----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-Q**

**      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**KERR-McGEE      CORPORATION**

| Delaware                                       | 73-1612389                         |
|------------------------------------------------|------------------------------------|
| (State                or Other Jurisdiction of | (I.R.S.                Employer    |
| Incorporation                or Organization)  | Identification                No.) |

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|                                                                                                                                       | **KERR-McGEE                CORPORATION**                                                                                                                                       |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       | **INDEX**                                                                                                                                                                       |   |
|                                                                                                                                       |                                                                                                                                                                            | PAGE   |
| **PART                I - FINANCIAL INFORMATION**                                                                                          |                                                                                                                                                                            |
|                                                                                                                                       |                                                                                                                                                                            |   |
| Item                1. Financial Statements (Unaudited)                                                                                    |                                                                                                                                                                            |
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       | Condensed                Consolidated Statement of Income for the Three Months Ended March                31, 2006                and 2005                                      | 1      |
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       | Condensed                Consolidated Balance Sheet at March 31, 2006 and December 31,                2005                                                                      | 2      |
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       | Condensed                Consolidated Statement of Cash Flows for the Three Months Ended March                31,                2006 and 2005                                  | 3      |
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       | Condensed                Consolidated Statement of Comprehensive Income (Loss) and Stockholders’                Equity for the Three Months Ended March 31, 2006 and 2005 | 4      |
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       | Notes                to Condensed Consolidated Financial Statements                                                                                                             | 5      |
|                                                                                                                                       |                                                                                                                                                                            |   |
| Item                2. Management's Discussion and Analysis of Financial Condition                and                Results of Operations | 27                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |   |
| Item                3. Quantitative and Qualitative Disclosures about Market                Risk                                           | 37                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |   |
| Item                4. Controls and Procedures                                                                                             | 39                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |   |
| Forward-Looking                Information                                                                                                 | 39                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |
|                                                                                                                                       |                                                                                                                                                                            |
| **PART                II - OTHER INFORMATION**                                                                                             |                                                                                                                                                                            |
|                                                                                                                                       |                                                                                                                                                                            |   |
| Item                1. Legal Proceedings                                                                                                   | 39                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |
| Item                2. Unregistered Sales of Equity Securities and Use of                Proceeds                                          | 40                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |
| Item                5. Other Information                                                                                                   | 40                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |
| Item                6. Exhibits                                                                                                            | 40                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |   |
| SIGNATURE                                                                                                                                  | 41                                                                                                                                                                              |
|                                                                                                                                       |                                                                                                                                                                            |   |
|                                                                                                                                       |                                                                                                                                                                            |

----

**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED STATEMENT OF INCOME**

**(UNAUDITED)**

|                                                                             |   | Three                Months Ended |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                             |   | March                31,          |   |
| (Millions                of dollars, except per-share amounts)                   |   | 2006                              |   | 2005 |   |
|                                                                             |   |                              |   |   |   |
| **Revenues**                                                                     |   |                              |   |   |   |   |   |
| Oil                and gas sales                                                 |   | $                                 | 1,179  |   | $ | 1,006 |   |
| Loss                on commodity derivatives                                     |   |                              | (114   | ) |   | (86 | ) |
| Gas                marketing revenues                                            |   |                              | 213    |   |   | 132 |   |
| Other                revenues                                                    |   |                              | 22     |   |   | 19 |   |
| Total                Revenues                                                    |   |                              | 1,300  |   |   | 1,071 |   |
|                                                                             |   |                              |   |   |   |   |   |
| **Operating                Expenses**                                            |   |                              |   |   |   |   |   |
| Lease                operating costs                                             |   |                              | 131    |   |   | 108 |   |
| Production                and ad valorem taxes                                   |   |                              | 31     |   |   | 30 |   |
| Transportation                expense                                            |   |                              | 23     |   |   | 23 |   |
| General                and administrative expense                                |   |                              | 74     |   |   | 53 |   |
| Exploration                expense                                               |   |                              | 52     |   |   | 55 |   |
| Gas                gathering, processing and other expenses                      |   |                              | 34     |   |   | 28 |   |
| Gas                marketing costs                                               |   |                              | 214    |   |   | 130 |   |
| Depreciation,                depletion and amortization                          |   |                              | 189    |   |   | 223 |   |
| Accretion                expense                                                 |   |                              | 3      |   |   | 6 |   |
| Asset                impairments                                                 |   |                              | -      |   |   | 4 |   |
| Gain                on sales of oil and gas properties                           |   |                              | (4     | ) |   | (22 | ) |
| Total                Operating Expenses                                          |   |                              | 747    |   |   | 638 |   |
|                                                                             |   |                              |   |   |   |   |   |
| **Operating                Income**                                              |   |                              | 553    |   |   | 433 |   |
|                                                                             |   |                              |   |   |   |   |   |
| Interest                expense                                                  |   |                              | (41    | ) |   | (60 | ) |
| Loss                on early repayment and modification of debt                  |   |                              | (81    | ) |   | - |   |
| Other                income (expense)                                            |   |                              | (3     | ) |   | (2 | ) |
|                                                                             |   |                              |   |   |   |   |   |
| **Income                from Continuing Operations before Income Taxes**         |   |                              | 428    |   |   | 371 |   |
| Provision                for Income Taxes                                        |   |                              | (152   | ) |   | (128 | ) |
|                                                                             |   |                              |   |   |   |   |   |
| **Income                from Continuing Operations**                             |   |                              | 276    |   |   | 243 |   |
| Income                (loss) from discontinued operations, net of taxes          |   |                              | (23    | ) |   | 112 |   |
| Cumulative                effect of change in accounting principle, net of taxes |   |                              | 2      |   |   | - |   |
|                                                                             |   |                              |   |   |   |   |   |
| **Net                Income**                                                    |   | $                                 | 255    |   | $ | 355 |   |
|                                                                             |   |                              |   |   |   |   |   |
| **Income                (Loss) per Common Share**                                |   |                              |   |   |   |   |   |
| Basic                -                                                           |   |                              |   |   |   |   |   |
| Continuing                operations                                             |   | $                                 | 2.43   |   | $ | 1.57 |   |
| Discontinued                operations                                           |   |                              | (0.20  | ) |   | 0.72 |   |
| Cumulative                effect of change in accounting principle               |   |                              | 0.02   |   |   | - |   |
| Net                income                                                        |   | $                                 | 2.25   |   | $ | 2.29 |   |
|                                                                             |   |                              |   |   |   |   |   |
| Diluted                -                                                         |   |                              |   |   |   |   |   |
| Continuing                operations                                             |   | $                                 | 2.39   |   | $ | 1.51 |   |
| Discontinued                operations                                           |   |                              | (0.20  | ) |   | 0.69 |   |
| Cumulative                effect of change in accounting principle               |   |                              | 0.02   |   |   | - |   |
| Net                income                                                        |   | $                                 | 2.21   |   | $ | 2.20 |   |
|                                                                             |   |                              |   |   |   |   |   |
| **Dividends                Declared per Common Share**                           |   | $                                 | .05    |   | $ | .45 |   |
|                                                                             |   |                              |   |   |   |   |   |

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED BALANCE SHEET**

**(UNAUDITED)**

|                                                                                                 |   | **March                    31,** |       | December                    31, |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|---------------------------------|--------|
| (Millions                    of dollars)                                                             |   | **2006**                         |       | 2005                            |   |
|                                                                                                 |   |                             |       |                            |   |
| **ASSETS**                                                                                           |   |
| **Current                    Assets**                                                                |   |                             |            |                            |   |   |   |
| Cash                    and cash equivalents                                                         |   | **$**                            | **83**     |                            | $      | 1,053 |   |
| Accounts                    receivable                                                               |   |                             | **677**    |                            |   | 753 |   |
| Derivatives                    and other current assets                                              |   |                             | **188**    |                            |   | 205 |   |
| Deferred                    income taxes                                                             |   |                             | **341**    |                            |   | 547 |   |
| Assets                    held for sale and Tronox assets                                            |   |                             | **22**     |                            |   | 691 |   |
| **Total                    Current Assets**                                                          |   |                             | **1,311**  |                            |   | 3,249 |   |
|                                                                                                 |   |                             |       |                            |   |   |   |
| **Property,                    Plant and Equipment**                                                 |   |                             | **11,669** |                            |   | 13,629 |   |
| **Less                    reserves for depreciation, depletion and                    amortization** |   |                             | **(3,689** | **)**                           |   | (5,194 | ) |
|                                                                                                 |   |                             | **7,980**  |                            |   | 8,435 |   |
|                                                                                                 |   |                             |       |                            |   |   |   |
| **Investments,                    Derivatives and Other Assets**                                     |   |                             | **326**    |                            |   | 427 |   |
| **Goodwill                    and Other Intangible Assets**                                          |   |                             | **1,177**  |                            |   | 1,179 |   |
| **Assets                    Held for Sale and Tronox Assets**                                        |   |                             | **693**    |                            |   | 986 |   |
|                                                                                                 |   |                             |       |                            |   |   |   |
| **Total                    Assets**                                                                  |   | **$**                            | **11,487** |                            | $      | 14,276 |   |

| **LIABILITIES                    AND STOCKHOLDERS' EQUITY**                            |   |
|----------------------------------------------------------------------------------------|--------|
| **Current                    Liabilities**                                             |   |   |   |   |   |   |   |
| Accounts                    payable                                                    |   | **$** | **358** |   | $ | 425 |   |
| Long-term                    debt due within one year                                  |   |   | **302** |   |   | 306 |   |
| Income                    taxes payable                                                |   |   | **166** |   |   | 429 |   |
| Commodity                    derivative liabilities                                    |   |   | **920** |   |   | 1,506 |   |
| Accrued                    liabilities                                                 |   |   | **767** |   |   | 846 |   |
| Liabilities                    associated with assets held for sale and Tronox    |   |   | **21** |   |   | 419 |   |
| **Total                    Current Liabilities**                                       |   |   | **2,534** |   |   | 3,931 |   |
|                                                                                   |   |   |   |   |   |   |   |
| **Long-Term                    Debt**                                                  |   |   | **2,099** |   |   | 2,277 |   |
|                                                                                   |   |   |   |   |   |   |   |
| **Noncurrent                    Liabilities**                                          |   |   |   |   |   |   |   |
| Deferred                    income taxes                                               |   |   | **1,482** |   |   | 1,445 |   |
| Asset                    retirement obligations                                        |   |   | **189** |   |   | 310 |   |
| Commodity                    derivative liabilities                                    |   |   | **431** |   |   | 658 |   |
| Other                                                                                  |   |   | **431** |   |   | 471 |   |
| Liabilities                    associated with assets held for sale and Tronox    |   |   | **126** |   |   | 1,069 |   |
| **Total                    Noncurrent Liabilities**                                    |   |   | **2,659** |   |   | 3,953 |   |
|                                                                                   |   |   |   |   |   |   |   |
| **Contingencies                    (Note 13)**                                         |   |   |   |   |   |   |   |
|                                                                                   |   |   |   |   |   |   |   |
| **Stockholders'                    Equity**                                            |   |   |   |   |   |   |   |
| Common                    stock, par value $1 - 500,000,000 shares authorized,         |   |   |   |   |   |   |   |
| 120,476,214                    and 119,668,552 shares issued at March 31, 2006         |   |   |   |   |   |   |   |
| and                    December 31, 2005, respectively                                 |   |   | **120** |   |   | 120 |   |
| Capital                    in excess of par value                                      |   |   | **3,737** |   |   | 3,702 |   |
| Preferred                    stock purchase rights                                     |   |   | **1** |   |   | 1 |   |
| Retained                    earnings                                                   |   |   | **1,713** |   |   | 1,704 |   |
| Accumulated                    other comprehensive loss                                |   |   | **(723** | **)** |   | (1,079 | ) |
| Common                    shares in treasury, at cost - 7,034,469 and 3,456,918 shares |   |   |   |   |   |   |   |
| at                    March 31, 2006 and December 31, 2005, respectively               |   |   | **(629** | **)** |   | (266 | ) |
| Deferred                    compensation                                               |   |   | **(24** | **)** |   | (67 | ) |
| **Total                    Stockholders' Equity**                                      |   |   | **4,195** |   |   | 4,115 |   |
|                                                                                   |   |   |   |   |   |   |   |
| **Total                    Liabilities and Stockholders’ Equity**                |   | **$** | **11,487** |   | $ | 14,276 |   |

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                            |   | Three                Months Ended |      |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                                            |   | March                31,          |      |
| (Millions                of dollars)                                                            |   | **2006**                          |      | 2005 |   |
|                                                                                            |   |                              |      |   |   |
| **Cash                Flows from Operating Activities**                                         |   |                              |      |   |   |   |   |
| Net                income                                                                       |   | **$**                             | **255**   |   | $ | 355 |   |
| Adjustments                to reconcile net income to net cash                                  |   |                              |      |   |   |   |   |
| provided                by operating activities -                                               |   |                              |      |   |   |   |   |
| Depreciation,                depletion and amortization                                         |   |                              | **225**   |   |   | 326 |   |
| Deferred                income taxes                                                            |   |                              | **58**    |   |   | 138 |   |
| Dry                hole expense                                                                 |   |                              | **15**    |   |   | 20 |   |
| Asset                impairments                                                                |   |                              | **-**     |   |   | 4 |   |
| Gain                on sale of assets                                                           |   |                              | **(4**    | **)** |   | (22 | ) |
| Accretion                expense                                                                |   |                              | **3**     |   |   | 9 |   |
| Loss                on early repayment and modification of debt                                 |   |                              | **81**    |   |   | - |   |
| Provision                for Tronox guarantee                                                   |   |                              | **56**    |   |   | - |   |
| Other                noncash items affecting net income                                         |   |                              | **(17**   | **)** |   | 109 |   |
| Changes                in assets and liabilities                                                |   |                              | **(537**  | **)** |   | (142 | ) |
| **Net                Cash Provided by Operating Activities**                                    |   |                              | **135**   |   |   | 797 |   |
|                                                                                            |   |                              |      |   |   |   |   |
| **Cash                Flows from Investing Activities**                                         |   |                              |      |   |   |   |   |
| Capital                expenditures                                                             |   |                              | **(453**  | **)** |   | (374 | ) |
| Dry                hole costs                                                                   |   |                              | **(23**   | **)** |   | (24 | ) |
| Proceeds                from sales of assets                                                    |   |                              | **8**     |   |   | 31 |   |
| Other                investing activities                                                       |   |                              | **23**    |   |   | (30 | ) |
| **Net                Cash Used in Investing Activities**                                        |   |                              | **(445**  | **)** |   | (397 | ) |
|                                                                                            |   |                              |      |   |   |   |   |
| **Cash                Flows from Financing Activities**                                         |   |                              |      |   |   |   |   |
| Issuance                of common stock upon exercise of stock options                          |   |                              | **29**    |   |   | 132 |   |
| Purchases                of treasury stock                                                      |   |                              | **(363**  | **)** |   | (250 | ) |
| Repayment                of debt                                                                |   |                              | **(250**  | **)** |   | (42 | ) |
| Dividends                paid                                                                   |   |                              | **(6**    | **)** |   | (68 | ) |
| Settlement                of Westport derivatives                                               |   |                              | **(21**   | **)** |   | (43 | ) |
| Tronox                Distribution (1)                                                          |   |                              | **(57**   | **)** |   | - |   |
| Other                financing activities                                                       |   |                              | **11**    |   |   | (5 | ) |
| **Net                Cash Used in Financing Activities**                                        |   |                              | **(657**  | **)** |   | (276 | ) |
|                                                                                            |   |                              |      |   |   |   |   |
| **Effects                of Exchange Rate Changes on Cash and Cash                Equivalents** |   |                              | **(3**    | **)** |   | 1 |   |
| **Net                Increase (Decrease) in Cash and Cash Equivalents**                         |   |                              | **(970**  | **)** |   | 125 |   |
| **Cash                and Cash Equivalents at Beginning of Period**                             |   |                              | **1,053** |   |   | 76 |   |
| **Cash                and Cash Equivalents at End of Period**                                   |   | **$**                             | **83**    |   | $ | 201 |   |

| (1)   | Represents                Tronox’s cash balance deconsolidated upon the                Distribution. |
|-----------------|------------------------------------------------------------------------------------------------------------|

