----

**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 and Six Months Ended                June                30, 2006 and 2005                            | 1      |
|                                                                                                                                             |                                                                                                                                                                         |   |
|                                                                                                                                             | Condensed                Consolidated Balance Sheet at June 30, 2006 and December 31,                2005                                                                    | 2      |
|                                                                                                                                             |                                                                                                                                                                         |   |
|                                                                                                                                             | Condensed                Consolidated Statement of Cash Flows for the Six Months Ended June                30,                2006 and 2005                                  | 3      |
|                                                                                                                                             |                                                                                                                                                                         |   |
|                                                                                                                                             | Condensed                Consolidated Statement of Comprehensive Income (Loss) and Stockholders’                Equity for the Six Months Ended June 30, 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 | 33                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |   |
| Item                3.  Quantitative                and Qualitative Disclosures about Market Risk                                           | 45                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |   |
| Item                4.  Controls                and Procedures                                                                              | 47                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |   |
| Forward-Looking                Information                                                                                                       | 47                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |
|                                                                                                                                             |                                                                                                                                                                         |
| **PART                II - OTHER INFORMATION**                                                                                                   |                                                                                                                                                                         |
|                                                                                                                                             |                                                                                                                                                                         |   |
| Item                1.  Legal                Proceedings                                                                                    | 47                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |
| Item                1A. Risk                Factors                                                                                         | 48                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |
| Item                2.  Unregistered                Sales of Equity Securities and Use of Proceeds                                          | 49                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |
| Item                4.  Submission                of Matters to a Vote of Security Holders                                                  | 49                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |
| Item                6.  Exhibits                                                                                                            | 50                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |   |
| SIGNATURE                                                                                                                                        | 51                                                                                                                                                                           |
|                                                                                                                                             |                                                                                                                                                                         |   |
|                                                                                                                                             |                                                                                                                                                                         |

----

**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED STATEMENT OF INCOME**

**(UNAUDITED)**

|                                                                             |   | Three                Months Ended |       | Six                Months Ended |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------|------------|---------------------------------|--------|
|                                                                             |   | June                30,           |       | June                30,         |   |
| (Millions                of dollars, except per-share amounts)                   |   | **2006**                          |       | 2005                            |   | **2006** |   | 2005 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |
| **Revenues**                                                                     |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Oil                and gas sales                                                 |   | **$**                             | **1,227**  |                            | $      | 1,108 |   | **$** | **2,406** |   | $ | 2,114 |   |
| Loss                on commodity derivatives                                     |   |                              | **(130**   | **)**                           |   | (82 | ) |   | **(244** | **)** |   | (168 | ) |
| Gas                marketing revenues                                            |   |                              | **147**    |                            |   | 138 |   |   | **360** |   |   | 270 |   |
| Other                revenues                                                    |   |                              | **23**     |                            |   | 19 |   |   | **45** |   |   | 38 |   |
| Total                Revenues                                                    |   |                              | **1,267**  |                            |   | 1,183 |   |   | **2,567** |   |   | 2,254 |   |
|                                                                             |   |                              |       |                            |   |  |   |   |   |   |   |  |   |
| **Operating                Expenses**                                            |   |                              |       |                            |   |  |   |   |   |   |   |  |   |
| Lease                operating costs                                             |   |                              | **128**    |                            |   | 115 |   |   | **259** |   |   | 223 |   |
| Production                and ad valorem taxes                                   |   |                              | **43**     |                            |   | 34 |   |   | **74** |   |   | 64 |   |
| Transportation                expense                                            |   |                              | **25**     |                            |   | 24 |   |   | **48** |   |   | 47 |   |
| General                and administrative expense                                |   |                              | **60**     |                            |   | 62 |   |   | **134** |   |   | 115 |   |
| Merger-related                costs                                              |   |                              | **8**      |                            |   | - |   |   | **8** |   |   | - |   |
| Exploration                expense                                               |   |                              | **106**    |                            |   | 116 |   |   | **158** |   |   | 171 |   |
| Gas                gathering, processing and other expenses                      |   |                              | **27**     |                            |   | 26 |   |   | **61** |   |   | 54 |   |
| Gas                marketing costs                                               |   |                              | **145**    |                            |   | 139 |   |   | **359** |   |   | 269 |   |
| Depreciation,                depletion and amortization                          |   |                              | **194**    |                            |   | 220 |   |   | **383** |   |   | 443 |   |
| Accretion                expense                                                 |   |                              | **4**      |                            |   | 5 |   |   | **7** |   |   | 11 |   |
| Provision                for environmental remediation costs                     |   |                              | **3**      |                            |   | 2 |   |   | **3** |   |   | 2 |   |
| Asset                impairments                                                 |   |                              | **-**      |                            |   | - |   |   | **-** |   |   | 4 |   |
| Gain                on sales of oil and gas properties                           |   |                              | **(1**     | **)**                           |   | (25 | ) |   | **(5** | **)** |   | (47 | ) |
| Total                Operating Expenses                                          |   |                              | **742**    |                            |   | 718 |   |   | **1,489** |   |   | 1,356 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| **Operating                Income**                                              |   |                              | **525**    |                            |   | 465 |   |   | **1,078** |   |   | 898 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Interest                expense                                                  |   |                              | **(49**    | **)**                           |   | (58 | ) |   | **(90** | **)** |   | (118 | ) |
| Loss                on early repayment and modification of debt                  |   |                              | **-**      |                            |   | - |   |   | **(81** | **)** |   | - |   |
| Other                income (expense)                                            |   |                              | **(3**     | **)**                           |   | (4 | ) |   | **(6** | **)** |   | (6 | ) |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations before Income Taxes**         |   |                              | **473**    |                            |   | 403 |   |   | **901** |   |   | 774 |   |
| Provision                for income taxes                                        |   |                              | **(167**   | **)**                           |   | (147 | ) |   | **(319** | **)** |   | (275 | ) |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations**                             |   |                              | **306**    |                            |   | 256 |   |   | **582** |   |   | 499 |   |
| Income                (loss) from discontinued operations, net of taxes          |   |                              | **(1**     | **)**                           |   | 114 |   |   | **(24** | **)** |   | 226 |   |
| Cumulative                effect of change in accounting principle, net of taxes |   |                              | **-**      |                            |   | - |   |   | **2** |   |   | - |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| **Net                Income**                                                    |   | **$**                             | **305**    |                            | $      | 370 |   | **$** | **560** |   | $ | 725 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| **Income                (Loss) per Common Share**                                |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Basic                -                                                           |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                             |   | **$**                             | **1.36**   |                            | $      | .91 |   | **$** | **2.57** |   | $ | 1.69 |   |
| Discontinued                operations                                           |   |                              | **(.01**   | **)**                           |   | .40 |   |   | **(.11** | **)** |   | .76 |   |
| Cumulative                effect of change in accounting principle               |   |                              | **-**      |                            |   | - |   |   | **.01** |   |   | - |   |
| Net                income                                                        |   | **$**                             | **1.35**   |                            | $      | 1.31 |   | **$** | **2.47** |   | $ | 2.45 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Diluted                -                                                         |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Continuing                operations                                             |   | **$**                             | **1.33**   |                            | $      | .90 |   | **$** | **2.53** |   | $ | 1.65 |   |
| Discontinued                operations                                           |   |                              | **-**      |                            |   | .40 |   |   | **(.11** | **)** |   | .74 |   |
| Cumulative                effect of change in accounting principle               |   |                              | **-**      |                            |   | - |   |   | **.01** |   |   | - |   |
| Net                income                                                        |   | **$**                             | **1.33**   |                            | $      | 1.30 |   | **$** | **2.43** |   | $ | 2.39 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| **Dividends                Declared per Common Share**                           |   | **$**                             | **.03125** |                            | $      | .025 |   | **$** | **.05625** |   | $ | .25 |   |
|                                                                             |   |                              |       |                            |   |   |   |   |   |   |   |  |   |

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED BALANCE SHEET**

**(UNAUDITED)**

|                                                                                         |   | **June                30,** |       |  December                31, |   |
|----------------------------------------------------------------------------------------------|--------|-----------------------------|------------|-----------------------------------|--------|
| (Millions                of dollars)                                                         |   | **2006**                    |       |  2005                        |   |
|                                                                                         |   |                        |       |                              |   |
| **ASSETS**                                                                         |   |
| **Current                Assets**                                                            |   |                        |            |                              |   |   |   |
| Cash                and cash equivalents                                                     |   | **$**                       | **156**    |                              | $      | 1,053 |   |
| Accounts                receivable                                                           |   |                        | **751**    |                              |   | 753 |   |
| Derivatives                and other current assets                                          |   |                        | **204**    |                              |   | 205 |   |
| Deferred                income taxes                                                         |   |                        | **380**    |                              |   | 547 |   |
| Assets                held for sale and Tronox assets                                        |   |                        | **24**     |                              |   | 691 |   |
| **Total                Current Assets**                                                      |   |                        | **1,515**  |                              |   | 3,249 |   |
|                                                                                         |   |                        |       |                              |   |   |   |
| **Property,                Plant and Equipment**                                             |   |                        | **12,091** |                              |   | 13,629 |   |
| **Less                reserves for depreciation, depletion and                amortization** |   |                        | **(3,874** | **)**                             |   | (5,194 | ) |
|                                                                                         |   |                        | **8,217**  |                              |   | 8,435 |   |
|                                                                                         |   |                        |       |                              |   |   |   |
| **Investments,                Derivatives and Other Assets**                                 |   |                        | **321**    |                              |   | 427 |   |
| **Goodwill                and Other Intangible Assets**                                      |   |                        | **1,175**  |                              |   | 1,179 |   |
| **Assets                Held for Sale and Tronox Assets**                                    |   |                        | **710**    |                              |   | 986 |   |
|                                                                                         |   |                        |       |                              |   |   |   |
| **Total                Assets**                                                              |   | **$**                       | **11,938** |                              | $      | 14,276 |   |
|                                                                                         |

| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                           |   |
|-----------------------------------------------------------------------------------|--------|
| **Current                Liabilities**                                            |   |   |   |   |   |   |   |
| Accounts                payable                                                   |   | **$** | **398** |   | $ | 425 |   |
| Long-term                debt due within one year                                 |   |   | **309** |   |   | 306 |   |
| Income                taxes payable                                               |   |   | **53** |   |   | 429 |   |
| Commodity                derivative liabilities                                   |   |   | **877** |   |   | 1,506 |   |
| Accrued                liabilities                                                |   |   | **831** |   |   | 846 |   |
| Liabilities                associated with assets held for sale and Tronox        |   |   | **25** |   |   | 419 |   |
| **Total                Current Liabilities**                                      |   |   | **2,493** |   |   | 3,931 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Long-Term                Debt**                                                 |   |   | **2,097** |   |   | 2,277 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Noncurrent                Liabilities**                                         |   |   |   |   |   |   |   |
| Deferred                income taxes                                              |   |   | **1,620** |   |   | 1,445 |   |
| Asset                retirement obligations                                       |   |   | **212** |   |   | 310 |   |
| Commodity                derivative liabilities                                   |   |   | **323** |   |   | 658 |   |
| Other                                                                             |   |   | **451** |   |   | 471 |   |
| Liabilities                associated with assets held for sale and Tronox        |   |   | **126** |   |   | 1,069 |   |
| **Total                Noncurrent Liabilities**                                   |   |   | **2,732** |   |   | 3,953 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Contingencies                and Commitments (Notes 13 and 14)**                |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |
| **Stockholders'                Equity**                                           |   |   |   |   |   |   |   |
| Common                stock, par value $1 - 500,000,000 shares authorized,        |   |   |   |   |   |   |   |
| 234,412,964                and 232,231,760 shares issued at June 30, 2006         |   |   |   |   |   |   |   |
| and                December 31, 2005, respectively                                |   |   | **234** |   |   | 120 |   |
| Capital                in excess of par value                                     |   |   | **3,654** |   |   | 3,702 |   |
| Preferred                stock purchase rights                                    |   |   | **1** |   |   | 1 |   |
| Retained                earnings                                                  |   |   | **2,006** |   |   | 1,704 |   |
| Accumulated                other comprehensive loss                               |   |   | **(621** | **)** |   | (1,079 | ) |
| Common                stock in treasury, at cost - 7,105,344 and 3,456,918 shares |   |   |   |   |   |   |   |
| at                June 30, 2006 and December 31, 2005, respectively               |   |   | **(635** | **)** |   | (266 | ) |
| Deferred                compensation cost                                         |   |   | **(23** | **)** |   | (67 | ) |
| **Total                Stockholders' Equity**                                     |   |   | **4,616** |   |   | 4,115 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Total                Liabilities and Stockholders’ Equity**               |   | **$** | **11,938** |   | $ | 14,276 |   |

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**CONDENSED      CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                            |   | Six                Months Ended |      |
|-------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|
|                                                                                            |   | June                30,         |      |
| (Millions                of dollars)                                                            |   | **2006**                        |      | 2005 |   |
|                                                                                            |   |                            |      |   |   |
| **Cash                Flows from Operating Activities**                                         |   |                            |      |   |   |   |   |
| Net                income                                                                       |   | **$**                           | **560**   |   | $ | 725 |   |
| Adjustments                to reconcile net income to net cash                                  |   |                            |      |   |   |   |   |
| provided                by operating activities -                                               |   |                            |      |   |   |   |   |
| Depreciation,                depletion and amortization                                         |   |                            | **430**   |   |   | 650 |   |
| Deferred                income taxes                                                            |   |                            | **107**   |   |   | 265 |   |
| Dry                hole expense                                                                 |   |                            | **73**    |   |   | 91 |   |
| Asset                impairments                                                                |   |                            | -         |   |   | 5 |   |
| Gain                on sale of assets                                                           |   |                            | **(5**    | **)** |   | (46 | ) |
| Accretion                expense                                                                |   |                            | **7**     |   |   | 17 |   |
| Loss                on early repayment and modification of debt                                 |   |                            | **81**    |   |   | - |   |
| Provision                for Tronox guarantee                                                   |   |                            | **56**    |   |   | - |   |
| Other                noncash items affecting net income                                         |   |                            | **(25**   | **)** |   | 146 |   |
| Changes                in assets and liabilities                                                |   |                            | **(574**  | **)** |   | (275 | ) |
| **Net                Cash Provided by Operating Activities**                                    |   |                            | **710**   |   |   | 1,578 |   |
|                                                                                            |   |                            |      |   |   |   |   |
| **Cash                Flows from Investing Activities**                                         |   |                            |      |   |   |   |   |
| Capital                expenditures                                                             |   |                            | **(925**  | **)** |   | (808 | ) |
| Dry                hole costs                                                                   |   |                            | **(40**   | **)** |   | (75 | ) |
| Proceeds                from sales of assets                                                    |   |                            | **11**    |   |   | 63 |   |
| Other                investing activities                                                       |   |                            | **15**    |   |   | (21 | ) |
| **Net                Cash Used in Investing Activities**                                        |   |                            | **(939**  | **)** |   | (841 | ) |
|                                                                                            |   |                            |      |   |   |   |   |
| **Cash                Flows from Financing Activities**                                         |   |                            |      |   |   |   |   |
| Issuance                of common stock upon exercise of stock options                          |   |                            | **43**    |   |   | 159 |   |
| Purchases                of treasury stock                                                      |   |                            | **(369**  | **)** |   | (250 | ) |
| Shares                repurchased under the tender offer                                        |   |                            | -         |   |   | (3,975 | ) |
| Repayment                of debt                                                                |   |                            | **(250**  | **)** |   | (392 | ) |
| Proceeds                from borrowings                                                         |   |                            | -         |   |   | 4,250 |   |
| Dividends                paid                                                                   |   |                            | **(11**   | **)** |   | (142 | ) |
| Settlement                of Westport derivatives                                               |   |                            | **(30**   | **)** |   | (80 | ) |
| Tronox                Distribution (1)                                                          |   |                            | **(57**   | **)** |   | - |   |
| Other                financing activities                                                       |   |                            | **9**     |   |   | (58 | ) |
| **Net                Cash Used in Financing Activities**                                        |   |                            | **(665**  | **)** |   | (488 | ) |
|                                                                                            |   |                            |      |   |   |   |   |
| **Effects                of Exchange Rate Changes on Cash and Cash                Equivalents** |   |                            | **(3**    | **)** |   | (1 | ) |
| **Net                Increase (Decrease) in Cash and Cash Equivalents**                         |   |                            | **(897**  | **)** |   | 248 |   |
| **Cash                and Cash Equivalents at Beginning of Year**                               |   |                            | **1,053** |   |   | 76 |   |
| **Cash                and Cash Equivalents at End of Period**                                   |   | **$**                           | **156**   |   | $ | 324 |   |

| (1)   | Represents                Tronox’s cash balance deconsolidated upon the Distribution. See Note                2. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

