Kerr-McGee Corp., joining the trend among independents as the recession and lower energy prices take their toll, has reduced its capital spending budget for 2002 to $890 million — down from its $1.24 billion spending last year. Most of this year’s capital spending, approximately $780 million, will be spent on oil and gas exploration and production. The Oklahoma City-based company spent $1.03 billion on E&P in 2001.

The smaller budget was approved by Kerr-McGee’s board last Tuesday. Most of the E&P projects slated so far are in North America, including $280 million allotted for the Gulf of Mexico and $125 million for U.S. onshore development. The board also approved spending about $375 million on international projects, including $310 million in the North Sea. Another $170 million has been budgeted for worldwide exploration projects, including drilling 20-30 exploratory wells — up to 15 of them in the deepwater Gulf of Mexico.

“We will be completing four major development projects that were started last year: Leadon, Skene, Nansen and Boomvang,” said CEO Luke R. Corbett. “The success of our exploration and appraisal program has resulted in two new developments for this year — Gunnison, in the Gulf of Mexico, and Tullich, in the UK. sector of the North Sea. We believe our drilling expertise and large inventory of worldwide drillable prospects will bring continued exploration success and new developments in the coming years.”

Gunnison is expected to come on-line in early 2004, while the North Sea Tullich project will be up and running by the fourth quarter of 2002, said Corbett.

In other news, the board on Tuesday declared a quarterly dividend of 45 cents per share of common stock for the quarter ending March 31, 2002. The dividend will be payable April 1, 2002, to shareholders of record as of March 1, 2002. Also, Nicholas J. Sutton, former chairman and CEO of HS Resources, which was acquired by Kerr-McGee last year (see NGI, May 21, 2001), was elected to the board, effective Jan. 1, 2002.

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