The Kerr-McGee Corporation, founded in 1929, was an energy company involved in the exploration and production of oil and gas. On June 23, 2006, Houston-based Anadarko Petroleum Corporation agreed to acquire Kerr-McGee in an all-cash transaction totaling $16.5 billion plus the assumption of $2.6 billion in debt. Kerr-McGee shareholders voted to approve the offer on August 10, 2006 and Kerr-McGee ceased to exist as an independent entity. As a result of the takeover, all operations (with the exception of Tronox which was spun off as a separate company in 2005) moved out of Oklahoma.
Kerr-McGee Corp. reports net income for the 2005 third quarter of $359.3 million ($3.09 per diluted common share), compared with $7.4 million ($.05 per share) for the 2004 third quarter. The company's 2005 third-quarter adjusted after-tax income was $294.1 million ($2.53 per share), compared with $143.0 million ($.95 per share) for the third quarter of 2004. Adjusted after-tax income is determined by excluding from net income results from discontinued operations (primarily North Sea operations) and other items.(1) Adjusted after-tax income for the 2005 third quarter increased $151.1 million from the 2004 quarter, primarily due to higher oil and natural gas sales prices and lower exploration costs. This increase was partially offset by the effect of lower oil and gas sales volumes due to recent hurricanes, higher lifting costs, losses on nonhedge derivatives and hedge ineffectiveness. Results of the company's North Sea oil and gas business, including the gain on sale of the company's interests in certain nonoperated oil and gas properties in the North Sea, are reported as income from discontinued operations for all periods presented.
Nine Months Ended Third Quarter Sept. 30, (Millions of dollars, except per-share amounts) 2005 2004 2005 2004 Net Income $359.3 $7.4 $1,084.6 $270.2 Income from Discontinued Operations (306.1) (31.0) (514.6) (112.1) Other Items (1) 240.9 166.6 304.1 176.7 Adjusted After-Tax Income $294.1 $143.0 $874.1 $334.8 Diluted Earnings Per Share Net Income $ 3.09 $ .05 $ 7.75 $2.27 Income from Discontinued Operations (2.63) (.21) (3.66) (.94) Income from Continuing Operations $.46 $(.16) $ 4.09 $1.33 Adjusted After-Tax Income $2.53 $ .95 $ 6.25 $2.82
Items included in "Other Items" are listed in the tables as "Other Information, Net of Income Taxes."
Adjusted after-tax income and the related measure per diluted share exclude items that management deems to not be reflective of the company's core operations. These measures are non-GAAP financial measures. Management believes that these measures provide valuable insight into the company's core earnings from operations and enable investors and analysts to better compare core operating results with those of other companies by eliminating items that may be unique to the company. Other companies may define these items differently, and the company cannot assure that adjusted after-tax income and the related measure per diluted share are comparable with similarly titled amounts for other companies.
"In the third quarter, we reported earnings in line with expectations and strong cash flow as we continued to implement our strategic plan to become a pure-play oil and gas exploration and production company," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. "We are proceeding with the separation of our chemical business through an initial public offering planned in the fourth quarter and continue to high grade our oil and gas portfolio by divesting of lower-growth oil and natural gas assets. We have announced the sale of our interest in the Javelina gas processing facility and all of our North Sea operations and are finalizing negotiations on select U.S. onshore properties. We expect each of these transactions to close by year end. Net proceeds from these asset sales and the separation of the chemical business are expected to provide about $4.4 billion for debt reduction and other corporate purposes. In addition, we are evaluating options for our Gulf of Mexico shelf properties.
"We continue to execute our drilling and development strategies," said Corbett. "We recently announced further success offshore Brazil that materially increased the Chinook field's estimated resource range to 150 million to 250 million barrels of oil. We successfully installed the Constitution spar hull in the deepwater gulf and plan to set the topsides during the fourth quarter, keeping this 100%-owned new development on schedule for first production by mid-2006. Earlier this month, we sanctioned development of another deepwater field in the Gulf of Mexico, Blind Faith, with first production expected in the first half of 2008."
