Kerr Mcgee 8-K Kerr-McGee Reports 2006 Second-Quarter Earnings

Exhibit 99.1

Kerr-McGee Reports 2006 Second-Quarter Earnings

Oklahoma City, Aug. 3, 2006 - Kerr-McGee Corp. (NYSE: KMG) reports income from continuing operations for the 2006 second quarter of $306 million ($1.33 per diluted common share) compared with $256 million ($.90 per share) for the 2005 second quarter.

The company’s 2006 second-quarter adjusted after-tax income was $299 million ($1.30 per diluted share), compared with $247 million ($.87 per share) for the second quarter of 2005. Adjusted after-tax income is determined by excluding asset impairments and gains/losses on property sales from income from continuing operations, and adjusting results of commodity derivative activities to reflect only actual net realized gains/losses associated with the current period. The increase in adjusted after-tax income for the 2006 second quarter is primarily due to higher oil and gas sales revenues partially offset by higher commodity derivative losses. Lifting costs increased in the second quarter of 2006 as compared to last year, but that increase wasmore than offset by lower depreciation, depletion and amortization, exploration expense and interest.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Millions of dollars, except per-share amounts	2006			2005			2006			2005
Income from Continuing Operations	$	306		$	256		$	582		$	499
Adjustments (net of tax): (1)
Exclude: Loss on commodity derivatives		85			53			159			109
Asset impairments and property sales		(1	)		(16	)		(3	)		(28	)
Include: Realized commodity derivative loss		(91	)		(46	)		(231	)		(63	)
Adjusted After-Tax Income	$	299		$	247		$	507		$	517
Diluted Earnings Per Share (2)
Continuing Operations	$	1.33		$	.90		$	2.53		$	1.65
Adjusted After-Tax Income	$	1.30		$	.87		$	2.20		$	1.71

⁽¹⁾ Pre-tax adjustments are shown separately in the Adjusted After-Tax Income Analysis on page 5 of this release.

⁽²⁾ Earnings per share for all periods presented have been retroactively adjusted to reflect the two-for-one stock split executed on June 14, 2006.

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. Management believes that these non-GAAP financial measures provide valuable insight into the company’s core earnings from continuing 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.

Revenues and Capital Expenditures

Second-quarter 2006 revenues from continuing operations were $1.3 billion, compared with $1.2 billion for the 2005 period. Cash capital expenditures from continuing operations, including dry-hole costs, totaled $489 million for the 2006 second quarter, compared with $414 million for the 2005 period.

Kerr-McGee is an Oklahoma City-based oil and natural gas exploration and production company focused in the U.S. onshore, deepwater Gulf of Mexico and select proven world-class hydrocarbon basins. For more information on Kerr-McGee, visit www.kerr-mcgee.com.

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Second-quarter financial information presented in this news release is preliminary. Second-quarter results will not become final until the company files its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission (SEC).

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,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “budget,” “goal,” “plans,” “objective,” “outlook,” “should,” or similar words. In addition, any statements regarding possible commerciality, development plans, capacity expansions, drilling of new wells, ultimate recoverability of reserves, future production rates and changes in any of the foregoing are forward-looking statements. 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 success of the oil and gas exploration and production program, drilling risks, uncertainties in interpreting engineering data, 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, progress made with respect to and developments related to the company’s proposed merger with Anadarko Petroleum Corporation, and other factors and risks identified in the Risk Factors section of the company’s Annual Report on Form 10-K and other SEC filings. Actual results and developments may differ materially from those expressed or implied in this news release.

Media contact:	John Christiansen Direct: 405-270-3995 Cell: 405-406-6574 jchristiansen@kmg.com
Investor contacts:	Rick Buterbaugh Direct: 405-270-3561	John Kilgallon Direct: 405-270-3521

