FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period Ended September 30, 1996

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Transition Period from _____ to _____

                          Commission File Number 1-3939


                             KERR-McGEE CORPORATION
             (Exact Name of Registrant as Specified in its Charter)


                        A Delaware Corporation 73-0311467
                (State or Other Jurisdiction of (I.R.S. Employer
               Incorporation or Organization) Identification No.)

                Kerr-McGee Center, Oklahoma City, Oklahoma 73125
              (Address of Principal Executive Offices and Zip Code)

        Registrant's telephone number, including area code (405) 270-1313


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                    Yes X No

Number of shares of common stock, $1.00 par value, outstanding as of October 31,
1996: 48,510,425





<PAGE>





                                                            
                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.
<TABLE>

                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                        CONSOLIDATED STATEMENT OF INCOME
                                   (UNAUDITED)
<CAPTION>

                                                               Three Months Ended                  Nine Months Ended
                                                                  September 30,                      September 30,
(Millions of dollars, except per-share amounts)                1996             1995              1996             1995
                                                            ------------------------        ---------------------------


<S>                                                         <C>             <C>             <C>              <C>       
Sales                                                       $ 487.6         $  444.1        $ 1,412.6        $  1,338.3
                                                            -------         --------        ---------        ----------

Costs and Expenses
    Costs and operating expenses                              261.0            252.2            773.0             739.6
    Selling, general, and administrative expenses              39.6             19.7            116.2              58.8
    Depreciation and depletion                                 81.2             81.6            214.9             236.2
    Asset impairment                                             -             227.4                -             227.4
    Exploration, including dry holes and
        amortization of undeveloped leases                     17.9             31.0             70.0              74.8
    Provision for environmental reclamation
        and remediation of inactive sites,
        net of reimbursements                                  11.4             27.5             25.6              42.1
    Taxes, other than income taxes                             17.1             16.0             51.4              49.2
    Interest and debt expense                                  13.6             13.5             38.5              48.4
                                                            -------         --------        ---------        ----------
           Total Costs and Expenses                           441.8            668.9          1,289.6           1,476.5
                                                            -------         --------        ---------        ----------

                                                               45.8           (224.8)           123.0            (138.2)
Other Income                                                   44.6              3.8            110.3              18.3
                                                            -------         --------        ---------        ----------

Income (Loss) from Continuing Operations
    before Income Taxes                                        90.4           (221.0)           233.3            (119.9)
Provision (Benefit) for Income Taxes                           28.1            (88.1)            72.4             (59.0)
                                                            -------         --------        ---------        ----------

Income (Loss) from Continuing Operations                       62.3           (132.9)           160.9             (60.9)

Income (Loss) from  Discontinued  Operations (net of benefit
 for income taxes of $5.9 and NIL for the three and nine
 months ended September 30, 1995, respectively)                   -            (10.2)               -                .2
                                                            -------         --------        ---------        ----------

Net Income (Loss)                                           $  62.3         $ (143.1)       $   160.9        $    (60.7)
                                                            =======         ========        =========        ==========

Net Income (Loss) per Common Share
    Continuing operations                                   $  1.27         $  (2.56)       $    3.22        $    (1.17)
    Discontinued operations                                       -             (.20)               -                 -
                                                            -------         --------        ---------        ----------

        Total                                               $  1.27         $  (2.76)       $    3.22        $    (1.17)
                                                            =======         ========        =========        ==========

Cash Dividends Declared per Common Share                    $   .41         $    .38        $    1.23        $     1.14

Average Number of Shares Outstanding
    (thousands)                                              48,901           51,858           49,751            51,783

The accompanying notes are an integral part of this statement.