Exploration and Production and Chemical Operating Profit
Third-quarter 2005 operating profit from continuing operations was $202.4 million, compared with $156.9 million in the 2004 third quarter. Exploration and production operating profit for the 2005 third quarter was $185.3 million, compared with $266.5 million for the prior-year quarter. Lower operating profit in 2005 reflects higher lifting costs, partially offset by lower exploration expense, and a decline in revenues (excluding gas marketing revenues) due to the net effect of higher oil and gas sales prices, lower sales volumes due to recent hurricanes and higher losses on nonhedge derivatives and hedge ineffectiveness.
At Sept. 30, 2005, the cost of exploratory wells drilling, which if completed and determined to be noncommercial prior to the filing of the company's financial statements with the U.S. Securities and Exchange Commission, exposes the company to additional third-quarter 2005 after-tax expense of $12.6 million.
Chemical operating profit in the third quarter of 2005 was $17.1 million, compared with a $109.6 million operating loss for the same prior-year period. The improvement in operating results was primarily a result of the third-quarter 2004 write-down related to the shut-down of the Savannah sulfate facilities and higher pigment sales prices, partially offset by the effect of lower sales volumes.
Oil and Gas Volumes and Prices
Kerr-McGee's daily oil production from continuing operations averaged 104,900 barrels in the 2005 third quarter, compared with 110,600 barrels in the 2004 period. The average sales price for oil from continuing operations for the 2005 third quarter, including the effect of the company's hedging program, was $46.26 per barrel, which was 52% higher than in the prior-year quarter.
Natural gas sales from continuing operations averaged 937 million cubic feet per day for the 2005 third quarter, compared with 999 million cubic feet in the 2004 third quarter. The average natural gas sales price from continuing operations, including the effects of the company's hedging program, was $7.10 per thousand cubic feet, compared with $5.25 per thousand cubic feet in the 2004 third quarter.
"Kerr-McGee's major operated facilities in the Gulf of Mexico sustained no structural damage from hurricanes Katrina and Rita, which is directly attributable to the outstanding efforts of our development and operations teams and our use of innovative technology," said Hager. "However, our production in the third quarter was curtailed by damage to pipelines and third-party infrastructure. Currently, we are producing approximately 75% of our pre-hurricane levels in the Gulf of Mexico. We will continue to bring additional production on line as pipelines and infrastructure allow."
Due to the Gulf of Mexico curtailments discussed above, the company's physical deliveries to certain sales indices are expected to be insufficient to cover the associated derivative contracts in place for the fourth quarter of 2005. Accordingly, the company recognized a third-quarter after-tax charge of $66.8 million associated with certain fourth-quarter 2005 derivative contracts assigned to the Gulf of Mexico where deliveries to specific sales indices are expected to be less than the associated hedged volumes. The company believes that it is probable that deliveries in the Gulf of Mexico will resume in sufficient volumes to match its remaining 2006 and 2007 derivative contracts by January 2006. The company also recognized an after-tax loss of $137.7 million in the third quarter for hedge ineffectiveness, representing the excess of the mark-to-market loss associated with all outstanding derivative contracts accounted for as hedges over the expected higher revenues the company will receive on its future sales of oil and natural gas.
Revenues and Capital Expenditures
Third-quarter 2005 revenues from continuing operations of $1.2 billion were up slightly from the prior-year period. Capital expenditures, including discontinued operations, were $526.1 million in the 2005 third quarter, compared with $418.8 million for the 2004 third quarter.
Debt and Cash Balances
At Sept. 30, 2005, debt outstanding totaled $6.345 billion, compared with $6.956 billion at June 30, 2005. During the third quarter, Kerr-McGee paid down debt by approximately $600 million sourced from operations and proceeds from property divestitures. Cash balances at Sept. 30 and June 30, 2005, were $662 million and $324 million, respectively.