----

**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                                  |   |        | -       |                                                                      |   | -                |   |                                                      | 725       |          |   | -                                            |   |                     | -        |   |   | - |   |   | 725 |   |
| Other                comprehensive loss                    |   |        | -       |                                                                      |   | -                |   |                                                      | -         |          |   | (562                                         | )      |                     | -        |   |   | - |   |   | (562 | ) |
| Comprehensive                income                        |   |        |    |                                                                      |   |             |   |                                                      |      |          |   |                                         |   |                     |     |   |   |   |   |   | 163 |   |
| Stock                issued upon conversion of debt        |   |        | 10      |                                                                      |   | 583              |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | 593 |   |
| Purchases                of treasury stock                 |   |        | -       |                                                                      |   | -                |   |                                                      | -         |          |   | -                                            |   |                     | (250     | ) |   | - |   |   | (250 | ) |
| Shares                repurchased and retired              |   |        | (47     | )                                                                         |   | (1,410           | )      |                                                      | (2,517    | )             |   | -                                            |   |                     | -        |   |   | (1 | ) |   | (3,975 | ) |
| Stock                option exercises                      |   |        | 3       |                                                                      |   | 156              |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | 159 |   |
| Restricted                stock activity                   |   |        | 1       |                                                                      |   | 25               |   |                                                      | -         |          |   | -                                            |   |                     | (3       | ) |   | (13 | ) |   | 10 |   |
| ESOP                deferred compensation                  |   |        | -       |                                                                      |   | -                |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | 3 |   |   | 3 |   |
| Tax                benefit from stock-based awards         |   |        | -       |                                                                      |   | 21               |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | 21 |   |
| Dividends                declared ($.25 per share)         |   |        | -       |                                                                      |   | -                |   |                                                      | (80       | )             |   | -                                            |   |                     | -        |   |   | - |   |   | (80 | ) |
| Balance                at June 30, 2005                    |   | $           | 119     |                                                                      | $      | 3,580            |   | $                                                         | (770      | )             | $      | (641                                         | )      | $                        | (261     | ) | $ | (65 | ) | $ | 1,962 |   |
|                                                       |   |        |    |                                                                      |   |             |   |                                                      |      |          |   |                                         |   |                     |     |   |   |   |   |   |   |   |
| **Balance                at December 31, 2005**            |   | **$**       | **120** |                                                                      | **$**  | **3,702**        |   | **$**                                                     | **1,704** |          | **$**  | **(1,079**                                   | **)**  | **$**                    | **(266** | **)** | **$** | **(66** | **)** | **$** | **4,115** |   |
| Comprehensive                Income:                       |   |        |    |                                                                      |   |             |   |                                                      |      |          |   |                                         |   |                     |     |   |   |   |   |   |   |   |
| Net                income                                  |   |        | -       |                                                                      |   | -                |   |                                                      | 560       |          |   | -                                            |   |                     | -        |   |   | - |   |   | 560 |   |
| Other                comprehensive income                  |   |        | -       |                                                                      |   | -                |   |                                                      | -         |          |   | 458                                          |   |                     | -        |   |   | - |   |   | 458 |   |
| Comprehensive                income                        |   |        |    |                                                                      |   |             |   |                                                      |      |          |   |                                         |   |                     |     |   |   |   |   |   | 1,018 |   |
| Adoption                of FAS No. 123(R)                  |   |        | -       |                                                                      |   | (42              | )      |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | 42 |   |   | - |   |
| Purchases                of treasury stock                 |   |        | -       |                                                                      |   | -                |   |                                                      | -         |          |   | -                                            |   |                     | (369     | ) |   | - |   |   | (369 | ) |
| Stock                option exercises                      |   |        | 1       |                                                                      |   | 42               |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | 43 |   |
| Amortization                of options and restricted      |   |        |    |                                                                      |   |             |   |                                                      |      |          |   |                                         |   |                     |     |   |   |   |   |   |   |   |
|                   stock cost, net of forfeitures |   |        | -       |                                                                      |   | 43               |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | 43 |   |
| ESOP                deferred compensation and other        |   |        | -       |                                                                      |   | -                |   |                                                      | (1        | )             |   | -                                            |   |                     | -        |   |   | 2 |   |   | 1 |   |
| Tax                benefit from stock-based awards         |   |        | -       |                                                                      |   | 22               |   |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | 22 |   |
| Dividends                declared ($.05625 per share)      |   |        | -       |                                                                      |   | -                |   |                                                      | (13       | )             |   | -                                            |   |                     | -        |   |   | - |   |   | (13 | ) |
| Tronox                Distribution (Note 2)                |   |        | -       |                                                                      |   | -                |   |                                                      | (244      | )             |   | -                                            |   |                     | -        |   |   | - |   |   | (244 | ) |
| Two-for-one                stock split                     |   |        | 113     |                                                                      |   | (113             | )      |                                                      | -         |          |   | -                                            |   |                     | -        |   |   | - |   |   | - |   |
| **Balance                at June 30, 2006**                |   | **$**       | **234** |                                                                      | **$**  | **3,654**        |   | **$**                                                     | **2,006** |          | **$**  | **(621**                                     | **)**  | **$**                    | **(635** | **)** | **$** | **(22** | **)** | **$** | **4,616** |   |
|                                                       |   |        |    |                                                                      |   |             |   |                                                      |      |          |   |                                         |   |                     |     |   |   |   |   |   |   |   |

----

**KERR-McGEE      CORPORATION AND SUBSIDIARY COMPANIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**JUNE      30,      2006**

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

**The      Company**

*Pending      Merger*

*Other      Recent Developments *

| ·   | On                May 9, 2006, the company’s Board of Directors (the Board) authorized a                two-for-one split of Kerr-McGee’s outstanding common stock. The stock                split was accomplished through a stock dividend issued on June 14,                2006 to                stockholders of record at the close of business on June 2, 2006.                Stock                held in treasury was not split. Unless otherwise indicated, common                shares                outstanding and per-share amounts in the accompanying condensed                consolidated financial statements and notes thereto have been                retroactively adjusted to reflect the stock split. The par value                of                Kerr-McGee’s common stock remains $1 per                share. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Board approved a 25% increase in the company's quarterly dividend                effective with the dividend paid on July 3, 2006. On a post-split                basis,                the quarterly dividend increased from $.025 to $.03125 per                share. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January 2006, the company entered into an agreement to sell its 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 the third quarter. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January 2006, the Board approved a $1 billion stock repurchase program.                During the first six months of 2006, approximately 3.4 million shares                of                stock (on a pre-split basis) were repurchased at an aggregate cost                of $356                million. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                November 2005, Tronox Incorporated (Tronox), a former wholly-owned                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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**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 performance units outstanding as of January 1, 2006 and                granted                subsequent to that date based on the change in their estimated fair                value |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                 |   | Three                MonthsEnded |   | Six                MonthsEnded |   |
|----------------------------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (Millions                of dollars, except per share amounts)       |   | June                30, 2006     |   | June                30, 2006   |   |
|                                                                 |   |                             |   |                           |   |
| *Increase                (decrease) in:*                             |   |                             |   |                           |   |   |   |
| Income                from continuing operations before income taxes |   | $                                | (4     | )                              | $      | (16 | ) |
| Income                from continuing operations                     |   |                             | (3     | )                              |   | (11 | ) |
| Net                income                                            |   |                             | (3     | )                              |   | (9 | ) |
| Earnings                per share:                                   |   |                             |   |                           |   |   |   |
|                   Basic                                    |   |                             | (.01   | )                              |   | (.04 | ) |
|                   Diluted                                  |   |                             | (.01   | )                              |   | (.04 | ) |
| Net                cash provided by operating activities             |   |                             | (4     | )                              |   | (13 | ) |
| Net                cash used in financing activities                 |   |                             | 4      |                           |   | 13 |   |

|                                                              |   | Three                MonthsEnded |   | Six                MonthsEnded |   |
|-------------------------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| (Millions                of dollars, except per share amounts)    |   | June                30, 2005     |   | June                30, 2005   |   |
|                                                              |   |                             |   |                           |   |
| Net                income, as reported                            |   | $                                | 370    |                           | $      | 725 |   |
| Add:                stock-based employee compensation expense     |   |                             |   |                           |   |   |   |
| included                in reported net income, net of taxes      |   |                             | 4      |                           |   | 13 |   |
| Deduct:                stock-based compensation expense           |   |                             |   |                           |   |   |   |
| determined                using a fair-value method, net of taxes |   |                             | (6     | )                              |   | (22 | ) |
| Pro                forma net income                               |   | $                                | 368    |                           | $      | 716 |   |
|                                                              |   |                             |   |                           |   |   |   |
| Net                income per share -                             |   |                             |   |                           |   |   |   |
| Basic                -                                            |   |                             |   |                           |   |   |   |
| As                reported                                        |   | $                                | 1.31   |                           | $      | 2.45 |   |
| Pro                forma                                          |   |                             | 1.31   |                           |   | 2.42 |   |
|                                                              |   |                             |   |                           |   |   |   |
| Diluted                -                                          |   |                             |   |                           |   |   |   |
| As                reported                                        |   | $                                | 1.30   |                           | $      | 2.39 |   |
| Pro                forma                                          |   |                             | 1.29   |                           |   | 2.36 |   |

***New      Accounting Pronouncements***
*Accounting      for Uncertainty in Income Taxes - An Interpretation of FASB Statement No.      109*

----

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

----

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

***Discontinued      Operations***

|                                                                  |   | Three                Months Ended June 30, |   |
|-----------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                  |   | 2006                                       |   | 2005 |   |
|                                                                  |   |                                       |   | North                Sea |   |   |   |   |   |
|                                                                  |   |                                       |   | Oil                and Gas |   |   |   |   |   |
| (Millions                of dollars)                             |   | Tronox                                     |   | Business |   | Tronox |   | Total |   |
|                                                                  |   |                                       |   |   |   |   |   |   |   |
| Revenues                                                              |   | $                                          | -      |   | $ | 311 |   | $ | 356 |   | $ | 667 |   |
|                                                                  |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) from Discontinued Operations:            |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Income                from operations                                 |   | $                                          | (1     | ) | $ | 160 | (1)  | $ | 16 | (1)  | $ | 176 |   |
| Income                tax (expense) benefit                           |   |                                       | -      |   |   | (55 | ) |   | (7 | ) |   | (62 | ) |
| Income                (loss) from discontinued operations, net of tax |   | $                                          | (1     | ) | $ | 105 |   | $ | 9 |   | $ | 114 |   |
|                                                                  |   |                                       |   |   |   |   |   |   |   |   |   |   |   |

|                                                                      |   | Six                Months Ended June 30, |   |
|---------------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                      |   | 2006                                     |   | 2005 |   |
|                                                                      |   |                                     |   | North                Sea |   |   |   |   |   |
|                                                                      |   |                                     |   | Oil                and Gas |   |   |   |   |   |
| (Millions                of dollars)                                 |   | Tronox                                   |   | Business |   | Tronox |   | Total |   |
|                                                                      |   |                                     |   |   |   |   |   |   |   |
| Revenues                                                                  |   | $                                        | 336    |   | $ | 623 |   | $ | 690 |   | $ | 1,313 |   |
|                                                                      |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) from Discontinued Operations:                |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Income                from operations                                     |   | $                                        | 34     |   | $ | 343 | (1)  | $ | 22 | (1) | $ | 365 |   |
| Provision                for Tronox guarantee                (2)          |   |                                     | (56    | ) |   | - |   |   | - |   |   | - |   |
| Pretax                income (loss) from discontinued operations          |   |                                     | (22    | ) |   | 343 |   |   | 22 |   |   | 365 |   |
| Income                tax (expense) benefit                               |   |                                     | 7      |   |   | (133 | ) |   | (6 | ) |   | (139 | ) |
| Net                income from operations allocable to minority interests |   |                                     | (9     | ) |   | - |   |   | - |   |   | - |   |
| Income                (loss) from discontinued operations, net of tax     |   | $                                        | (24    | ) | $ | 210 |   | $ | 16 |   | $ | 226 |   |
|                                                                      |   |                                     |   |   |   |   |   |   |   |   |   |   |   |

| (1)   | Under                the                company’s $5.25 billion secured credit agreement which was in effect from                May 2005 through January 9, 2006, the company was required to                use 100% of the net after-tax cash proceeds from disposition of certain                assets to repay debt. Because the North Sea oil and gas and Tronox                assets                were subject to this requirement, interest expense on debt that was                required to be repaid upon the sale of the North Sea business and                the                Tronox IPO ($19 million and $5 million, respectively) is classified                as a                component of income from discontinued operations for the three and                six                months ended June 30, 2005 (or $15 million on an after-tax                basis). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