The  1995  amounts  have  been   restated  to  conform  with  the   current-year
presentation.
</TABLE>



<PAGE>
<TABLE>


                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
<CAPTION>

                                                                  September 30,       December 31,
(Millions of dollars)                                                      1996               1995
                                                                ----------------------------------
<S>                                                                   <C>                <C>
ASSETS
Current Assets
    Cash                                                              $   159.9          $    87.3
    Notes and accounts receivable                                         360.5              333.4
    Inventories                                                           216.5              221.0
    Deposits and prepaid expenses                                          90.2              121.9
                                                                      ---------          ---------
           Total Current Assets                                           827.1              763.6
                                                                      ---------          ---------

Property, Plant, and Equipment                                          5,549.3            5,767.4
    Less reserves for depreciation,
       depletion, and amortization                                      3,372.3            3,557.0
                                                                      ---------          ---------
                                                                        2,177.0            2,210.4
                                                                      ---------          ---------

Investments and Other Assets                                              182.9              239.0
                                                                      ---------          ---------

                                                                      $ 3,187.0          $ 3,213.0
                                                                      =========          =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
    Short-term borrowings                                             $   124.8          $    94.0
    Accounts payable                                                      245.6              296.6
    Current portion of long-term debt                                         -                7.5
    Other current liabilities                                             199.4              176.2
                                                                      ---------          ---------
           Total Current Liabilities                                      569.8              574.3
                                                                      ---------          ---------

Long-Term Debt                                                            625.4              632.2
                                                                      ---------          ---------

Deferred Credits and Reserves                                             640.6              591.1
                                                                      ---------          ---------

Stockholders' Equity
    Common stock, par value $1 - 150,000,000
       shares authorized, 53,727,107 shares issued at
       9-30-96 and 53,513,888 at 12-31-95                                  53.7               53.5
    Capital in excess of par value                                        327.8              318.2
    Preferred stock purchase rights                                          .5                 .5
    Retained earnings                                                   1,308.6            1,209.0
    Unrealized gain on available-for-sale securities                       10.0               25.9
    Common shares in treasury, at cost - 5,105,115
       shares at 9-30-96 and 2,444,690 at 12-31-95                       (273.9)            (110.5)
    Deferred compensation                                                 (75.5)             (81.2)
                                                                      ---------          ---------
           Total Stockholders' Equity                                   1,351.2            1,415.4
                                                                      ---------          ---------

                                                                      $ 3,187.0          $ 3,213.0
                                                                      =========          =========


The "successful  efforts"  method of accounting for oil and gas exploration and
production  activities has been followed in preparing this balance sheet.

The accompanying notes are an integral part of this statement.

The  1995  amounts  have  been   restated  to  conform  with  the   current-year
presentation.
</TABLE>



<PAGE>
<TABLE>


                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>


                                                                               Nine Months Ended
                                                                                 September 30,
(Millions of dollar)                                                         1996             1995
                                                                        --------------------------

<S>                                                                       <C>              <C>
Operating Activities
Net income (Loss)                                                         $ 160.9          $  (60.7)
Adjustments to reconcile to net cash
    provided by operating activities -
        Depreciation, depletion, and amortization                           222.0             264.2
        Deferred income taxes                                                37.1             (66.0)
        Realized gain on available-for-sale securities                      (22.9)                -
        Asset impairment                                                        -             227.4
        Gain on sale of refining and marketing operations                       -              (1.7)
        Provision for reclamation and remediation
           of inactive sites                                                 34.8              53.6
        Noncash items affecting net income                                   (7.7)             25.6
        Current tax effect on adjustments                                    15.5                 -
        Other net cash provided by (used in) operating activities            43.1            (134.6)
                                                                          -------          --------
           Net Cash Provided by Operating Activities                        482.8             307.8
                                                                          -------          --------

Investing Activities
Capital expenditures                                                       (298.2)           (368.9)
Proceeds from the sales of available-for-sale securities                     28.5                 -
Proceeds from sales of exploration and production assets                     26.5                 -
Proceeds from sales of refining and marketing assets                         12.7             386.1
Decrease in investments                                                       8.4              52.9
Other investing activities                                                    9.1               2.2
                                                                          -------          --------
           Net Cash Provided by (Used in) Investing Activities             (213.0)             72.3
                                                                          -------          --------


Financing Activities
Increase (decrease) in short-term borrowings                                 30.8            (219.9)
Issuance of long-term debt                                                   24.2                 -
Purchase of treasury stock                                                 (163.5)                -
Dividends paid                                                              (62.7)            (59.0)
Repayment of debt                                                           (35.8)            (90.4)
Other financing activities                                                    9.8               7.9
                                                                          -------          --------
           Net Cash Used in Financing Activities                           (197.2)           (361.4)
                                                                          -------          --------

Net Increase in Cash and Cash Equivalents                                    72.6              18.7

Cash and Cash Equivalents at Beginning of Period                             87.3              80.8
                                                                          -------          --------

Cash and Cash Equivalents at End of Period                                $ 159.9          $   99.5
                                                                          =======          ========



The accompanying notes are an integral part of this statement.