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) **

**AND      STOCKHOLDERS’ EQUITY**

**(UNAUDITED)**

| (Millions                  of dollars)                  |   | CommonStock |    | Capital                  inExcess                  ofPar                  Value |   | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome                  (Loss) |      | TreasuryStock |   | DeferredCompensationand                  Other |   | TotalStockholders'Equity |     |
|---------------------------------------------------------|--------|-------------|---------|---------------------------------------------------------------------------------|--------|------------------|--------|-------------------------------------------------------------|-----------|---------------|--------|------------------------------------------------|--------|--------------------------|----------|
| Balance                  at December 31, 2004           |   | $           | 152     | ** **                                                                      | $      | 4,205            |   | $                                                           | 1,102     | ** **    | $      | (79                                            | )      | $                        | (8       | ) | $ | (54 | ) | $ | 5,318 |   |
| Comprehensive                  Income (Loss):           |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   |   |   |
| Net                  income                             |   |        | -       |                                                                            |   | -                |   |                                                        | 355       |          |   | -                                              |   |                     | -        |   |   | - |   |   | 355 |   |
| Other                  comprehensive loss               |   |        | -       |                                                                            |   | -                |   |                                                        | -         |          |   | (457                                           | )      |                     | -        |   |   | - |   |   | (457 | ) |
| Comprehensive                  loss                     |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   | (102 | ) |
| Shares                  issued upon conversion of debt  |   |        | 10      |                                                                            |   | 583              |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | - |   |   | 593 |   |
| Purchases                  of treasury shares           |   |        | -       |                                                                            |   | -                |   |                                                        | -         |          |   | -                                              |   |                     | (250     | ) |   | - |   |   | (250 | ) |
| Stock                  option exercises                 |   |        | 2       |                                                                            |   | 130              |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | - |   |   | 132 |   |
| Restricted                  stock activity              |   |        | 1       |                                                                            |   | 24               |   |                                                        | -         |          |   | -                                              |   |                     | (2       | ) |   | (19 | ) |   | 4 |   |
| ESOP                  deferred compensation             |   |        | -       |                                                                            |   | -                |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | 2 |   |   | 2 |   |
| Tax                  benefit from stock-based awards    |   |        | -       |                                                                            |   | 16               |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | - |   |   | 16 |   |
| Dividends                  declared ($.45 per share)    |   |        | -       |                                                                            |   | -                |   |                                                        | (74       | )             |   | -                                              |   |                     | -        |   |   | - |   |   | (74 | ) |
| Other                                                   |   |        | -       |                                                                            |   | -                |   |                                                        | (1        | )             |   | -                                              |   |                     | -        |   |   | - |   |   | (1 | ) |
| Balance                  at March 31, 2005              |   | $           | 165     |                                                                            | $      | 4,958            |   | $                                                           | 1,382     |          | $      | (536                                           | )      | $                        | (260     | ) | $ | (71 | ) | $ | 5,638 |   |
|                                                    |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   |   |   |
| **Balance                  at December 31, 2005**       |   | **$**       | **120** |                                                                            | **$**  | **3,702**        |   | **$**                                                       | **1,704** |          | **$**  | **(1,079**                                     | **)**  | **$**                    | **(266** | **)** | **$** | **(66** | **)** | **$** | **4,115** |   |
| Comprehensive                  Income:                  |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   |   |   |
| Net                  income                             |   |        | -       |                                                                            |   | -                |   |                                                        | 255       |          |   | -                                              |   |                     | -        |   |   | - |   |   | 255 |   |
| Other                  comprehensive income             |   |        | -       |                                                                            |   | -                |   |                                                        | -         |          |   | 356                                            |   |                     | -        |   |   | - |   |   | 356 |   |
| Comprehensive                  income                   |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   | 611 |   |
| Adoption                  of FAS No. 123(R)             |   |        | -       |                                                                            |   | (42              | )      |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | 42 |   |   | - |   |
| Purchases                  of treasury shares           |   |        | -       |                                                                            |   | -                |   |                                                        | -         |          |   | -                                              |   |                     | (363     | ) |   | - |   |   | (363 | ) |
| Stock                  option exercises                 |   |        | -       |                                                                            |   | 29               |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | - |   |   | 29 |   |
| Amortization                  of options and restricted |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   |   |   |
|                     stock, net of forfeitures |   |        | -       |                                                                            |   | 34               |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | - |   |   | 34 |   |
| ESOP                  deferred compensation             |   |        | -       |                                                                            |   | -                |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | 1 |   |   | 1 |   |
| Tax                  benefit from stock-based awards    |   |        | -       |                                                                            |   | 14               |   |                                                        | -         |          |   | -                                              |   |                     | -        |   |   | - |   |   | 14 |   |
| Dividends                  declared ($.05 per share)    |   |        | -       |                                                                            |   | -                |   |                                                        | (6        | )             |   | -                                              |   |                     | -        |   |   | - |   |   | (6 | ) |
| Tronox                  Distribution (Note 2)           |   |        | -       |                                                                            |   | -                |   |                                                        | (238      | )             |   | -                                              |   |                     | -        |   |   | - |   |   | (238 | ) |
| Other                                                   |   |        | -       |                                                                            |   | -                |   |                                                        | (2        | )             |   | -                                              |   |                     | -        |   |   | - |   |   | (2 | ) |
| **Balance                  at March 31, 2006**          |   | **$**       | **120** |                                                                            | **$**  | **3,737**        |   | **$**                                                       | **1,713** |          | **$**  | **(723**                                       | **)**  | **$**                    | **(629** | **)** | **$** | **(23** | **)** | **$** | **4,195** |   |
|                                                    |   |        |    |                                                                            |   |             |   |                                                        |      |          |   |                                           |   |                     |     |   |   |   |   |   |   |   |

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH      31, 2006**

| **1.** | **The                Company, Basis of Presentation and Accounting                Policies** |
|--------|----------------------------------------------------------------------------------------------|

**The      Company**

*Recent      Developments *

| ·   | In                January 2006, the company entered into an agreement to sell its interests                in Gulf of Mexico shelf oil and natural gas properties to W&T                Offshore, Inc. for approximately $1.34 billion in cash, subject to                certain                adjustments. The transaction, which has an effective date of October                1,                2005 and is subject to customary closing conditions and regulatory                approvals, is expected to close in late second quarter or early third                quarter. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January 2006, the company's Board of Directors (the Board) approved                a $1                billion stock repurchase program. During the first quarter, approximately                3.4 million shares of Kerr-McGee’s stock were repurchased at an aggregate                cost of $350 million. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                November 2005, Tronox Incorporated (Tronox), a former subsidiary                that held                Kerr-McGee's chemical business, completed an initial public offering                (IPO)                of 17.5 million shares of Class A common stock, which reduced Kerr-McGee’s                equity interest in Tronox to 57%. On March 30, 2006, Kerr-McGee completed                a pro rata distribution to its stockholders in the form of a dividend                of                shares of Tronox Class B common stock it owned (the Distribution)                and no                longer has any ownership or voting interest in Tronox. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On                May 9, 2006, the Board authorized a two-for-one split of Kerr-McGee’s                outstanding common stock. The stock split will be accomplished through                a                stock dividend to be issued on June 14, 2006 to stockholders of record                at                the close of business on June 2, 2006. Common shares issued and                outstanding and earnings per share in the accompanying consolidated                financial statements do not give effect to the stock split. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Board also approved a 25% increase in the company's quarterly dividend                effective with the dividend payable on July 3, 2006. On a pre-split                basis,                the quarterly dividend will increase from $.05 per share to $.0625                per                share. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Basis      of Presentation**

----

**Accounting      Policies**

***Employee      Stock-Based Compensation***
*      -*
** **

| ·   | Compensation                cost for all stock option and stock awards that were unvested as                of                January 1, 2006 based on the grant-date fair value estimated in accordance                with the original provisions of FAS No.                123 |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Compensation                cost for all stock options and nonvested stock awards granted subsequent                to January 1, 2006 based on the grant-date fair value estimated in                accordance with the provisions of FAS No. 123(R) |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Compensation                cost for all performance units (outstanding as of January 1, 2006                and                granted subsequent to that date) based on the change in their estimated                fair value during the first quarter                2006 |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Millions                of dollars, except per-share amounts)       |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------|
|                                                                 |   |   |   |
| *Increase                (decrease) in:*                             |   |   |   |   |
| Income                from continuing operations before income taxes |   | $      | (19    | ) |
| Income                from continuing operations                     |   |   | (12    | ) |
| Net                income                                            |   |   | (10    | ) |
| Earnings                per share:                                   |   |   |   |   |
| Basic                                                                |   |   | (.09   | ) |
| Diluted                                                              |   |   | (.09   | ) |
| Net                cash provided by operating activities             |   |   | (14    | ) |
| Net                cash used in financing activities                 |   |   | 14     |   |

----

| (Millions                of dollars, except per-share amounts)     |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
|                                                               |   |   |   |
| Net                income, as reported                             |   | $      | 355    |   |
| Add:                stock-based employee compensation expense      |   |   |   |   |
| included                in reported net income, net of taxes       |   |   | 9      |   |
| Deduct:                stock-based compensation expense determined |   |   |   |   |
| using                a fair-value method, net of taxes             |   |   | (16    | ) |
| Pro                forma net income                                |   | $      | 348    |   |
|                                                               |   |   |   |   |
| Net                income per share -                              |   |   |   |   |
| Basic                -                                             |   |   |   |   |
| As                reported                                         |   | $      | 2.29   |   |
| Pro                forma                                           |   |   | 2.25   |   |
|                                                               |   |   |   |   |
| Diluted                -                                           |   |   |   |   |
| As                reported                                         |   | $      | 2.20   |   |
| Pro                forma                                           |   |   | 2.15   |   |

| **2.** | **Tronox                Separation** |
|--------|--------------------------------------|

----

| **3.** | **Discontinued                Operations and Assets Held for                Sale** |
|--------|------------------------------------------------------------------------------------|

***Discontinued      Operations***

|                                                                      |   | Three                Months Ended March 31, |    |
|---------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                      |   | **2006**                                    |    | 2005 |   |
|                                                                      |   |                                        |    | North                Sea |   |   |   |   |   |
|                                                                      |   |                                        |    | Oil                and Gas |   |   |   |   |   |
| (Millions                of dollars)                                 |   | **Tronox**                                  |    | Business |   | Tronox |   | Total |   |
|                                                                      |   |                                        |    |   |   |   |   |   |   |
| Revenues                                                                  |   | **$**                                       | **336** |   | $ | 312 |   | $ | 334 |   | $ | 646 |   |
|                                                                      |   |                                        |    |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) from Discontinued Operations:                |   |                                        |    |   |   |   |   |   |   |   |   |   |   |
| Income                from operations                                     |   | **$**                                       | **35**  |   | $ | 183 |   | $ | 6 |   | $ | 189 |   |
| Provision                for Tronox guarantee (1)                    |   |                                        | **(56** | **)** |   | - |   |   | - |   |   | - |   |
| Pretax                income (loss) from discontinued operations          |   |                                        | **(21** | **)** |   | 183 |   |   | 6 |   |   | 189 |   |
| Income                tax (expense) benefit                               |   |                                        | **7**   |   |   | (78 | ) |   | 1 |   |   | (77 | ) |
| Net                income from operations allocable to minority interests |   |                                        | **(9**  | **)** |   | - |   |   | - |   |   | - |   |
| Income                (loss) from discontinued operations, net of tax     |   | **$**                                       | **(23** | **)** | $ | 105 |   | $ | 7 |   | $ | 112 |   |
|                                                                      |   |                                        |    |   |   |   |   |   |   |   |   |   |   |

| (1)   | Additional                information about the guarantee is provided in Note                2. |
|-----------------|-------------------------------------------------------------------------------------------------|