***Assets      Held for Sale***

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

|                                                                                                                                        |   | Three                Months Ended |    | Six                Months Ended |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|
|                                                                                                                                        |   | June                30,           |    | June                30,         |   |
| (Millions                of dollars)                                                                                                        |   | **2006**                          |    | 2005                            |   | **2006** |   | 2005 |   |
|                                                                                                                                        |   |                              |    |                            |   |   |   |   |   |
| Foreign                currency translation -                                                                                               |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Translation                adjustments, net of minority interest of $2                                                                      |   | **$**                             | **5**   |                            | $      | (16 | ) | **$** | **6** |   | $ | (14 | ) |
| Reclassification                to retained earnings                                                                                        |   |                              | **-**   |                            |   | - |   |   | **(24** | **)** |   | - |   |
| Total                foreign currency translation adjustments                                                                               |   |                              | **5**   |                            |   | (16 | ) |   | **(18** | **)** |   | (14 | ) |
| Net                gains (losses) on commodity derivatives -                                                                                |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Unrealized                gains (losses), net of taxes of nil, $81, $(111) and $353                                                         |   |                              | **-**   |                            |   | (139 | ) |   | **207** |   |   | (623 | ) |
| Reclassification                of realized losses to net income,                  net of taxes of $(52), $(28), $(150) and $(43) |   |                              | **98**  |                            |   | 50 |   |   | **276** |   |   | 75 |   |
| Reclassification                to retained earnings                                                                                        |   |                              | **-**   |                            |   | - |   |   | **1** |   |   | - |   |
| Total                gains (losses) on commodity derivatives, net                                                                           |   |                              | **98**  |                            |   | (89 | ) |   | **484** |   |   | (548 | ) |
| Minimum                pension liability -                                                                                                  |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Minimum                pension liability adjustments, net of taxes of $5                                                                    |   |                              | **-**   |                            |   | - |   |   | **(10** | **)** |   | - |   |
| Reclassification                to retained earnings, net of taxes of $(1)                                                                  |   |                              | -       |                            |   | - |   |   | **2** |   |   | - |   |
| Total                minimum pension liability adjustments                                                                                  |   |                              | -       |                            |   | - |   |   | **(8** | **)** |   | - |   |
| Other                comprehensive income (loss)                                                                                            |   | **$**                             | **103** |                            | $      | (105 | ) | **$** | **458** |   | $ | (562 | ) |

|                                                    |   | **June                30,** |     | December                31, |   |
|---------------------------------------------------------|--------|-----------------------------|----------|-----------------------------|--------|
| (Millions                of dollars)                    |   | **2006**                    |     | 2005                        |   |
|                                                    |   |                        |     |                        |   |
| Foreign                currency translation adjustments |   | **$**                       | **17**   |                        | $      | 35 |   |
| Unrealized                loss on commodity derivatives |   |                        | **(611** | **)**                       |   | (1,095 | ) |
| Minimum                pension liability adjustments    |   |                        | **(27**  | **)**                       |   | (19 | ) |
|                                                    |   | **$**                       | **(621** | **)**                       | $      | (1,079 | ) |

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

----

|                                                      |   | **As                of June 30, 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 |   | **$**                                    | **98**  |   | **$** | **23** |   | **$** | **(872** | **)** | **$** | **(322** | **)** | **$** | **(611** | **)** |
| Gas                marketing-related derivatives          |   |                                     | **5**   |   |   | **1** |   |   | **(5** | **)** |   | **(1** | **)** |   | **-** |   |
| Total                                                     |   | **$**                                    | **103** |   | **$** | **24** |   | **$** | **(877** | **)** | **$** | **(323** | **)** | **$** | **(611** | **)** |

|                                                      |   | 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 taxes. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------|

|                                                            |   | Three                  Months Ended |     | Six                  Months Ended |   |
|-----------------------------------------------------------------|--------|-------------------------------------|----------|-----------------------------------|--------|
|                                                            |   | June                  30,           |     | June                  30,         |   |
| (Millions                  of dollars)                          |   | **2006**                            |     | 2005                              |   | **2006** |   | 2005 |   |
|                                                            |   |                                |     |                              |   |   |   |   |   |
| Loss                  on hedge derivatives                      |   | **$**                               | **(150** | **)**                             | $      | (59 | ) | **$** | **(424** | **)** | $ | (85 | ) |
| Mark-to-market                  nonhedge derivative gain (loss) |   |                                | **20**   |                              |   | 12 |   |   | **150** |   |   | (39 | ) |
| Gain                  (loss) due to hedge ineffectiveness       |   |                                | **-**    |                              |   | (35 | ) |   | **30** |   |   | (44 | ) |
|                                                            |   |                                | **(130** | **)**                             |   | (82 | ) |   | **(244** | **)** |   | (168 | ) |
| Gas                  marketing-related derivatives              |   |                                | **-**    |                              |   | 2 |   |   | **-** |   |   | 4 |   |
| Total                                                           |   | **$**                               | **(130** | **)**                             | $      | (80 | ) | **$** | **(244** | **)** | $ | (164 | ) |
|                                                            |   |                                |     |                              |   |   |   |   |   |   |   |   |   |

***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                   |   |      | -      |     |   | 3        |   |   | 3 |   |
| Change                in the fair value of hedged debt    |   |      | -      |     |   | 1        |   |   | 1 |   |
| Early                redemption of 7% debentures due 2011 |   |      | (250   | )        |   | 69       |   |   | (181 | ) |
| Tronox                Distribution                        |   |      | (550   | )        |   | -        |   |   | (550 | ) |
| Balance                at June 30, 2006                   |   | $         | 2,432  |     | $      | (26      | )      | $ | 2,406 |   |

| (1)   | Includes                $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  |   |
|---------------------------------------------|--------|---------------------------------------|--------|
|                                        |   | Dismantlement                         |   | Personnel |   |   |   |
| (Millions                of dollars)        |   | and                Closure            |   | Costs |   | Total |   |
|                                        |   |                                  |   |   |   |   |   |
| Balance                at December 31, 2005 |   | $                                     | 6      |   | $ | 21 |   | $ | 27 |   |
| Provisions/Accruals                (1)      |   |                                  | -      |   |   | 7 |   |   | 7 |   |
| Payments                                    |   |                                  | (1     | ) |   | (12 | ) |   | (13 | ) |
| Tronox                Distribution          |   |                                  | (5     | ) |   | (6 | ) |   | (11 | ) |
| Balance                at June 30, 2006     |   | $                                     | -      |   | $ | 10 |   | $ | 10 |   |

| **(1)  ** | Includes                a $2 million charge related to Tronox, which is reflected in loss                from                discontinued operations in the Condensed Consolidated Statement of                Income.** ** |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**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 unit 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 its peers. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Impact      of Pending Merger***
**-**

***Effect      of Tronox Separation and the Stock Split***

----

***Stock-Based      Compensation Cost***
* *

|                                                                |   | Three                Months Ended |   | Six                Months Ended |   |
|---------------------------------------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|
|                                                                |   | June                30,           |   | June                30,         |   |
| (Millions                of dollars)                                |   | **2006**                          |   | 2005                            |   | **2006** |   | 2005 |   |
|                                                                |   |                              |   |                            |   |   |   |   |   |
| Stock                options                                        |   | **$**                             | **5**  |                            | $      | - |   | **$** | **25** |   | $ | 1 |   |
| Restricted                stock                                     |   |                              | **5**  |                            |   | 5 |   |   | **20** |   |   | 10 |   |
| Performance                units                                    |   |                              | **11** |                            |   | - |   |   | **17** |   |   | 7 |   |
| Total                stock-based compensation expense               |   |                              | **21** |                            |   | 5 |   |   | **62** |   |   | 18 |   |
| Income                tax benefit                                   |   |                              | **(8** | **)**                           |   | (1 | ) |   | **(22** | **)** |   | (6 | ) |
| Total                stock-based compensation expense, net of taxes |   | **$**                             | **13** |                            | $      | 4 |   | **$** | **40** |   | $ | 12 |   |

|                                 |   | Unrecognized |   | Remaining |   |
|--------------------------------------|--------|--------------|--------|-----------|--------|
|                                 |   | Cost         |   | Period    |   |
| (Millions                of dollars) |   | (Pretax)     |   | (Years)   |   |
|                                 |   |         |   |      |   |
| Stock                options         |   | $            | 28     |      |   | 2.1 |   |
| Restricted                stock      |   |         | 25     |      |   | 1.8 |   |
| Performance                units     |   |         | 29     |      |   | 2.0 |   |
|                                 |   | $            | 82     |      |   | 2.0 |   |

***Stock      Options***

|                                            |   |                     |       |           |   |                                       |   | Intrinsic                                  |   |
|-------------------------------------------------|--------|--------------------------|------------|----------------|--------|--------------------------------------------|--------|--------------------------------------------|--------|
|                                            |   | Number                of |       |           |   | Contractual                                |   | Value                                      |   |
| Options                                         |   | Shares                   |       | Price (2) |   |  Life                (Years) (2) |   |                   (Millions) (3) |   |
|                                            |   |                     |       |           |   |                                       |   |                                       |   |
| Outstanding                at December 31, 2005 |   |                     | 9,929,090  |           | $      | 25.65                                      |   |                                       |   |   |   |   |   |
| Granted                                         |   |                     | 2,431,304  |           |   | 45.36                                      |   |                                       |   |   |   |   |   |
| Exercised                                       |   |                     | (1,727,552 | )              |   | 24.87                                      |   |                                       |   |   |   |   |   |
| Forfeited                (1)                    |   |                     | (462,305   | )              |   | 29.07                                      |   |                                       |   |   |   |   |   |
| Expired                                         |   |                     | (8,558     | )              |   | 23.82                                      |   |                                       |   |   |   |   |   |
| Outstanding                at June 30, 2006     |   |                     | 10,161,979 |           | $      | 30.34                                      |   |                                       | 7.2    |   | $ | 396 |   |
| Exercisable                at June 30, 2006     |   |                     | 5,403,830  |           | $      | 25.66                                      |   |                                       | 5.8    |   | $ | 236 |   |

| (1)   | Includes                options to purchase 335,165 shares of Kerr-McGee stock that were                forfeited                by Tronox employees at the date of the                Distribution. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Represents                weighted average exercise price and weighted average remaining contractual                life, as applicable. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Reflects                aggregate intrinsic value based on the difference between the market                price                of Kerr-McGee common stock and the options' exercise                price. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (Millions                of dollars)  |   | **                 2006** |   |                  2005 |   |
|---------------------------------------|--------|--------------------------------|--------|----------------------------|--------|
|                                  |   |                           |   |
| Intrinsic                value        |   | **$**                          | **47** |                       | $      | 58 |   |
| Cash                proceeds received |   |                           | **43** |                       |   | 159 |   |
| Tax                benefit realized   |   |                           | **16** |                       |   | 20 |   |

*Valuation      and Cost Attribution Methods *

|                                                                       |   |     |      |   |   |
|----------------------------------------------------------------------------|--------|----------|-----------|--------|--------|
|                                                                       |   | **2006** |      | 2005   |   |
|                                                                       |   |     |      |   |   |
| Expected                volatility (annualized)                            |   |     | **28.0**  | **%**  |   | 26.4 | % |
| Expected                dividend yield (annualized)                        |   |     | **.2**    | **%**  |   | 3.5 | % |
| Expected                term (years)                                       |   |     | **5.6**   |   |   | 6 |   |
| Risk-free                rate                                              |   |     | **4.49**  | **%**  |   | 3.9 | % |
| Weighted                average per-share fair value of options granted(1) |   | **$**    | **16.20** |   | $      | 10.11 |   |

| (1)   | Retroactively                adjusted to reflect the effects of the two-for-one stock split and                the                Distribution. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

*Expected      Volatility *

*Expected      Dividend Yield *

*Expected      Term *

*Risk-Free      Interest Rate*

----

***Nonvested      and Restricted Stock***

|                                        |   | Shares |      | Fair                Value (1) |   |
|---------------------------------------------|--------|--------|-----------|-------------------------------|--------|
|                                        |   |   |      |                          |   |
| Balance                at December 31, 2005 |   |   | 2,481,250 |                          | $      | 26.93 |   |
| Granted                                     |   |   | 482,140   |                          |   | 49.29 |   |
| Vested                                      |   |   | (819,770  | )                             |   | 21.61 |   |
| Forfeited                (2)                |   |   | (193,318  | )                             |   | 32.20 |   |
| Balance                at June 30, 2006     |   |   | 1,950,302 |                          | $      | 34.16 |   |

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

| (2)   | Includes                approximately 146,000 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 the Distribution |   |        | (2,794,330 | )                            |   | (1 | ) |
| Units                    granted (1)                                     |   |        | 15,980,157 |                         |   | N/A |   |
| Award                    settlement                                      |   |        | (9,292,084 | )                            |   | (9 | ) |
| Compensation                    cost recognized                          |   |        | -          |                         |   | 17 |   |
| Balance                    at June 30, 2006                    (2)       |   |        | 36,763,551 |                         | $      | 26 |   |

| (1)   | Grant-date                measurement of new performance unit awards is not required. Rather,                fair                value of the 2006 grant was estimated as of June 30, 2006 to determine                the                2006 compensation cost associated with these                awards. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Performance                units shown represent 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                obligations at December 31, 2005       |   | $          | 1,255  |                           | $      | 297 |   |
| Service                cost                                   |   |       | 13     |                           |   | 2 |   |
| Interest                cost                                  |   |       | 26     |                           |   | 6 |   |
| Plan                amendments                                |   |       | 15     |                           |   | - |   |
| Net                actuarial gain                             |   |       | (31    | )                              |   | (4 | ) |
| Contributions                by plan participants             |   |       | -      |                           |   | 3 |   |
| Benefits                paid                                  |   |       | (49    | )                              |   | (11 | ) |
| Tronox                Distribution                            |   |       | (500   | )                              |   | (147 | ) |
| Benefit                obligations at June 30, 2006           |   | $          | 729    |                           | $      | 146 |   |
| *Change                in plan assets -*                      |   |       |   |                           |   |   |   |
| Fair                value of plan assets at December 31, 2005 |   | $          | 1,132  |                           | $      | - |   |
| Actual                return on plan assets                   |   |       | 18     |                           |   | - |   |
| Employer                contributions                         |   |       | 2      |                           |   | 8 |   |
| Participant                contributions                      |   |       | -      |                           |   | 3 |   |
| Benefits                paid                                  |   |       | (49    | )                              |   | (11 | ) |
| Tronox                Distribution (1)                        |   |       | (512   | )                              |   | - |   |
| Fair                value of plan assets at June 30, 2006 (2) |   | $          | 591    |                           | $      | - |   |