The  1995  amounts  have  been   restated  to  conform  with  the   current-year
presentation.

</TABLE>




<PAGE>





                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1996



A.   The condensed  financial  statements  included herein have been prepared by
     the company,  without audit,  pursuant to the rules and  regulations of the
     Securities  and  Exchange  Commission  and, in the  opinion of  management,
     include all  adjustments,  consisting  only of normal  recurring  accruals,
     necessary to present  fairly the  resulting  operations  for the  indicated
     periods.  Certain information and footnote disclosures normally included in
     financial   statements  prepared  in  accordance  with  generally  accepted
     accounting principles have been condensed or omitted pursuant to such rules
     and  regulations.  Although the company  believes that the  disclosures are
     adequate to make the information presented not misleading,  it is suggested
     that these condensed  financial  statements be read in conjunction with the
     financial statements and the notes thereto included in the company's latest
     annual report on Form 10-K.

     Financial  Accounting  Standards  No.  123,  "Accounting  for  Stock-Based
     Compensation," was effective January 1, 1996. This statement  prescribes an
     alternate  method of accounting for stock-based  compensation  awards under
     which the fair value of  stock-based  compensation  awards is recognized as
     expense over the vesting  period of the award.  The company has elected not
     to apply this optional accounting treatment.

B.   After  adding  the  dilutive  effect of the  conversion  of  options to the
     weighted average number of shares  outstanding,  the shares used to compute
     net income per common share were  49,128,607  and  52,089,204 for the three
     months ended September 30, 1996 and 1995, respectively,  and 50,003,527 and
     51,947,026  for  the  nine  months  ended  September  30,  1996  and  1995,
     respectively.

C.   Net cash provided by operating activities reflects cash payments for income
     taxes and interest as follows:

                                                Nine Months Ended
                                                  September 30,
      (Millions of dollars)                   1996           1995
                                           ----------------------

      Income taxes                          $22.9             $47.3
      Interest                               42.2              51.3

D.   The  company  held  U.S.  government   obligations  and  equity  securities
     considered to be available for sale at September 30, 1996, and December 31,
     1995. These financial  instruments are carried in the Consolidated  Balance
     Sheet at fair value,  based on quoted  market  prices.  The company held no
     securities  classified  as held to maturity  or trading  during the periods
     presented.  At September 30, 1996, and December 31, 1995,  these  financial
     instruments were as follows:

<TABLE>

<CAPTION>


                                                   September 30, 1996                      December 31, 1995
                                             ---------------------------------      ---------------------------------
                                             Fair              Gross Unrealized     Fair              Gross Unrealized
      (Millions of dollars)                  Value    Cost      Holding Gains       Value     Cost      Holding Gains
                                             -----   ------   -----------------     -----    ------   ----------------

      <S>                                   <C>       <C>           <C>            <C>        <C>          <C>  
      Equity Securities                     $19.3     $ 3.2         $16.1          $53.4      $11.6        $41.8
      U.S. Government Obligations
         Maturing within one year            30.9      30.9             -            9.6        9.6            -
         Maturing between one
             and four years                     -         -             -           17.2       17.1           .1
                                            -----     -----         -----          -----      -----        -----

                Total                       $50.2     $34.1         $16.1          $80.2      $38.3        $41.9
                                            =====     =====         =====          =====      =====        =====

</TABLE>


<PAGE>



                                                       

     During 1996, the company sold equity securities considered to be available
     for sale.  Proceeds from the sale for the first nine months of 1996 totaled
     $28.3 million,  resulting in a realized gain of $22.9 million before income
     taxes.  The  average  cost of the  securities  was  used in  computing  the
     realized  gain.  During 1996,  the company  donated  350,000  shares of its
     investment in equity securities to the Kerr-McGee Foundation Corporation, a
     tax-exempt   entity  whose  purpose  is  to  contribute  to  not-for-profit
     organizations.  The fair  value  of  these  donated  shares  totaled  $16.4
     million, which includes appreciation of $13.4 million before income taxes.