06-39

KERR-McGEE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Preliminary and Unaudited)
	Three Months Ended						Six Months Ended
(Millions of dollars, except per-share amounts)	June 30,						June 30,
	2006			2005			2006			2005
Revenues
Oil and gas sales	$	1,227		$	1,108		$	2,406		$	2,114
Loss on commodity derivatives		(130	)		(82	)		(244	)		(168	)
Gas marketing revenues		147			138			360			270
Other revenues		23			19			45			38
Total Revenues		1,267			1,183			2,567			2,254
Operating Expenses
Lease operating costs		128			115			259			223
Production and ad valorem taxes		43			34			74			64
Transportation expense		25			24			48			47
General and administrative expense		60			62			134			115
Merger-related costs		8			-			8			-
Exploration expense		106			116			158			171
Gas gathering, processing and other expenses		27			26			61			54
Gas marketing costs		145			139			359			269
Depreciation, depletion and amortization		194			220			383			443
Accretion expense		4			5			7			11
Provision for environmental remediation costs		3			2			3			2
Asset impairments		-			-			-			4
Gain on sales of oil and gas properties		(1	)		(25	)		(5	)		(47	)
Total Operating Expenses		742			718			1,489			1,356
Operating Income		525			465			1,078			898
Interest expense		(49	)		(58	)		(90	)		(118	)
Loss on early repayment and modification of debt		-			-			(81	)		-
Other income (expense)		(3	)		(4	)		(6	)		(6	)
Income from Continuing Operations before Income Taxes		473			403			901			774
Provision for income taxes		(167	)		(147	)		(319	)		(275	)
Income from Continuing Operations		306			256			582			499
Income from discontinued operations, net of tax		(1	)		114			(24	)		226
Cumulative effect of change in accounting principle, net of tax		-			-			2			-
Net Income	$	305		$	370		$	560		$	725
Basic Earnings per Common Share (a) -
Continuing operations	$	1.36		$	0.91		$	2.57		$	1.69
Discontinued operations		(0.01	)		0.40			(0.11	)		0.76
Cumulative effect of change in accounting principle		-			-			0.01			-
Net income	$	1.35		$	1.31		$	2.47		$	2.45
Diluted Earnings per Common Share (a) -
Continuing operations	$	1.33		$	0.90		$	2.53		$	1.65
Discontinued operations		-			0.40			(0.11	)		0.74
Cumulative effect of change in accounting principle		-			-			0.01			-
Net income	$	1.33		$	1.30		$	2.43		$	2.39
Weighted average shares outstanding (thousands) (a) -
Basic		225,070			281,625			226,201			295,566
Diluted		229,303			285,428			230,114			305,426
(a)On June 14, 2006, the company executed a two-for-one stock split. The number of shares outstanding and earnings per share for historical periods
have been retroactively adjusted to reflect the stock split.

KERR-McGEE CORPORATION
ADJUSTED AFTER-TAX INCOME ANALYSIS
(Preliminary and Unaudited)
	Three Months Ended						Six Months Ended
(Millions of dollars, except per-share amounts)	June 30,						June 30,
	2006			2005			2006			2005
Revenues, excluding marketing and derivatives
Natural gas sales	$	569		$	632		$	1,238		$	1,180
Crude oil, condensate and natural gas liquids sales		658			476			1,168			934
Other revenues		23			19			45			38
		1,250			1,127			2,451			2,152
Operating expenses, excluding marketing
Lease operating costs (a)		128			115			259			223
Production and ad valorem taxes		43			34			74			64
Total lifting costs		171			149			333			287
Transportation expense		25			24			48			47
General and administrative expense(a)		60			62			134			115
Merger-related costs		8			-			8			-
Exploration expense (a)		106			116			158			171
Gas gathering, processing and other expenses		27			26			61			54
Depreciation, depletion and amortization		194			220			383			443
Accretion expense		4			5			7			11
Provision for environmental remediation costs		3			2			3			2
		598			604			1,135			1,130
Core E&P Operating Profit		652			523			1,316			1,022
Loss on commodity derivatives		(130	)		(82	)		(244	)		(168	)
Gas marketing revenues		147			138			360			270
Gas purchase costs (including transportation)		(145	)		(139	)		(359	)		(269	)
Asset impairments		-			-			-			(4	)
Gain on sales of oil and gas properties		1			25			5			47
Operating Income		525			465			1,078			898
Interest expense		(49	)		(58	)		(90	)		(118	)
Loss on early repayment and modification of debt		-			-			(81	)		-
Other income (expense)		(3	)		(4	)		(6	)		(6	)
Income from Continuing Operations before Income Taxes		473			403			901			774
Provision for Income Taxes		(167	)		(147	)		(319	)		(275	)
Income from Continuing Operations (GAAP)		306			256			582			499
Exclude:  Loss on commodity derivatives		130			82			244			168
Asset impairments		-			-			-			4
Gain on sales of oil and gas properties		(1	)		(25	)		(5	)		(47	)
Include: Realized commodity derivative loss (b)		(140	)		(70	)		(355	)		(96	)
Income tax (expense) benefit associated with adjusting items		4			4			41			(11	)
Adjusted After-Tax Income (non-GAAP)	$	299		$	247		$	507		$	517
Adjusted After-Tax Income per Diluted Common Share (non-GAAP) (c)	$	1.30		$	0.87		$	2.20		$	1.71
Weighted Average Number of Diluted Shares Outstanding (thousands) (c)		229,303			285,428			230,114			305,426
(a)Lease operating expense (LOE), G&A expense and exploration expense include stock-based compensation cost as presented in the following table:
(In millions of dollars)		LOE			G&A			Exploration
Three months ended June 30, 2006	$	7.0		$	11.4		$	2.2
Three months ended June 30, 2005		1.5			3.0			0.5
Six months ended June 30, 2006		18.9			37.1			6.0
Six months ended June 30, 2005		3.0			13.4			1.0
(b)Represents actual realizations (settlements) for all commodity derivatives, whether hedge or non-hedge, associated with the applicable period.
(c)On June 14, 2006, the company executed a two-for-one stock split. The number of shares outstanding and earnings per share for historical periods have
been retroactively adjusted to reflect the stock split.
Adjusted After-Tax Income and the related measure per diluted share exclude items that management deems not to be reflective of the company's core operations or reflect timing differences between periods. Management believes that these non-GAAP financial measures provide valuable insight into the company's core earnings from continuing operations and enable investors 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 is comparable with similarly titled amounts for other companies.