| (1)   | Includes                plan assets of $450 million transferred from Kerr-McGee’s U.S. qualified                retirement plan trust to Tronox. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 |   |
|                                                         |   | **June                30,**     |     | December                31,          |   | **June                30,** |   | December                31, |   |
| (Millions                of dollars)                         |   | **2006**                        |     | 2005                                 |   | **2006** |   | 2005 |   |
|                                                         |   |                            |     |                                 |   |   |   |   |   |
| Benefit                obligations                           |   | **$**                           | **729**  |                                 | $      | 1,255 |   | **$** | **146** |   | $ | 297 |   |
| Fair                value of plan assets                     |   |                            | **591**  |                                 |   | 1,132 |   |   | **-** |   |   | - |   |
| Funded                status of plans - under funded         |   |                            | **(138** | **)**                                |   | (123 | ) |   | **(146** | **)** |   | (297 | ) |
| *Amounts                not recognized in the Condensed*     |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| *Consolidated                Balance Sheet -*                |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| Prior                service cost                            |   |                            | **34**   |                                 |   | 42 |   |   | **(7** | **)** |   | (14 | ) |
| Net                actuarial loss                            |   |                            | **176**  |                                 |   | 282 |   |   | **37** |   |   | 80 |   |
| Net                prepaid expense (accrued liability)       |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| recognized                                                   |   | **$**                           | **72**   |                                 | $      | 201 |   | **$** | **(116** | **)** | $ | (231 | ) |
| *Classification                of amounts recognized in the* |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| *Condensed                Consolidated Balance Sheet -*      |   |                            |     |                                 |   |   |   |   |   |   |   |   |   |
| Prepaid                pension cost                          |   | **$**                           | **115**  |                                 | $      | 249 |   | **$** | **-** |   | $ | - |   |
| Accrued                benefit liability                     |   |                            | **(91**  | **)**                                |   | (79 | ) |   | **(116** | **)** |   | (231 | ) |
| Intangible                asset                              |   |                            | **6**    |                                 |   | - |   |   | **-** |   |   | - |   |
| Accumulated                other comprehensive loss (pretax) |   |                            | **42**   |                                 |   | 31 |   |   | **-** |   |   | - |   |
| Total                                                        |   | **$**                           | **72**   |                                 | $      | 201 |   | **$** | **(116** | **)** | $ | (231 | ) |

|                                          |   | **At                June 30, 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 |   | **$**                                      | **97**  |                                     | **$**  | **146** |   | $ | 65 |   | $ | 297 |   |
| Projected                benefit obligation   |   |                                       | **107** |                                     |   | **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 June 30, 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 retirement                plan. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Millions                of dollars)          |   | **At                June 30, 2006** |    | At                December 31, 2005 |   |
|-----------------------------------------------|--------|-------------------------------------|---------|-------------------------------------|--------|
|                                          |   |                                |    |                                |   |
| Accumulated                benefit obligation |   | **$**                               | **570** |                                | $      | 990 |   |
|                                          |   |                                |    |                                |   |   |   |
| Projected                benefit obligation   |   | **$**                               | **622** |                                | $      | 1,093 |   |
| Market                value of plan assets    |   |                                | **591** |                                |   | 1,070 |   |
| Funded                status - under funded   |   | **$**                               | **(31** | **)**                               | $      | (23 | ) |

***Expected      Benefit Payments***

|                                                |   |   |   |   |   |   |   |   |   |   |   | 2011-  |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| (Millions                of dollars)                |   | 2006   |   | 2007   |   | 2008   |   | 2009   |   | 2010   |   | 2015   |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retirement                plans                     |   | $      | 31     |   | $      | 76     |   | $      | 62     |   | $      | 65     |   | $ | 65 |   | $ | 340 |   |
| Postretirement                health and life plans |   |   | 5      |   |   | 11     |   |   | 11     |   |   | 11     |   |   | 11 |   |   | 54 |   |

----

***Net      Periodic Cost***

|                                          |   |  Retirement                Plans |     | PostretirementHealth                and Life Plans |   |
|-----------------------------------------------|--------|---------------------------------------|----------|----------------------------------------------------|--------|
|                                          |   | Three                Months Ended     |     | Three                Months Ended                  |   |
|                                          |   | June                30,               |     | June                30,                            |   |
| (Millions                of dollars)          |   |                                  | **2006** |                                               |   | 2005 |   |   | **2006** |   |   | 2005 |   |
|                                          |   |                                  |     |                                               |   |   |   |   |   |   |   |   |   |
| Net                periodic cost -            |   |                                  |     |                                               |   |   |   |   |   |   |   |   |   |
| Service                cost                   |   | **$**                                 | **5**    |                                               | $      | 8 |   | **$** | **1** |   | $ | 1 |   |
| Interest                cost                  |   |                                  | **10**   |                                               |   | 15 |   |   | **2** |   |   | 3 |   |
| Expected                return on plan assets |   |                                  | **(13**  | **)**                                              |   | (24 | ) |   | **-** |   |   | - |   |
| Net                amortization -             |   |                                  |     |                                               |   |   |   |   |   |   |   |   |   |
| Prior                service cost             |   |                                  | **3**    |                                               |   | 2 |   |   | **-** |   |   | (1 | ) |
| Net                actuarial loss             |   |                                  | **1**    |                                               |   | 1 |   |   | **-** |   |   | 2 |   |
| Total                                         |   | **$**                                 | **6**    |                                               | $      | 2 |   | **$** | **3** |   | $ | 5 |   |

|                                          |   |  Retirement                Plans |    | PostretirementHealth                and Life Plans |   |
|-----------------------------------------------|--------|---------------------------------------|---------|----------------------------------------------------|--------|
|                                          |   | Six                Months Ended       |    | Six                Months Ended                    |   |
|                                          |   | June                30,               |    | June                30,                            |   |
| (Millions                of dollars)          |   | **2006**                              |    | 2005                                               |   | **2006** |   | 2005 |   |
|                                          |   |                                  |    |                                               |   |   |   |   |   |
| Net                periodic cost -            |   |                                  |    |                                               |   |   |   |   |   |   |   |   |   |
| Service                cost                   |   | **$**                                 | **12**  |                                               | $      | 15 |   | **$** | **2** |   | $ | 2 |   |
| Interest                cost                  |   |                                  | **25**  |                                               |   | 31 |   |   | **4** |   |   | 5 |   |
| Expected                return on plan assets |   |                                  | **(33** | **)**                                              |   | (48 | ) |   | **-** |   |   | - |   |
| Net                amortization -             |   |                                  |    |                                               |   |   |   |   |   |   |   |   |   |
| Prior                service cost             |   |                                  | **8**   |                                               |   | 4 |   |   | **-** |   |   | (2 | ) |
| Net                actuarial loss             |   |                                  | **3**   |                                               |   | 2 |   |   | **-** |   |   | 3 |   |
| Total                                         |   | **$**                                 | **15**  |                                               | $      | 4 |   | **$** | **6** |   | $ | 8 |   |

***Assumptions***

|                                          | **March                30, 2006**(1) | December                31, 2005  |
|-----------------------------------------------|--------------------------------------|-----------------------------------|
|                                          |                                 |                              |
| Discount                rate                  | **5.85%**                            | 5.50%                             |
| Rate                of compensation increases | **4.50%**                            |                   4.50% |

| (1)   | Benefit                obligations of plans impacted by the Tronox Distribution were remeasured                as of the Distribution date. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

----

**11.**
**Earnings      Per Share**

|                                          |   | For                the Three Months Ended June 30, |    |
|-----------------------------------------------|--------|----------------------------------------------------|---------|
|                                          |   |                                               |    | **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       |   | **$**                                              | **306** |   |   | **225.1** |   | **$** | **1.36** |   | $ | 256 |   |   | 281.6 |   | $ | .91 |   |
| Effect                of dilutive securities: |   |                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted                stock               |   |                                               | -       |   |   | **1.2** |   |   |   |   |   | - |   |   | 1.5 |   |   |   |   |
| Stock                options                  |   |                                               | -       |   |   | **3.0** |   |   |   |   |   | - |   |   | 2.3 |   |   |   |   |
| Diluted                earnings per share     |   | **$**                                              | **306** |   |   | **229.3** |   | **$** | **1.33** |   | $ | 256 |   |   | 285.4 |   | $ | .90 |   |

|                                          |   | For                the Six Months Ended June 30, |    |
|-----------------------------------------------|--------|--------------------------------------------------|---------|
|                                          |   |                                             |    | **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       |   | **$**                                            | **582** |   |   | **226.2** |   | **$** | **2.57** |   | $ | 499 |   |   | 295.6 |   | $ | 1.69 |   |
| Effect                of dilutive securities: |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.25%                convertible debentures   |   |                                             | -       |   |   | - |   |   |   |   |   | 4 |   |   | 6.4 |   |   |   |   |
| Restricted                stock               |   |                                             | -       |   |   | **1.0** |   |   |   |   |   | - |   |   | 1.3 |   |   |   |   |
| Stock                options                  |   |                                             | -       |   |   | **2.9** |   |   |   |   |   | - |   |   | 2.1 |   |   |   |   |
| Diluted                earnings per share     |   | **$**                                            | **582** |   |   | **230.1** |   | **$** | **2.53** |   | $ | 503 |   |   | 305.4 |   | $ | 1.65 |   |

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

|                                           |   | Shares |    | Treasury |   | Shares      |   |
|------------------------------------------------|--------|--------|---------|----------|--------|-------------|--------|
| (Thousands                of shares)           |   | Issued |    | Stock    |   | Outstanding |   |
|                                           |   |   |    |     |   |        |   |
| Balance                at December 31, 2005    |   |   | 232,232 |     |   | 3,457       |   |   | 228,775 |   |
| Stock                option exercises          |   |   | 1,684   |     |   | **-**       |   |   | 1,684 |   |
| Issuance                of restricted stock    |   |   | 482     |     |   | **-**       |   |   | 482 |   |
| Other                issuances                 |   |   | 15      |     |   | -           |   |   | 15 |   |
| Forfeiture                of restricted stock  |   |   | -       |     |   | 97          |   |   | (97 | ) |
| Purchases                of treasury stock (1) |   |   | -       |     |   | 3,551       |   |   | (3,551 | ) |
| Balance                at June 30, 2006        |   |   | 234,413 |     |   | 7,105       |   |   | 227,308 |   |

| (1)   | Includes                shares surrendered by employees in satisfaction of withholding tax                obligations. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

***Preferred      Share Purchase Rights Plan***
* *

----

**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        |   |                        | -      |                           |   | 3                             |   |   | 21 |   |
| Payments                / Settlements       |   |                        | (5     | )                              |   | (13                           | )      |   | (21 | ) |
| Tronox                Distribution          |   |                        | (8     | )                              |   | (216                          | )      |   | (57 | ) |
| Balance                at June 30, 2006     |   | $                           | 17     |                           | $      | 42                            |   | $ | - |   |

| (1)   | Provision                for environmental remediation and restoration and associated accruals                for                third-party reimbursements 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. Provision for environmental remediation                costs                associated with continuing operations for the three and six months                ended                June 30, 2006 of $3 million reflects a $1 million increase in                reserves for environmental remediation and a loss of $2 million associated                with a write-down of assets located at sites where environmental                investigation and/or remediation is in progress. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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**

**Other      Environmental Sites**

**Deepwater      Royalty Relief Act**

----

**Other      Litigation**

| **14.** | **Commitments** |
|---------|-----------------|

***Purchase      Obligations***

***Drilling      Rig Commitments***

***Employee      Continuity Agreements***

***Commitments      Associated with the Proposed Merger***

| **15.** | **Business                Segments** |
|---------|--------------------------------------|

----

| (Millions                of dollars)                                 |   | Gulf                of Mexico |   | Rocky                Mountain |   | Southern |   | China  |   | Other                (1) |   | Total  |   |
|----------------------------------------------------------------------|--------|-------------------------------|--------|-------------------------------|--------|----------|--------|--------|--------|--------------------------|--------|--------|--------|
|                                                                 |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |
| **Three                months ended June 30, 2006:**                 |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |
| Revenues                                                             |   | $                             | 609    |                          | $      | 339      |   | $      | 201    |                     | $      | 101    |   | $ | - |   | $ | 1,250 | (2)  |
|                                                                 |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   |   |   |
| Operating                profit                                      |   | $                             | 434    |                          | $      | 182      |   | $      | 85     |                     | $      | 59     |   | $ | (41 | ) | $ | 719 |   |
|                                                                 |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   |   |   |
| Net                marketing margin                                  |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   | 2 |   |
| Loss                on oil and gas derivatives                       |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   | (130 | ) |
| Corporate                costs                                       |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   | (66 | )(3) |
| Interest                and debt expense                             |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   | (49 | ) |
| Other                income (expense)                                |   |                          |   |                          |   |     |   |   |   |                     |   |   |   |   |   |   |   | (3 | ) |
| Income                from continuing operations before income taxes |   |                          |   |                          |   |     |   |   |   | $                        | 473    |   |

| **Three                months ended June 30, 2005:**                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Revenues                                                             |   | $      | 553    |   | $      | 296    |   | $      | 205    |   | $      | 73     |   | $      | -      |   | $ | 1,127 | (2)  |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                profit                                      |   | $      | 336    |   | $      | 178    |   | $      | 91     |   | $      | 32     |   | $      | (34    | ) | $ | 603 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                marketing margin                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1 | ) |
| Loss                on oil and gas derivatives                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (82 | ) |
| Corporate                costs                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (55 | )                (3) |
| Interest                and debt expense                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (58 | ) |
| Other                income (expense)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (4 | ) |
| Income                from continuing operations before income taxes |   |   |   |   |   |   |   |   |   | $      | 403    |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Six                months ended June 30, 2006:**                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                             |   | $      | 1,139  |   | $      | 704    |   | $      | 433    |   | $      | 175    |   | $ | - |   | $ | 2,451 | (2)  |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                profit                                      |   | $      | 822    |   | $      | 391    |   | $      | 208    |   | $      | 105    |   | $ | (69 | ) | $ | 1,457 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                marketing margin                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1 |   |
| Loss                on oil and gas derivatives                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (244 | ) |
| Corporate                costs                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (136 | )                (3) |
| Interest                and debt expense                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (171 | ) |
| Other                income (expense)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (6 | ) |
| Income                from continuing operations before income taxes |   |   |   |   |   |   |   |   |   | $      | 901    |   |

| **Six                months ended June 30, 2005:**                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Revenues                                                             |   | $      | 1,049  |   | $      | 561    |   | $      | 395    |   | $      | 147    |   | $      | -      |   | $ | 2,152 | (2)  |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                profit                                      |   | $      | 648    |   | $      | 313    |   | $      | 192    |   | $      | 80     |   | $      | (55    | ) | $ | 1,178 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                marketing margin                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1 |   |
| Loss                on oil and gas derivatives                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (168 | ) |
| Corporate                costs                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (113 | )                (3) |
| Interest                and debt expense                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (118 | ) |
| Other                income (expense)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (6 | ) |
| Income                from continuing operations before income taxes |   |   |   |   |   |   |   |   |   | $      | 774    |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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

| (2)   | Excludes                third-party marketing revenues and oil and gas derivatives that are                not                considered in the determination of segment operating profit. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 the E&P segment’s                operating profit in 2005 are included here for consistency with 2006                presentation. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **16.** | **Condensed                Consolidating Financial                Information** |
|---------|---------------------------------------------------------------------------------|

