Kerr-McGee 1Q Profit More Than Doubles

Wednesday, April 27th 2005, 11:09 am

By: News On 6

OKLAHOMA CITY (AP) _ Kerr-McGee Corp. said Wednesday that first-quarter earnings more than doubled from last year, driven by higher oil and natural gas prices, higher sales volumes and improved chemical operating results.

Net income surged to $354.5 million, or $2.20 per share, from $152.2 million, or $1.41 per share, last year. Excluding items, the company earned $389.9 million, or $2.42 per share, in the latest period.

Revenue of $1.72 billion were up 55 percent from $1.11 billion in the prior-year period.

Analysts surveyed by Thomson First Call were looking for the company to post earnings of $2.20 per share on sales of $1.54 billion in the latest quarter.

Kerr-McGee said higher sales volumes primarily were due to the acquisition of Westport Resources Corp., the start of production in the Bohai Bay area of China, and from the Red Hawk field in the deepwater Gulf of Mexico in the 2004 third quarter.

``In the first quarter, we again met or exceeded our guidance in all aspects of our operations,'' said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. ``We remain on track to achieve average daily production volumes in the range of 352,000 to 367,000 barrels of oil equivalent for the year.''

The average sales price for oil for the 2005 first quarter, including the effect of the company's hedging program, was $40.98 per barrel, which was 50 percent higher than last year. The average natural gas sales price was $6.11 per thousand cubic feet, up sharply from $5.35 in the 2004 first quarter.

The earnings jump came during a quarter in which Kerr-McGee appeased billionaire investor Carl Icahn by agreeing to a $4 billion stock buyback. The company agreed to pay a 15 percent premium for shares to head off a proxy fight with Icahn and a group of investors who were disappointed with the company's performance and who intended to seek a seat on the company's board at the May 10 annual meeting.

Icahn had also demanded that Kerr-McGee sell its chemical business, capitalize on high commodity prices by selling future oil production in advance and using proceeds to buy back company stock. Management responded by announcing plans to sell or spin-off the chemical business.