     Equity  securities  are  carried  in the  Consolidated  Balance  Sheet  as
     Investments and Other Assets.  U.S.  government  obligations are carried as
     Current  Assets or  Investments  and Other  Assets,  depending  upon  their
     maturity.  The change in the equity component for unrealized  holding gains
     and losses, net of income taxes, for the first nine months of 1996 and 1995
     was as follows:

                                                         Nine Months Ended
                                                            September 30,
      (Millions of dollars)                         1996                    1995
                                                 -------------------------------

      Balance, January 1                         $  25.9                 $  11.5
         Net realized gains                         (5.6)                     -
         Net unrealized holding gains                4.0                     2.3
                                                 -------                 -------
      Balance, March 31                             24.3                    13.8
         Net realized gains                         (4.8)                      -
         Net appreciation of donated securities      (.7)                      -
         Net unrealized holding gains                1.2                     3.2
                                                 -------                 -------
      Balance, June 30                              20.0                    17.0
         Net realized gains                         (3.8)                      -
         Net appreciation of donated securities     (7.6)                      -
         Net unrealized holding gains                1.4                     5.1
                                                 -------                 -------
      Balance, September 30                      $  10.0                 $  22.1
                                                 =======                 =======


E.   The company uses  futures and options  contracts to hedge the effect of the
     price  volatility of crude oil and natural gas. Net pre-tax  hedging losses
     on crude oil and natural gas recognized for the first nine months and third
     quarter of 1996 were $30.2  million  and $8.2  million,  respectively.  The
     effect of the losses was to reduce the  company's  average gross margin for
     crude oil by $.94 per barrel for the first nine months of 1996 and $.77 per
     barrel for the third quarter.  The negative impact on the company's average
     gross margin for domestic gas was $.22 and $.13 per MCF for the nine months
     and the third quarter of 1996, respectively.

F.   The company adopted the provisions of the Statement of Financial Accounting
     Standards  (FAS) No. 121,  "Accounting  for the  Impairment  of  Long-Lived
     Assets and for Long-Lived  Assets to Be Disposed Of," during the third 1995
     quarter.  In conjunction  with the adoption of this statement,  the company
     now   evaluates   impairment  of  its  proved  oil  and  gas  assets  on  a
     field-by-field  basis  rather  than the  previously  used  area-of-interest
     basis.  Chemical,  coal,  and other assets are  evaluated on an  individual
     asset basis or logical groupings of assets.

     As a result  of this  change in  accounting  principle  in the 1995  third
     quarter,  certain  oil and gas fields in the  United  States and Canada and
     certain coal and other assets were deemed to be impaired because the assets
     were not expected to recover their entire  carrying  value  through  future
     cash flows.  The  write-down  totaling  $123.6  million and included in the
     income  statement  caption  "Asset   Impairment,"  was  determined  as  the
     difference  between the carrying  value and the estimated  fair value.  The
     fair value for these impaired assets was generally  determined based on the
     estimated  present  value of future cash  flows.  The asset  impairment  by
     business  segment was $99.6 million for exploration  and production,  $22.9
     million for coal, and $1.1 million for other.

     During the 1995 third quarter,  the company's  exploration  and production
     operating unit announced a divestiture and restructuring program.  Included
     in this program were a number of crude oil and natural gas properties  that
     were considered nonstrategic. The majority of these properties were located
     onshore in the United States;  however,  certain of these  properties  were
     located in the Gulf of Mexico,  Canada,  and the North Sea. At the time the
     properties were determined to be nonstrategic, they comprised approximately
     10% of the  company's oil and gas reserves and accounted for 10% of the oil
     and gas  production  volumes and 5% of the company's  annual cash flow. The
     carrying  value  of  these  assets  totaled  $172.2  million  prior  to the
     write-down discussed below.

