Kerr-McGee Corp. cited the “continued slowdown in the U.S. and worldwide economies” and lower oil and gas production as reasons that its second quarter net income was down 19%, standing at $175 million, or $1.71 per diluted share, compared with $217 million, or $2.13 per share for the same period of 2000. Last year’s second quarter included $107 million, or $1.02 per share, in special charges. No special charges were recorded for this year’s second quarter.
Net income for the first half of this year was a record $510 million, or $4.92 a share, compared with $295 million, or $3.02 per share a year earlier. Special items in the first half of 2001 contributed $102 million to net income, mostly because of new accounting requirements for derivatives, while the cumulative effect of the accounting change reduced net income by $20 million.
“Kerr-McGee continued to generate strong earnings and cash flow per share during the second quarter while taking steps to further strengthen and balance its portfolio of assets,” said CEO Luke R. Corbett. “We have supplemented our drilling success with the announced agreement to acquire HS Resources, a core U.S. onshore gas asset (see Daily GPI, June 8). Offshore, development of four new fields is on schedule to dramatically increase production values beginning in the fourth quarter of this year, and we have enhanced our prospect portfolio through additional lease acquisitions in proven, high potential trends around the world.”
Total operating profit in the quarter was $340 million, down from $372 million excluding special charges a year ago. Exploration and production profit also was down, standing at $311 million from $325 million a year earlier. The decline, said the company, was because of lower oil and gas volumes and a decrease in average oil prices of $1.43/bbl, “which was not entirely offset by an increase in average gas prices of 94 cents/Mcf.”
Kerr-McGee also cited the economic slowdown worldwide, which it said had caused a “reduction in demand within the titanium dioxide industry.” Because of the slowdown, its chemical quarterly operating profit of $30 million decreased $18 million from a year earlier. Lower unit sales prices and lower sales volumes for product from the company’s titanium dioxide pigment operations “more than offset the positive impact of lower total costs compared with the same 2000 period.”
Daily oil production for the second quarter averaged 191,000 bbl, compared with 206,700 bbl for second quarter 2000. The average oil price declined to $24.90/bbl in the quarter, compared with $26.33/bbl a year ago. Daily natural gas sales averaged 523 MMcf, compared with 543 MMcf a year earlier. Average natural gas prices increased to $4.36/Mcf, a 27% increase from a year ago.
Capital expenditures also were much higher than a year ago’s second quarter, standing at $493 million, compared with $151 million in the second quarter of 2000. For the first six months of the year, capital expenditures excluding acquisitions were $886 million, compared with $235 million a year ago.
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