6)

 (459.8)

Financing Activities

Issuance of long-term debt

841.3 

999.5 

Repayment of long-term debt

(965.5)

(639.3)

Decrease in short-term borrowings

(4.9)

(29.2)

Issuance of common stock

374.9 

4.6 

Dividends paid

(123.6)

(99.5)

Other financing activities

           - 

  (41.6)

        Net Cash Provided by Financing Activities

   122. 2 

  194.5 

Effects of Exchange Rate Changes on Cash and Cash Equivalents

      (2.5)

    (4.4)

Net Increase (Decrease) in Cash and Cash Equivalents

(91.8)

63.4 

Cash and Cash Equivalents at Beginning of Period

    266.6 

  121.0 

Cash and Cash Equivalents at End of Period

$  174.8 

$184.4 

A.

The condensed financial statements included herein have been prepared by the company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of management, include all adjustments, consisting only of normal recurring accruals, necessary to present fairly the resulting operations for the indicated periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Although the company believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the company's latest annual report on Form 10-K.

B.

Effective January 1, 1999, the company adopted Statement of Position (SOP) No. 98-5, "Reporting on the Costs of Start-Up Activities." The SOP requires costs of start-up activities to be expensed as incurred. Unamortized start-up costs at the beginning of the year were required to be recognized as cumulative effect of a change in accounting principle, which increased the 1999 nine-month after-tax loss by $4.1 million.

In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement requires recording all derivative instruments as assets or liabilities, measured at fair value. The standard is effective for fiscal years beginning after June 15, 2000. The company has conducted an inventory of its derivative instruments and is assessing the applicability of FAS 133 to the exposures. Efforts continue to identify all derivatives, document hedging strategies and determine methods of addressing effectiveness of the hedges. Management continues to believe that the standard will not have a material impact on the company's results of operations due to the limited amount of derivative and hedging activities in which the company engages.

In September 2000, the Emerging Issues Task Force (EITF) reached a final consensus on Issue 00-10, "Accounting for Shipping and Handling Fees and Costs," effective for the company's fourth quarter of 2000. The consensus on the issue requires amounts billed to a customer for shipping and handling to be classified as revenue in the income statement. Also, the classification of the costs incurred to provide the shipping and handling service should generally be included in cost of sales; however, if such costs are not part of cost of sales, disclosure must be made of the amount of such costs and the line item on the income statement in which the costs are included. Upon adoption, restatement of prior years' statements will be required. Management is currently assessing the impact of the EITF issue on the company's income statement classification.

C.

Net cash provided by operating activities reflects cash payments for income taxes and interest as follows:

Nine Months Ended

September 30,

          (Millions of dollars)

   2000 

   1999 

D.

During the third quarter of 2000 and 1999, comprehensive income was $248.7 million and $220.4 million, respectively. For the nine months ended September 30, 2000 and 1999, comprehensive income was $603.5 million and $139.9 million, respectively.

The company has certain investments that are considered to be available for sale. The company also has debt that is exchangeable into equity securities of an investee that are considered available for sale. These financial instruments are carried in the Consolidated Balance Sheet at fair value, which is based on quoted market prices. The company had no securities classified as held to maturity or trading at September 30, 2000, or December 31, 1999. At September 30, 2000, and December 31, 1999, available-for-sale securities for which fair value can be determined are as follows:

         September 30, 2000      

       December 31, 1999       

Gross

Gross

Unrealized

Unrealized

Fair

Holding

Fair

Holding

Value

 Cost 

Gain (Loss)

Value

 Cost 

    Gain   

$598.7

208.8

$389.9 

$327.2

$208.8

$118.4

507.4

330.3

(177.1)

327.2

330.3

3.1

1.8

1.8

- 

4.7

4.7

-

4.3

4.3

         - 

11.1

10.9

       .2

$212.8 

$121.7

E.

Investments in equity affiliates totaled $59.4 million at September 30, 2000, and $59 million at December 31, 1999. Equity income related to the investments is included in Other Income in the Consolidated Statement of Income and totaled $6.3 million and $4.1 million for the three months ended September 30, 2000 and 1999, respectively. For the first nine months of 2000, equity income totaled $19.8 million, compared with $11.2 million for the same 1999 period.

F.

The following tables set forth the computation of basic and diluted earnings per share (EPS) for the three-month and nine-month periods ended September 30, 2000 and 1999.