     As  a  result  of  the  divestiture  program,  which  is  expected  to  be
     essentially  complete  by year-end  1996,  these  nonstrategic  oil and gas
     properties were written down to their estimated fair value less the cost to
     sell if the carrying value of the property  exceeded such fair value net of
     the  estimated  cost  of  selling  the  property.  The  write-down  on  the
     properties  totaled  $103.8  million  and has been  included  in the income
     statement as part of the expense caption "Asset Impairment."

     In connection with the divestiture program, the exploration and production
     operating  unit  implemented  a  restructuring  program to  reorganize  its
     administrative  and operating  functions.  In 1995,  the company  accrued a
     total of $6.2 million for future compensation,  outplacement,  and the cost
     of special termination benefits for retiring employees.

     In 1996,  the company  announced  the  relocation of its  exploration  and
     production  operating unit to Houston,  Texas.  During the third quarter of
     1996, $10 million was accrued for the costs associated with this relocation
     and  restructuring.  In  addition,  the company  accrued $4 million for the
     anticipated  shutdown  of a  railroad  crosstie  facility  operated  by the
     chemical business segment.

G.    CONTINGENCIES

      WEST CHICAGO -

      In 1973,  a  wholly  owned  subsidiary,  Kerr-McGee  Chemical  Corporation
      (KMCC),  closed an operation in West  Chicago,  Illinois,  that  processed
      thorium  ores.   Operations   resulted  in  some   low-level   radioactive
      contamination  at the site.  In 1979,  KMCC filed a plan with the  Nuclear
      Regulatory Commission to decommission the facility.  The State of Illinois
      (the  State)  now has  jurisdiction  over the site  and  requires  offsite
      disposal of  contaminated  material.  The following  discusses the current
      status of various matters associated with this closed facility.

      Decommissioning  - In 1994, KMCC, the City of West Chicago,  and the State
      executed  a   Settlement   Agreement   (the   Agreement)   regarding   the
      decommissioning  of the closed  West  Chicago  facility.  Pursuant  to the
      Agreement,  KMCC built or leased appropriate  support facilities and began
      shipping material from the site to a licensed  permanent disposal facility
      in Utah during 1994.  Although shipments  continue,  the State has not yet
      issued  a  license  amendment  that  would  permit  KMCC to  complete  the
      decommissioning work.

      Under the  Illinois  Uranium and Thorium  Mill  Tailings  Control Act (the
      Act),  KMCC is obligated to pay an annual storage fee of $2 per cubic foot
      of byproduct material located at the former facility. Under the Agreement,
      the amount of the storage fee paid each year shall not exceed $26 million,
      and all amounts paid  pursuant to the Act are to be  reimbursed to KMCC as
      decommissioning  expenditures  are incurred.  As of October 1996, KMCC has
      received reimbursement for all amounts paid under the Act to the State and
      will continue to seek  reimbursement for future amounts paid under the Act
      as decommissioning costs are incurred.

      The aggregate  cost to  decommission  the former  facility is difficult to
      estimate  because of the many  contingencies,  including  the terms of the
      license  amendment  required  to  complete  the  decommissioning  process.
      Decommissioning  costs to KMCC will be  reduced by any  amounts  recovered
      pursuant to Title X of the Energy  Policy Act of 1992,  which was recently
      amended to increase the amount  authorized  to $65 million plus  inflation
      adjustments.  A total of $28 million has been  received  through the third
      quarter of 1996. At September 30, 1996,  the remaining  reserves  provided
      for the cost to decommission the site under the plan proposed by KMCC were
      $161 million  (before any further  recovery under the Energy Policy Act of
      1992),  payable over the time necessary to relocate the  materials,  which
      was  estimated  at  year-end  1995 to take a minimum  of four years and is
      dependent on receiving the necessary licensing amendment.

