For those of you who don’t know Carl Icahn purchased 10% of Kerr-McGee’s stock. He is now suggesting new officers be placed on KM’s board. He is also suggesting that Kerr-McGee sell their chemical division.




Could a recommendation to leave Oklahoma be next?










Icahn seeks changes at Kerr-McGee


By Adam Wilmoth
The Oklahoman


Famed corporate raider Carl Icahn has announced plans to nominate new directors at Kerr-McGee Corp., the Oklahoma City-based energy company reported Wednesday, less than two weeks after Icahn said he plans to buy up to 10 percent of the company's stock.

"Nominating directors is a stockholder's prerogative," the company said in a written statement. "Kerr-McGee has an independent, strong and highly experienced board that is focused on building value for all stockholders, and we are confident in our strategy to do just that."

In a letter to shareholders, Kerr-McGee Senior Vice President Gregory F. Pilcher informed shareholders about Icahn's plans and wrote that Kerr-McGee's board "believes that this action is not in your best interest and urges you not to sign or return any proxy card that the Icahn Group may send you."

Directors William F. Wallace and Ian L. White are up for re-election at the shareholders meeting, which is scheduled for May 10 at 9 a.m.

Often best known for taking over Trans World Airlines Inc. in 1985 and for trying to break up RJR Nabisco, Icahn also is a director of XO Communications Inc. and the majority holder of American Real Estate Partners LP. Forbes magazine has estimated his net worth at $7.6 billion.

Icahn, who is the owner of about 2 percent of the stock in Austin, Texas-based Temple Inland Inc., on Friday announced his plans to nominate his own set of directors and challenge that company's choice at the upcoming annual meeting.

Industry analyst David Khani has said Icahn's first goal likely is to force Kerr-McGee to sell its chemical division.

"In the past, he's gone after conglomerates that have more than one type of business," said Khani, an industry analyst with Friedman, Billings, Ramsey in Arlington, Va. "Those companies usually trade at a discounted price because investors don't find value on each business independently."

Kerr-McGee previously said it would consider selling the chemical subsidiary. Last week the company announced it has hired an investment bank to help present options for its chemical division.

I believe that it's only a matter of time before they move to Houston.

I believe that it's only a matter of time before they move to Houston.

One of the rare times, I have to agree... Some. I wold change the line to MIGHT move to Houston.

Personally, I am sick of Texas stealing our businesses.

One of the rare times, I have to agree...



Ditto.


Personally, I am sick of Texas stealing our businesses.

Ditto again. Although it's not a Texas interest that would bring them there. It would be the perception that a Houston location would make the company more efficient, thus more profitable to its shareholders. OKC must do everything it can to provide a counterargument. This is one case where hiring a PR firm to help build a case that their OKC location is best for the long-term health of the company. Some kind of peer pressure from other OKC-based executives would help too. Give 'em some corporate welfare while we're at it.

We also can't take Devon for granted either, with all the sharks (other energy companies) circling around it.

Personally, I don't feel that selling off its chemical division is a smart choice for KerrMcGee. It's the chemical division that got KerrMcGee through much of the 90's when oil prices hit rock bottom. Sure, oil is expensive now, but what happens if oil prices ever go back down? I know, it's hard to imagine that now, but you never know.

Putting all your money on one barrel of apples, is not smart in my opinion.

What do you guys think?

This has been in the works for some time. The general belief by the big money is that once ties are broken with Chemical, Kerr will be a prime target for takeover by another company. What that means for OKC remains to be seen but I have a feeling it won't be good. If they spin off the Chemicals division as a separate company the present jobs might stay here but if Chemicals is bought, odds are that all those jobs are gone from OKC. And they are some high paying jobs for the most part.

As far as the oil and gas division, I belive there has been speculation that Devon would be one of the logical choices to buy Kerr but who knows at this point. Personally as much as I hate to admit it, I feel that it won't be long before Kerr is no longer in OKC. I hope I'm wrong...

Personally, I don't feel that selling off its chemical division is a smart choice for KerrMcGee. It's the chemical division that got KerrMcGee through much of the 90's when oil prices hit rock bottom. Sure, oil is expensive now, but what happens if oil prices ever go back down? I know, it's hard to imagine that now, but you never know.