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Income**

**For      the Three Months Ended June 30, 2006**

|                                                                     |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|--------------------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                                     |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |
| **Revenues**                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Oil                and gas sales                                         |   | $                | -      |            | $      | 514           |   | $            | 713    |         | $      | - |   | $ | 1,227 |   |
| Loss                on commodity derivatives                             |   |             | -      |            |   | -             |   |         | (130   | )            |   | - |   |   | (130 | ) |
| Gas                marketing revenues                                    |   |             | -      |            |   | 147           |   |         | -      |         |   | - |   |   | 147 |   |
| Other                revenues                                            |   |             | -      |            |   | 15            |   |         | 8      |         |   | - |   |   | 23 |   |
| Total                Revenues                                            |   |             | -      |            |   | 676           |   |         | 591    |         |   | - |   |   | 1,267 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Expenses**                                    |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Lease                operating costs                                     |   |             | -      |            |   | 72            |   |         | 56     |         |   | - |   |   | 128 |   |
| Production                and ad valorem taxes                           |   |             | -      |            |   | 32            |   |         | 11     |         |   | - |   |   | 43 |   |
| Transportation                expense                                    |   |             | -      |            |   | 9             |   |         | 16     |         |   | - |   |   | 25 |   |
| General                and administrative expense                        |   |             | -      |            |   | (1            | )      |         | 61     |         |   | - |   |   | 60 |   |
| Merger-related                costs                                      |   |             | 8      |            |   | -             |   |         | -      |         |   | - |   |   | 8 |   |
| Exploration                expense                                       |   |             | -      |            |   | 16            |   |         | 90     |         |   | - |   |   | 106 |   |
| Gas                gathering, processing and other expenses              |   |             | -      |            |   | 17            |   |         | 10     |         |   | - |   |   | 27 |   |
| Gas                marketing costs                                       |   |             | -      |            |   | 145           |   |         | -      |         |   | - |   |   | 145 |   |
| Depreciation,                depletion and amortization                  |   |             | -      |            |   | 120           |   |         | 74     |         |   | - |   |   | 194 |   |
| Accretion                expense                                         |   |             | -      |            |   | 2             |   |         | 2      |         |   | - |   |   | 4 |   |
| Provision                for environmental remediation costs             |   |             | -      |            |   | 3             |   |         | -      |         |   | - |   |   | 3 |   |
| Gain                on sales of oil and gas properties                   |   |             | -      |            |   | -             |   |         | (1     | )            |   | - |   |   | (1 | ) |
| Total                Operating Expenses                                  |   |             | 8      |            |   | 415           |   |         | 319    |         |   | - |   |   | 742 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Income (Loss)**                               |   |             | (8     | )               |   | 261           |   |         | 272    |         |   | - |   |   | 525 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Interest                expense                                          |   |             | (115   | )               |   | (7            | )      |         | (142   | )            |   | 215 |   |   | (49 | ) |
| Other                income (expense)                                    |   |             | 392    |            |   | 36            |   |         | 167    |         |   | (598 | ) |   | (3 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations before Income Taxes** |   |             | 269    |            |   | 290           |   |         | 297    |         |   | (383 | ) |   | 473 |   |
| Benefit                (provision) for income taxes                      |   |             | 36     |            |   | (99           | )      |         | (104   | )            |   | - |   |   | (167 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations**                     |   |             | 305    |            |   | 191           |   |         | 193    |         |   | (383 | ) |   | 306 |   |
| Loss                from discontinued operations, net of taxes           |   |             | -      |            |   | -             |   |         | (1     | )            |   | - |   |   | (1 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Net                Income**                                            |   | $                | 305    |            | $      | 191           |   | $            | 192    |         | $      | (383 | ) | $ | 305 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Income**

**For      the Three Months Ended June 30, 2005**

|                                                                     |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|--------------------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                                     |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |
| **Revenues**                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Oil                and gas sales                                         |   | $                | -      |            | $      | 484           |   | $            | 624    |         | $      | - |   | $ | 1,108 |   |
| Loss                on commodity derivatives                             |   |             | -      |            |   | -             |   |         | (82    | )            |   | - |   |   | (82 | ) |
| Gas                marketing revenues                                    |   |             | -      |            |   | 138           |   |         | -      |         |   | - |   |   | 138 |   |
| Other                revenues                                            |   |             | -      |            |   | 13            |   |         | 6      |         |   | - |   |   | 19 |   |
| Total                Revenues                                            |   |             | -      |            |   | 635           |   |         | 548    |         |   | - |   |   | 1,183 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Expenses**                                    |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Lease                operating costs                                     |   |             | -      |            |   | 63            |   |         | 52     |         |   | - |   |   | 115 |   |
| Production                and ad valorem taxes                           |   |             | -      |            |   | 33            |   |         | 1      |         |   | - |   |   | 34 |   |
| Transportation                expense                                    |   |             | -      |            |   | 10            |   |         | 14     |         |   | - |   |   | 24 |   |
| General                and administrative expense                        |   |             | -      |            |   | -             |   |         | 62     |         |   | - |   |   | 62 |   |
| Exploration                expense                                       |   |             | -      |            |   | 15            |   |         | 101    |         |   | - |   |   | 116 |   |
| Gas                gathering, processing and other expenses              |   |             | -      |            |   | 19            |   |         | 7      |         |   | - |   |   | 26 |   |
| Gas                marketing costs                                       |   |             | -      |            |   | 139           |   |         | -      |         |   | - |   |   | 139 |   |
| Depreciation,                depletion and amortization                  |   |             | -      |            |   | 114           |   |         | 106    |         |   | - |   |   | 220 |   |
| Accretion                expense                                         |   |             | -      |            |   | 2             |   |         | 3      |         |   | - |   |   | 5 |   |
| Provision                for environmental remediation costs             |   |             | -      |            |   | -             |   |         | 2      |         |   | - |   |   | 2 |   |
| Gain                on sales of oil and gas properties                   |   |             | -      |            |   | (25           | )      |         | -      |         |   | - |   |   | (25 | ) |
| Total                Operating Expenses                                  |   |             | -      |            |   | 370           |   |         | 348    |         |   | - |   |   | 718 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Income**                                      |   |             | -      |            |   | 265           |   |         | 200    |         |   | - |   |   | 465 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Interest                expense                                          |   |             | (48    | )               |   | (6            | )      |         | (99    | )            |   | 95 |   |   | (58 | ) |
| Other                income (expense)                                    |   |             | 424    |            |   | 10            |   |         | 154    |         |   | (592 | ) |   | (4 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations before Income Taxes** |   |             | 376    |            |   | 269           |   |         | 255    |         |   | (497 | ) |   | 403 |   |
| Benefit                (provision) for income taxes                      |   |             | 9      |            |   | (94           | )      |         | (62    | )            |   | - |   |   | (147 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations**                |   |             | 385    |            |   | 175           |   |         | 193    |         |   | (497 | ) |   | 256 |   |
| Income                (loss) from discontinued operations, net of taxes  |   |             | (15    | )               |   | -             |   |         | 129    |         |   | - |   |   | 114 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Net                Income**                                            |   | $                | 370    |            | $      | 175           |   | $            | 322    |         | $      | (497 | ) | $ | 370 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Income**

**For      the Six Months Ended June 30, 2006**

|                                                                             |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|----------------------------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                                             |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |
| **Revenues**                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Oil                and gas sales                                                 |   | $                | -      |            | $      | 1,087         |   | $            | 1,319  |         | $      | - |   | $ | 2,406 |   |
| Loss                on commodity derivatives                                     |   |             | -      |            |   | -             |   |         | (244   | )            |   | - |   |   | (244 | ) |
| Gas                marketing revenues                                            |   |             | -      |            |   | 360           |   |         | -      |         |   | - |   |   | 360 |   |
| Other                revenues                                                    |   |             | -      |            |   | 30            |   |         | 15     |         |   | - |   |   | 45 |   |
| Total                Revenues                                                    |   |             | -      |            |   | 1,477         |   |         | 1,090  |         |   | - |   |   | 2,567 |   |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Expenses**                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Lease                operating costs                                             |   |             | -      |            |   | 145           |   |         | 114    |         |   | - |   |   | 259 |   |
| Production                and ad valorem taxes                                   |   |             | -      |            |   | 61            |   |         | 13     |         |   | - |   |   | 74 |   |
| Transportation                expense                                            |   |             | -      |            |   | 18            |   |         | 30     |         |   | - |   |   | 48 |   |
| General                and administrative expense                                |   |             | -      |            |   | (1            | )      |         | 135    |         |   | - |   |   | 134 |   |
| Merger-related                costs                                              |   |             | 8      |            |   | -             |   |         | -      |         |   | - |   |   | 8 |   |
| Exploration                expense                                               |   |             | -      |            |   | 26            |   |         | 132    |         |   | - |   |   | 158 |   |
| Gas                gathering, processing and other expenses                      |   |             | -      |            |   | 41            |   |         | 20     |         |   | - |   |   | 61 |   |
| Gas                marketing costs                                               |   |             | -      |            |   | 359           |   |         | -      |         |   | - |   |   | 359 |   |
| Depreciation,                depletion and amortization                          |   |             | -      |            |   | 238           |   |         | 145    |         |   | - |   |   | 383 |   |
| Accretion                expense                                                 |   |             | -      |            |   | 3             |   |         | 4      |         |   | - |   |   | 7 |   |
| Provision                for environmental remediation costs                     |   |             | -      |            |   | 3             |   |         | -      |         |   | - |   |   | 3 |   |
| Gain                on sales of oil and gas properties                           |   |             | -      |            |   | (4            | )      |         | (1     | )            |   | - |   |   | (5 | ) |
| Total                Operating Expenses                                          |   |             | 8      |            |   | 889           |   |         | 592    |         |   | - |   |   | 1,489 |   |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Income (Loss)**                                       |   |             | (8     | )               |   | 588           |   |         | 498    |         |   | - |   |   | 1,078 |   |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Interest                expense                                                  |   |             | (192   | )               |   | (13           | )      |         | (324   | )            |   | 439 |   |   | (90 | ) |
| Loss                on early repayment and modification of debt                  |   |             | (12    | )               |   | -             |   |         | (69    | )            |   | - |   |   | (81 | ) |
| Other                income (expense)                                            |   |             | 744    |            |   | 64            |   |         | 344    |         |   | (1,158 | ) |   | (6 | ) |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations before Income Taxes**         |   |             | 532    |            |   | 639           |   |         | 449    |         |   | (719 | ) |   | 901 |   |
| Benefit                (Provision) for Income Taxes                              |   |             | 62     |            |   | (224          | )      |         | (157   | )            |   | - |   |   | (319 | ) |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations**                             |   |             | 594    |            |   | 415           |   |         | 292    |         |   | (719 | ) |   | 582 |   |
| Income                (loss) from discontinued operations, net of taxes          |   |             | (36    | )               |   | -             |   |         | 12     |         |   | - |   |   | (24 | ) |
| Cumulative                effect of change in accounting principle, net of taxes |   |             | 2      |            |   | -             |   |         | -      |         |   | - |   |   | 2 |   |
|                                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Net                Income**                                                    |   | $                | 560    |            | $      | 415           |   | $            | 304    |         | $      | (719 | ) | $ | 560 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Income**

**For      the Six Months Ended June 30, 2005**

|                                                                     |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|--------------------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                                     |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |
| **Revenues**                                                             |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Oil                and gas sales                                         |   | $                | -      |            | $      | 922           |   | $            | 1,192  |         | $      | - |   | $ | 2,114 |   |
| Loss                on commodity derivatives                             |   |             | -      |            |   | -             |   |         | (168   | )            |   | - |   |   | (168 | ) |
| Gas                marketing revenues                                    |   |             | -      |            |   | 270           |   |         | -      |         |   | - |   |   | 270 |   |
| Other                revenues                                            |   |             | -      |            |   | 26            |   |         | 12     |         |   | - |   |   | 38 |   |
| Total                Revenues                                            |   |             | -      |            |   | 1,218         |   |         | 1,036  |         |   | - |   |   | 2,254 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Expenses**                                    |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Lease                operating costs                                     |   |             | -      |            |   | 122           |   |         | 101    |         |   | - |   |   | 223 |   |
| Production                and ad valorem taxes                           |   |             | -      |            |   | 62            |   |         | 2      |         |   | - |   |   | 64 |   |
| Transportation                expense                                    |   |             | -      |            |   | 20            |   |         | 27     |         |   | - |   |   | 47 |   |
| General                and administrative expense                        |   |             | -      |            |   | (3            | )      |         | 118    |         |   | - |   |   | 115 |   |
| Exploration                expense                                       |   |             | -      |            |   | 26            |   |         | 145    |         |   | - |   |   | 171 |   |
| Gas                gathering, processing and other expenses              |   |             | -      |            |   | 38            |   |         | 16     |         |   | - |   |   | 54 |   |
| Gas                marketing costs                                       |   |             | -      |            |   | 269           |   |         | -      |         |   | - |   |   | 269 |   |
| Depreciation,                depletion and amortization                  |   |             | -      |            |   | 229           |   |         | 214    |         |   | - |   |   | 443 |   |
| Accretion                expense                                         |   |             | -      |            |   | 4             |   |         | 7      |         |   | - |   |   | 11 |   |
| Provision                for environmental remediation costs             |   |             | -      |            |   | -             |   |         | 2      |         |   | - |   |   | 2 |   |
| Asset                impairments                                         |   |             | -      |            |   | -             |   |         | 4      |         |   | - |   |   | 4 |   |
| Gain                on sales of oil and gas properties                   |   |             | -      |            |   | (47           | )      |         | -      |         |   | - |   |   | (47 | ) |
| Total                Operating Expenses                                  |   |             | -      |            |   | 720           |   |         | 636    |         |   | - |   |   | 1,356 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Operating                Income**                                      |   |             | -      |            |   | 498           |   |         | 400    |         |   | - |   |   | 898 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Interest                expense                                          |   |             | (90    | )               |   | (16           | )      |         | (190   | )            |   | 178 |   |   | (118 | ) |
| Other                income (expense)                                    |   |             | 814    |            |   | 18            |   |         | 203    |         |   | (1,041 | ) |   | (6 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations before Income Taxes** |   |             | 724    |            |   | 500           |   |         | 413    |         |   | (863 | ) |   | 774 |   |
| Benefit                (provision) for income taxes                      |   |             | 16     |            |   | (175          | )      |         | (116   | )            |   | - |   |   | (275 | ) |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Income                from Continuing Operations**                |   |             | 740    |            |   | 325           |   |         | 297    |         |   | (863 | ) |   | 499 |   |
| Income                (loss) from discontinued operations, net of taxes  |   |             | (15    | )               |   | -             |   |         | 241    |         |   | - |   |   | 226 |   |
|                                                                     |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Net                Income**                                            |   | $                | 725    |            | $      | 325           |   | $            | 538    |         | $      | (863 | ) | $ | 725 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Balance Sheet**

