Kerr-McGee to curtail capital spending

Oklahoma-based independent Kerr-McGee, in an effort to reduce expenses and debt, says it plans to budget a total of $915 million in capital expenditures in 2004, down from the $1.1 billion the company expects to spend this year.

“Our 2004 capital program has been developed with a continued emphasis on strict financial discipline,” Luke Corbett, Kerr-McGee’s chief executive officer, said Nov. 15

However, Corbett said Kerr-McGee’s reduced program for next year “still provides sufficient funds to profitably grow our two core businesses ... while we continue to focus on debt reduction.”

He said the company would be able to operate within cash flow in 2004 and that would allow Kerr-McGee to reduce debt by more than $500 million, plus return about $180 million in dividends to shareholders.

The capital budget for 2004 oil and gas operations is about $800 million, with about $330 million earmarked for the Gulf of Mexico, $180 million for the North Sea, $155 million for U.S. onshore, $125 million for other international projects, and $10 million for technology. About $95 in capital expenditures will go to Kerr-McGee’s chemical operations.

In addition, exploration expense is projected at $300 million for 2004, down from an estimated $350 million this year. Next year the company plans to drill about 50 exploration wells, including 10 to 15 in deepwater Gulf of Mexico, five to seven on the Gulf’s continental shelf, four to six in the North Sea, 15 to 20 onshore United States and seven to 11 wells in other international areas.