Kerr-McGee Corp. Oil & Gas Onshore LP has sold a portion of its West Texas and Oklahoma producing assets for $127 million to Aethon I, LP. The sale includes 16 fields with estimated net production of 4,900 b/d of oil and 7 MMcf/d of gas. Kerr-McGee said proceeds from the sale have been used to reduce debt.

“We continue to meet our goals in rationalizing non-core assets and reducing debt,” said Kerr-McGee CEO Luke R. Corbett. “The sale of these higher-cost properties will enable us to better focus on the growth potential of our core operating areas.”

So far this year, Kerr-McGee has sold $170 million in assets in Indonesia, another $132 million in its Bayu-Undan project in Australia, $140 million (plus a 5% working interest in the Harding field) in assets in the North Sea, plus another $139 million in drilling and international property assets. Total divestitures now total more than $750 million in proceeds.

The company announced earlier this month that its active fourth-quarter drilling program is continuing on schedule. It currently has 13 exploratory and appraisal wells drilling, including seven deepwater wells. Five additional exploratory wells are anticipated to be spud by year-end, including two deepwater wells. However, Kerr-McGee will be spending less next year on U.S. exploration and production (see related story).

Oklahoma City-based Kerr-McGee also said Monday that it plans to exit the forest products business, which represents only about 1% of its total assets. Its chemicals unit plans to exit forest products and close four of its five forest product treatment plants. The fifth plant is leased from Union Pacific and the company is negotiating plans for its future use. Kerr McGee said it will take an after-tax charge of $13 million in the fourth quarter to cover the costs of the plant closures. Three are expected to close by the end of 2003 and one by the end of 2004.

“Exiting the forest products business is consistent with Kerr-McGee’s strategic plan to profitably grow our two core businesses, oil and gas exploration and production and the production and marketing of titanium dioxide pigment,” said W. Pete Woodward, Kerr-McGee senior vice president responsible for chemicals. “We will continue to work with state and federal regulators and follow regulatory requirements as we close the plants. We believe we have adequately reserved for the known costs of closing and decommissioning these sites.”

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