**As      of June 30, 2006**

|                                                            |   |  Kerr-McGee |   |  Guarantor |   | Non-Guarantor |   |         |   |         |   |
|-----------------------------------------------------------------|--------|------------------|--------|-----------------|--------|---------------|--------|--------------|--------|--------------|--------|
| (Millions                of dollars)                            |   | Corporation      |   | Subsidiary      |   | Subsidiaries  |   | Eliminations |   | Consolidated |   |
|                                                            |   |
| **ASSETS**                                                      |   |
| **Current                Assets**                               |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Cash                and cash equivalents                        |   | $                | 1      |            | $      | 2             |   | $            | 153    |         | $      | - |   | $ | 156 |   |
| Intercompany                receivables                         |   |             | -      |            |   | -             |   |         | 77     |         |   | (77 | ) |   | - |   |
| Accounts                receivable                              |   |             | 2      |            |   | 279           |   |         | 470    |         |   | - |   |   | 751 |   |
| Derivatives                and other current assets             |   |             | -      |            |   | 30            |   |         | 174    |         |   | - |   |   | 204 |   |
| Deferred                income taxes                            |   |             | 5      |            |   | 14            |   |         | 361    |         |   | - |   |   | 380 |   |
| Assets                held for sale                             |   |             | -      |            |   | -             |   |         | 24     |         |   | - |   |   | 24 |   |
| Total                Current Assets                             |   |             | 8      |            |   | 325           |   |         | 1,259  |         |   | (77 | ) |   | 1,515 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Property,                Plant and Equipment - Net**          |   |             | **-**  |            |   | 5,470         |   |         | 2,747  |         |   | - |   |   | 8,217 |   |
| **Investment                in Subsidiaries**                   |   |             | 11,600 |            |   | -             |   |         | -      |         |   | (11,600 | ) |   | - |   |
| **Investments,                Derivatives and Other Assets**    |   |             | 16     |            |   | 81            |   |         | 224    |         |   | - |   |   | 321 |   |
| **Goodwill                and Other Intangible Assets**         |   |             | -      |            |   | 370           |   |         | 805    |         |   | - |   |   | 1,175 |   |
| **Assets                held for sale**                         |   |             | -      |            |   | -             |   |         | 710    |         |   | - |   |   | 710 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Total                Assets**                                 |   | $                | 11,624 |            | $      | 6,246         |   | $            | 5,745  |         | $      | (11,677 | ) | $ | 11,938 |   |
|                                                            |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**         |
| **Current                Liabilities**                          |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Intercompany                borrowings                          |   | $                | 4,616  |            | $      | 293           |   | $            | -      |         | $      | (4,909 | ) | $ | - |   |
| Accounts                payable                                 |   |             | 13     |            |   | 192           |   |         | 193    |         |   | - |   |   | 398 |   |
| Long-term                debt due within one year               |   |             | 309    |            |   | -             |   |         | -      |         |   | - |   |   | 309 |   |
| Income                taxes payable                             |   |             | -      |            |   | -             |   |         | 53     |         |   | - |   |   | 53 |   |
| Commodity                derivative liabilities                 |   |             | -      |            |   | 5             |   |         | 872    |         |   | - |   |   | 877 |   |
| Accrued                liabilities                              |   |             | 62     |            |   | 260           |   |         | 509    |         |   | - |   |   | 831 |   |
| Liabilities                associated with assets held for sale |   |             | -      |            |   | -             |   |         | 25     |         |   | - |   |   | 25 |   |
| Total                Current Liabilities                        |   |             | 5,000  |            |   | 750           |   |         | 1,652  |         |   | (4,909 | ) |   | 2,493 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Long-Term                Debt**                               |   |             | 1,802  |            |   | -             |   |         | 295    |         |   | - |   |   | 2,097 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Noncurrent                Liabilities**                       |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| Deferred                income taxes                            |   |             | (30    | )               |   | 1,326         |   |         | 324    |         |   | - |   |   | 1,620 |   |
| Asset                retirement obligations                     |   |             | -      |            |   | 91            |   |         | 121    |         |   | - |   |   | 212 |   |
| Commodity                derivative liabilities                 |   |             | -      |            |   | 1             |   |         | 322    |         |   | - |   |   | 323 |   |
| Other                                                           |   |             | 69     |            |   | 65            |   |         | 317    |         |   | - |   |   | 451 |   |
| Liabilities                associated with assets held for sale |   |             | -      |            |   | -             |   |         | 126    |         |   | - |   |   | 126 |   |
| Total                Noncurrent Liabilities                     |   |             | 39     |            |   | 1,483         |   |         | 1,210  |         |   | - |   |   | 2,732 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Stockholders'                Equity**                         |   |             | 4,783  |            |   | 4,013         |   |         | 2,588  |         |   | (6,768 | ) |   | 4,616 |   |
|                                                            |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Total                Liabilities and Stockholders' Equity**   |   | $                | 11,624 |            | $      | 6,246         |   | $            | 5,745  |         | $      | (11,677 | ) | $ | 11,938 |   |

----

**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      |            | $      | 5             |   | $            | 1,047  |         | $      | - |   | $ | 1,053 |   |
| Accounts                receivable                           |   |             | 1      |            |   | 371           |   |         | 381    |         |   | - |   |   | 753 |   |
| Derivatives                and other current assets          |   |             | -      |            |   | 33            |   |         | 172    |         |   | - |   |   | 205 |   |
| Deferred                income taxes                         |   |             | -      |            |   | 14            |   |         | 533    |         |   | - |   |   | 547 |   |
| Tronox                Assets                                 |   |             | -      |            |   | -             |   |         | 691    |         |   | - |   |   | 691 |   |
| Total                Current Assets                          |   |             | 2      |            |   | 423           |   |         | 2,824  |         |   | - |   |   | 3,249 |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Property,                Plant and Equipment - Net**       |   |             | **-**  |            |   | 5,247         |   |         | 3,188  |         |   | - |   |   | 8,435 |   |
| **Investment                in Subsidiaries**                |   |             | 8,688  |            |   | -             |   |         | -      |         |   | (8,688 | ) |   | - |   |
| **Investments,                Derivatives and Other Assets** |   |             | 25     |            |   | 80            |   |         | 402    |         |   | (80 | ) |   | 427 |   |
| **Goodwill                and Other Intangible Assets**      |   |             | -      |            |   | 374           |   |         | 805    |         |   | - |   |   | 1,179 |   |
| **Assets                Held for Sale and Tronox Assets**    |   |             | -      |            |   | 4             |   |         | 982    |         |   | - |   |   | 986 |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |
| **Total                Assets**                              |   | $                | 8,715  |            | $      | 6,128         |   | $            | 8,201  |         | $      | (8,768 | ) | $ | 14,276 |   |
|                                                         |   |             |   |            |   |          |   |         |   |         |   |   |   |   |   |   |

| **LIABILITIES                AND STOCKHOLDERS' EQUITY**       |   |
|---------------------------------------------------------------|--------|
| **Current                Liabilities**                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intercompany                borrowings                        |   | $ | 2,459 |   | $ | 1,354 |   | $ | 1,866 |   | $ | (5,679 | ) | $ | - |   |
| Accounts                payable                               |   |   | 6 |   |   | 231 |   |   | 188 |   |   | - |   |   | 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 | ) |   | 263 |   |   | 655 |   |   | - |   |   | 846 |   |
| Liabilities                associated with Tronox             |   |   | - |   |   | - |   |   | 419 |   |   | - |   |   | 419 |   |
| Total                Current Liabilities                      |   |   | 2,699 |   |   | 1,862 |   |   | 5,049 |   |   | (5,679 | ) |   | 3,931 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long-Term                Debt**                             |   |   | 1,801 |   |   | - |   |   | 476 |   |   | - |   |   | 2,277 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent                Liabilities**                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                income taxes                          |   |   | (9 | ) |   | 639 |   |   | 815 |   |   | - |   |   | 1,445 |   |
| Asset                retirement obligations                   |   |   | - |   |   | 74 |   |   | 236 |   |   | - |   |   | 310 |   |
| Commodity                derivative liabilities               |   |   | - |   |   | - |   |   | 658 |   |   | - |   |   | 658 |   |
| Other                noncurrent liabilities                   |   |   | - |   |   | 91 |   |   | 380 |   |   | - |   |   | 471 |   |
| Liabilities                associated with Tronox             |   |   | - |   |   | - |   |   | 1,069 |   |   | - |   |   | 1,069 |   |
| Total                Noncurrent Liabilities                   |   |   | (9 | ) |   | 804 |   |   | 3,158 |   |   | - |   |   | 3,953 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Stockholders'                Equity**                       |   |   | 4,224 |   |   | 3,462 |   |   | (482 | ) |   | (3,089 | ) |   | 4,115 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Stockholders' Equity** |   | $ | 8,715 |   | $ | 6,128 |   | $ | 8,201 |   | $ | (8,768 | ) | $ | 14,276 |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Cash Flows**

**For      the Six Months Ended June 30, 2006**

|                                                                   |   |        |   |       |   | Non-         |   |         |   |         |   |
|------------------------------------------------------------------------|--------|-------------|--------|------------|--------|--------------|--------|--------------|--------|--------------|--------|
|                                                                   |   | Kerr-McGee  |   | Guarantor  |   | Guarantor    |   |         |   |         |   |
| (Millions                of dollars)                                   |   | Corporation |   | Subsidiary |   | Subsidiaries |   | Eliminations |   | Consolidated |   |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |
| **Cash                Flows from Operating Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Net                income                                              |   | $           | 560    |       | $      | 415          |   | $            | 304    |         | $      | (719 | ) | $ | 560 |   |
| Adjustments                to reconcile net income to net cash         |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| provided                by (used in) operating activities-             |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
|                  Depreciation, depletion and amortization         |   |        | -      |       |   | 246          |   |         | 184    |         |   | - |   |   | 430 |   |
|                  Deferred income taxes                            |   |        | (34    | )          |   | 49           |   |         | 92     |         |   | - |   |   | 107 |   |
|                  Dry hole expense                                 |   |        | -      |       |   | 4            |   |         | 69     |         |   | - |   |   | 73 |   |
|                  Gain on sale of assets                           |   |        | -      |       |   | (4           | )      |         | (1     | )            |   | - |   |   | (5 | ) |
|                  Accretion expense                                |   |        | -      |       |   | 3            |   |         | 4      |         |   | - |   |   | 7 |   |
|                  Loss on early repayment and modification         |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
|                     of debt                        |   |        | 12     |       |   | -            |   |         | 69     |         |   | - |   |   | 81 |   |
|                  Provision for Tronox guarantee                   |   |        | 56     |       |   | -            |   |         | -      |         |   | - |   |   | 56 |   |
|                  Equity in earnings of subsidiaries               |   |        | (719   | )          |   | -            |   |         | -      |         |   | 719 |   |   | - |   |
|                  Other noncash items affecting net income         |   |        | 2      |       |   | 21           |   |         | (48    | )            |   | - |   |   | (25 | ) |
|                  Changes in assets and liabilities                |   |        | 178    |       |   | 43           |   |         | (795   | )            |   | - |   |   | (574 | ) |
| **Net                Cash Provided by (Used in) Operating Activities** |   |        | 55     |       |   | 777          |   |         | (122   | )            |   | - |   |   | 710 |   |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Capital                expenditures                                    |   |        | -      |       |   | (449         | )      |         | (476   | )            |   | - |   |   | (925 | ) |
| Dry                hole costs                                          |   |        | -      |       |   | (4           | )      |         | (36    | )            |   | - |   |   | (40 | ) |
| Proceeds                from sales of assets                           |   |        | -      |       |   | 5            |   |         | 6      |         |   | - |   |   | 11 |   |
| Other                investing activities                              |   |        | -      |       |   | -            |   |         | 15     |         |   | - |   |   | 15 |   |
| **Net                Cash Used in Investing Activities**               |   |        | -      |       |   | (448         | )      |         | (491   | )            |   | - |   |   | (939 | ) |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Issuance                of common stock upon exercise of               |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| stock                options                                           |   |        | 43     |       |   | -            |   |         | -      |         |   | - |   |   | 43 |   |
| Purchases                of treasury stock                             |   |        | (369   | )          |   | -            |   |         | -      |         |   | - |   |   | (369 | ) |
| Repayment                of debt                                       |   |        | -      |       |   | -            |   |         | (250   | )            |   | - |   |   | (250 | ) |
| Dividends                paid                                          |   |        | (11    | )          |   | -            |   |         | -      |         |   | - |   |   | (11 | ) |
| Increase                (decrease) in intercompany                     |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| notes                payable                                           |   |        | 273    |       |   | (332         | )      |         | 59     |         |   | - |   |   | - |   |
| Settlement                of Westport derivatives                      |   |        | -      |       |   | -            |   |         | (30    | )            |   | - |   |   | (30 | ) |
| Tronox                Distribution                                     |   |        | -      |       |   | -            |   |         | (57    | )            |   | - |   |   | (57 | ) |
| Other                financing activities                              |   |        | 9      |       |   | -            |   |         | -      |         |   | - |   |   | 9 |   |
| **Net                Cash Used in Financing Activities**               |   |        | (55    | )          |   | (332         | )      |         | (278   | )            |   | - |   |   | (665 | ) |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Effects                of Exchange Rate Changes on Cash**            |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **and                Cash Equivalents**                                |   |        | -      |       |   | -            |   |         | (3     | )            |   | - |   |   | (3 | ) |
| **Net                Decrease in Cash and Cash Equivalents**           |   |        | -      |       |   | (3           | )      |         | (894   | )            |   | - |   |   | (897 | ) |
| **Cash                and Cash Equivalents at Beginning of Year**      |   |        | 1      |       |   | 5            |   |         | 1,047  |         |   | - |   |   | 1,053 |   |
| **Cash                and Cash Equivalents at End of Period**          |   | $           | 1      |       | $      | 2            |   | $            | 153    |         | $      | - |   | $ | 156 |   |
|                                                                   |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |

----

**Kerr-McGee      Corporation and Subsidiary Companies**

**Condensed      Consolidating Statement of Cash Flows**

**For      the Six Months Ended June 30, 2005**

|                                                                    |   |        |   |       |   | Non-         |   |         |   |         |   |
|-------------------------------------------------------------------------|--------|-------------|--------|------------|--------|--------------|--------|--------------|--------|--------------|--------|
|                                                                    |   | Kerr-McGee  |   | Guarantor  |   | Guarantor    |   |         |   |         |   |
| (Millions                of dollars)                                    |   | Corporation |   | Subsidiary |   | Subsidiaries |   | Eliminations |   | Consolidated |   |
|                                                                    |   |        |   |       |   |         |   |         |   |         |   |
| **Cash                Flows from Operating Activities**                 |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Net                income                                               |   | $           | 725    |       | $      | 325          |   | $            | 538    |         | $      | (863 | ) | $ | 725 |   |
| Adjustments                to reconcile net income to net cash          |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| provided                by (used in) operating activities-              |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Depreciation,                depletion and amortization                 |   |        | -      |       |   | 236          |   |         | 414    |         |   | - |   |   | 650 |   |
| Deferred                income taxes                                    |   |        | (2     | )          |   | 20           |   |         | 247    |         |   | - |   |   | 265 |   |
| Dry                hole expense                                         |   |        | -      |       |   | 10           |   |         | 81     |         |   | - |   |   | 91 |   |
| Asset                impairments                                        |   |        | -      |       |   | -            |   |         | 5      |         |   | - |   |   | 5 |   |
| (Gain)                loss on sale of assets                            |   |        | -      |       |   | (47          | )      |         | 1      |         |   | - |   |   | (46 | ) |
| Accretion                expense                                        |   |        | -      |       |   | 4            |   |         | 13     |         |   | - |   |   | 17 |   |
| Equity                in earnings of subsidiaries                       |   |        | (771   | )          |   | -            |   |         | -      |         |   | 771 |   |   | - |   |
| Other                noncash items affecting net income                 |   |        | (17    | )          |   | 168          |   |         | (99    | )            |   | 94 |   |   | 146 |   |
| Changes                in assets and liabilities                        |   |        | 11     |       |   | (192         | )      |         | (92    | )            |   | (2 | ) |   | (275 | ) |
| **Net                Cash Provided by (Used in)**                       |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Operating                Activities**                                 |   |        | (54    | )          |   | 524          |   |         | 1,108  |         |   | - |   |   | 1,578 |   |
|                                                                    |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                 |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Capital                expenditures                                     |   |        | -      |       |   | (347         | )      |         | (461   | )            |   | - |   |   | (808 | ) |
| Dry                hole costs                                           |   |        | -      |       |   | (11          | )      |         | (64    | )            |   | - |   |   | (75 | ) |
| Proceeds                from sales of assets                            |   |        | -      |       |   | 54           |   |         | 9      |         |   | - |   |   | 63 |   |
| Other                investing activities                               |   |        | -      |       |   | (21          | )      |         | -      |         |   | - |   |   | (21 | ) |
| **Net                Cash Used in Investing Activities**                |   |        | -      |       |   | (325         | )      |         | (516   | )            |   | - |   |   | (841 | ) |
|                                                                    |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                 |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| Issuance                of common stock upon exercise of                |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| stock                options                                            |   |        | 159    |       |   | -            |   |         | -      |         |   | - |   |   | 159 |   |
| Purchases                of treasury stock                              |   |        | (250   | )          |   | -            |   |         | -      |         |   | - |   |   | (250 | ) |
| Repayment                of debt                                        |   |        | (350   | )          |   | -            |   |         | (42    | )            |   | - |   |   | (392 | ) |
| Proceeds                from borrowings                                 |   |        | 4,250  |       |   | -            |   |         | -      |         |   | - |   |   | 4,250 |   |
| Dividends                paid                                           |   |        | (142   | )          |   | -            |   |         | -      |         |   | - |   |   | (142 | ) |
| Increase                (decrease) in intercompany                      |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| notes                payable                                            |   |        | 419    |       |   | (183         | )      |         | (236   | )            |   | - |   |   | - |   |
| Settlement                of Westport derivatives                       |   |        | -      |       |   | -            |   |         | (80    | )            |   | - |   |   | (80 | ) |
| Shares                repurchased under the tender offer                |   |        | (3,975 | )          |   | -            |   |         | -      |         |   | - |   |   | (3,975 | ) |
| Other                financing activities                               |   |        | (58    | )          |   | -            |   |         | -      |         |   | - |   |   | (58 | ) |
| **Net                Cash Provided by (Used in)**                       |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Financing                Activities**                                 |   |        | 53     |       |   | (183         | )      |         | (358   | )            |   | - |   |   | (488 | ) |
|                                                                    |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **Effects                of Exchange Rate Changes on Cash**             |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |
| **and                Cash Equivalents**                                 |   |        | -      |       |   | -            |   |         | (1     | )            |   | - |   |   | (1 | ) |
| **Net                Increase (Decrease) in Cash and Cash Equivalents** |   |        | (1     | )          |   | 16           |   |         | 233    |         |   | - |   |   | 248 |   |
| **Cash                and Cash Equivalents at Beginning of Year**       |   |        | 2      |       |   | 11           |   |         | 63     |         |   | - |   |   | 76 |   |
| **Cash                and Cash Equivalents at End of Period**           |   | $           | 1      |       | $      | 27           |   | $            | 296    |         | $      | - |   | $ | 324 |   |
|                                                                    |   |        |   |       |   |         |   |         |   |         |   |   |   |   |   |   |

----

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

**Overview      and Recent Developments**

*Pending      Merger*

*Other      Recent Developments *

| ·   | On                May 9, 2006, the company’s Board of Directors (the Board) authorized a                two-for-one split of Kerr-McGee’s outstanding common stock. The stock                split was accomplished through a stock dividend issued on June 14,                2006 to                stockholders of record at the close of business on June 2, 2006.                Unless                otherwise indicated, common share and per share amounts in this Quarterly                Report on Form 10-Q have been retroactively adjusted to reflect the                stock                split. The par value of Kerr-McGee’s common stock remains $1 per                share. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Board also approved a 25% increase in the company's quarterly dividend                effective with the dividend paid on July 3, 2006. On a post-split                basis,                the quarterly dividend increased from $.025 to $.03125 per                share. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January 2006, the company entered into an agreement to sell its 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 the third quarter. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                January 2006, the Board approved a $1 billion stock repurchase program.                During the first six months of 2006, approximately 3.4 million shares                of                stock (on a pre-split basis) were repurchased at an aggregate cost                of $356                million. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                November 2005, Tronox Incorporated (Tronox), a former wholly-owned                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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Results      of Consolidated Operations**

|                                                                             |   | Three                Months Ended |      | Six                Months Ended |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------|-----------|---------------------------------|--------|
|                                                                             |   | June                30,           |      | June                30,         |   |
| (Millions                of dollars)                                             |   | **2006**                          |      | 2005                            |   | **2006** |   | 2005 |   |
|                                                                             |   |                              |      |                            |   |   |   |   |   |
| Revenues                                                                         |   | **$**                             | **1,267** |                            | $      | 1,183 |   | **$** | **2,567** |   | $ | 2,254 |   |
|                                                                             |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Operating                income                                                  |   | **$**                             | **525**   |                            | $      | 465 |   | **$** | **1,078** |   | $ | 898 |   |
|                                                                             |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations                                 |   | **$**                             | **306**   |                            | $      | 256 |   | **$** | **582** |   | $ | 499 |   |
| Income                (loss) from discontinued operations, net of taxes          |   |                              | **(1**    | **)**                           |   | 114 |   |   | **(24** | **)** |   | 226 |   |
| Cumulative                effect of change in accounting principle, net of taxes |   |                              | -         |                            |   | - |   |   | **2** |   |   | - |   |
| Net                income                                                        |   | **$**                             | **305**   |                            | $      | 370 |   | **$** | **560** |   | $ | 725 |   |
|                                                                             |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations per common share:               |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Basic                                                                            |   | **$**                             | **1.36**  |                            | $      | .91 |   | **$** | **2.57** |   | $ | 1.69 |   |
| Diluted                                                                          |   |                              | **1.33**  |                            |   | .90 |   |   | **2.53** |   |   | 1.65 |   |
|                                                                             |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Net                income per common share:                                      |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Basic                                                                            |   | **$**                             | **1.35**  |                            | $      | 1.31 |   | **$** | **2.47** |   | $ | 2.45 |   |
| Diluted                                                                          |   |                              | **1.33**  |                            |   | 1.30 |   |   | **2.43** |   |   | 2.39 |   |
|                                                                             |   |                              |      |                            |   |   |   |   |   |   |   |   |   |

***Overview***

*Tronox      Separation*
*Interest      Expense and Loss on Early Repayment and Modification of Debt*

----

**Revenues      **

|                                                                                           |   | Three                Months Ended |      | Six                Months Ended |   |
|------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|---------------------------------|--------|
|                                                                                           |   | June                30,           |      | June                30,         |   |
| (Millions                of dollars)                                                           |   | **2006**                          |      | 2005                            |   | **2006** |   | 2005 |   |
| **Revenues                -**                                                                  |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Natural                gas sales                                                               |   | **$**                             | **569**   |                            | $      | 632 |   | **$** | **1,238** |   | $ | 1,180 |   |
| Crude                oil, condensate and natural gas liquids sales                             |   |                              | **658**   |                            |   | 476 |   |   | **1,168** |   |   | 934 |   |
| Loss                on oil and gas derivatives - hedge                                         |   |                              | **(150**  | **)**                           |   | (59 | ) |   | **(424** | **)** |   | (85 | ) |
| Mark-to-market                nonhedge derivative gain (loss)                                  |   |                              | **20**    |                            |   | 12 |   |   | **150** |   |   | (39 | ) |
| Gain                (loss) due to hedge ineffectiveness                                        |   |                              | **-**     |                            |   | (35 | ) |   | **30** |   |   | (44 | ) |
| Gas                marketing revenues                                                          |   |                              | **147**   |                            |   | 138 |   |   | **360** |   |   | 270 |   |
| Process,                gathering and other revenues                                           |   |                              | **23**    |                            |   | 19 |   |   | **45** |   |   | 38 |   |
| Total                                                                                          |   | **$**                             | **1,267** |                            | $      | 1,183 |   | **$** | **2,567** |   | $ | 2,254 |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| **Natural                Gas Production and Average Sales Prices -**                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Production                (MMcf/d) -                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Gulf                of Mexico -                                                                |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Deepwater                                                                |   |                              | **253**   |                            |   | 285 |   |   | **246** |   |   | 270 |   |
|                  Shelf                                                                    |   |                              | **120**   |                            |   | 167 |   |   | **105** |   |   | 162 |   |
| U.S.                Onshore -                                                                  |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Rocky Mountain                                                           |   |                              | **388**   |                            |   | 330 |   |   | **376** |   |   | 331 |   |
|                  Southern                                                                 |   |                              | **223**   |                            |   | 241 |   |   | **232** |   |   | 253 |   |
|                    Total                                                        |   |                              | **984**   |                            |   | 1,023 |   |   | **959** |   |   | 1,016 |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Average                Sales Prices (per Mcf) -                                                |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Gulf                of Mexico -                                                                |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Deepwater                                                                |   | **$**                             | **6.80**  |                            | $      | 7.19 |   | **$** | **7.58** |   | $ | 6.91 |   |
|                  Shelf                                                                    |   |                              | **6.76**  |                            |   | 6.97 |   |   | **7.47** |   |   | 6.73 |   |
| U.S.                Onshore -                                                                  |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Rocky Mountain                                                           |   |                              | **5.84**  |                            |   | 6.42 |   |   | **6.66** |   |   | 6.07 |   |
|                  Southern                                                                 |   |                              | **6.56**  |                            |   | 6.72 |   |   | **7.28** |   |   | 6.16 |   |
|                    Average                                                      |   | **$**                             | **6.36**  |                            | $      | 6.79 |   | **$** | **7.14** |   | $ | 6.42 |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| **Oil,                Condensate and NGL Production and Average Sales                Prices-** |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Production                (Mbbls/d) -                                                          |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Gulf                of Mexico -                                                                |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Deepwater                                                                |   |                              | **59**    |                            |   | 47 |   |   | **53** |   |   | 47 |   |
|                  Shelf                                                                    |   |                              | **9**     |                            |   | 13 |   |   | **9** |   |   | 14 |   |
| U.S.                Onshore -                                                                  |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Rocky Mountain                                                           |   |                              | **21**    |                            |   | 22 |   |   | **21** |   |   | 22 |   |
|                  Southern                                                                 |   |                              | **13**    |                            |   | 14 |   |   | **13** |   |   | 14 |   |
|                    Total U.S.                                                   |   |                              | **102**   |                            |   | 96 |   |   | **96** |   |   | 97 |   |
| China                                                                                          |   |                              | **17**    |                            |   | 17 |   |   | **17** |   |   | 19 |   |
| Total                                                                                          |   |                              | **119**   |                            |   | 113 |   |   | **113** |   |   | 116 |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Average                Wellhead Sales Prices (per bbl) -                                       |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Gulf                of Mexico -                                                                |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Deepwater                                                                |   | **$**                             | **61.66** |                            | $      | 47.26 |   | **$** | **59.29** |   | $ | 46.03 |   |
|                  Shelf                                                                    |   |                              | **58.39** |                            |   | 47.25 |   |   | **56.69** |   |   | 46.46 |   |
| U.S.                Onshore -                                                                  |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                  Rocky Mountain                                                           |   |                              | **57.49** |                            |   | 43.44 |   |   | **54.81** |   |   | 41.82 |   |
|                  Southern                                                                 |   |                              | **57.62** |                            |   | 45.58 |   |   | **52.95** |   |   | 44.03 |   |
|                    Average U.S.                                                 |   |                              | **59.99** |                            |   | 46.13 |   |   | **57.20** |   |   | 44.84 |   |
| China                                                                                          |   |                              | **63.58** |                            |   | 42.85 |   |   | **59.08** |   |   | 40.46 |   |
| Average                                                                                        |   | **$**                             | **60.52** |                            | $      | 45.60 |   | **$** | **57.47** |   | $ | 44.09 |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| **Energy                Equivalent Production -**                                              |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Thousands                of barrels of oil equivalent (Mboe) per day                           |   |                              | **283**   |                            |   | 284 |   |   | **272** |   |   | 286 |   |
| Millions                of cubic feet of gas equivalent (MMcfe) per day                        |   |                              | **1,699** |                            |   | 1,702 |   |   | **1,634** |   |   | 1,715 |   |
|                                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |

----

***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***

***Merger-related      Costs***

***Exploration      Expense***

|                                              |   | Three                Months Ended |    | Six                Months Ended |   |
|---------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|
|                                              |   | June                30,           |    | June                30,         |   |
| (Millions                of dollars)              |   | **2006**                          |    | 2005                            |   | **2006** |   | 2005 |   |
|                                              |   |                              |    |                            |   |   |   |   |   |
| Exploration                costs (1)              |   | **$**                             | **17**  |                            | $      | 16 |   | **$** | **31** |   | $ | 27 |   |
| Geological                and geophysical costs   |   |                              | **20**  |                            |   | 14 |   |   | **32** |   |   | 29 |   |
| Dry                hole expense                   |   |                              | **58**  |                            |   | 71 |   |   | **73** |   |   | 86 |   |
| Amortization                of undeveloped leases |   |                              | **11**  |                            |   | 15 |   |   | **22** |   |   | 30 |   |
| Sales                of unproved properties       |   |                              | **-**   |                            |   | - |   |   | **-** |   |   | (1 | ) |
| Total                exploration expense          |   | **$**                             | **106** |                            | $      | 116 |   | **$** | **158** |   | $ | 171 |   |

| (1)   | Exploration                costs include delay rentals, cost of retaining and carrying unproved                properties and exploration department                overhead. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

|                                                          |   | Three                Months Ended |     | Six                Months Ended |   |
|---------------------------------------------------------------|--------|-----------------------------------|----------|---------------------------------|--------|
|                                                          |   | June                30,           |     | June                30,         |   |
| (Millions                of dollars)                          |   | **2006**                          |     | 2005                            |   | **2006** |   | 2005 |   |
|                                                          |   |                              |     |                            |   |   |   |   |   |
| Oil                and gas properties                         |   | **$**                             | **183**  |                            | $      | 209 |   | **$** | **362** |   | $ | 422 |   |
| Other                property, plant and equipment (1)        |   |                              | **11**   |                            |   | 11 |   |   | **21** |   |   | 21 |   |
| Total                                                         |   | **$**                             | **194**  |                            | $      | 220 |   | **$** | **383** |   | $ | 443 |   |
|                                                          |   |                              |     |                            |   |   |   |   |   |   |   |   |   |
| DD&A                rate per boe - oil and gas properties |   | **$**                             | **7.11** |                            | $      | 8.05 |   | **$** | **7.36** |   | $ | 8.14 |   |

| (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***

|                                                   |   | Three                Months Ended |   | Six                Months Ended |   |
|--------------------------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|
|                                                   |   | June                30            |   | June                30          |   |
| (Millions                of dollars)                   |   | **2006**                          |   | 2005                            |   | **2006** |   | 2005 |   |
|                                                   |   |                              |   |                            |   |   |   |   |   |
| *Interest                expense reported in:*         |   |                              |   |                            |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations       |   | **$**                             | **49** |                            | $      | 58 |   | **$** | **90** |   | $ | 118 |   |
| Income                from discontinued operations (1) |   |                              | **-**  |                            |   | 24 |   |   | **-** |   |   | 24 |   |
| Total                                                  |   | **$**                             | **49** |                            | $      | 82 |   | **$** | **90** |   | $ | 142 |   |