***Assets      Held for Sale***

| **4.** | **Other                Comprehensive Income (Loss)** |
|--------|------------------------------------------------------|

|                                                                             |   | Three                Months Ended |    |
|----------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                             |   | March                31,          |    |
| (Millions                of dollars)                                             |   | **2006**                          |    | 2005 |   |
|                                                                             |   |                              |    |   |   |
| Foreign                currency translation -                                    |   |                              |    |   |   |   |   |
| Translation                adjustments, net of minority interest of $2           |   | **$**                             | **1**   |   | $ | 2 |   |
| Reclassification                to retained earnings                             |   |                              | **(24** | **)** |   | - |   |
| Total                foreign currency translation adjustments                    |   |                              | **(23** | **)** |   | 2 |   |
| Net                gains (losses) on cash flow hedges -                          |   |                              |    |   |   |   |   |
| Unrealized                gains (losses), net of taxes of $(111) and $272        |   |                              | **207** |   |   | (484 | ) |
| Reclassification                of realized losses to net income,                |   |                              |    |   |   |   |   |
| net                of taxes of $(97) and $(14)                                   |   |                              | **179** |   |   | 25 |   |
| Reclassification                to retained earnings                             |   |                              | **1**   |   |   | - |   |
| Total                gains (losses) on cash flow hedges, net                     |   |                              | **387** |   |   | (459 | ) |
| Minimum                pension liability -                                       |   |                              |    |   |   |   |   |
| Minimum                pension liability adjustments, net of taxes of $5         |   |                              | **(10** | **)** |   | - |   |
| Reclassification                to retained earnings, net of taxes of $(1)  |   |                              | **2**   |   |   | - |   |
| Total                minimum pension liability adjustments                       |   |                              | **(8**  | **)** |   | - |   |
| Other                comprehensive income (loss)                                 |   | **$**                             | **356** |   | $ | (457 | ) |

----

|                                                    |   | **March                31,** |     | December                31, |   |
|---------------------------------------------------------|--------|------------------------------|----------|-----------------------------|--------|
| (Millions                of dollars)                    |   | **2006**                     |     | 2005                        |   |
|                                                    |   |                         |     |                        |   |
| Foreign                currency translation adjustments |   | **$**                        | **12**   |                        | $      | 35 |   |
| Unrealized                loss on cash flow hedges      |   |                         | **(708** | **)**                       |   | (1,095 | ) |
| Minimum                pension liability adjustments    |   |                         | **(27**  | **)**                       |   | (19 | ) |
|                                                    |   | **$**                        | **(723** | **)**                       | $      | (1,079 | ) |

**5.**
**Derivative      Instruments**

|                                                      |   | **As                of March 31, 2006**  |   |
|-----------------------------------------------------------|--------|------------------------------------------|--------|
|                                                      |   | **Derivative                Fair Value** |   |   |   |
|                                                      |   | **Current**                              |   | **Long-Term** |   | **Current** |   | **Long-Term** |   | **Deferred** |   |
| (Millions                of dollars)                      |   | **Asset**                                |   | **Asset** |   | **Liability** |   | **Liability** |   | **Loss                in AOCI****(1)** |   |
|                                                      |   |                                     |   |   |   |   |   |   |   |   |   |
| Oil                and gas production-related derivatives |   | **$**                                    | **72** |   | **$** | **32** |   | **$** | **(915** | **)** | **$** | **(431** | **)** | **$** | **(708** | **)** |
| Gas                marketing-related derivatives          |   |                                     | **5**  |   |   | **-** |   |   | **(5** | **)** |   | **-** |   |   | **-** |   |
| Total                                                     |   | **$**                                    | **77** |   | **$** | **32** |   | **$** | **(920** | **)** | **$** | **(431** | **)** | **$** | **(708** | **)** |

|                                                      |   | As                of December 31, 2005 |   |
|-----------------------------------------------------------|--------|----------------------------------------|--------|
|                                                      |   | Derivative                Fair Value   |   |   |   |
|                                                      |   | Current                                |   | Long-Term |   | Current |   | Long-Term |   | Deferred |   |
| (Millions                of dollars)                      |   | Asset                                  |   | Asset |   | Liability |   | Liability |   | Loss                in AOCI(1) |   |
|                                                      |   |                                   |   |   |   |   |   |   |   |   |   |
| Oil                and gas production-related derivatives |   | $                                      | 101    |   | $ | 34 |   | $ | (1,492 | ) | $ | (658 | ) | $ | (1,095 | ) |
| Gas                marketing-related derivatives          |   |                                   | 13     |   |   | 1 |   |   | (14 | ) |   | - |   |   | - |   |
| Total                                                     |   | $                                      | 114    |   | $ | 35 |   | $ | (1,506 | ) | $ | (658 | ) | $ | (1,095 | ) |

| (1)   | Amounts                deferred in accumulated other comprehensive income (AOCI) are reflected                net of tax. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

|                                                          |   | Three                Months Ended |     |
|---------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                          |   | March                31,          |     |
| (Millions                of dollars)                          |   | **2006**                          |     | 2005 |   |
|                                                          |   |                              |     |   |   |
| Loss                on hedge derivatives                      |   | **$**                             | **(274** | **)** | $ | (26 | ) |
| Mark-to-market                nonhedge derivative gain (loss) |   |                              | **130**  |   |   | (51 | ) |
| Gain                (loss) due to hedge ineffectiveness       |   |                              | **30**   |   |   | (9 | ) |
|                                                          |   |                              | **(114** | **)** |   | (86 | ) |
| Gas                marketing-related derivatives              |   |                              | **1**    |   |   | 2 |   |
| Total                                                         |   | **$**                             | **(113** | **)** | $ | (84 | ) |
|                                                          |   |                              |     |   |   |   |   |

***Discontinuation      of Hedge Accounting***
* *
* *

----

| **6.** | **Exploratory                Drilling Costs** |
|--------|-----------------------------------------------|

| **7.** | **Debt** |
|--------|----------|

|                                                      |   |      |   | Debt     |   | Carrying |   |
|-----------------------------------------------------------|--------|-----------|--------|----------|--------|----------|--------|
| (Millions                of dollars)                      |   | Principal |   | Discount |   | Amount   |   |
|                                                      |   |      |   |     |   |     |   |
| Balance                at December 31, 2005 (1)           |   | $         | 3,232  |     | $      | (99      | )      | $ | 3,133 |   |
| Amortization                of discount                   |   |      | -      |     |   | 2        |   |   | 2 |   |
| Change                in the fair value of hedged debt    |   |      | -      |     |   | (3       | )      |   | (3 | ) |
| Early                redemption of 7% debentures due 2011 |   |      | (250   | )        |   | 69       |   |   | (181 | ) |
| Tronox                Distribution                        |   |      | (550   | )        |   | -        |   |   | (550 | ) |
| Balance                at March 31, 2006                  |   | $         | 2,432  |     | $      | (31      | )      | $ | 2,401 |   |

| (1)   | Included                $550 million of Tronox debt presented in the Condensed Consolidated                Balance Sheet as liabilities associated with                Tronox. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **8.** | **Exit,                Disposal and Restructuring                Activities** |
|--------|-------------------------------------------------------------------------------|

|                                        |   | Reserve                Activity                (1) |   |
|---------------------------------------------|--------|----------------------------------------------------|--------|
|                                        |   | Dismantlement                                      |   | Personnel |   |   |   |
| (Millions                of dollars)        |   | and                Closure                         |   | Costs                (2) |   | Total |   |
|                                        |   |                                               |   |   |   |   |   |
| Balance                at December 31, 2005 |   | $                                                  | 6      |   | $ | 21 |   | $ | 27 |   |
| Provisions/Accruals                         |   |                                               | -      |   |   | 5 |   |   | 5 |   |
| Payments                                    |   |                                               | (1     | ) |   | - |   |   | (1 | ) |
| Tronox                Distribution          |   |                                               | (5     | ) |   | (6 | ) |   | (11 | ) |
| Balance                at March 31, 2006    |   | $                                                  | -      |   | $ | 20 |   | $ | 20 |   |

| **(1)  ** | Provisions                for exit, disposal and restructuring activities include a charge                of $2                million related to Tronox, which is reflected in loss from discontinued                operations in the Condensed Consolidated Statement of Income.** ** |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Of                the $20 million reserve, approximately $11 million was paid in April                2006. |
|-----------------|-------------------------------------------------------------------------------------------------------------|

----

**9.**
**Employee      Stock-Based Compensation **

***Overview***

|                                 |                          | Vesting |                    | Cash-                or |                                      |
|--------------------------------------|-------------------------------|---------|-------------------------|-------------------------|-------------------------------------------|
|                                 | Contractual                   | Period  | Vesting                 | Stock-                  | Vesting                and Other          |
|                                 | Life                (years)   | (years) | Term                (1) | Settled                 | Conditions                                |
|                                 |                          |    |                    |                    |
| Stock                options         | 10                            | 3       | Graded                  | Stock                   | Employee                service           |
| Restricted                stock      | not                applicable | 3       | Cliff                   | Stock                   | Employee                service           |
| Performance                units (2) | 3                             | 3       | Cliff                   | Cash                    | Employee                service and       |
|                                 |                          |    |                    |                    | achievement                of specified   |
|                                 |                          |    |                    |                    | stockholder                return targets |
|                                 |                          |    |                    |                    |                                      |

| (1)   | An                employee holding stock options vests in one third of the award annually.                An employee vests in the entire restricted stock award at the end                of the                three-year vesting period. Employees terminating their employment                due to                retirement fully vest in their stock option and restricted stock                awards                upon retirement; and, subject to certain conditions, retain the right                to                receive a pro rata payout under the performance units awards to the                extent                services have been provided. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Performance                unit awards provide an employee with a potential cash payment at                the end                of a three-year performance cycle based on Kerr-McGee's total stockholder                return (stockholder return assuming dividend reinvestment) relative                to                selected peer companies. Payout levels vary depending upon Kerr-McGee's                rank relative to certain peer companies. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                             |   | Three                Months Ended |    |
|----------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                             |   | March                31,          |    |
| (Millions                of dollars)                                             |   | **2006**                          |    | 2005 |   |
|                                                                             |   |                              |    |   |   |
| Stock                options                                                     |   | **$**                             | **20**  |   | $ | 1 |   |
| Restricted                stock                                                  |   |                              | **15**  |   |   | 5 |   |
| Performance                units                                                 |   |                              | **6**   |   |   | 7 |   |
|                   Total stock-based compensation expense, pretax       |   |                              | **41**  |   |   | 13 |   |
| Income                tax benefit                                                |   |                              | **(14** | **)** |   | (5 | ) |
|                   Total stock-based compensation expense, net of taxes |   | **$**                             | **27**  |   | $ | 8 |   |

|                                 |   | Unrecognized |   | Remaining |   |
|--------------------------------------|--------|--------------|--------|-----------|--------|
|                                 |   | Cost         |   | Period    |   |
| (Millions                of dollars) |   | (Pretax)     |   | (years)   |   |
|                                 |   |         |   |      |   |
| Stock                options         |   | $            | 35     |      |   | 2.3 |   |
| Restricted                stock      |   |         | 30     |      |   | 2.1 |   |
| Performance                units     |   |         | 22     |      |   | 2.1 |   |
|                                 |   | $            | 87     |      |   | 2.2 |   |

----

***Effect      of Tronox Separation***

***Stock      Options***

|                                            |   |                     |      |                     |   |                            |   | Intrinsic                     |   |
|-------------------------------------------------|--------|--------------------------|-----------|--------------------------|--------|---------------------------------|--------|-------------------------------|--------|
|                                            |   | Number                of |      |                     |   | Contractual                     |   | Value                         |   |
| Options                                         |   | Shares                   |      | Price                (3) |   | Life                (years) (3) |   | (Millions)                (4) |   |
|                                            |   |                     |      |                     |   |                            |   |                          |   |
| Outstanding                at December 31, 2005 |   |                     | 4,799,124 |                     | $      | 53.21                           |   |                          |   |   |   |   |   |
| Granted                                         |   |                     | 1,172,225 |                     |   | 94.10                           |   |                          |   |   |   |   |   |
| Exercised                                       |   |                     | (560,271  | )                        |   | 52.16                           |   |                          |   |   |   |   |   |
| Forfeited                (1)                    |   |                     | (182,809  | )                        |   | 55.80                           |   |                          |   |   |   |   |   |
| Expired                                         |   |                     | (808      | )                        |   | 57.40                           |   |                          |   |   |   |   |   |
| Antidilution                adjustment (2)      |   |                     | 193,655   |                     |   | (2.24                           | )      |                          |   |   |   |   |   |
| Outstanding                at March 31, 2006    |   |                     | 5,421,116 |                     | $      | 60.16                           |   |                          | 7.5    |   | $ | 191 |   |
| Exercisable                at March 31, 2006    |   |                     | 2,979,237 |                     | $      | 51.03                           |   |                          | 6.2    |   | $ | 132 |   |

| (1)   | Includes                options to purchase 161,596 shares of Kerr-McGee stock that were                forfeited                by Tronox employees at the date of the                Distribution. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Represents                a modification to the terms of outstanding awards in connection with                the                distribution, as discussed below. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Represents                weighted average exercise price and weighted average remaining contractual                life, as applicable. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Reflects                aggregate intrinsic value based on the difference between the market                price                of Kerr-McGee stock and the options' exercise                price. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Three                Months Ended |   |
|---------------------------------------|--------|-----------------------------------|--------|
|                                  |   | March                31,          |   |
| (Millions                of dollars)  |   | **2006**                          |   | 2005 |   |
|                                  |   |                              |   |   |   |
| Intrinsic                value        |   | **$**                             | **27** |   | $ | 45 |   |
| Cash                proceeds received |   |                              | **29** |   |   | 132 |   |
| Excess                tax benefit     |   |                              | **7**  |   |   | 16 |   |

*Valuation      and cost attribution methods *

----

|                                                                    |   | Three                Months Ended |      |
|-------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                    |   | March                31,          |      |
|                                                                    |   | **2006**                          |      | 2005 |   |
|                                                                    |   |                              |      |   |   |
| Expected                volatility (annualized)                         |   |                              | **28.0**  | **%** |   | 26.4 | % |
| Expected                dividend yield (annualized)                     |   |                              | **0.2**   | **%** |   | 3.5 | % |
| Expected                term (years)                                    |   |                              | **5.6**   |   |   | 6.0 |   |
| Risk-free                rate                                           |   |                              | **4.49**  | **%** |   | 3.9 | % |
| Weighted                average per-share fair value of options granted |   | **$**                             | **33.61** |   | $ | 20.96 |   |