                   For the Three Months Ended September 30,                     

                  2000                       

                    1999                   

Per-Share

Per-Share

Income

Shares

   Income  

Income

Shares

   Income  

$264.6

94.3

$2.81

$97.7

86.4

$1.13

5.3

9.8

-

-

2.2

1.7

-

-

         -

     .2

       -

    .2

$272.1

106.0

$2.57

$97.7

86.6

$1.13

                    For the Nine Months Ended September 30,                    

                   2000                     

                    1999                  

Per-Share

Per-Share

Income

Shares

Income

Income

Shares

Income

$559.7

93.1

$6.01

$32.4

86.4

$.37

13.6

8.3

- 

-

6.8

1.7

- 

-

         -

     .2

      - 

      -

$580.1

103.3

$5.62

$32.4

86.4

$.37

G.

On January 18, 2000, the company completed the acquisition of Repsol S.A.'s upstream United Kingdom North Sea operations for $555 million. During the second quarter of 2000, the company finalized the agreements with Kemira Oyj of Finland to purchase its titanium dioxide pigment operations in Savannah, Ga., and Botlek, Netherlands, for $403 million. The acquisitions were accounted for using the purchase method of accounting for business combinations. In accordance with the purchase agreement, the results of operations from the purchased Repsol assets have been reported in the company's income statement beginning January 1, 2000. The Savannah and Botlek pigment operating results have been included in the company's income statement beginning April 1 and May 1, 2000, respectively. The following table provides selected pro-forma information as if the operations had been combined as of January 1, 1999.

H.

CONTINGENCIES

West Chicago, Illinois

In 1973, a wholly owned subsidiary, Kerr-McGee Chemical Corporation, now Kerr-McGee Chemical LLC (Chemical), closed the facility in West Chicago, Illinois, that processed thorium ores. Historical operations had resulted in low-level radioactive contamination at the facility and in the surrounding areas. In 1979, Chemical filed a plan with the Nuclear Regulatory Commission (NRC) to decommission the facility. In 1990, the NRC transferred jurisdiction over the facility to the State of Illinois (the State). Following is the current status of various matters associated with the closed facility.

Closed Facility - In 1994, Chemical, the City of West Chicago (the City) and the State reached agreement on the initial phase of the decommissioning plan for the closed West Chicago facility, and Chemical began shipping material from the site to a licensed permanent disposal facility.

In February 1997, Chemical executed an agreement with the City covering the terms and conditions for completing the final phase of decommissioning work. The State has indicated approval of the agreement and has issued license amendments authorizing much of the work. Chemical expects most of the work to be completed within the next four years, leaving principally only groundwater remediation and/or monitoring for subsequent years.

In 1992, the State enacted legislation imposing an annual storage fee equal to $2 per cubic foot of byproduct material located at the closed facility. The storage fee cannot exceed $26 million per year, and any storage fee payments must be reimbursed to Chemical as decommissioning costs are incurred. Chemical has been fully reimbursed for all storage fees paid pursuant to this legislation. In June 1997, the legislation was amended to provide that future storage fee obligations are to be offset against decommissioning costs incurred but not yet reimbursed.

Vicinity Areas - The United States Environmental Protection Agency (EPA) has listed four areas in the vicinity of the closed West Chicago facility on the National Priority List promulgated by EPA under authority of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and has designated Chemical as a potentially responsible party in these four areas. Two of the four areas presently are being studied to determine the extent of contamination and the nature of any remedy. These two areas are known as the Sewage Treatment Plant and Kress Creek. The scope of the required cleanup for these two areas has not been determined. EPA previously issued unilateral administrative orders for the other two areas (known as the residential areas and Reed-Keppler Park), which require Chemical to conduct removal actions to excavate contaminated soils and ship the soils elsewhere for disposal. Without waiving any of its rights or defenses, Chemical is conducting the work required by the two orders. Chemical has substantially completed the required excavation and restoration work at the park site, and will be monitoring the site pending final EPA approval.

Judicial Proceedings - In December 1996, a lawsuit was filed against the company and Chemical in Illinois state court on behalf of a purported class of present and former West Chicago residents. The lawsuit seeks damages for alleged diminution in property values and the establishment of a medical monitoring fund to benefit those allegedly exposed to thorium wastes originating from the former facility. The case was removed to federal court. In August 2000, the court approved a settlement that resolves the litigation on a class-wide basis.