      Offsite Areas - The U.S. Environmental  Protection Agency (EPA) has listed
      four areas in the  vicinity of the West  Chicago  facility on the National
      Priority   List  that  the  EPA   promulgates   under   authority  of  the
      Comprehensive Environmental Response,  Compensation,  and Liability Act of
      1980 and has designated KMCC as a potentially  responsible  party in these
      four areas.  The EPA issued  unilateral  administrative  orders for two of
      these areas (referred to as the residential area and  Reed-Keppler  Park),
      which  require KMCC to conduct  removal  actions to excavate  contaminated
      soils and to ship the soils elsewhere for disposal. At September 30, 1996,
      the  remaining  estimated  cost  to  clean  up the  residential  area  and
      Reed-Keppler Park was $12 million and $11 million,  respectively.  Without
      waiving  any of its  rights or  defenses,  KMCC  began the  cleanup of the
      residential  area site in May 1995 and expects to begin the cleanup of the
      Reed-Keppler Park site later this year.

      Judicial  Proceedings  -  Reference  is  made to the  Financial  Condition
      section of  Management's  Discussion  and Analysis for a discussion of the
      settlement of the personal injury lawsuits at West Chicago.

      OTHER -

      In October 1996, the company  agreed to merge its North  American  onshore
      oil and gas  exploration  and  production  operations  into  Devon  Energy
      Corporation  (Devon) in  exchange  for  9,954,000  shares of newly  issued
      common  stock,  or 31% of Devon's  total common  shares  outstanding.  The
      company has named three  additional  directors  to be appointed to Devon's
      current  six-member  board as of the  effective  date of the  transaction.
      Kerr-McGee's   representation  on  Devon's  board  of  directors  will  be
      maintained in proportion to the ownership  interest in Devon common stock.
      Kerr-McGee will account for the  transaction as a nonmonetary  exchange of
      similar  productive assets in accordance with APB No. 29,  "Accounting for
      Nonmonetary  Transactions." Therefore, no gain or loss will be recognized.
      The company's interest in Devon will be accounted for by the equity method
      under APB No. 18, "The Equity  Method of  Accounting  for  Investments  in
      Common  Stock." The merger has been approved by the boards of directors of
      both  companies.  The  transaction,  which is expected to close and become
      effective on December 31, 1996,  is subject to approval by the majority of
      the holders of Devon  common stock at a special  stockholders'  meeting on
      December 6, 1996.

      Reference  is made to the  Financial  Condition  section  of  Management's
      Discussion and Analysis for a discussion of the company's  settlement with
      certain of its insurance  carriers of the pending claims for environmental
      coverage.

      SUMMARY -

      The plants and facilities of the company and its  subsidiaries are subject
      to  various  environmental  laws  and  regulations.  The  company  or  its
      subsidiaries  have been notified that they may be  responsible  in varying
      degrees  for a portion  of the costs to clean up  certain  waste  disposal
      sites and former  plant  sites.  At  September  30,  1996,  the  remaining
      reserves  provided  for  the  cost to  investigate  and/or  remediate  all
      presently identified sites of former or current operations, including $184
      million for the former  facility and offsite areas in West  Chicago,  were
      $299 million.  Expenditures  from  inception  through  September 30, 1996,
      totaled $319 million.

      In addition to the environmental issues previously discussed,  the company
      or  its  subsidiaries  are  also  a  party  to a  number  of  other  legal
      proceedings  pending in various courts or agencies in which the company or
      a subsidiary  appears as plaintiff or  defendant.  Because of  continually
      changing laws and regulations, the nature of the company's businesses, and
      pending  legal  proceedings,  it is not possible to reliably  estimate the
      amount or timing of all future expenditures  relating to environmental and
      other   contingencies.   The  company   provides  for  costs   related  to
      contingencies  when a loss  is  probable  and  the  amount  is  reasonably
      estimable.  Although management believes,  after consultation with general
      counsel,   that  adequate  reserves  have  been  provided  for  all  known
      contingencies,  the  ultimate  cost  will  depend on the  outcomes  of the
      above-noted  uncertainties.  Therefore,  it is  possible  that  additional
      reserves could be required in the future that could have a material effect
      on  results  of  operations  in a  particular  quarter  or annual  period.
      However,  the ultimate  resolution of these commitments and contingencies,
      to the  extent not  previously  provided  for,  should not have a material
      adverse effect on the company's financial position.