*Expected      Volatility *

*Expected      Dividend Yield *

*Expected      Term *

*Risk-Free      Interest Rate*

***Nonvested      and Restricted Stock***

|                                        |   | Shares |      | Fair                Value (1) |   |
|---------------------------------------------|--------|--------|-----------|-------------------------------|--------|
|                                        |   |   |      |                          |   |
| Balance                at December 31, 2005 |   |   | 1,240,625 |                          | $      | 53.85 |   |
| Granted                                     |   |   | 241,070   |                          |   | 98.58 |   |
| Vested                                      |   |   | (409,885  | )                             |   | 43.22 |   |
| Forfeited                (2)                |   |   | (79,784   | )                             |   | 62.16 |   |
| Balance                at March 31, 2006    |   |   | 992,026   |                          | $      | 68.44 |   |

| (1)   | Represents                the weighted-average grant-date fair                value. |
|-----------------|--------------------------------------------------------------------------------------|

| (2)   | Includes                approximately 73,000 shares forfeited by Tronox employees as of the                Distribution date. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------|

*Valuation      and cost attribution method *

----

***Performance      Units***

|                                                                 |   |              |       | Carrying                      |   |
|----------------------------------------------------------------------|--------|-------------------|------------|------------------------------------|--------|
|                                                                 |   | Performance  |       | Amount                    of  |   |
| (Millions                    of dollars)                             |   | Units             |       | Liability                          |   |
|                                                                 |   |              |       |                               |   |
| Balance                    at December 31, 2005                      |   |              | 33,545,679 |                               | $      | 21 |   |
| Cumulative                    effect of adopting FAS 123(R)          |   |              | (675,871   | )                                  |   | (2 | ) |
| Forfeitures                    by Tronox employees upon Distribution |   |              | (2,794,330 | )                                  |   | (1 | ) |
| Units                    granted (1)                                 |   |              | 15,980,157 |                               |   | N/A |   |
| Award                    settlement                                  |   |              | (9,292,084 | )                                  |   | (9 | ) |
| Compensation                    cost                                 |   |              | -          |                               |   | 6 |   |
| Balance                    at March 31, 2006 (2)                     |   |              | 36,763,551 |                               | $      | 15 |   |

| (1)   | Grant-date                measurement of new performance unit awards is not required to be                performed. Rather, fair value of the 2006 grant was estimated as                of March                31, 2006 to determine the first quarter 2006 compensation cost associated                with these awards. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Performance                units balance represents units outstanding and expected to                vest. |
|-----------------|------------------------------------------------------------------------------------------------------------|

*Valuation      and cost attribution method *

**10.**
**Employee      Benefit Plans **

***Overview***

***Effect      of Tronox Separation***

----

***Benefit      Obligations and Funded Status***
*** ***

|                                                           |   |       |      | Postretirement                 |   |
|----------------------------------------------------------------|--------|------------|-----------|--------------------------------|--------|
|                                                           |   | Retirement |      | Health                and Life |   |
| (Millions                of dollars)                           |   | Plans      |      | Plans                          |   |
|                                                           |   |       |      |                           |   |
| *Change                in benefit obligations -*               |   |       |      |                           |   |   |   |
| Benefit                obligation at December 31, 2005         |   | **$**      | **1,255** |                           | $      | 297 |   |
| Service                cost                                    |   |       | **8**     |                           |   | 1 |   |
| Interest                cost                                   |   |       | **16**    |                           |   | 4 |   |
| Plan                amendments/law changes                     |   |       | **15**    |                           |   | - |   |
| Net                actuarial gain                              |   |       | **(32**   | **)**                          |   | (4 | ) |
| Contributions                by plan participants              |   |       | **-**     |                           |   | 2 |   |
| Benefits                paid                                   |   |       | **(31**   | **)**                          |   | (7 | ) |
| Tronox                Distribution                             |   |       | **(500**  | **)**                          |   | (147 | ) |
| Benefit                obligation at March 31, 2006            |   | **$**      | **731**   |                           | $      | 146 |   |
| *Change                in plan assets -*                       |   |       |      |                           |   |   |   |
| Fair                value of plan assets at December 31, 2005  |   | **$**      | **1,132** |                           | $      | - |   |
| Actual                return on plan assets                    |   |       | **31**    |                           |   | - |   |
| Employer                contributions                          |   |       | **2**     |                           |   | 5 |   |
| Participant                contributions                       |   |       | **-**     |                           |   | 2 |   |
| Benefits                paid                                   |   |       | **(31**   | **)**                          |   | (7 | ) |
| Tronox                Distribution (1)                         |   |       | **(503**  | **)**                          |   | - |   |
| Fair                value of plan assets at March 31, 2006 (2) |   | **$**      | **631**   |                           | $      | - |   |

| (1)   | Includes                plan assets of $441 million transferred from Kerr-McGee’s U.S. qualified                retirement plan trust to Tronox on March 30, 2006, the Distribution                date.                The initial transfer amount was determined based on census information                and                actuarial estimates as of an earlier date. A final determination                of plan                assets to be transferred to Tronox based on census data and other                information as of the Distribution date will be completed in May                2006 and                will result in an incremental transfer of plan assets between Kerr-McGee                and Tronox. The company does not expect this incremental transfer                to have                a material effect on its financial statements. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Excludes                the grantor trust assets of $67 million associated with the company’s                supplemental nonqualified U.S. retirement plans. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                         |   |                            |     | Postretirement                       |   |
|--------------------------------------------------------------|--------|---------------------------------|----------|--------------------------------------|--------|
|                                                         |   | Retirement                Plans |     | Health                and Life Plans |   |
|                                                         |   | **March                31,**    |     | December                31,          |   | **March                31,** |   | December                31, |   |
| (Millions                of dollars)                         |   | **2006**                        |     | 2005                                 |   | **2006** |   | 2005 |   |
|                                                         |   |                            |     |                                 |   |   |   |   |   |
| Benefit                obligation                            |   | **$**                           | **731**  |                                 | $      | 1,255 |   | **$** | **146** |   | $ | 297 |   |
| Fair                value of plan assets                     |   |                            | **631**  |                                 |   | 1,132 |   |   | **-** |   |   | - |   |
| Funded                status of plans - under funded         |   |                            | **(100** | **)**                                |   | (123 | ) |   | **(146** | **)** |   | (297 | ) |
| *Amounts                not recognized in the Condensed*     |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| *Consolidated                Balance Sheet -*                |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| Prior                service cost                            |   |                            | **37**   |                                 |   | 42 |   |   | **(6** | **)** |   | (14 | ) |
| Net                actuarial loss                            |   |                            | **150**  |                                 |   | 282 |   |   | **37** |   |   | 80 |   |
| Net                prepaid expense (accrued liability)       |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| recognized                                                   |   | **$**                           | **87**   |                                 | $      | 201 |   | **$** | **(115** | **)** | $ | (231 | ) |
| *Classification                of amounts recognized in the* |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| *Condensed                Consolidated Balance Sheet -*      |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| Prepaid                pension cost                          |   | **$**                           | **126**  |                                 | $      | 249 |   | **$** | **-** |   | $ | - |   |
| Accrued                benefit liability                     |   |                            | **(87**  | **)**                                |   | (79 | ) |   | **(115** | **)** |   | (231 | ) |
| Intangible                asset                              |   |                            | **6**    |                                 |   | - |   |   | **-** |   |   | - |   |
| Accumulated                other comprehensive loss (pretax) |   |                            | **42**   |                                 |   | 31 |   |   | **-** |   |   | - |   |
| Total                                                        |   | **$**                           | **87**   |                                 | $      | 201 |   | **$** | **(115** | **)** | $ | (231 | ) |

----

|                                          |   | **At                March 31, 2006** |    | At                December 31, 2005  |   |
|-----------------------------------------------|--------|--------------------------------------|---------|--------------------------------------|--------|
|                                          |   | Nonqualified                         |    | Postretirement                       |   | Nonqualified |   | Postretirement |   |
| (Millions                of dollars)          |   | Retirement                Plans (1)  |    | Health                and Life Plans |   | Retirement                Plans (1) |   | Health                and Life Plans |   |
|                                          |   |                                 |    |                                 |   |   |   |   |   |
| Accumulated                benefit obligation |   | **$**                                | **95**  |                                 | **$**  | **146** |   | $ | 65 |   | $ | 297 |   |
| Projected                benefit obligation   |   |                                 | **104** |                                 |   | **146** |   |   | 80 |   |   | 297 |   |

| (1)   | Although                not considered plan assets, a grantor trust was established from                which                payments for certain U.S. supplemental benefits are made. The trust                assets                had a balance of $67 million and $50 million at March 31, 2006 and                December 31, 2005, respectively. In January 2006, the company made                a                discretionary contribution to the grantor trust of $22 million. In                connection with the Distribution of Tronox, the company transferred                $4                million of grantor trust assets to the newly-established Tronox                nonqualified benefit plan. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Millions                of dollars)               |   | **At                March 31, 2006** |    | At                December 31, 2005 |   |
|----------------------------------------------------|--------|--------------------------------------|---------|-------------------------------------|--------|
|                                               |   |                                 |    |                                |   |
| Accumulated                benefit obligation      |   | **$**                                | **575** |                                | $      | 990 |   |
|                                               |   |                                 |    |                                |   |   |   |
| Projected                benefit obligation        |   | **$**                                | **627** |                                | $      | 1,093 |   |
| Market                value of plan assets         |   |                                 | **631** |                                |   | 1,070 |   |
| Funded                status - over/(under) funded |   | **$**                                | **4**   |                                | $      | (23 | ) |

***Expected      Benefit Payments***

|                                                |   |   |   |   |   |   |   |   |   |   |   | 2011-  |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| (Millions                of dollars)                |   | 2006   |   | 2007   |   | 2008   |   | 2009   |   | 2010   |   | 2015   |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retirement                plans                     |   | $      | 63     |   | $      | 76     |   | $      | 62     |   | $      | 65     |   | $ | 65 |   | $ | 340 |   |
| Postretirement                health and life plans |   |   | 11     |   |   | 11     |   |   | 11     |   |   | 11     |   |   | 11 |   |   | 54 |   |

***Net      Periodic Cost***

|                                          |   |                            |    | Postretirement                       |   |
|-----------------------------------------------|--------|---------------------------------|---------|--------------------------------------|--------|
|                                          |   | Retirement                Plans |    | Health                and Life Plans |   |
| (Millions                of dollars)          |   | **2006**                        |    | 2005                                 |   | **2006** |   | 2005 |   |
|                                          |   |                            |    |                                 |   |   |   |   |   |
| Net                periodic cost -            |   |                            |    |                                 |   |   |   |   |   |   |   |   |   |
| Service                cost                   |   | **$**                           | **7**   |                                 | $      | 7 |   | **$** | **1** |   | $ | 1 |   |
| Interest                cost                  |   |                            | **15**  |                                 |   | 16 |   |   | **2** |   |   | 2 |   |
| Expected                return on plan assets |   |                            | **(20** | **)**                                |   | (24 | ) |   | **-** |   |   | - |   |
| Net                amortization -             |   |                            |    |                                 |   |   |   |   |   |   |   |   |   |
| Prior                service cost             |   |                            | **5**   |                                 |   | 2 |   |   | **-** |   |   | (1 | ) |
| Net                actuarial (gain) loss      |   |                            | **2**   |                                 |   | 1 |   |   | **-** |   |   | 1 |   |
| Total                                         |   | **$**                           | **9**   |                                 | $      | 2 |   | **$** | **3** |   | $ | 3 |   |

***Assumptions***

|                                          | **March                30, 2006** | December                31, 2005  |
|-----------------------------------------------|-----------------------------------|-----------------------------------|
|                                          |                              |                              |
| Discount                rate                  | **5.85%**                         | 5.50%                             |
| Rate                of compensation increases | **4.50%**                         |                   4.50% |

----

| **11.** | **Earnings                Per Share** |
|---------|---------------------------------------|

|                                          |   | For                the Three Months Ended March 31, |    |
|-----------------------------------------------|--------|-----------------------------------------------------|---------|
|                                          |   |                                                |    | **2006** |   |   |   |   |   | 2005 |   |   |   |
|                                          |   | **Income                from**                      |    |   |   |   |   | Income                from |   |   |   |   |   |
| (In                millions, except           |   | **Continuing**                                      |    |   |   | **Per-Share** |   | Continuing |   |   |   | Per-Share |   |
| per-share                amounts)             |   | **Operations**                                      |    | **Shares** |   | **Income** |   | Operations |   | Shares |   | Income |   |
|                                          |   |                                                |    |   |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share       |   | **$**                                               | **276** |   |   | **113.6** |   | **$** | **2.43** |   | $ | 243 |   |   | 154.8 |   | $ | 1.57 |   |
| Effect                of dilutive securities: |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.25%                convertible debentures   |   |                                                | -       |   |   | - |   |   |   |   |   | 3 |   |   | 6.4 |   |   |   |   |
| Restricted                stock               |   |                                                | -       |   |   | **.5** |   |   |   |   |   | - |   |   | .6 |   |   |   |   |
| Stock                options                  |   |                                                | -       |   |   | **1.3** |   |   |   |   |   | - |   |   | 1.0 |   |   |   |   |
| Diluted                earnings per share     |   | **$**                                               | **276** |   |   | **115.4** |   | **$** | **2.39** |   | $ | 246 |   |   | 162.8 |   | $ | 1.51 |   |

| **12.** | **Capital                Stock** |
|---------|----------------------------------|

|                                                             |   | Common |    | Treasury    |   |
|------------------------------------------------------------------|--------|--------|---------|-------------|--------|
| (Thousands                of shares)                             |   | Stock  |    |  Stock |   |
|                                                             |   |   |    |        |   |
| Balance                at December 31, 2004                      |   |   | 152,049 |        |   | 160 |   |
| Stock                option exercises                            |   |   | 2,406   |        |   | - |   |
| Issuance                of restricted stock                      |   |   | 450     |        |   | - |   |
| Forfeiture                of restricted stock                    |   |   | -       |        |   | 29 |   |
| Shares                issued upon conversion of 5.25% debentures |   |   | 9,818   |        |   | - |   |
| Purchases                of treasury shares                      |   |   | -       |        |   | 3,145 |   |
| Balance                at March 31, 2005                         |   |   | 164,723 |        |   | 3,334 |   |
|                                                             |   |   |    |        |   |   |   |
| Balance                at December 31, 2005                      |   |   | 119,669 |        |   | 3,457 |   |
| Stock                option exercises                            |   |   | 559     |        |   | **-** |   |
| Issuance                of restricted stock                      |   |   | 241     |        |   | **-** |   |
| Other                issuances                                   |   |   | 7       |        |   | - |   |
| Forfeiture                of restricted stock                    |   |   | -       |        |   | 80 |   |
| Purchases                of treasury shares (1)                  |   |   | -       |        |   | 3,497 |   |
| Balance                at March 31, 2006                         |   |   | 120,476 |        |   | 7,034 |   |