Kerr-McGee will hold a conference call today at 11 a.m. EDT to discuss its third-quarter 2005 financial and operating results and expectations for the future. Interested parties may listen to the call via Kerr-McGee's website at http://www.kerr-mcgee.com/ or by calling 1-888-482-0024 in the United States or 1-617-801-9702 outside the United States. The password for both dial-in numbers will be "Kerr-McGee."
Detailed listings of Kerr-McGee's oil and gas derivatives and projected daily average production volumes will be available on the company's website at http://www.kerr-mcgee.com/ir/guidance.htm at the time of the call. A replay of the call will be available for 48 hours at 1-888-286-8010 in the United States or 1-617-801-6888 outside the United States. The code for the replay will be #37639132. The webcast will be archived for 30 days on the company's website.
Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company with worldwide operations and assets of more than $16 billion. For more information, visit the company's website at http://www.kerr-mcgee.com/.
Statements in this news release regarding the company's or management's intentions, beliefs or expectations, or that otherwise speak to future events, are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include those statements preceded by, followed by or that otherwise include the words "believes,""will,""expects,""anticipates,""intends,""estimates,""projects,""target,""budget,""goal,""plans,""objective,""outlook,""should," or similar words. Future results and developments discussed in these statements may be affected by numerous factors and risks, such as the accuracy of the assumptions that underlie the statements, the market value of Kerr-McGee's products, demand for consumer products for which Kerr-McGee's businesses supply raw materials, the financial resources of competitors, changes in laws and regulations, the ability to respond to challenges in international markets, including changes in currency exchange rates, political or economic conditions in areas where Kerr-McGee operates, trade and regulatory matters, general economic conditions, and other factors and risks identified in the Risk Factors section of Kerr-McGee's Annual Report on Form 10-K and other U.S. Securities and Exchange Commission (SEC) filings, as well as Tronox's registration statement on Form S-1, which has been filed with the SEC. Actual results and developments may differ materially from those expressed or implied in this news release.
Exploration and production operating profit was $633.8 million, compared with $266.5 million in the 2004 fourth quarter. Higher operating profit in 2005 reflects net pretax gains on property sales of $169.1 million compared with a net loss of $21.8 million in the prior-year quarter. Additionally, higher oil and gas sales prices contributed to the increase but were partially offset by lower sales volumes primarily due to the continuing effects of the 2005 hurricanes on third-party-operated infrastructure in the Gulf of Mexico and divestment of noncore U.S. onshore properties.
Chemical operating profit in the fourth quarter of 2005 was $20.1 million, compared with $9.6 million for the same prior-year period. The increase primarily is due to higher pigment sales prices.
Debt and Cash Balances
At Dec. 31, 2005, debt outstanding totaled $3.1 billion, which includes $550 million of Tronox debt, compared with $6.3 billion at Sept. 30, 2005. During the fourth-quarter 2005, Kerr-McGee paid down debt by approximately $3.8 billion with funds sourced primarily from the sale of our North Sea oil and gas business and U.S. onshore property divestitures. Cash balances at Dec. 31 and Sept. 30, 2005, were $1.1 billion and $662 million, respectively.
Oil and Gas Volumes and Prices
Kerr-McGee's daily oil production from continuing operations averaged 99,400 barrels in the 2005 fourth quarter, compared with 121,900 barrels in the 2004 period. The average realized oil price for the 2005 fourth quarter, including the effect of the company's hedging program, was $44.57 per barrel, which was a 46% increase from the prior-year quarter.
Natural gas sales from continuing operations averaged 883 million cubic feet per day for the 2005 fourth quarter, compared with 1,041 million cubic feet in the 2004 fourth quarter. The average realized natural gas price, including the effects of the company's hedging program, was $7.28 per thousand cubic feet, compared with $5.29 per thousand cubic feet in the 2004 fourth quarter.
