Kerr-McGee Corp. has bought a 50% stake in four explorationlicenses covering 1.5 million acres offshore Nova Scotia, Canada,from Canadian 88 Energy Corp. for $10.5 million. The deepwaterexploration prospects are located 125 miles south of Halifax inwater depths from 500 to 9,200 feet.

“This area, which is about 100 miles from the Sable Islanddevelopments, will add another promising deepwater explorationopportunity to Kerr-McGee’s extensive inventory of worldwideprospects,” said Kerr-McGee CEO Luke R. Corbett. “With thisacquisition, Kerr-McGee will own more than 18 million acres in thedeepwater areas of the Gulf of Mexico, Australia, Brazil, Gabon,Thailand and Canada.”

Kerr-McGee Offshore Canada Ltd. will operate all four licenses.Canadian 88 will retain the remaining 50% interest. Under the termsof the agreement, Kerr-McGee will replace C$9.4 million (US$6.5million) of work commitment promissory notes previously filed byCanadian 88 with the Canada-Nova Scotia Offshore Petroleum Board.Kerr-McGee also will assume US$1.5 million (C$2.2 million) offuture seismic processing costs related to the project.

Through this transaction, Kerr-McGee also acquired 2-D and 3-Dseismic over portions of the licensed area and anticipates drillingthe first exploratory well in 2002. Canadian 88 and WesternGeophysical shot a large deepwater 3-D seismic program (900 squaremiles) off the east coast of Canada. Initial mapping indicates a largeturbidite fan play analogous to major discoveries offshore Angola andBrazil. Photographs and maps are available from Canadian 88’s websiteat www.cdn88energy.com.

“Kerr-McGee brings to the table the deepwater expertise neededto drill and develop this play while leaving us with a verysignificant ownership interest,” said Canadian 88 President JosephPritchett III. “I would like to acknowledge the role that Canadian88’s former president and founder, Greg Noval, had in positioningthe company in the Scotian Shelf.” Canadian 88 is one of thelargest single landholders in the newly evolving deepwater EastCoast exploration play.

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