Durango success enhances Gunnison development

Kerr-McGee Corp. (Oklahoma City) today announced the successful drilling of the Durango prospect, in 3,150 feet of water on Garden Banks block 667 in the Gulf of Mexico, adjacent to the Gunnison field. The Durango exploratory well encountered nearly 200 feet of net gas pay that could increase estimated reserves for the Gunnison sub-basin by approximately 120 billion cubic feet of gas equivalent. The company has previously estimated Gunnison reserves to be in the range of 150 million to 250 million barrels of oil equivalent.

At the Gunnison field, three successful appraisal wells and two successful sidetracks have been drilled to date. The most recent appraisal well, Garden Banks 668 #3, located approximately 2.5 miles west of the discovery well, encountered more than 200 feet of net oil and gas pay in three main reservoirs. A final appraisal well, the Garden Banks 668 #4 located about 1 mile northwest of the discovery well, is expected to spud within the week to appraise the northerly downdip extent of the Gunnison reservoirs. An additional exploratory prospect, Dawson on Garden Banks block 669 to the east of Gunnison, is expected to be drilled later this year.

"We are very pleased with our success at Durango, coupled with continued success of our appraisal program at Gunnison," said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. "The Durango discovery further enhances the value of the Gunnison field, where we have begun evaluating development options as we move toward our goal to sanction project development by year-end. The Gunnison facility could serve as the processing hub for this core area of the gulf where Kerr-McGee holds interests in more than 40 blocks."

The Gunnison sub-basin includes Garden Banks blocks 667, 668 and 669, all operated by Kerr-McGee Oil & Gas Corp., a wholly owned subsidiary of Kerr-McGee Corp., with 50% interest. Partners in the blocks are Nexen Petroleum USA Inc., a wholly owned subsidiary of Nexen Inc. with 30% interest, and Cal Dive International, Inc., with 20% interest.

The truss spar system is one of the options being considered for development of the Gunnison area. Kerr-McGee is leading the industry in the use of truss spar technology. Currently, the company is developing two deepwater Gulf of Mexico fields, Nansen and Boomvang, using the world's first truss spars. Development is on schedule, with first production at Nansen expected before year-end and first production at Boomvang planned for first quarter of 2002.

Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company with worldwide operations and assets of $7.9 billion.

Source: Kerr-McGee Corp.