Kerr-McGee's production in the Gulf of Mexico has recovered to 85% of pre- hurricane levels for the fourth-quarter 2005. Although Kerr-McGee experienced no significant damage to its equipment, production remained curtailed due to damage to third-party-operated pipelines and infrastructure.
Revenues and Capital Expenditures
Fourth-quarter 2005 revenues from continuing operations were $1.8 billion, compared with $1.4 billion for the prior-year period. Capital expenditures (including discontinued operations) were $514.7 million in the 2005 fourth quarter, compared with $462.3 million for the 2004 fourth quarter.
Adjusted After-tax Income
The company's 2005 fourth-quarter adjusted after-tax income was $125.7 million ($1.07 per share), compared with $129.7 million ($.84 per share) for the fourth quarter of 2004. Adjusted after-tax income is determined by excluding from net income results from discontinued operations (primarily North Sea operations) and other items.(1) Results of the company's North Sea oil and gas business, including the gain on sale, are reported as income from discontinued operations for all periods presented.
Fourth Quarter Year Ended December 31, (Millions of dollars, except per-share amounts) 2005 2004 2005 2004 Net Income $ 2,155.6 $133.8 $ 3,240.2 $ 404.0 Income from Discontinued Operations (1,750.1) (27.5) (2,264.7) (139.6) Other Items (1) (279.8) 23.4 24.3 198.9 Adjusted After-Tax Income $125.7 $129.7 $999.8 $ 463.3 Diluted Earnings Per Share Net Income $18.46 $.86 $24.12 $3.18 Income from Discontinued Operations (14.99) (.17) (16.84) (1.10) Income from Continuing Operations $3.47 $.69 $7.28 $2.08 Adjusted After-Tax Income $1.07 $.84 $7.46 $3.65 (1) Items included in "Other Items" are listed in the tables as "Other Information, Net of Income Taxes."
Adjusted after-tax income and the related measure per diluted share exclude items that management deems to not be reflective of the company's core operations or represent timing differences between periods. These measures are non-GAAP financial measures. Management believes that these measures provide valuable insight into the company's core earnings from operations and enable investors and analysts to better compare core operating results with those of other companies by eliminating items that may be unique to the company. Other companies may define these items differently, and the company cannot assure that adjusted after-tax income and the related measure per diluted share are comparable with similarly titled amounts for other companies.
Kerr-McGee Corp. reports net income for the 2005 third quarter of $359.3 million ($3.09 per diluted common share), compared with $7.4 million ($.05 per share) for the 2004 third quarter. The company's 2005 third-quarter adjusted after-tax income was $294.1 million ($2.53 per share), compared with $143.0 million ($.95 per share) for the third quarter of 2004. Adjusted after-tax income is determined by excluding from net income results from discontinued operations (primarily North Sea operations) and other items.(1) Adjusted after-tax income for the 2005 third quarter increased $151.1 million from the 2004 quarter, primarily due to higher oil and natural gas sales prices and lower exploration costs. This increase was partially offset by the effect of lower oil and gas sales volumes due to recent hurricanes, higher lifting costs, losses on nonhedge derivatives and hedge ineffectiveness. Results of the company's North Sea oil and gas business, including the gain on sale of the company's interests in certain nonoperated oil and gas properties in the North Sea, are reported as income from discontinued operations for all periods presented.
Nine Months Ended Third Quarter Sept. 30, (Millions of dollars, except per-share amounts) 2005 2004 2005 2004 Net Income $359.3 $7.4 $1,084.6 $270.2 Income from Discontinued Operations (306.1) (31.0) (514.6) (112.1) Other Items (1) 240.9 166.6 304.1 176.7 Adjusted After-Tax Income $294.1 $143.0 $874.1 $334.8 Diluted Earnings Per Share Net Income $ 3.09 $ .05 $ 7.75 $2.27 Income from Discontinued Operations (2.63) (.21) (3.66) (.94) Income from Continuing Operations $.46 $(.16) $ 4.09 $1.33 Adjusted After-Tax Income $2.53 $ .95 $ 6.25 $2.82
Items included in "Other Items" are listed in the tables as "Other Information, Net of Income Taxes."