Government Reimbursement - Pursuant to Title X of the Energy Policy Act of 1992 (Title X), the U.S. Department of Energy is obligated to reimburse Chemical for certain decommissioning and cleanup costs in recognition of the fact that much of the facility's production was dedicated to United States government contracts. Title X was amended in 1998 to increase the amount authorized for reimbursement to $140 million plus inflation adjustments. Through September 30, 2000, Chemical has been reimbursed approximately $115 million under Title X. These reimbursements are provided by congressional appropriations.

Other Matters

The company and/or its subsidiaries are parties to a number of legal and administrative proceedings involving environmental and/or other matters pending in various courts or agencies. These include proceedings associated with facilities currently or previously owned, operated or used by the company, its subsidiaries, and/or their predecessors, and include claims for personal injuries and property damages. The company's current and former operations also involve management of regulated materials and are subject to various environmental laws and regulations. These laws and regulations will obligate the company and/or its subsidiaries to clean up various sites at which petroleum and other hydrocarbons, chemicals, low-level radioactive substances and/or other materials have been disposed of or released. Some of these sites have been designated Superfund sites by EPA pursuant to CERCLA.

The company provides for costs related to contingencies when a loss is probable and the amount is reasonably estimable. It is not possible for the company to reliably estimate the amount and timing of all future expenditures related to environmental and legal matters and other contingencies because:

*

some sites are in the early stages of investigation, and other sites may be identified in the future;

*

cleanup requirements are difficult to predict at sites where remedial investigations have not been completed or final decisions have not been made regarding cleanup requirements, technologies or other factors that bear on cleanup costs;

*

environmental laws frequently impose joint and several liability on all potentially responsible parties, and it can be difficult to determine the number and financial condition of other potentially responsible parties and their shares of responsibility for cleanup costs; and

*

environmental laws and regulations are continually changing, and court proceedings are inherently uncertain.

As of September 30, 2000, the company has reserves totaling $232 million for cleaning up and remediating environmental sites, reflecting the reasonably estimable costs for addressing these sites. This includes $121 million for the West Chicago sites. Cumulative expenditures at all environmental sites through September 30, 2000, total $759 million. Management believes, after consultation with General Counsel, that currently the company has reserved adequately for the reasonably estimable costs of contingencies. However, additions to the reserves may be required as additional information is obtained that enables the company to better estimate its liabilities, including liability at sites now under review, though the company cannot now reliably estimate the amount of future additions to the reserves.

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Millions of dollars)

      2000 

   1999 

      2000 

     1999 

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

          .2 

         - 

          .3 

          .2 

      Total Sales

$1,089.3 

$752.5 

$2,959.6 

$1,895.6 

Operating Profit

  Exploration and production

$   405.6 

$209.5 

$1,022.2 

$   331.3 

  Chemicals - Pigment

47.3 

25.1 

85.6 

81.8 

  Chemicals - Other

        5.7 

     4.5 

       13.2 

        9.8 

      Total Operating Profit

458.6 

239.1 

1,121.0 

422.9 

Other Expense

     (53.5)

  (77.6)

    (257.1)

   (334.9)

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 Income Taxes

           - 

         - 

            - 

       (4.1)

Net Income

$   264.6 

$  97.7 

$   559.7 

$    32.4 

Three Months Ended

Nine Months Ended

September 30,

September 30,

2000

1999

2000

1999

Crude oil and condensate sales

(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

111.9

108.1

117.9

107.4

  Other International

  16.5

  15.2

  14.5

  15.6

        Total

202.0

205.2

206.7

200.0

Average crude oil sales price (per barrel)

  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 natural gas sales price (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

Item 1.

Legal Proceedings.

For a previously reported legal proceeding, see Item 1. of Form 10-Q for the quarter ended June 30, 2000. See also Note H. to the consolidated financial statements in this Form 10-Q.

Item 6.

Exhibits and Reports on Form 8-K.

(a)

Exhibits -

Exhibit No.

    27.0        Financial Data Schedule

(b)

Reports on Form 8-K

Current report on Form 8-K dated October 17, 2000, and filed October 18, 2000, for purposes of reporting under Item 5, the date of the company's third-quarter earnings release and conference call.

Current report on Form 8-K dated October 25, 2000, and filed October 26, 2000, for purposes of reporting under Item 5, the company's third-quarter 2000 financial and operating results.

Date  November 6, 2000

By:

(Deborah A. Kitchens)             

Deborah A. Kitchens