***Provision      for Income Taxes***

----

**Tronox      Separation**

*Overview      and Recent Developments*

**Financial      Condition and Liquidity**

|                                                                                                 |   |                        |                        |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------------------------|
|                                                                                                 |   | **June                30,** |                        | December                31, |   |
| (Millions                of dollars)                                                                 |   | **2006**                    |                        | 2005 |   |
|                                                                                                 |   |                        |                        |   |   |
| Current                ratio (1)                                                                     |   |                        | **0.6                to 1** |   |   | 0.8                to 1 |   |
| Cash                and cash equivalents                                                             |   | **$**                       | **156**                     |   | $ | 1,053 |   |
| Debt                repayment obligations due within one year (2)                                    |   |                        | **306**                     |   |   | 306 |   |
| Unused                capacity under revolving lines of credit (3)                                   |   |                        | **1,193**                   |   |   | 1,184 |   |
| Total                debt, including $550 million of Tronox debt at December 31,                2005 |   |                        | **2,406**                   |   |   | 3,133 |   |
| Stockholders’                equity and minority interest                (4)                   |   | **$**                       | **4,616**                   |   | $ | 4,327 |   |
| Debt                to total capitalization (4)                                                      |   |                        | **34**                      | **%** |   | 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 June 30, 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   | ) |   | (265 | ) |
| Repurchases                of common stock (3)                    |   |                                  | -      |   |   | (356 | ) |

| (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 $244 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. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

***Credit      Ratings***

|                                           | December                31, 2005 |   | June                30, 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**

|                                                                    |   | Six                Months                Ended |     |
|-------------------------------------------------------------------------|--------|------------------------------------------------|----------|
|                                                                    |   | June                30,                        |     |
| (Millions                of                dollars)                     |   | **2006**                                       |     | 2005 |   |
|                                                                    |   |                                           |     |   |   |
| Net                cash                provided by operating activities |   | **$**                                          | **710**  |   | $ | 1,578 |   |
| Net                cash used                in investing activities     |   |                                           | **(939** | **)** |   | (841 | ) |
| Net                cash used                in financing activities     |   |                                           | **(665** | **)** |   | (488 | ) |

***Operating      Activities***
** - **

***Investing      Activities -***

|                                                                    |   | Six                Months                EndedJune                30, |     |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|----------|
| (Millions                of                dollars)                     |   | **2006**                                                              |     | 2005 |   |
|                                                                    |   |                                                                  |     |   |   |
| Capital                expenditures -                                   |   |                                                                  |     |   |   |   |   |
| Exploration                and development (including dry hole costs) - |   |                                                                  |     |   |   |   |   |
| Continuing                operations                                    |   | **$**                                                                 | **(933** | **)** | $ | (766 | ) |
| Discontinued                operations                                  |   |                                                                  | **-**    |   |   | (77 | ) |
|  Tronox                                                            |   |                                                                  | **(22**  | **)** |   | (31 | ) |
| Corporate                and                other                       |   |                                                                  | **(10**  | **)** |   | (9 | ) |
| Total                capital                expenditures                |   |                                                                  | **(965** | **)** |   | (883 | ) |
| Proceeds                from                sales of assets             |   |                                                                  | **11**   |   |   | 63 |   |
| Other                investing activities                               |   |                                                                  | **15**   |   |   | (21 | ) |
| Net                cash used                in investing activities     |   | **$**                                                                 | **(939** | **)** | $ | (841 | ) |

----

***Financing      Activities -***

**Obligations      and Commitments**

| (Millions                of dollars)       |   | Payments                due by period |   |
|--------------------------------------------|--------|---------------------------------------|--------|
|                                       |   |                                  |   |   |   | 2007 |   | 2009 |   | After |   |
| Type                of Obligation          |   | Total                                 |   | 2006 |   | -2008 |   | -2010 |   | 2010 |   |
|                                       |   |                                  |   |   |   |   |   |   |   |   |   |
| Transportation                capacity     |   | $                                     | 360    |   | $ | **-** |   | $ | 23 |   | $ | 47 |   | $ | 290 |   |
| Drilling                rig commitments    |   |                                  | 117    |   |   | 6 |   |   | 75 |   |   | 36 |   |   | - |   |
| Employee                retention benefits |   |                                  | 53     |   |   | 17 |   |   | 36 |   |   | - |   |   | - |   |
|                                       |   | $                                     | 530    |   | $ | 23 |   | $ | 134 |   | $ | 83 |   | $ | 290 |   |

***Other      Obligations and Commitments***

----

**New/Revised      Accounting Standards**

***New      Accounting Pronouncements***
*Accounting      for Uncertainty in Income Taxes - An Interpretation of FASB Statement No.      109*

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

----

**Commodity      Price Risk**

|                                   |   | **July                - 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                - $65.81 |                                         |   | 22,000 |   | $ | 45.00                - $61.42 |   |   | 18,000 |   |
|                                   |   |                                           |                          |                                         |   |   |   |   |   |   |   |   |   |
| Three-way                collars       |   | $                                              | 25.00                - $28.65 |                                         |   | 2,000 | (b) |   | - |   |   | - |   |
| Three-way                average floor |   | $                                              | 20.88                         |                                         |   |   |   |   |   |   |   |   |   |
|                                   |   |                                           |                          |                                         |   | 63,345 |   |   |   |   |   | 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)                     |   | $         | 1.51                         |    |   | 178,451   |      | $       | 1.33                        |   |   | 67,808 |   |
| NWPL                (2)                    |   | $         | 1.46                         |    |   | 145,109   |      | $       | 1.30                        |   |   | 53,247 |   |
|                                       |   |      |                         |    |   | 323,560   |      |    |                        |   |   | 121,055 |   |
|                                       |   |      |                         |    |   |      |      |    |                        |   |   |   |   |

| (a)   | Placed                by Kerr-McGee in connection with the Westport Resources merger 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.   | Kerr-McGee                Oil and Gas Onshore LP (KM Onshore), 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 Onshore 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 Onshore.  The affiliate intends to                vigorously defend against the NOVs.  The affiliate and the state and                federal agencies are currently discussing the allegations and possible                resolutions. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B.   | On                November 14, 2005, the company received a letter from the United                States                Department of Justice (DOJ) alleging that the company violated certain                air                quality and permitting regulations at the Cottonwood and Ouray compressor                stations in Uintah County, Utah, which were operated by Westport                Oil and                Gas Company, L.P. prior to Westport’s merger with Kerr-McGee. No formal                demand has been made by the DOJ. Later DOJ alleged that certain air                quality regulations were also violated at the Bridge compressor station.                The affiliate and the state and federal agencies currently are discussing                the allegations and possible                resolutions. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C.   | On                June 26, 2006, a petition was filed in the District Court of Oklahoma                County, Oklahoma styled John Rinderknecht, On Behalf of Himself and                All                Others Similarly Situated v. Kerr-McGee Corp., Luke R. Corbett, Sylvia                A.                Earle, Martin C. Jischke, Leroy C. Richie, William E. Bradford, David                C.                Genever-Watling, Farah M. Walters, Robert O. Lorenz, Michael Portillo,                William F. Wallace and Ian L. White-Thomson. On July 25, 2006, another                petition was filed in the District Court of Oklahoma County, Oklahoma                styled Marilyn Clark, On Behalf of Herself and All Others Similarly                Situated v. Kerr-McGee Corp., Luke R. Corbett, Sylvia A. Earle, Martin                C.                Jischke, Leroy C. Richie, William E. Bradford, David C. Genever-Watling,                Farah M. Walters, Robert O. Lorenz, Michael Portillo, William F.                Wallace                and Ian L. White-Thomson. The plaintiffs in both actions allege that                they                are shareholders of the company, and they each purport to sue on                behalf of                a class of other company shareholders. Both petitions allege that                the                company and its directors engaged in self-dealing and breached fiduciary                duties owed to the company’s shareholders in connection with the merger                agreement with Anadarko Petroleum Corporation. Among other things,                the                petitions seek to enjoin and prevent the parties from completing                the                merger until the company adopts and implements a procedure to obtain                the                highest possible price for the company shareholders. On July 28,                2006, the                company entered into an agreement in principle to settle the lawsuits                by                agreeing to make certain additional disclosures in a Form 8-K filing,                to                seek the certification of a class, and, subject to court approval,                to                paying class counsel fees and expenses of                $825,000. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

**Item      1A.**
**Risk      Factors**

**In      addition to those risk factors previously described in the company’s Form 10-K      for the year ended December 31, 2005, and the company’s other filings with the      SEC, investors should carefully consider the following      risks:**

*Business      Uncertainties and Contractual Restrictions While Merger is Pending.*

*Failure      to Complete Merger Could Negatively Impact Stock Price, Future Business and      Financial Results. *

| ·   | The                company may be required to pay a termination fee of $493 million                if the                merger agreement is terminated under certain circumstances and the                company                enters into an alternative                transaction; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                current market price of the company’s common stock may reflect a market                assumption that the merger will occur, and a failure to complete                the                merger could result in a decline in the market price of the company’s                common stock; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Certain                costs relating to the merger (such as legal and financial advisory                fees)                are payable by the company whether or not the merger is                completed; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | There                may be substantial disruption to the business of the company and                a                distraction of its management and employees from day-to-day operations,                because matters related to the merger (including integration planning)                may                require substantial commitments of time and resources, which could                otherwise have been devoted to other opportunities that could have                been                beneficial to the company; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                company’s business could be adversely affected if it is unable to retain                key employees or attract qualified                replacements; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                company would continue to face the risks that it currently faces                as an                independent company. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

**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) |   |
|                            |   |                                                |   |                                                          |   |                                                                                                                              |   |                                                                                                                                              |   |
| April                1-30, 2006 |   |                                                | 5,000  |                                                          | $      | 74.09                                                                                                                             |   |                                                                                                                                              | -      |   |   |   |   |
| May                1-31, 2006   |   |                                                | 66,780 |                                                          |   | 99.64                                                                                                                             |   |                                                                                                                                              | 54,000 |   | $ | 644,000,000 |   |
| June                1-30, 2006  |   |                                                | 4,075  |                                                          |   | 64.57                                                                                                                             |   |                                                                                                                                              | -      |   |   |   |   |
| Total                           |   |                                                | 75,855 |                                                          | $      | 96.07                                                                                                                             |   |                                                                                                                                              | 54,000 |   |   |   |   |

**Item      4.**
**Submission      of Matters to a Vote of Security Holders.**

| (1)   | Stockholders                ratified the appointment of Ernst & Young LLP as the company’s                independent auditors for 2006. There were 99,578,208 votes for the                proposal; 333,909 votes against the proposal; and 1,090,324                abstentions. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Stockholders                did not approve a stockholder proposal to establish an Office of                the Board                of Directors. There were 4,916,212 votes for the proposal; 73,574,075                votes against the proposal; and 6,025,995                abstentions. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The                following directors were elected with the following vote                totals. |
|-----------------|----------------------------------------------------------------------------------------------------|

|                             |   | Votes                   |   | Votes     |
|----------------------------------|--------|-------------------------|--------|-----------|
|                             |   | In                Favor |   | Withheld  |
| Silvia                A. Earle   |   | 99,080,208              |   | 1,922,233 |
| Martin                C. Jischke |   | 97,729,280              |   | 3,273,161 |
| Leroy                C. Richie   |   | 99,083,955              |   | 1,918,486 |

----

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

|   | Exhibit                No. |                                                                                                                                                                                                                                                                                                          |
|--------|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 2.1                        | Agreement                and Plan of Merger among the company, Anadarko Petroleum Corporation                and                APC Acquisition Sub, Inc., filed as Exhibit 2.1 to Current Report on                Form 8-K dated June 26, 2006, and incorporated herein by                reference.   |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 4.1                        | Second                Amendment to Rights Agreement, dated as of June 23, 2006, by and                between the company and UMB Bank, N.A., filed as Exhibit 4.3 to Amendment                No. 2 to Form 8-A dated June 26, 2006, and incorporated herein by                reference.               |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 10.1                       | Amended                Continuity Agreement, dated May 22, 2006, between the company and                Luke R.                Corbett, filed as Exhibit 10.1 to Current Report on Form 8-K dated                May 22,                2006, and incorporated herein by reference.                           |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 10.2                       | Amended                Continuity Agreement, dated May 22, 2006, between the company and                Kenneth                W. Crouch, filed as Exhibit 10.2 to Current Report on Form 8-K dated                May                22, 2006, and incorporated herein by reference.                         |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 10.3                       | Amended                Continuity Agreement, dated May 22, 2006, between the company and                David A.                Hager, filed as Exhibit 10.3 to Current Report on Form 8-K dated                May 22,                2006, and incorporated herein by reference.                            |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 10.4                       | Amended                Continuity Agreement, dated May 22, 2006, between the company and                Gregory                F. Pilcher, filed as Exhibit 10.4 to Current Report on Form 8-K dated                May                22, 2006, and incorporated herein by reference.                        |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 10.5                       | Amended                Continuity Agreement, dated May 22, 2006, between the company and                Robert                M. Wohleber, filed as Exhibit 10.5 to Current Report on Form 8-K                dated May                22, 2006, and incorporated herein by reference.                        |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 10.6                       | Amended                and Restated Continuity Agreement, dated as of June 22, 2006, between                the company and Luke R. Corbett, filed as Exhibit 10.1 to Current                Report                on Form 8-K dated June 26, 2006, and incorporated herein by                reference. |
|   |                       |                                                                                                                                                                                                                                                                                                          |
|   | 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.                                                                                                                                          |

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**SIGNATURE**

**KERR-McGEE      CORPORATION**

| Date: August                4, 2006 | By:    | /s/                John M. Rauh              |
|------------------------------------------|--------|----------------------------------------------|
|                                     |   | John                M. Rauh                  |
|                                     |   | Vice                President and Controller |
|                                     |   | and                Chief Accounting Officer  |