Adjusted after-tax income and the related measure per diluted share exclude items that management deems to not be reflective of the company's core operations. These measures are non-GAAP financial measures. Management believes that these measures provide valuable insight into the company's core earnings from operations and enable investors and analysts to better compare core operating results with those of other companies by eliminating items that may be unique to the company. Other companies may define these items differently, and the company cannot assure that adjusted after-tax income and the related measure per diluted share are comparable with similarly titled amounts for other companies.
"In the third quarter, we reported earnings in line with expectations and strong cash flow as we continued to implement our strategic plan to become a pure-play oil and gas exploration and production company," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. "We are proceeding with the separation of our chemical business through an initial public offering planned in the fourth quarter and continue to high grade our oil and gas portfolio by divesting of lower-growth oil and natural gas assets. We have announced the sale of our interest in the Javelina gas processing facility and all of our North Sea operations and are finalizing negotiations on select U.S. onshore properties. We expect each of these transactions to close by year end. Net proceeds from these asset sales and the separation of the chemical business are expected to provide about $4.4 billion for debt reduction and other corporate purposes. In addition, we are evaluating options for our Gulf of Mexico shelf properties.
"We continue to execute our drilling and development strategies," said Corbett. "We recently announced further success offshore Brazil that materially increased the Chinook field's estimated resource range to 150 million to 250 million barrels of oil. We successfully installed the Constitution spar hull in the deepwater gulf and plan to set the topsides during the fourth quarter, keeping this 100%-owned new development on schedule for first production by mid-2006. Earlier this month, we sanctioned development of another deepwater field in the Gulf of Mexico, Blind Faith, with first production expected in the first half of 2008."
Exploration and Production and Chemical Operating Profit
Third-quarter 2005 operating profit from continuing operations was $202.4 million, compared with $156.9 million in the 2004 third quarter. Exploration and production operating profit for the 2005 third quarter was $185.3 million, compared with $266.5 million for the prior-year quarter. Lower operating profit in 2005 reflects higher lifting costs, partially offset by lower exploration expense, and a decline in revenues (excluding gas marketing revenues) due to the net effect of higher oil and gas sales prices, lower sales volumes due to recent hurricanes and higher losses on nonhedge derivatives and hedge ineffectiveness.
At Sept. 30, 2005, the cost of exploratory wells drilling, which if completed and determined to be noncommercial prior to the filing of the company's financial statements with the U.S. Securities and Exchange Commission, exposes the company to additional third-quarter 2005 after-tax expense of $12.6 million.
Chemical operating profit in the third quarter of 2005 was $17.1 million, compared with a $109.6 million operating loss for the same prior-year period. The improvement in operating results was primarily a result of the third-quarter 2004 write-down related to the shut-down of the Savannah sulfate facilities and higher pigment sales prices, partially offset by the effect of lower sales volumes.
Oil and Gas Volumes and Prices
Kerr-McGee's daily oil production from continuing operations averaged 104,900 barrels in the 2005 third quarter, compared with 110,600 barrels in the 2004 period. The average sales price for oil from continuing operations for the 2005 third quarter, including the effect of the company's hedging program, was $46.26 per barrel, which was 52% higher than in the prior-year quarter.
Natural gas sales from continuing operations averaged 937 million cubic feet per day for the 2005 third quarter, compared with 999 million cubic feet in the 2004 third quarter. The average natural gas sales price from continuing operations, including the effects of the company's hedging program, was $7.10 per thousand cubic feet, compared with $5.25 per thousand cubic feet in the 2004 third quarter.
"Kerr-McGee's major operated facilities in the Gulf of Mexico sustained no structural damage from hurricanes Katrina and Rita, which is directly attributable to the outstanding efforts of our development and operations teams and our use of innovative technology," said Hager. "However, our production in the third quarter was curtailed by damage to pipelines and third-party infrastructure. Currently, we are producing approximately 75% of our pre-hurricane levels in the Gulf of Mexico. We will continue to bring additional production on line as pipelines and infrastructure allow."