KERR-McGEE CORPORATION
OPERATING HIGHLIGHTS
(Preliminary and Unaudited)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
Natural Gas Production and Average Sales Prices	2006		2005		2006		2005
Production Volumes (MMcf/d)
Gulf of Mexico –
Deepwater		253		285		246		270
Shelf		120		167		105		162
U.S. Onshore –
Rocky Mountain		388		330		376		331
Southern		223		241		232		253
Total		984		1,023		959		1,016
Average Wellhead Sales Prices (per Mcf)
Gulf of Mexico –
Deepwater	$	6.80	$	7.19	$	7.58	$	6.91
Shelf		6.76		6.97		7.47		6.73
U.S. Onshore –
Rocky Mountain		5.84		6.42		6.66		6.07
Southern		6.56		6.72		7.28		6.16
Average	$	6.36	$	6.79	$	7.14	$	6.42
Crude Oil, Condensate and NGL Production and Average Sales Prices
Production Volumes (Mbbls/d)
Gulf of Mexico –
Deepwater		59		47		53		47
Shelf		9		13		9		14
U.S. Onshore –
Rocky Mountain		21		22		21		22
Southern		13		14		13		14
Total U.S.		102		96		96		97
China (a)		17		17		17		19
Total		119		113		113		116
Average Wellhead Sales Prices (per bbl)
Gulf of Mexico –
Deepwater	$	61.66	$	47.26	$	59.29	$	46.03
Shelf		58.39		47.25		56.69		46.46
U.S. Onshore –
Rocky Mountain		57.49		43.44		54.81		41.82
Southern		57.62		45.58		52.95		44.03
Average U.S.		59.99		46.13		57.20		44.84
China		63.58		42.85		59.08		40.46
Average	$	60.52	$	45.60	$	57.47	$	44.09
Energy Equivalent Production Volumes
Total –
MBoe per day		283		284		272		286
MMcfe per day		1,699		1,702		1,634		1,715
(a) China sales volumes were 17 Mbbls/d for three months and 16 Mbbls/d for six months of 2006 and 19 Mbbls/d for three months and
20 Mbbls/d for six months of 2005. Sales volumes differ from production volumes due to timing of cargo liftings.

KERR-McGEE CORPORATION
SELECTED BALANCE SHEET INFORMATION
(Unaudited)
(Millions of dollars)
	June 30,		December 31,
Selected Balance Sheet Information	2006		2005
Cash and cash equivalents	$	156	$	1,053
Current assets		1,515		3,249
Total assets		11,938		14,276
Current liabilities		2,493		3,931
Total debt		2,406		2,583	(a)
Stockholders' equity		4,616		4,115
Shares outstanding at period-end (thousands)		227,308		228,775	(b)
(a)  In 2006, certain December 31, 2005 balances were reclassified to present Tronox as a discontinued operation. Total debt at year-end of
$3.133 billion was reduced by $550 million (representing Tronox debt eliminated at the spinoff date) as a result of such reclassifications.
(b)  On June 14, 2006, the company executed a two-for-one stock split. The shares outstanding at December 31, 2005 have been retroactively
adjusted to reflect the stock split.