Putting all your money on one barrel of apples, is not smart in my opinion.



I agree. Diversifying is good.

I could fully see Devon buying KerrMcGee. Hey, Devon needs more office space anyways. Might as well take over KerrMcGee tower!

On the surface, it looks like that would strengthen both their positions and help diffuse talk of any aquisitions or moves.

Honestly I'm not sure if the companies would do well together...they're focus is completely different. Devon is drilling more locally here at home on land. KerrMcGee is foing more offshore drilling and international drilling (in China). Maybe KerrMcGee could become Devon's international department! :)

Looks like the feud between Kerr McGee and Icahn is starting to get nasty!

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"Kerr-McGee sues Icahn

By Adam Wilmoth
The Oklahoman

The conflict between Kerr-McGee Corp. and billionaire investor Carl Icahn heated up Thursday as the Oklahoma City-based energy company sued Icahn and his associates, claiming breach of federal antitrust laws and violation of the company's bylaws.
The lawsuit filed late Thursday in federal court in Oklahoma City asks the judge to bar Icahn and his associates from voting with shares they recently acquired and seeks to have their nominations as directors nullified.

"Defendants' apparent failure timely to disclose the existence of their group ... has harmed the company and its stockholders by allowing defendants improperly to accumulate a sizable position in the company's stock and to withhold from the company information it needs to respond appropriately to director nominations," Kerr-McGee said in the lawsuit.

Reached by phone at his office in New York late Thursday, Mark Weitzen, general counsel for Icahn Investment Partners, said he had not seen the lawsuit but said it was without merit.

"It sounds like there is not any substance to it, but we will see them in court," Weitzen said.

Kerr-McGee said the investors violated the Securities Exchange Act of 1934 by acting as a group without disclosing the group's existence and the members' collective intent. Kerr-McGee also alleges the investors violated antitrust laws because at least one of the partners notified regulators of its share purchases well after it acquired more than the limit of $50 million worth of shares.

Kerr-McGee also claimed Icahn and his associates did not properly nominate themselves for election to the company's board, again because the nomination forms did not identify all of the partners behind the nomination. The company alleges that the nomination forms also did not contain all necessary information, including detailed accounts of all company shares the nominees bought or sold within the past two years.

Kerr-McGee filed its lawsuit just hours after Icahn renewed his push for Kerr-McGee Corp. to follow his plan for improving shareholder value. Icahn increased his demands, saying Kerr-McGee should end its exploratory deepwater drilling program.

"We believe KMG can spend its money much more judiciously than to continue spending money on high-risk exploration," Icahn said in a letter to Kerr-McGee Chairman and Chief Executive Officer Luke Corbett. The letter was filed with the Securities and Exchange Commission.

The Oklahoma City-based energy company defended its drilling program, saying its strategy has been historically successful.

"We have a well-balanced portfolio with high-quality assets, including 9,000 repeatable, low-risk exploitation projects," Kerr-McGee spokeswoman Debbie Schramm said. "Those are complemented by high-potential exploration opportunities in the deepwater Gulf and in selected international and new venture areas."

Kerr-McGee historically has been known for its exploratory efforts. The company in 1947 completed the world's first commercially productive well out of the sight of land, and Kerr-McGee continues to lead the industry in development of deepwater drilling technology.

Recently, however, the company has faced scrutiny from investors and analysts for failures in its exploratory program.

In a January analyst conference call, Corbett expressed his disappointment that the company's deepwater Gulf of Mexico exploration program found two dry holes and had no large discoveries in 2004.

"We've shown in the past that we can have a successful program in that area, and we have to get it back on track," Corbett said. "I am not only disappointed in our execution in the Gulf of Mexico deepwater, it's unacceptable. And if we don't execute this year and have the success that we need to have, I am prepared to change our strategy in that region."

Industry analyst David Khani, with Friedman, Billings, Ramsey in Arlington, Va., said the company should continue to focus at least some of its efforts in the higher-risk drilling in the future.

"Kerr-McGee is an exploration company that's had very good success in the past and very moderate success in the most recent period," Khani said. "But I would say exploration is probably going to become more important over the next few years as oil service costs and capital are constrained. As oil demand continues to increase, we think exploration is going to become more in vogue."