Due to the Gulf of Mexico curtailments discussed above, the company's physical deliveries to certain sales indices are expected to be insufficient to cover the associated derivative contracts in place for the fourth quarter of 2005. Accordingly, the company recognized a third-quarter after-tax charge of $66.8 million associated with certain fourth-quarter 2005 derivative contracts assigned to the Gulf of Mexico where deliveries to specific sales indices are expected to be less than the associated hedged volumes. The company believes that it is probable that deliveries in the Gulf of Mexico will resume in sufficient volumes to match its remaining 2006 and 2007 derivative contracts by January 2006. The company also recognized an after-tax loss of $137.7 million in the third quarter for hedge ineffectiveness, representing the excess of the mark-to-market loss associated with all outstanding derivative contracts accounted for as hedges over the expected higher revenues the company will receive on its future sales of oil and natural gas.
Revenues and Capital Expenditures
Third-quarter 2005 revenues from continuing operations of $1.2 billion were up slightly from the prior-year period. Capital expenditures, including discontinued operations, were $526.1 million in the 2005 third quarter, compared with $418.8 million for the 2004 third quarter.
Debt and Cash Balances
At Sept. 30, 2005, debt outstanding totaled $6.345 billion, compared with $6.956 billion at June 30, 2005. During the third quarter, Kerr-McGee paid down debt by approximately $600 million sourced from operations and proceeds from property divestitures. Cash balances at Sept. 30 and June 30, 2005, were $662 million and $324 million, respectively.
Kerr-McGee will hold a conference call today at 11 a.m. EDT to discuss its third-quarter 2005 financial and operating results and expectations for the future. Interested parties may listen to the call via Kerr-McGee's website at http://www.kerr-mcgee.com/ or by calling 1-888-482-0024 in the United States or 1-617-801-9702 outside the United States. The password for both dial-in numbers will be "Kerr-McGee."
Detailed listings of Kerr-McGee's oil and gas derivatives and projected daily average production volumes will be available on the company's website at http://www.kerr-mcgee.com/ir/guidance.htm at the time of the call. A replay of the call will be available for 48 hours at 1-888-286-8010 in the United States or 1-617-801-6888 outside the United States. The code for the replay will be #37639132. The webcast will be archived for 30 days on the company's website.
Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company with worldwide operations and assets of more than $16 billion. For more information, visit the company's website at http://www.kerr-mcgee.com/.
Statements in this news release regarding the company's or management's intentions, beliefs or expectations, or that otherwise speak to future events, are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include those statements preceded by, followed by or that otherwise include the words "believes,""will,""expects,""anticipates,""intends,""estimates,""projects,""target,""budget,""goal,""plans,""objective,""outlook,""should," or similar words. Future results and developments discussed in these statements may be affected by numerous factors and risks, such as the accuracy of the assumptions that underlie the statements, the market value of Kerr-McGee's products, demand for consumer products for which Kerr-McGee's businesses supply raw materials, the financial resources of competitors, changes in laws and regulations, the ability to respond to challenges in international markets, including changes in currency exchange rates, political or economic conditions in areas where Kerr-McGee operates, trade and regulatory matters, general economic conditions, and other factors and risks identified in the Risk Factors section of Kerr-McGee's Annual Report on Form 10-K and other U.S. Securities and Exchange Commission (SEC) filings, as well as Tronox's registration statement on Form S-1, which has been filed with the SEC. Actual results and developments may differ materially from those expressed or implied in this news release.
Exploration and production operating profit was $633.8 million, compared with $266.5 million in the 2004 fourth quarter. Higher operating profit in 2005 reflects net pretax gains on property sales of $169.1 million compared with a net loss of $21.8 million in the prior-year quarter. Additionally, higher oil and gas sales prices contributed to the increase but were partially offset by lower sales volumes primarily due to the continuing effects of the 2005 hurricanes on third-party-operated infrastructure in the Gulf of Mexico and divestment of noncore U.S. onshore properties.