----

| **13.** | **Contingencies** |
|---------|-------------------|

|                                        |   |                        |   | Reserves                for    |   |                          |   |
|---------------------------------------------|--------|-----------------------------|--------|--------------------------------|--------|-------------------------------|--------|
|                                        |   | Reserves                for |   | Environmental                  |   | Reimbursements                |   |
| (Millions                of dollars)        |   | Litigation                  |   | Remediation                (1) |   | Receivable                (1) |   |
|                                        |   |                        |   |                           |   |                          |   |
| Balance                at December 31, 2005 |   | $                           | 30     |                           | $      | 268                           |   | $ | 57 |   |
| Provisions                / Accruals        |   |                        | -      |                           |   | 2                             |   |   | 21 |   |
| Payments                / Settlements       |   |                        | (5     | )                              |   | (11                           | )      |   | (21 | ) |
| Tronox                Distribution          |   |                        | (8     | )                              |   | (216                          | )      |   | (57 | ) |
| Balance                at March 31, 2006    |   | $                           | 17     |                           | $      | 43                            |   | $ | - |   |

| (1)   | Provisions                for environmental remediation and restoration and associated accruals                of                third-party reimbursements of environmental costs include $2 million                and                $21 million, respectively, related to Tronox. These amounts are reflected                in the Condensed Consolidated Statement of Income as a component                of loss                from discontinued operations. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Some                sites are in the early stages of investigation, and other sites may                be                identified in the future. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Remediation                activities vary significantly in duration, scope and cost from site                to                site depending on the mix of unique site characteristics, applicable                technologies and regulatory agencies                involved. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cleanup                requirements are difficult to predict at sites where remedial                investigations have not been completed or final decisions have not                been                made regarding cleanup requirements, technologies or other factors                that                bear on cleanup costs. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Environmental                laws frequently impose joint and several liability on all responsible                parties, and it can be difficult to determine the number and financial                condition of other responsible parties and their respective shares                of                responsibility for cleanup costs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Environmental                laws and regulations, as well as enforcement policies, are continually                changing, and the outcome of court proceedings and discussions with                regulatory agencies are inherently                uncertain. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Unanticipated                construction problems and weather conditions can hinder the completion                of                environmental remediation. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Some                legal matters are in the early stages of investigation or proceeding                or                their outcomes otherwise may be difficult to predict, and other legal                matters may be identified in the future. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                inability to implement a planned engineering design or use planned                technologies and excavation methods may require revisions to the                design of                remediation measures, which can delay remediation and increase                costs. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                identification of additional areas or volumes of contamination and                changes                in costs of labor, equipment and technology generate corresponding                changes                in environmental remediation costs. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Los      Angeles County, California**

***Financial      Reserves***

**Other      Environmental Sites**

**Deepwater      Royalty Relief Act**

**Other      Litigation**

----

| **14.** | **Business                Segments** |
|---------|--------------------------------------|

| (Millions                  of dollars)                                 |   | Gulf                  of Mexico |   | Rocky                  Mountain |   | Southern |   | China  |   | Other                  (1) |   | Total  |   |
|------------------------------------------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|----------|--------|--------|--------|----------------------------|--------|--------|--------|
|                                                                   |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |
| **Three                  months ended March 31, 2006:**                |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |
| Revenues                                                               |   | $                               | 530    |                            | $      | 365      |   | $      | 232    |                       | $      | 74     |   | $ | - |   | $ | 1,201 | (2)  |
|                                                                   |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   |   |   |
| Operating                  profit                                      |   | $                               | 388    |                            | $      | 209      |   | $      | 123    |                       | $      | 46     |   | $ | (28 | ) | $ | 738 |   |
|                                                                   |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   |   |   |
| Net                  marketing margin                                  |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   | (1 | ) |
| Loss                  on commodity derivatives                         |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   | (114 | ) |
| Corporate                  costs                                       |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   | (70 | )                  (3) |
| Interest                  and debt expense                             |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   | (122 | ) |
| Other                  income (expense)                                |   |                            |   |                            |   |     |   |   |   |                       |   |   |   |   |   |   |   | (3 | ) |
| Income                  from continuing operations before income taxes |   |                            |   |                            |   |     |   |   |   | $                          | 428    |   |

| **Three                months ended March 31, 2005:**                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Revenues                                                             |   | $      | 496    |   | $      | 265    |   | $      | 190    |   | $      | 74     |   | $      | -      |   | $ | 1,025 | (2)  |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                profit                                      |   | $      | 312    |   | $      | 135    |   | $      | 101    |   | $      | 48     |   | $      | (21    | ) | $ | 575 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                marketing margin                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2 |   |
| Loss                on commodity derivatives                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (86 | ) |
| Corporate                costs                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (58 | )                (3) |
| Interest                and debt expense                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (60 | ) |
| Other                income (expense)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2 | ) |
| Income                from continuing operations before income taxes |   |   |   |   |   |   |   |   |   | $      | 371    |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)   | Represents                exploration activities outside our core operating areas and certain                general and administrative costs associated with E&P                operations. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Excludes                revenues of $213 million and $132 million associated with third-party                marketing activities in 2006 and 2005,                respectively. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Represents                general and administrative costs, depreciation expense and property                taxes                incurred outside our E&P operations. Certain corporate general and                administrative costs previously reported as part of E&P segment                operating profit in 2005 are included here for consistency with 2006                presentation. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **15.** | **Condensed                Consolidating Financial                Information** |
|---------|---------------------------------------------------------------------------------|

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Income**

**For      the Three Months Ended March 31, 2006**

|                                                            |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|-----------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                            |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |
| **Revenues**                                                    |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Oil                and gas sales                                |   | $                | -      |            | $      | 162           |   | $            | 1,017  |         | $      | - |   | $ | 1,179 |   |
| Loss                on commodity derivatives                    |   |             | -      |            |   | -             |   |         | (114   | )            |   | - |   |   | (114 | ) |
| Gas                marketing revenues                           |   |             | -      |            |   | 213           |   |         | -      |         |   | - |   |   | 213 |   |
| Other                revenues                                   |   |             | -      |            |   | 19            |   |         | 3      |         |   | - |   |   | 22 |   |
| Total                Revenues                                   |   |             | -      |            |   | 394           |   |         | 906    |         |   | - |   |   | 1,300 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Expenses**                           |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Lease                operating costs                            |   |             | -      |            |   | 14            |   |         | 117    |         |   | - |   |   | 131 |   |
| Production                and ad valorem taxes                  |   |             | -      |            |   | 3             |   |         | 28     |         |   | - |   |   | 31 |   |
| Transportation                expense                           |   |             | -      |            |   | 3             |   |         | 20     |         |   | - |   |   | 23 |   |
| General                and administrative expense               |   |             | -      |            |   | -             |   |         | 74     |         |   | - |   |   | 74 |   |
| Exploration                expense                              |   |             | -      |            |   | -             |   |         | 52     |         |   | - |   |   | 52 |   |
| Gas                gathering, processing and other              |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
|                   expenses                            |   |             | -      |            |   | 19            |   |         | 15     |         |   | - |   |   | 34 |   |
| Gas                marketing costs                              |   |             | -      |            |   | 214           |   |         | -      |         |   | - |   |   | 214 |   |
| Depreciation,                depletion and amortization         |   |             | -      |            |   | 26            |   |         | 163    |         |   | - |   |   | 189 |   |
| Accretion                expense                                |   |             | -      |            |   | -             |   |         | 3      |         |   | - |   |   | 3 |   |
| Gain                on sales of oil and gas properties          |   |             | -      |            |   | -             |   |         | (4     | )            |   | - |   |   | (4 | ) |
| Total                Operating Expenses                         |   |             | -      |            |   | 279           |   |         | 468    |         |   | - |   |   | 747 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Income**                             |   |             | -      |            |   | 115           |   |         | 438    |         |   | - |   |   | 553 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Interest                expense                                 |   |             | (77    | )               |   | -             |   |         | (188   | )            |   | 224 |   |   | (41 | ) |
| Loss                on early repayment and modification of debt |   |             | (12    | )               |   | -             |   |         | (69    | )            |   | - |   |   | (81 | ) |
| Other                income (expense)                           |   |             | 352    |            |   | 6             |   |         | 199    |         |   | (560 | ) |   | (3 | ) |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations before**     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **                  Income Taxes**                    |   |             | 263    |            |   | 121           |   |         | 380    |         |   | (336 | ) |   | 428 |   |
| Benefit                (Provision) for Income Taxes             |   |             | 26     |            |   | (45           | )      |         | (133   | )            |   | - |   |   | (152 | ) |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations**            |   |             | 289    |            |   | 76            |   |         | 247    |         |   | (336 | ) |   | 276 |   |
| Income                (loss) from discontinued operations,      |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
|                   net of taxes                        |   |             | (36    | )               |   | -             |   |         | 13     |         |   | - |   |   | (23 | ) |
| Cumulative                effect of change in accounting        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
|                   principle, net of taxes             |   |             | 2      |            |   | -             |   |         | -      |         |   | - |   |   | 2 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Net                Income**                                   |   | $                | 255    |            | $      | 76            |   | $            | 260    |         | $      | (336 | ) | $ | 255 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Income**

**For      the Three Months Ended March 31, 2005**

|                                                        |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|-------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                        |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |
| **Revenues**                                                |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Oil                and gas sales                            |   | $                | -      |            | $      | 129           |   | $            | 877    |         | $      | - |   | $ | 1,006 |   |
| Loss                on commodity derivatives                |   |             | -      |            |   | -             |   |         | (86    | )            |   | - |   |   | (86 | ) |
| Gas                marketing revenues                       |   |             | -      |            |   | 132           |   |         | -      |         |   | - |   |   | 132 |   |
| Other                revenues                               |   |             | -      |            |   | 16            |   |         | 3      |         |   | - |   |   | 19 |   |
| Total                Revenues                               |   |             | -      |            |   | 277           |   |         | 794    |         |   | - |   |   | 1,071 |   |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Expenses**                       |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Lease                operating costs                        |   |             | -      |            |   | 10            |   |         | 98     |         |   | - |   |   | 108 |   |
| Production                and ad valorem taxes              |   |             | -      |            |   | 8             |   |         | 22     |         |   | - |   |   | 30 |   |
| Transportation                expense                       |   |             | -      |            |   | 3             |   |         | 20     |         |   | - |   |   | 23 |   |
| General                and administrative expense           |   |             | -      |            |   | (1            | )      |         | 54     |         |   | - |   |   | 53 |   |
| Exploration                expense                          |   |             | -      |            |   | 2             |   |         | 53     |         |   | - |   |   | 55 |   |
| Gas                gathering, processing and other          |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| expenses                                                    |   |             | -      |            |   | 17            |   |         | 11     |         |   | - |   |   | 28 |   |
| Gas                marketing costs                          |   |             | -      |            |   | 130           |   |         |   |         |   |   |   |   | 130 |   |
| Depreciation,                depletion and amortization     |   |             | -      |            |   | 28            |   |         | 195    |         |   | - |   |   | 223 |   |
| Accretion                expense                            |   |             | -      |            |   | 1             |   |         | 5      |         |   | - |   |   | 6 |   |
| Asset                impairments                            |   |             | -      |            |   | -             |   |         | 4      |         |   | - |   |   | 4 |   |
| Gain                on sales of oil and gas properties      |   |             | -      |            |   | -             |   |         | (22    | )            |   | - |   |   | (22 | ) |
| Total                Operating Expenses                     |   |             | -      |            |   | 198           |   |         | 440    |         |   | - |   |   | 638 |   |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Income**                         |   |             | -      |            |   | 79            |   |         | 354    |         |   | - |   |   | 433 |   |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Interest                expense                             |   |             | (42    | )               |   | (6            | )      |         | (95    | )            |   | 83 |   |   | (60 | ) |
| Other                income (expense)                       |   |             | 390    |            |   | -             |   |         | 57     |         |   | (449 | ) |   | (2 | ) |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations before** |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                Taxes**                             |   |             | 348    |            |   | 73            |   |         | 316    |         |   | (366 | ) |   | 371 |   |
| Benefit                (Provision) for Income Taxes         |   |             | 7      |            |   | (25           | )      |         | (110   | )            |   | - |   |   | (128 | ) |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations**        |   |             | 355    |            |   | 48            |   |         | 206    |         |   | (366 | ) |   | 243 |   |
| Income                from discontinued operations,         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
|                   net of taxes                    |   |             | -      |            |   | -             |   |         | 112    |         |   | - |   |   | 112 |   |
|                                                        |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Net                Income**                               |   | $                | 355    |            | $      | 48            |   | $            | 318    |         | $      | (366 | ) | $ | 355 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Balance Sheet**