Icahn's letter Thursday renewed his call for Kerr-McGee to sell its chemical business, capitalize on high commodity prices through a process of selling up to 32 percent of its future oil production in advance and use proceeds from both steps to buy back company stock. The letter also said his plan would be beneficial to Kerr-McGee and its shareholders because it would allow the company to take advantage of current near-record high commodity prices.

Company directors said Tuesday they will pursue either selling or spinning off the company's chemical subsidiary and that they plan to buy back up to $1 billion in Kerr-McGee stock.

But the directors rejected Icahn's plan for advanced sale of oil.

Thursday, Kerr-McGee stood by its decision earlier in the week.

"We strongly disagree with the self-serving position taken by Mr. Icahn and his associates," Schramm said. "Our board has made its position clear, and we are proceeding with our plan to unlock value for our shareholders through the separation of our chemical business and share repurchase program."

I tend to agree with KerrMcGee in this one. Sure, they tuned up two dry wells in the Gulf last year, but there's still a lot of potential there. You have to lose a few to gain a few.

KerrMcGee seems to have a balance of high and low risk projects.

Icahn seems to want to turn the company in a more consrvative direction, which might be good for the short term, but not so good for the long term.

Now, if they continue to turn up dry wells in the Gulf, we might have to reconsider.

Honestly I'm not sure if the companies would do well together...they're focus is completely different. Devon is drilling more locally here at home on land. KerrMcGee is foing more offshore drilling and international drilling (in China). Maybe KerrMcGee could become Devon's international department! :)

Yeah, exactly. Maybe they can complement one another. But to be honest, I don't know enough about either company to know if it would be a good fit operationally or financially.

I believe Icahn is wanting the company to focus more on profit-making in the present, instead of looking towards to the future. Abandoning drilling in the the Gulf would be a mistake, IMO.

This is now being discussed in public. It's looking like a real possibility. What a blow that would be to downtown unless another occupant could be found for that building.

This is now being discussed in public. It's looking like a real possibility. What a blow that would be to downtown unless another occupant could be found for that building.

KerrMcGee probably occupies only 30% of the building anyways. For years now they've leased it out.

Support for Kerr-McGee Corporation
http://www.oedc.net/img/spacer.gif


MEMO

TO: All Members of The State Chamber

FROM: Dick Rush, President & CEO

SUBJECT: Support for Kerr-McGee Corporation

DATE: March 21, 2005

One of Oklahoma’s major energy companies, Kerr-McGee Corporation, is facing an assault and possible take-over. We are urging all of our members to step forward and show your support of this great Oklahoma company. As your State Chamber we have supported the protection of Oklahoma businesses for almost 80 years. Outside negative influences should not be allowed to come in and place Oklahoma jobs in jeopardy.

Therefore we are asking you to send individual letters of support to Kerr-McGee’s corporate offices (P.O. Box 25861, Oklahoma City, OK 73125-0861) and to copy your state representative and senator (State Capitol, Oklahoma City, OK 73105). These letters should be short and to the point. Basically, we need to thank Kerr-McGee for their corporate citizenship and state leadership.

Larry Nichols, Chairman and CEO of Devon Energy Corporation and the 2005 Chairman of the Board for The State Chamber, has publicly stated “Our state is built on the foundation of our oil and gas industry. We offer our support to Kerr-McGee during this time of challenge. We need more great companies like Kerr-McGee, not less.”

Please add your name to the growing list of Oklahoma business leaders who support Oklahoma companies and jobs. Thanks.

Just sent out my letter - let's show our support! Takes two minutes and 37 cents, this is a way we might be able to help...

I have a feeling that this is a dollars and cents move, especially for Icahn. We'll have to wait and see how the other stockholders feel. It doesn't look good though. It's nice to see that they're figthing this.

I just happened to come across the Kerr-Mcgee chemical unit listing on the auction block and it gave me a sick feeling in my gut.

I was watching a Dateline show about companies that drastically cut retiree benefits. A Carl Icahn company and its retirees was used to tell the story.

KerrMcGee probably occupies only 30% of the building anyways. For years now they've leased it out.
that isn't true at all....