By OGJ editors
HOUSTON, Nov. 29 -- Kerr-McGee Corp., Oklahoma City, closed its initial public offering of Tronox Inc.'s Class A common stock in what the company described as "a significant step" in its transition to a pure-play oil and gas exploration and production company.
Kerr-McGee received approximately $800 million from the Tronox IPO and related debt-financing transactions. Kerr-McGee still will control Tronox, a manufacturer of titanium dioxide pigment, through its ownership of Tronox's Class B common stock (OGJ Online, Oct. 24, 2005). It will consolidate the results of Tronox, including Tronox's debt of $550 million, in its financial statements until the expected distribution of the remaining shares to Kerr-McGee shareholders through a spin-off or split-off in 2006.
Kerr-McGee also has sold North Sea and selected US land oil and gas properties. It used net proceeds from the IPO, concurrent debt issuances by Tronox, and various asset sales to pay off the $4.25 billion term loans issued in connection with the company's modified "Dutch Auction" tender offer for 46.7 million shares of its own stock in May.
Kerr-McGee is evaluating bids for its Gulf of Mexico shelf properties. With the divestment of those properties, more than 95% of Kerr-McGee's oil and gas reserves will be in the US, and 60% will be natural gas. It has more than 12,000 identified low-risk development projects within its two large resource plays at Wattenberg field in Colorado's Denver-Julesburg basin and in the Greater Natural Buttes area in Utah's Uinta basin. From these projects and development of major deepwater fields in the Gulf of Mexico, the company expects to increase production at a compound growth rate of 5-9%/year through 2007.