**As      of March 31, 2006**

|                                                         |   |  Kerr-McGee |    |  Guarantor |   | Non-Guarantor |   |         |     |         |   |
|--------------------------------------------------------------|--------|------------------|---------|-----------------|--------|---------------|--------|--------------|----------|--------------|--------|
| (Millions                of dollars)                         |   | Corporation      |    | Subsidiary      |   | Subsidiaries  |   | Eliminations |     | Consolidated |   |
|                                                         |   |             |    |            |   |          |   |         |     |         |   |
| **ASSETS**                                                   |   |
| **Current                Assets**                            |   |             |    |            |   |          |   |         |     |         |   |   |   |   |   |   |
| Cash                and cash equivalents                     |   | $                | 2       |            | $      | -             |   | $            | 81       |         | $      | - |   | $ | 83 |   |
|    Intercompany              receivables      |   |             |  - |            |   | -             |   |         |  60 |         |   |  (60 | )  |   | - |   |
| Accounts                receivable                           |   |             | -       |            |   | 246           |   |         | 431      |         |   | - |   |   | 677 |   |
| Derivatives                and other current assets          |   |             | -       |            |   | 9             |   |         | 179      |         |   | - |   |   | 188 |   |
| Deferred                income taxes                         |   |             | -       |            |   | -             |   |         | 341      |         |   | - |   |   | 341 |   |
| Assets                held for sale                          |   |             | -       |            |   | -             |   |         | 22       |         |   | - |   |   | 22 |   |
| Total                Current Assets                          |   |             | 2       |            |   | 255           |   |         | 1,114    |         |   | (60 | ) |   | 1,311 |   |
|                                                         |   |             |    |            |   |          |   |         |     |         |   |   |   |   |   |   |
| **Property,                Plant and Equipment - Net**       |   |             |    |            |   | 2,024         |   |         | 5,956    |         |   | - |   |   | 7,980 |   |
| **Investments                in Subsidiaries**               |   |             | 11,151  |            |   | -             |   |         | -        |         |   | (11,151 | ) |   | - |   |
| **Investments,                Derivatives and Other Assets** |   |             | 16      |            |   | -             |   |         | 390      |         |   | (80 | ) |   | 326 |   |
| **Goodwill                and Other Intangible Assets**      |   |             | -       |            |   | 346           |   |         | 831      |         |   | - |   |   | 1,177 |   |
| **Assets                Held for Sale**                      |   |             | -       |            |   | -             |   |         | 693      |         |   | - |   |   | 693 |   |
|                                                         |   |             |    |            |   |          |   |         |     |         |   |   |   |   |   |   |
| **Total                Assets**                              |   | $                | 11,169  |            | $      | 2,625         |   | $            | 8,984    |         | $      | (11,291 | ) | $ | 11,487 |   |
|                                                         |   |             |    |            |   |          |   |         |     |         |   |   |   |   |   |   |

| **LIABILITIES                AND STOCKHOLDERS' EQUITY**         |   |
|-----------------------------------------------------------------|--------|
| **Current                Liabilities**                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intercompany                borrowings                          |   | $ | 4,553 |   | $ | 128 |   | $ | - |   | $ | (4,681 | ) | $ | - |   |
| Accounts                payable                                 |   |   | 6 |   |   | 73 |   |   | 279 |   |   | - |   |   | 358 |   |
| Long-term                debt due within one year               |   |   | 302 |   |   | - |   |   | - |   |   | - |   |   | 302 |   |
| Income                taxes payable                             |   |   | - |   |   | - |   |   | 166 |   |   | - |   |   | 166 |   |
| Commodity                derivative liabilities                 |   |   | - |   |   | 5 |   |   | 915 |   |   | - |   |   | 920 |   |
| Accrued                liabilities                              |   |   | 19 |   |   | 139 |   |   | 609 |   |   | - |   |   | 767 |   |
| Liabilities                associated with assets held for sale |   |   | - |   |   | - |   |   | 21 |   |   | - |   |   | 21 |   |
| Total                Current Liabilities                        |   |   | 4,880 |   |   | 345 |   |   | 1,990 |   |   | (4,681 | ) |   | 2,534 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long-Term                Debt**                               |   |   | 1,802 |   |   | - |   |   | 297 |   |   | - |   |   | 2,099 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent                Liabilities**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                income taxes                            |   |   | (54 | ) |   | 534 |   |   | 1,002 |   |   | - |   |   | 1,482 |   |
| Asset                retirement obligations                     |   |   | - |   |   | 39 |   |   | 150 |   |   | - |   |   | 189 |   |
| Commodity                derivative liabilities                 |   |   | - |   |   | - |   |   | 431 |   |   | - |   |   | 431 |   |
| Other                                                           |   |   | 55 |   |   | 60 |   |   | 316 |   |   | - |   |   | 431 |   |
| Liabilities                associated with assets held for sale |   |   | - |   |   | - |   |   | 126 |   |   | - |   |   | 126 |   |
| Total                Noncurrent Liabilities                     |   |   | 1 |   |   | 633 |   |   | 2,025 |   |   | - |   |   | 2,659 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Stockholders'                Equity**                         |   |   | 4,486 |   |   | 1,647 |   |   | 4,672 |   |   | (6,610 | ) |   | 4,195 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Stockholders' Equity**   |   | $ | 11,169 |   | $ | 2,625 |   | $ | 8,984 |   | $ | (11,291 | ) | $ | 11,487 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Balance Sheet**

**As      of December 31, 2005**

|                                                         |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|--------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                         |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |
| **ASSETS**                                                   |   |
| **Current                Assets**                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Cash                and cash equivalents                     |   | $                | 1      |            | $      | -             |   | $            | 1,052  |         | $      | - |   | $ | 1,053 |   |
| Accounts                receivable                           |   |             | 1      |            |   | 245           |   |         | 507    |         |   | - |   |   | 753 |   |
| Derivatives                and other current assets          |   |             | -      |            |   | 17            |   |         | 188    |         |   | - |   |   | 205 |   |
| Deferred                income taxes                         |   |             | -      |            |   | 2             |   |         | 545    |         |   | - |   |   | 547 |   |
| Tronox                Assets                                 |   |             | -      |            |   | -             |   |         | 691    |         |   | - |   |   | 691 |   |
| Total                Current Assets                          |   |             | 2      |            |   | 264           |   |         | 2,983  |         |   | - |   |   | 3,249 |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Property,                Plant and Equipment - Net**       |   |             | **-**  |            |   | 1,915         |   |         | 6,520  |         |   | - |   |   | 8,435 |   |
| **Investments                in Subsidiaries**               |   |             | 8,688  |            |   | -             |   |         | -      |         |   | (8,688 | ) |   | - |   |
| **Investments,                Derivatives and Other Assets** |   |             | 25     |            |   | 1             |   |         | 481    |         |   | (80 | ) |   | 427 |   |
| **Goodwill                and Other Intangible Assets**      |   |             | -      |            |   | 346           |   |         | 833    |         |   | - |   |   | 1,179 |   |
| **Assets                Held for Sale and Tronox Assets**    |   |             | -      |            |   | -             |   |         | 986    |         |   | - |   |   | 986 |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Total                Assets**                              |   | $                | 8,715  |            | $      | 2,526         |   | $            | 11,803 |         | $      | (8,768 | ) | $ | 14,276 |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |

| **LIABILITIES                AND STOCKHOLDERS' EQUITY**       |   |
|---------------------------------------------------------------|--------|
| **Current                Liabilities**                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intercompany                borrowings                        |   | $ | 2,459 |   | $ | 183 |   | $ | 3,037 |   | $ | (5,679 | ) | $ | - |   |
| Accounts                payable                               |   |   | 6 |   |   | 69 |   |   | 350 |   |   | - |   |   | 425 |   |
| Long-term                debt due within one year             |   |   | 306 |   |   | - |   |   | - |   |   | - |   |   | 306 |   |
| Income                taxes payable                           |   |   | - |   |   | - |   |   | 429 |   |   | - |   |   | 429 |   |
| Commodity                derivative liabilities               |   |   | - |   |   | 14 |   |   | 1,492 |   |   | - |   |   | 1,506 |   |
| Accrued                liabilities                            |   |   | (72 | ) |   | 239 |   |   | 679 |   |   | - |   |   | 846 |   |
| Liabilities                associated with Tronox        |   |   | - |   |   | - |   |   | 419 |   |   | - |   |   | 419 |   |
| Total                Current Liabilities                      |   |   | 2,699 |   |   | 505 |   |   | 6,406 |   |   | (5,679 | ) |   | 3,931 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long-Term                Debt**                             |   |   | 1,801 |   |   | - |   |   | 476 |   |   | - |   |   | 2,277 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent                Liabilities**                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                income taxes                          |   |   | (9 | ) |   | 517 |   |   | 937 |   |   | - |   |   | 1,445 |   |
| Asset                retirement obligations                   |   |   | - |   |   | 28 |   |   | 282 |   |   | - |   |   | 310 |   |
| Commodity                derivative liabilities               |   |   | - |   |   | - |   |   | 658 |   |   | - |   |   | 658 |   |
| Other                noncurrent liabilities                   |   |   | - |   |   | 50 |   |   | 421 |   |   | - |   |   | 471 |   |
| Liabilities                associated with Tronox        |   |   | - |   |   | - |   |   | 1,069 |   |   | - |   |   | 1,069 |   |
| Total                Noncurrent Liabilities                   |   |   | (9 | ) |   | 595 |   |   | 3,367 |   |   | - |   |   | 3,953 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Stockholders'                Equity**                       |   |   | 4,224 |   |   | 1,426 |   |   | 1,554 |   |   | (3,089 | ) |   | 4,115 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Stockholders' Equity** |   | $ | 8,715 |   | $ | 2,526 |   | $ | 11,803 |   | $ | (8,768 | ) | $ | 14,276 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Cash Flows**

**For      the Three Months Ended March 31, 2006**

|                                                                     |   |        |   |       |   | Non-         |   |         |   |         |   |
|--------------------------------------------------------------------------|--------|-------------|--------|------------|--------|--------------|--------|--------------|--------|--------------|--------|
|                                                                     |   | Kerr-McGee  |   | Guarantor  |   | Guarantor    |   |         |   |         |   |
| (Millions                  of dollars)                                   |   | Corporation |   | Subsidiary |   | Subsidiaries |   | Eliminations |   | Consolidated |   |
|                                                                     |   |        |   |       |   |         |   |         |   |         |   |
| **Cash                  Flows from Operating Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Net                  income                                              |   | $           | 255    |       | $      | 76           |   | $            | 260    |         | $      | (336 | )  | $ | 255 |   |
| Adjustments                  to reconcile net income to net cash         |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| provided                  by operating activities-                       |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Depreciation,                  depletion and amortization                |   |        | -      |       |   | 26           |   |         | 199    |         |   | - |   |   | 225 |   |
| Deferred                  income taxes                                   |   |        | (49    | )          |   | 26           |   |         | 81     |         |   | - |   |   | 58 |   |
| Dry                  hole expense                                        |   |        | -      |       |   | -            |   |         | 15     |         |   | - |   |   | 15 |   |
| Gain                  on sale of assets                        |   |        | -      |       |   | -            |   |         | (4     | )            |   | - |   |   | (4 | ) |
| Accretion                  expense                                       |   |        | -      |       |   | -            |   |         | 3      |         |   | - |   |   | 3 |   |
| Provision                  for Tronox guarantee                          |   |        | 56     |       |   | -            |   |         | -      |         |   | - |   |   | 56 |   |
| Equity                  in earnings of subsidiaries                      |   |        | (336   | )          |   | -            |   |         | -      |         |   | 336 |   |   | - |   |
| Loss                  on early repayment and modification                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| of                  debt                                                 |   |        | 12     |       |   | -            |   |         | 69     |         |   | - |   |   | 81 |   |
| Other                  noncash items affecting net income                |   |        | 2      |       |   | -            |   |         | (19    | )            |   | - |   |   | (17 | ) |
| Changes                  in assets and liabilities                       |   |        | 101    |       |   | (87          | )      |         | (551   | )            |   | - |   |   | (537 | ) |
| Net                  Cash Provided by Operating Activities               |   |        | 41     |       |   | 41           |   |         | 53     |         |   | - |   |   | 135 |   |
|                                                                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                  Flows from Investing Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Capital                  expenditures                                    |   |        | -      |       |   | (34          | )      |         | (419   | )            |   | - |   |   | (453 | ) |
| Dry                  hole costs                                          |   |        | -      |       |   | -            |   |         | (23    | )            |   | - |   |   | (23 | ) |
| Proceeds                  from sales of assets                           |   |        | -      |       |   | -            |   |         | 8      |         |   | - |   |   | 8 |   |
| Other                  investing activities                              |   |        | -      |       |   | -            |   |         | 23     |         |   | - |   |   | 23 |   |
| Net                  Cash Used in Investing Activities                   |   |        | -      |       |   | (34          | )      |         | (411   | )            |   | - |   |   | (445 | ) |
|                                                                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                  Flows from Financing Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Issuance                  of common stock upon exercise of stock options |   |        | 29     |       |   | -            |   |         | -      |         |   | - |   |   | 29 |   |
| Purchases                  of treasury stock                             |   |        | (363   | )          |   | -            |   |         | -      |         |   | - |   |   | (363 | ) |
| Repayment                  of debt                                       |   |        | -      |       |   | -            |   |         | (250   | )            |   | - |   |   | (250 | ) |
| Increase                  (decrease) in intercompany                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| notes                  payable                                           |   |        | 289    |       |   | (7           | )      |         | (282   | )            |   | - |   |   | - |   |
| Dividends                  paid                                          |   |        | (6     | )          |   | -            |   |         | -      |         |   | - |   |   | (6 | ) |
| Settlement                  of Westport derivatives                      |   |        | -      |       |   | -            |   |         | (21    | )            |   | - |   |   | (21 | ) |
| Tronox                  Distribution                                     |   |        | -      |       |   | -            |   |         | (57    | )            |   | - |   |   | (57 | ) |
| Other                  financing activities                              |   |        | 11     |       |   | -            |   |         | -      |         |   | - |   |   | 11 |   |
| Net                  Cash Used in Financing Activities                   |   |        | (40    | )          |   | (7           | )      |         | (610   | )            |   | - |   |   | (657 | ) |
|                                                                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Effects                  of Exchange Rate Changes on Cash**            |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **and                  Cash Equivalents**                                |   |        | -      |       |   | -            |   |         | (3     | )            |   | - |   |   | (3 | ) |
| **Net                  Increase (Decrease) in Cash and Cash**            |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Equivalents**                                                          |   |        | 1      |       |   | -            |   |         | (971   | )            |   | - |   |   | (970 | ) |
| **Cash                  and Cash Equivalents at Beginning of Period**    |   |        | 1      |       |   | -            |   |         | 1,052  |         |   | - |   |   | 1,053 |   |
| **Cash                  and Cash Equivalents at End of Period**          |   | $           | 2      |       | $      | -            |   | $            | 81     |         | $      | - |   | $ | 83 |   |
|                                                                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Cash Flows**

