Kerr-McGee to pursue the separation of its chemical business

OKLAHOMA CITY , October 25, 2005 (press release) – Kerr-McGee Corp. announced today that its Board of Directors has authorized management to proceed with its proposal to pursue alternatives for the separation of the chemical business including a spinoff or sale. In addition, the Board has authorized the company to proceed with a share repurchase program initially set at $1 billion. The Board expects to expand the share repurchase program as the chemical business separation proceeds.

“We do not believe that the value of our chemical business is adequately reflected in our market valuation,” said Luke R. Corbett, Kerr-McGee chairman and chief executive officer. “For some time, the Board has been considering the separation of chemical, and current market conditions for this industry now make it an ideal time to unlock this value for our stockholders. By developing and capitalizing on cost, quality and technological advantages, we have grown our chemical business into the world’s third-largest producer and marketer of titanium dioxide. Similarly, we have grown our oil and gas operations into the nation’s sixth-largest independent exploration and production company by strategically focusing on core areas. More importantly, we now have created a well-balanced portfolio of attractive, high-quality oil and gas assets that provides a large inventory of repeatable, low-risk exploitation projects and high-potential exploration opportunities. Following separation of the chemical business, we will continue to focus on our core competencies in exploration, exploitation, development and production to further enhance value for all stockholders.”

Kerr-McGee’s chemical unit has gross production capacity of 624,000 tonnes per year of titanium dioxide, an inorganic white pigment used in paint, coatings, plastics, paper and many other products. Approximately 83% of this capacity utilizes the company’s proprietary chloride-process technology for producing titanium dioxide pigment. The company’s pigment is marketed around the world under the TRONOX® brand.

Share Repurchase Program

The initial $1 billion share repurchase program primarily will be financed through the use of free cash flow generated from operations after planned capital expenditures, which is projected to be approximately $850 million in 2005. To ensure a portion of the projected cash flow, the company has hedged approximately 45% of its expected oil production and approximately 50% of its expected U.S. natural gas production for 2005 and expects to add to these positions from time to time. The company also expects to utilize a portion of its existing bank credit facility and may issue new securities, which may be in the form of debt or perpetual preferred stock, to fund the remaining repurchase program. The company will maintain its plan to retire an additional $450 million of debt maturities due in 2005. The Board and management reiterated their commitment to maintain an investment-grade credit rating.

The timing and final number of shares to be repurchased under an expanded repurchase program will depend on the outcome of the chemical business separation, as well as business and market conditions, applicable securities law limitations and other factors. Shares may be purchased from time to time in the open market or through privately negotiated transactions at prevailing prices, and the program may be suspended or discontinued at any time without prior notice.

Icahn Proposal Irresponsible

With respect to a proposal put forward by the Icahn group suggesting a volumetric production payment (VPP) transaction for 250 million barrels of oil equivalent (BOE), the Board, following careful consideration of recommendations from its financial advisors, unanimously rejected the proposal as irresponsible and not in the best interests of all of its stockholders, creditors and the company.

“Mr. Icahn’s proposal of a VPP of this magnitude would extract the revenue from approximately 32% of our proved developed producing reserves, while leaving the company with 100% of the costs,” said Corbett. “This would not leave the company with sufficient capital to develop the more than 425 million BOE of reserves currently booked as proved but undeveloped. As a result, we believe the value of our remaining proved reserves would be greatly reduced. Additionally, this proposal would not allow for the timely exploitation of our large inventory of identified probable and possible resources and exploration of our high-potential prospect inventory. Finally, since none of the proceeds from Mr. Icahn’s proposal would be applied to debt reduction, it would have very serious negative implications to our capital structure and likely cause our credit rating to drop to junk status.”

“We have seen VPPs employed productively on a much more prudent scale, but Mr. Icahn’s proposal is tantamount to mortgaging the company’s future simply to provide Mr. Icahn and his partners with some quick cash. We believe Mr. Icahn’s analysis is flawed, and we will make our case directly with our stockholders.”

Lehman Brothers Inc. and JP Morgan are acting as financial advisors to the company.

Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company with worldwide operations and assets of more than $14 billion. For more information on Kerr-McGee, visit its website at www.kerr-mcgee.com.

IMPORTANT INFORMATION

Kerr-McGee filed an amended preliminary proxy statement with the U.S. Securities and Exchange Commission (SEC) on March 2, 2005 relating to Kerr-McGee’s solicitation of proxies from the stockholders of Kerr-McGee with respect to the Kerr-McGee 2005 annual meeting of stockholders. Kerr-McGee and its directors and certain of its officers and other employees may be deemed to be participants in the solicitation of proxies for the 2005 annual meeting. The amended preliminary proxy statement contains detailed information regarding the names, affiliation and interests of individuals who may be deemed participants in the solicitation of proxies of Kerr-McGee’s stockholders. Kerr-McGee also will be filing a definitive proxy statement and other relevant documents. KERR-MCGEE ADVISES SECURITY HOLDERS TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Kerr-McGee's proxy statement and other relevant documents may be obtained without charge from the SEC’s website at www.sec.gov and from Kerr-McGee at www.kerr-mcgee.com. You also may obtain a free copy of Kerr-McGee’s definitive proxy statement, when it becomes available, by contacting Georgeson Shareholder Communications Inc. toll free at 877-278-6310.

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