Chemical operating profit in the fourth quarter of 2005 was $20.1 million, compared with $9.6 million for the same prior-year period. The increase primarily is due to higher pigment sales prices.
Debt and Cash Balances
At Dec. 31, 2005, debt outstanding totaled $3.1 billion, which includes $550 million of Tronox debt, compared with $6.3 billion at Sept. 30, 2005. During the fourth-quarter 2005, Kerr-McGee paid down debt by approximately $3.8 billion with funds sourced primarily from the sale of our North Sea oil and gas business and U.S. onshore property divestitures. Cash balances at Dec. 31 and Sept. 30, 2005, were $1.1 billion and $662 million, respectively.
Oil and Gas Volumes and Prices
Kerr-McGee's daily oil production from continuing operations averaged 99,400 barrels in the 2005 fourth quarter, compared with 121,900 barrels in the 2004 period. The average realized oil price for the 2005 fourth quarter, including the effect of the company's hedging program, was $44.57 per barrel, which was a 46% increase from the prior-year quarter.
Natural gas sales from continuing operations averaged 883 million cubic feet per day for the 2005 fourth quarter, compared with 1,041 million cubic feet in the 2004 fourth quarter. The average realized natural gas price, including the effects of the company's hedging program, was $7.28 per thousand cubic feet, compared with $5.29 per thousand cubic feet in the 2004 fourth quarter.
Kerr-McGee's production in the Gulf of Mexico has recovered to 85% of pre- hurricane levels for the fourth-quarter 2005. Although Kerr-McGee experienced no significant damage to its equipment, production remained curtailed due to damage to third-party-operated pipelines and infrastructure.
Revenues and Capital Expenditures
Fourth-quarter 2005 revenues from continuing operations were $1.8 billion, compared with $1.4 billion for the prior-year period. Capital expenditures (including discontinued operations) were $514.7 million in the 2005 fourth quarter, compared with $462.3 million for the 2004 fourth quarter.
Adjusted After-tax Income
The company's 2005 fourth-quarter adjusted after-tax income was $125.7 million ($1.07 per share), compared with $129.7 million ($.84 per share) for the fourth quarter of 2004. Adjusted after-tax income is determined by excluding from net income results from discontinued operations (primarily North Sea operations) and other items.(1) Results of the company's North Sea oil and gas business, including the gain on sale, are reported as income from discontinued operations for all periods presented.
Fourth Quarter Year Ended December 31, (Millions of dollars, except per-share amounts) 2005 2004 2005 2004 Net Income $ 2,155.6 $133.8 $ 3,240.2 $ 404.0 Income from Discontinued Operations (1,750.1) (27.5) (2,264.7) (139.6) Other Items (1) (279.8) 23.4 24.3 198.9 Adjusted After-Tax Income $125.7 $129.7 $999.8 $ 463.3 Diluted Earnings Per Share Net Income $18.46 $.86 $24.12 $3.18 Income from Discontinued Operations (14.99) (.17) (16.84) (1.10) Income from Continuing Operations $3.47 $.69 $7.28 $2.08 Adjusted After-Tax Income $1.07 $.84 $7.46 $3.65 (1) Items included in "Other Items" are listed in the tables as "Other Information, Net of Income Taxes."
Adjusted after-tax income and the related measure per diluted share exclude items that management deems to not be reflective of the company's core operations or represent timing differences between periods. These measures are non-GAAP financial measures. Management believes that these measures provide valuable insight into the company's core earnings from operations and enable investors and analysts to better compare core operating results with those of other companies by eliminating items that may be unique to the company. Other companies may define these items differently, and the company cannot assure that adjusted after-tax income and the related measure per diluted share are comparable with similarly titled amounts for other companies.