S&P ups Kerr-McGee outlook to stable

Standard & Poor's said affirmed Kerr-McGee Corp.'s BB+ corporate credit, senior secured debt and senior unsecured debt ratings and revised the outlook to stable from negative.

The agency said the outlook revision is based on the change in its oil pricing assumptions and on the company's improved operating performance.

S&P said the ratings on Kerr-McGee continue to be based on financial policy concerns and the company's participation in the cyclical, volatile exploration and production segment of the oil and gas industry. In 2005, management assumed a large debt burden in order to fund a $4.25 billion share repurchase program. Although the company reduced debt in a fairly rapid fashion in 2005, primarily with proceeds from asset sales, management recently announced a $1 billion share repurchase program, which will likely be funded with existing cash and free operating cash flow.

These factors outweigh a satisfactory business position, attractive prospects and favorable near-term industry fundamentals, according to the agency.

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