**For      the Three Months Ended March 31, 2005**

|                                                                   |   |        |   |       |   | Non-         |   |         |   |         |   |
|------------------------------------------------------------------------|--------|-------------|--------|------------|--------|--------------|--------|--------------|--------|--------------|--------|
|                                                                   |   | Kerr-McGee  |   | Guarantor  |   | Guarantor    |   |         |   |         |   |
| (Millions                of dollars)                                   |   | Corporation |   | Subsidiary |   | Subsidiaries |   | Eliminations |   | Consolidated |   |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |
| **Cash                Flows from Operating Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Net                income                                              |   | $           | 355    |       | $      | 48           |   | $            | 318    |         | $      | (366 | ) | $ | 355 |   |
| Adjustments                to reconcile net income to net cash         |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| provided                by (used in) operating activities-             |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Depreciation,                depletion and amortization                |   |        | -      |       |   | 28           |   |         | 298    |         |   | - |   |   | 326 |   |
| Deferred                income taxes                                   |   |        | (2     | )          |   | (2           | )      |         | 142    |         |   | - |   |   | 138 |   |
| Dry                hole expense                                        |   |        | -      |       |   | -            |   |         | 20     |         |   | - |   |   | 20 |   |
| Asset                impairments                                       |   |        | -      |       |   | -            |   |         | 4      |         |   | - |   |   | 4 |   |
| Gain                on sale of assets                        |   |        | -      |       |   | -            |   |         | (22    | )            |   | - |   |   | (22 | ) |
| Accretion                expense                                       |   |        | -      |       |   | 1            |   |         | 8      |         |   | - |   |   | 9 |   |
| Equity                in earnings of subsidiaries                      |   |        | (366   | )          |   | -            |   |         | -      |         |   | 366 |   |   | - |   |
| Other                noncash items affecting net income                |   |        | -      |       |   | (2           | )      |         | 111    |         |   | - |   |   | 109 |   |
| Changes                in assets and liabilities                       |   |        | (42    | )          |   | 14           |   |         | (114   | )            |   | - |   |   | (142 | ) |
| Net                Cash Provided by (Used in)                          |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Operating                Activities                                    |   |        | (55    | )          |   | 87           |   |         | 765    |         |   | - |   |   | 797 |   |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Capital                expenditures                                    |   |        | -      |       |   | (32          | )      |         | (342   | )            |   | - |   |   | (374 | ) |
| Dry                hole costs                                          |   |        | -      |       |   | -            |   |         | (24    | )            |   | - |   |   | (24 | ) |
| Proceeds                from sales of assets                           |   |        | -      |       |   | -            |   |         | 31     |         |   | - |   |   | 31 |   |
| Other                investing activities                              |   |        | -      |       |   | -            |   |         | (30    | )            |   | - |   |   | (30 | ) |
| Net                Cash Used in Investing Activities                   |   |        | -      |       |   | (32          | )      |         | (365   | )            |   | - |   |   | (397 | ) |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Issuance                of common stock upon exercise of stock options |   |        | 132    |       |   | -            |   |         | -      |         |   | - |   |   | 132 |   |
| Purchases                of treasury stock                             |   |        | (250   | )          |   | -            |   |         | -      |         |   | - |   |   | (250 | ) |
| Repayment                of debt                                       |   |        | -      |       |   | -            |   |         | (42    | )            |   | - |   |   | (42 | ) |
| Increase                (decrease) in intercompany                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| notes                payable                                           |   |        | 244    |       |   | (55          | )      |         | (189   | )            |   | - |   |   | - |   |
| Dividends                paid                                          |   |        | (68    | )          |   | -            |   |         | -      |         |   | - |   |   | (68 | ) |
| Settlement                of Westport derivatives                      |   |        | -      |       |   | -            |   |         | (43    | )            |   | - |   |   | (43 | ) |
| Other                financing activities                              |   |        | (3     | )          |   | -            |   |         | (2     | )            |   | - |   |   | (5 | ) |
| Net                Cash Provided by (Used in)                          |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Financing                Activities                                    |   |        | 55     |       |   | (55          | )      |         | (276   | )            |   | - |   |   | (276 | ) |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Effects                of Exchange Rate Changes on Cash**            |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **and                Cash Equivalents**                                |   |        | -      |       |   | -            |   |         | 1      |         |   | - |   |   | 1 |   |
| **Net                Increase in Cash and Cash Equivalents**           |   |        | -      |       |   | -            |   |         | 125    |         |   | - |   |   | 125 |   |
| **Cash                and Cash Equivalents at Beginning of Period**    |   |        | 2      |       |   | -            |   |         | 74     |         |   | - |   |   | 76 |   |
| **Cash                and Cash Equivalents at End of Period**          |   | $           | 2      |       | $      | -            |   | $            | 199    |         | $      | - |   | $ | 201 |   |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |

----

| **Item                2.** | **Management’s                Discussion and Analysis of Financial Condition and Results of                Operations.** |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------|

**Overview      and Recent Developments**

*Recent      Developments *

| ·   | In                January 2006, we entered into an agreement to sell our interests                in                certain Gulf of Mexico shelf oil and natural gas properties to W&T                Offshore, Inc. (W&T) for approximately $1.34 billion in cash, subject                to certain adjustments. The transaction, which has an effective date                of                October 1, 2005 and is subject to customary closing conditions and                regulatory approvals, is expected to close in late second or early                third                quarter. For the first quarter 2006, these properties have been accounted                for as “held for sale” in our financial                statements. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January 2006, the Board of Directors (the Board) approved a $1 billion                stock repurchase program. During the first quarter, approximately                3.4                million shares of Kerr-McGee’s stock were repurchased at an aggregate cost                of $350 million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                November                2005, Tronox Incorporated (Tronox), a former subsidiary that held                Kerr-McGee’s chemical business, completed an initial public offering (IPO)                of 17.5 million shares of Class A common stock, which reduced Kerr-McGee’s                equity interest in Tronox to 57%. On March 30, 2006, Kerr-McGee completed                a pro rata distribution to its stockholders in the form of a dividend                of                shares of Tronox Class B common stock it owned (the Distribution).                This                transaction completed the transformation of Kerr-McGee to a pure-play                exploration and production company. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On                May 9, 2006, the Board authorized a two-for-one split of Kerr-McGee’s                outstanding common stock. The stock split will be accomplished through                a                stock dividend to be issued on June 14, 2006 to stockholders of record                at                the close of business on June 2, 2006. Assuming the stock split was                effected on March 31, 2006, the company would have had approximately                227                million shares issued and                outstanding. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Board also approved a 25% increase in the company's quarterly dividend                effective with the dividend payable on July 3, 2006. On a pre-split                basis,                the quarterly dividend will increase from $.05 per share to $.0625                per                share. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Results      of Consolidated Operations**

|                                                                             |   | Three                Months Ended |      |
|----------------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                             |   | March                31,          |      |
| (Millions                of dollars, except per-share amounts)                   |   | **2006**                          |      | 2005 |   |
|                                                                             |   |                              |      |   |   |
| Revenues                                                                         |   | **$**                             | **1,300** |   | $ | 1,071 |   |
|                                                                             |   |                              |      |   |   |   |   |
| Operating                income                                                  |   | **$**                             | **553**   |   | $ | 433 |   |
|                                                                             |   |                              |      |   |   |   |   |
| Income                from continuing operations                                 |   | **$**                             | **276**   |   | $ | 243 |   |
| Income                (loss) from discontinued operations, net of taxes          |   |                              | **(23**   | **)** |   | 112 |   |
| Cumulative                effect of change in accounting principle, net of taxes |   |                              | **2**     |   |   | - |   |
| Net                income                                                        |   | **$**                             | **255**   |   | $ | 355 |   |
|                                                                             |   |                              |      |   |   |   |   |
| Income                from continuing operations per common share:               |   |                              |      |   |   |   |   |
|                   Basic                                                |   | **$**                             | **2.43**  |   | $ | 1.57 |   |
|                   Diluted                                              |   |                              | **2.39**  |   |   | 1.51 |   |
|                                                                             |   |                              |      |   |   |   |   |
| Net                income per common share:                                      |   |                              |      |   |   |   |   |
|                   Basic                                                |   | **$**                             | **2.25**  |   | $ | 2.29 |   |
|                   Diluted                                              |   |                              | **2.21**  |   |   | 2.20 |   |

*New/Revised      Accounting Standards*

*Gains      (Losses) Associated with Commodity Derivatives*
*** ***

*Overview      and Recent Developments *

----

**Revenues**

|                                                                 |   | Three                Months Ended |      |
|----------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                 |   | March                31,          |      |
| (Millions                of dollars)                                 |   | **2006**                          |      | 2005 |   |
|                                                                 |   |                              |      |   |   |
| **Revenues**                -                                        |   |                              |      |   |   |   |   |
| Natural                gas sales                                     |   | **$**                             | **669**   |   | $ | 548 |   |
| Crude                oil, condensate and natural gas liquids sales   |   |                              | **510**   |   |   | 458 |   |
| Loss                on oil and gas derivatives - hedge               |   |                              | **(274**  | **)** |   | (26 | ) |
| Mark-to-market                nonhedge derivative gain (loss)        |   |                              | **130**   |   |   | (51 | ) |
| Gain                (loss) due to hedge ineffectiveness              |   |                              | **30**    |   |   | (9 | ) |
| Gas                marketing revenues                                |   |                              | **213**   |   |   | 132 |   |
| Processing,                gathering and other revenues              |   |                              | **22**    |   |   | 19 |   |
| Total                                                                |   | **$**                             | **1,300** |   | $ | 1,071 |   |
|                                                                 |   |                              |      |   |   |   |   |
| **Natural                Gas Production and Average Sales Prices -** |   |                              |      |   |   |   |   |
|                                                                 |   |                              |      |   |   |   |   |
| Production                (MMcf/d)                -                  |   |                              |      |   |   |   |   |
| Gulf                of Mexico -                                      |   |                              |      |   |   |   |   |
| Deepwater                                                            |   |                              | **238**   |   |   | 256 |   |
| Shelf                                                                |   |                              | **91**    |   |   | 156 |   |
| U.S.                Onshore -                                        |   |                              |      |   |   |   |   |
| Rocky                Mountain                                        |   |                              | **363**   |   |   | 331 |   |
| Southern                                                             |   |                              | **242**   |   |   | 266 |   |
| Total                                                                |   |                              | **934**   |   |   | 1,009 |   |

|                                                                                            |   |   |      |   |   |
|-------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
| Average                Sales Prices (per Mcf)                -                                  |   |   |      |   |   |   |   |
| Gulf                of Mexico -                                                                 |   |   |      |   |   |   |   |
| Deepwater                                                                                       |   | **$**  | **8.43**  |   | $      | 6.59 |   |
| Shelf                                                                                           |   |   | **8.41**  |   |   | 6.47 |   |
| U.S.                Onshore                                                                     |   |   |      |   |   |   |   |
| Rocky                Mountain                                                                   |   |   | **7.55**  |   |   | 5.71 |   |
| Southern                                                                                        |   |   | **7.95**  |   |   | 5.65 |   |
| Average                                                                                         |   | **$**  | **7.96**  |   | $      | 6.04 |   |
|                                                                                            |   |   |      |   |   |   |   |
| **Oil,                Condensate and NGL Production and Average Sales Prices                -** |   |   |      |   |   |   |   |
|                                                                                            |   |   |      |   |   |   |   |
| Production                (Mbbls/d)                -                                            |   |   |      |   |   |   |   |
| Gulf                of Mexico -                                                                 |   |   |      |   |   |   |   |
| Deepwater                                                                                       |   |   | **47**    |   |   | 48 |   |
| Shelf                                                                                           |   |   | **8**     |   |   | 14 |   |
| U.S.                Onshore -                                                                   |   |   |      |   |   |   |   |
| Rocky                Mountain                                                                   |   |   | **21**    |   |   | 22 |   |
| Southern                                                                                        |   |   | **14**    |   |   | 14 |   |
| Total                U.S.                                                                       |   |   | **90**    |   |   | 98 |   |
| China                                                                                           |   |   | **16**    |   |   | 22 |   |
| Total                                                                                           |   |   | **106**   |   |   | 120 |   |
|                                                                                            |   |   |      |   |   |   |   |
| Average                Wellhead Sales Prices (per bbl)                -                         |   |   |      |   |   |   |   |
| Gulf                of Mexico -                                                                 |   |   |      |   |   |   |   |
| Deepwater                                                                                       |   | **$**  | **56.29** |   | $      | 44.80 |   |
| Shelf                                                                                           |   |   | **54.84** |   |   | 45.70 |   |
| U.S.                Onshore -                                                                   |   |   |      |   |   |   |   |
| Rocky                Mountain                                                                   |   |   | **52.09** |   |   | 40.14 |   |
| Southern                                                                                        |   |   | **48.33** |   |   | 42.49 |   |
| Average                U.S.                                                                     |   |   | **53.98** |   |   | 43.56 |   |
| China                                                                                           |   |   | **53.83** |   |   | 38.37 |   |
| Average                                                                                         |   | **$**  | **53.96** |   | $      | 42.63 |   |
|                                                                                            |   |   |      |   |   |   |   |
| **Energy                Equivalent Production -**                                               |   |   |      |   |   |   |   |
| Thousands                of barrels of oil equivalent (Mboe) per day                            |   |   | **261**   |   |   | 288 |   |
| Millions                of cubic feet of gas equivalent (MMcfe) per day                         |   |   | **1,568** |   |   | 1,727 |   |

----

***Natural      Gas Revenues and Production***

***Crude      Oil Revenues and Production -***

***Gains      (Losses) Associated with Commodity Derivatives -***

----

***Gas      Marketing Activities***
*** ***

***Processing,      Gathering and Other Revenues***
*** ***

**Operating      Expenses**

***Lease      Operating Costs***
*** ***

***Production      and Ad Valorem Taxes***
*** ***

***General      and Administrative Expense***

----

***Exploration      Expense -***

|                                              |   | Three                Months Ended |   |
|---------------------------------------------------|--------|-----------------------------------|--------|
|                                              |   | March                31,          |   |
| (Millions                of dollars)              |   | **2006**                          |   | 2005 |   |
|                                              |   |                              |   |   |   |
| Exploration                costs (1)              |   | **$**                             | **14** |   | $ | 10 |   |
| Geological                and geophysical costs   |   |                              | **12** |   |   | 15 |   |
| Dry                hole expense                   |   |                              | **15** |   |   | 16 |   |
| Amortization                of undeveloped leases |   |                              | **11** |   |   | 15 |   |
| Sales                of unproved properties       |   |                              | -      |   |   | (1 | ) |
| Total                exploration expense          |   | **$**                             | **52** |   | $ | 55 |   |

***Gas      Gathering, Processing and Other Expenses***
*** ***

***Depreciation,      Depletion and Amortization (DD&A)***

|                                                                  |   | Three                Months Ended |     |
|-----------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                  |   | March                31,          |     |
| (Millions                of dollars)                                  |   | **2006**                          |     | 2005 |   |
|                                                                  |   |                              |     |   |   |
| Oil                and gas properties                                 |   | **$**                             | **179**  |   | $ | 213 |   |
| Other                property, plant and equipment                (1) |   |                              | **10**   |   |   | 10 |   |
| Total                                                                 |   | **$**                             | **189**  |   | $ | 223 |   |
|                                                                  |   |                              |     |   |   |   |   |
| DD&A                rate per boe - oil and gas properties         |   | **$**                             | **7.64** |   | $ | 8.23 |   |

| (1)   | Represents                depreciation of the company's gas gathering and pipeline assets,                primarily                in Colorado and Utah, as well as general corporate equipment and                facilities. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Accretion      Expense***
*** ***

