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Kerr-McGee’s production up by 25% in third quarter
Ray Tyson Petroleum News Houston Correspondent
It all comes together for Kerr-McGee in the third quarter of this year its oil and gas production will rocket more than 25 percent, thanks in large part to new offshore field developments and a recent corporate merger.
That milestone will follow a highly successful second quarter in which Kerr-McGee’s profit soared 59 percent to $110.6 million or $1.01 per share from $69.6 million or 68 cents per share in the year-ago period. Capex expenditures down Revenues of $1.1 billion in the second quarter were up slightly from the 2003 period, the company said, but capital expenditures were down to $289.2 million from $340.1 million a year earlier.
Oil production in the second quarter actually dropped 9 percent from the year-ago period to 140,500 barrels per day, due largely to the divestiture of non-core properties, while natural gas production for the comparable periods rose 6 percent to 740 million cubic feet per day. Increase comes from deepwater Gulf, Bohai Bay But the company said in a July 28 conference call with analysts that overall company output should increase by more than a quarter in this year’s third quarter ending Sept. 30, as production continues to ramp up at the Red Hawk and Gunnison fields in deepwater Gulf of Mexico and from a new core area in China’s Bohai Bay, and the full production benefit from the $3.4 billion Westport Resources merger earlier this year is realized.
Additional production from existing fields also is expected to contribute to Kerr-McGee’s production increase in the 2004 third quarter, the company said.
In the Westport deal, Kerr-McGee gained proved reserves of 1.8 trillion cubic feet of natural gas equivalent, consisting of 76 percent natural gas and primarily located in the Rocky Mountain and Texas Gulf Coast areas. The transaction also included probable and possible reserves of 1.8 trillion cubic feet of natural gas equivalent, about 50 percent of which are located in and around the Natural Buttes field, in the Uinta basin of northeast Utah. Second Red Hawk well to go online Kerr-McGee’s total daily production volume ultimately is expected to increase more than 34 percent, giving the new company daily production of about 1.2 billion cubic feet of natural gas and 160,000 barrels of oil.
Separately, production from Red Hawk, with an estimated resource base of about 250 billion cubic feet of natural gas, is expected to ramp up to a peak of 120 million cubic feet of natural gas per day in early August after the second well is placed on production.
In Bohai Bay, Kerr-McGee expects to have 10 wells on line by the end of July producing 15,000 to 20,000 barrels of oil per day. With additional wells, output is expected to peak at 40,000 to 45,000 barrels per day by mid-2005.
Kerr-McGee’s debt to total capitalization at June 30, 2004 decreased to 46 percent compared with 58 percent at December 31, 2003. The company carried $4.4 billion in debt at the end of the recent quarter versus $3.7 billion at the end of the prior quarter. Kerr-McGee assumed about $1 billion in debt on June 25, 2004 upon completion of the merger with Westport Resources.
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