***Asset      Impairments and Gain (Loss) on Sales of Assets***

***Interest      Expense and Loss on Early Repayment and Modification of      Debt***
*      -*
*** ***

***Provision      for Income Taxes -***

***Income      (Loss) from Discontinued Operations -***
*Tronox      Separation*

**Tronox      Separation**

*Overview      and Recent Developments*

----

**Financial      Condition and Liquidity**

|                                                                                                 |   |                         |                        |
|------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------------------------|
|                                                                                                 |   | **March                31,** |                        | December                31, |   |
| (Millions                of dollars)                                                                 |   | **2006**                     |                        | 2005 |   |
|                                                                                                 |   |                         |                        |   |   |
| Current                ratio (1)                                                                     |   |                         | **0.5                to 1** |   |   | 0.8                to 1 |   |
| Cash                and cash equivalents                                                             |   | **$**                        | **83**                      |   | $ | 1,053 |   |
| Debt                repayment obligations due within one year (2)                                    |   |                         | **306**                     |   |   | 306 |   |
| Unused                capacity under revolving lines of credit (3)                                   |   |                         | **1,185**                   |   |   | 1,184 |   |
| Total                debt, including $550 million of Tronox debt at December 31,                2005 |   |                         | **2,401**                   |   |   | 3,133 |   |
| Stockholders’                equity and minority interest                (4)                   |   | **$**                        | **4,195**                   |   | $ | 4,327 |   |
| Debt                to total capitalization (4)                                                      |   |                         | **36**                      | **%** |   | 42 | % |

| (1)   | Represents a                ratio of current assets to current                liabilities.  |
|-----------------|-------------------------------------------------------------------------------------------------------|

| (2)   | Represents                principal amount of Kerr-McGee debt maturing within one year from                the                respective balance sheet date. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Reflects                partial utilization to support outstanding letters of credit. No                revolving                borrowings were outstanding at December 31, 2005 or March 31, 2006.                The $1.25 billion unsecured revolving credit facility currently in                effect                terminates in January 2011. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Capitalization                is determined as total debt plus total stockholders’ equity and, as of                December 31, 2005, minority stockholders’ interest in net assets of Tronox                of $212 million. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Sources      of Liquidity***

***Working      Capital Position***
*-*

----

***Debt      to Total Capitalization***
*-*

|                                                              |   | Increase                (Decrease) in |   |
|-------------------------------------------------------------------|--------|---------------------------------------|--------|
| (Millions                of dollars)                              |   | Total                Debt             |   | Total                Equity |   |
| Early                redemption of $250 million 7% debentures (1) |   | $                                     | (181   | ) | $ | (45 | ) |
| Tronox                Distribution (2)                            |   |                                  | (550   | ) |   | (259 | ) |
| Repurchases                of common stock (3)                    |   |                                  | -      |   |   | (350 | ) |

| (1)   | The                decrease in equity represents the after-tax loss on early redemption                of                the debentures that resulted from writing off unamortized discount                of $69                million. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The                Distribution reduced retained earnings by $238 million and accumulated                other comprehensive income by $21                million. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Represents                open-market purchases of Kerr-McGee stock under the $1 billion stock                repurchase program authorized by our Board of Directors in January                2006. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Credit      Ratings***

|                                           | December                31, 2005 |   | May                9, 2006 |
|------------------------------------------------|----------------------------------|--------|----------------------------|
| Standard                & Poor’s     | BB+                              |   | BB+                        |
| Moody’s                Investors Service | Ba3                              |   | Ba2                        |

***Credit      Facilities and Debt Covenants***
** **

| ·   | Consolidated                Leverage Ratio of no more than                3.5:1 |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Consolidated                Interest Coverage Ratio over a specified period of at least 3:1 |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Asset                Coverage Ratio of more than 1.75:1 so long as the company’s corporate                credit rating is below investment grade |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

***Property      Insurance Coverage***
*      -*

----

**Cash      Flows**

|                                                       |   | Three                  Months                  Ended |     |
|------------------------------------------------------------|--------|------------------------------------------------------|----------|
|                                                       |   | March                  31,                           |     |
| (Millions                  of dollars)                     |   |                                                 | **2006** |   |   | 2005 |   |
| Net                  cash provided by operating activities |   | **$**                                                | **135**  |   | $ | 797 |   |
| Net                  cash used in investing activities     |   |                                                 | **(445** | **)** |   | (397 | ) |
| Net                  cash used in financing activities     |   |                                                 | **(657** | **)** |   | (276 | ) |

***Operating        Activities -***

***Investing      Activities -***

|                                                                          |   | Three                Months                EndedMarch                31, |           |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|----------------|
| (Millions                of dollars)                                          |   | **2006**                                                                 |           | 2005 |   |
|                                                                          |   |                                                                     |           |   |   |
| Capital                expenditures -                                         |   |                                                                     |           |   |   |   |   |
|                  Exploration and production (including dry hole costs) - |   |                                                                     |           |   |   |   |   |
|                   Continuing operations                   |   | **$ **                                                              | ** (451** | **)**  | $  |  (358 | )  |
|                   Discontinued operations                 |   |                                                                     | ** -**    |   |   |  (26 | )  |
|   Tronox                                                            |   |                                                                     | **(22**        | **)** |   | (11 | ) |
|                  Corporate and other                                     |   |                                                                     | **(3**         | **)** |   | (3 | ) |
|                    Total capital expenditures                  |   |                                                                     | **(476**       | **)** |   | (398 | ) |
| Proceeds                from sales of assets                                  |   |                                                                     | **8**          |   |   | 31 |   |
| Other                investing activities                                     |   |                                                                     | **23**         |   |   | (30 | ) |
| Net                cash used                in investing activities           |   | **$**                                                                    | **(445**       | **)** | $ | (397 | ) |

----

***Financing        Activities -***

**New/Revised      Accounting Standards**

| **Item                3.** | **Quantitative                and Qualitative Disclosures about Market                Risk.** |
|----------------------------|-----------------------------------------------------------------------------------------------|

----

**Commodity      Price Risk**

|                                   |   | **April                - December 2006**       |                          | **2007**                                     |   |
|----------------------------------------|--------|------------------------------------------------|-------------------------------|----------------------------------------------|--------|
|                                   |   | AverageContract                Price($/Barrel) |                          | Average                Daily Volume(Barrels) |   | AverageContract                Price($/Barrel) |   | Average                Daily Volume(Barrels) |   |
| **Crude                Oil (WTI) -**   |   |                                           |                          |                                         |   |   |   |   |   |   |   |   |   |
| Fixed                price swaps       |   | $                                              | 53.13                         |                                         |   | 20,345 |   | $ | 51.44 |   |   | 27,250 |   |
|                                   |   |                                           |                          |                                         |   |   |   |   |   |   |   |   |   |
| Costless                collars        |   | $                                              | 27.00                - $30.58 |                                         |   | 19,000 | (a)  |   | - |   |   | - |   |
|                                   |   | $                                              | 45.00                - $65.62 |                                         |   | 20,345 |   | $ | 45.00                - $61.42 |   |   | 18,000 |   |
|                                   |   |                                           |                          |                                         |   |   |   |   |   |   |   |   |   |
| Three-way                collars       |   | $                                              | 25.00                - $28.65 |                                         |   | 2,000 | (b)  |   | - |   |   | - |   |
| Three-way                average floor |   | $                                              | 20.88                         |                                         |   |   |   |   |   |   |   |   |   |
|                                   |   |                                           |                          |                                         |   | 61,690 |   |   |   |   |   | 45,250 |   |
|                                   |   |                                           |                          |                                         |   |   |   |   |   |   |   |   |   |

|                                       |   | ($/MMBtu) |                         | (MMBtu) |   | ($/MMBtu) |      | (MMBtu) |                        |
|--------------------------------------------|--------|-----------|------------------------------|---------|--------|-----------|-----------|---------|-----------------------------|
| **Natural                Gas (NYMEX) -**   |   |      |                         |    |   |      |      |    |                        |   |   |   |   |
| Fixed                price swaps           |   | $         | 7.54                         |    |   | 196,000   |      | $       | 7.03                        |   |   | 265,000 |   |
|                                       |   |      |                         |    |   |      |      |    |                        |   |   |   |   |
| Costless                collars            |   | $         | 4.75                - $ 5.50 |    |   | 340,000   | (a)  |    | -                           |   |   | - |   |
|                                            |   | $         | 6.00                - $10.80 |    |   | 197,000   |      | $       | 6.00                - $9.03 |   |   | 265,000 |   |
|                                       |   |      |                         |    |   |      |      |    |                        |   |   |   |   |
| Three-way                collars           |   | $         | 4.00                - $ 6.00 |    |   | 20,000    | (b)  |    | -                           |   |   | - |   |
| Three-way                average floor     |   | $         | 3.04                         |    |   |      |      |    |                        |   |   |   |   |
|                                       |   |      |                         |    |   | 753,000   |      |    |                        |   |   | 530,000 |   |
|                                       |   |      |                         |    |   |      |      |    |                        |   |   |   |   |
| **Basis                Swaps vs. NYMEX -** |   |      |                         |    |   |      |      |    |                        |   |   |   |   |
| CIG                (1)                     |   | $         | 1.49                         |    |   | 163,400   |      | $       | 0.95                        |   |   | 35,425 |   |
| NWPL                (2)                    |   | $         | 1.43                         |    |   | 138,382   |      | $       | 1.05                        |   |   | 34,123 |   |
|                                       |   |      |                         |    |   | 301,782   |      |    |                        |   |   | 69,548 |   |
|                                       |   |      |                         |    |   |      |      |    |                        |   |   |   |   |

| (a)   | Placed                by Kerr-McGee in connection with the Westport Resources marger in                June 2004. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| (b)   | Acquired                in the Westport merger. |
|-----------------|-------------------------------------------------|

| (1)   | Colorado                Interstate Gas pipeline index. |
|-----------------|--------------------------------------------------------|

| (2)   | Northwest                Pipeline Rocky Mountain index. |
|-----------------|---------------------------------------------------------|

*Results      of Operations - Revenues - Gains (Losses) Associated with Commodity      Derivatives*

----

| **Item                4.** | **Controls                and Procedures**. |
|----------------------------|---------------------------------------------|

**Forward-Looking      Information**

**PART      II - OTHER INFORMATION**

**Item      1.**
**Legal      Proceedings**

|   | A. | On                December 28, 2005, an affiliate of the company, Kerr-McGee Oil & Gas                Onshore LP (formerly known as Westport Oil and Gas Company L.P.),                received                a letter from the Environmental Protection Agency (EPA) alleging                that the                affiliate violated the Clean Water Act when it constructed well pads                and                associated roads and pipelines in a wetland adjacent to the Hams                Fork                River in Wyoming without obtaining necessary permits. Kerr-McGee                Oil &                Gas Onshore LP has submitted to EPA a plan to restore wetlands to                the                area, which is currently under review. No formal demand has been                made by                EPA. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | B. | Kerr-McGee                Rocky Mountain Corporation (KM Rocky Mountain), an affiliate of the                company, received notices of violation (NOVs) from the Colorado Department                of Public Health and Environment (CDPHE) on June 21, 2005, and November                4,                2005.  The NOVs allege that, with respect to certain production                operations in Colorado, the affiliate exceeded allowable air emissions                under the Clean Air Act.  KM Rocky Mountain recently was informed                that the CDPHE intends to address these matters collectively, including                any related penalties, which could result in penalties in excess                of                $100,000.  However, no formal demand has been made of KM Rocky                Mountain.  The affiliate intends to vigorously defend against the                NOVs.  It currently is discussing the allegations and possible                resolutions with CDPHE.  |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | C. | For                a discussion of other legal proceedings and contingencies, reference                is                made to Note 13 to the Condensed Consolidated Financial Statements                included in Item 1 of this quarterly report on Form 10-Q, which is                incorporated herein by reference. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      2.**
**Unregistered      Sales of Equity Securities and Use of Proceeds.**

|                               |                                                |                                                          |                                                                                                                              |                                                                                                                                              |
|------------------------------------|-----------------------------------------------------|---------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Period                             | Total                Number of Shares Purchased (a) | Average                Price Paidper                Share (a) | Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs                (b) | Maximum                Approximate Dollar Value of Shares that May Yet Be Purchased Under                the                Plans or Programs (b) |
|                               |                                                |                                                          |                                                                                                                              |                                                                                                                                              |
| January                1-31, 2006  | 1,756,963                                           | $106.26                                                       | 1,615,800                                                                                                                         |                                                                                                                                              |
| February                1-28, 2006 | 1,484,615                                           |                  102.33                                  | 1,474,000                                                                                                                         |                                                                                                                                              |
| March                1-31, 2006    | 362,673                                             |                   86.82                             | 275,900                                                                                                                           | $650,000,000                                                                                                                                      |
| Total                              | 3,604,251                                           | $102.69                                                       | 3,365,700                                                                                                                         |                                                                                                                                              |

**Item      5.**
**Other      Information.**

**Item      6.**
**Exhibits.      **

|   | Exhibit                No. |                                                                                                                                                                                 |
|--------|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                       |                                                                                                                                                                                 |
|   | 31.1                       | Certification                pursuant to Securities Exchange Act Rule 15d-14(a), as adopted pursuant                to                Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |                       |                                                                                                                                                                                 |
|   | 31.2                       | Certification                pursuant to Securities Exchange Act Rule 15d-14(a), as adopted pursuant                to                Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |                       |                                                                                                                                                                                 |
|   | 32.1                       | Certification                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002.                 |
|   |                       |                                                                                                                                                                                 |
|   | 32.2                       | Certification                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002.                 |

----

**SIGNATURE**

**KERR-McGEE      CORPORATION**

| Date: May                10, 2006 | By:    | /s/                John M. Rauh              |
|----------------------------------------|--------|----------------------------------------------|
|                                   |   | John                M. Rauh                  |
|                                   |   | Vice                President and Controller |
|                                   |   | and                Chief Accounting Officer  |