Item 2.  Management's  Discussion  and  Analysis  of Results of  Operations  and
         Financial Condition.

Comparison of 1996 Results with 1995 Results

CONSOLIDATED OPERATIONS

Third-quarter  1996 net  income  totaled  $62.3  million,  compared  with a 1995
third-quarter net loss of $143.1 million.  Excluding unusual items,  income from
continuing operations was $57.7 million in the 1996 third quarter, compared with
$28.1  million in the same 1995 period.  For the first nine months of 1996,  net
income was $160.9 million, compared with a net loss of $60.7 million in the same
1995 period.  Excluding unusual items and discontinued  operations,  income from
continuing  operations  for the first nine months of 1996 totaled $152  million,
compared with $100.1 million in 1995.

Unusual items were of both an operating and nonoperating  nature.  Unusual items
affecting  operating  profit  for  both the 1996  third-quarter  and  nine-month
periods were $10 million for the  relocation of the  exploration  and production
unit to  Houston  and $4  million  for the  anticipated  shutdown  of a railroad
crosstie treatment facility. The unusual items affecting operating profit in the
third  quarter and the first nine  months of 1995  included  $227.4  million for
asset  impairment  related to the  adoption  of FAS No. 121 and  divestiture  of
certain oil and natural gas properties and $6.2 million for restructuring  costs
resulting from the divestiture program. See Note F to the Consolidated Financial
Statements  for a  discussion  of the  items  above.  Unusual  items  benefiting
nonoperating  income in the 1996 third  quarter were  insurance  settlements  of
$26.5 million and gains on sales of equity  securities of $6 million,  partially
offset  by  environmental  provisions  (net of  reimbursements)  totaling  $11.4
million.  Unusual items benefiting nonoperating expense the first nine months of
1996  included  insurance  settlements  of $65.3  million  and gains on sales of
equity  securities of $22.9 million,  partially offset by provisions for settled
and  pending  litigation  of $28.9  million,  environmental  provisions  (net of
reimbursements)  totaling $25.8 million,  and other  provisions of $5.8 million.
The unusual items  affecting  nonoperating  expense in the third quarter and the
first  nine  months  of  1995  totaling  $26.5  million  related   primarily  to
environmental provisions.

Operating  profit in the 1996 third  quarter was $89 million,  compared  with an
operating loss of $173.8 million in the same 1995 quarter.  After  adjusting the
third  quarters of both years for unusual  items,  operating  profit in the 1996
period was $103 million, up from $59.8 million in 1995. The improved results for
the  quarter  were due to higher  crude oil and  natural  gas sales  prices  and
volumes,  lower exploration  expense,  lower per-unit coal production costs, and
higher pigment sales volumes.  Partially  offsetting were lower pigment and coal
sales prices and higher  feedstock  and energy  costs for the  chemical  pigment
operations.

Operating  profit the first nine months of 1996 was $257 million,  compared with
an operating loss of $16.6 million for the same 1995 period.  Excluding  unusual
items,  operating  profit  for the first nine  months of 1996 was $271  million,
compared with $217 million for the same 1995 period.  The improved  results were
due to higher  crude oil and natural gas sales  prices,  lower  exploration  and
production operating expense,  lower depreciation and depletion,  lower per-unit
coal production  costs and higher coal sales volumes,  partially offset by lower
crude oil and natural gas sales volumes,  higher  feedstock and energy costs for
chemical pigment operations,  lower pigment sales prices and volumes,  and lower
coal sales prices.

Third-quarter 1996 nonoperating  income was $1.4 million,  compared with expense
of $47.2  million  for the 1995  quarter.  For the  first  nine  months of 1996,
nonoperating  expense was $23.7  million,  compared with $103.3 million in 1995.
Excluding the unusual items discussed  above,  third-quarter  1996  nonoperating
expense was $19.7 million,  compared with $20.6 million in the same 1995 period.
Nonoperating  expense  excluding unusual items for the first nine months of 1996
was $51.4  million,  down from $76.7  million in 1995,  due  primarily  to lower
environmental  provisions  and  higher  gains on sales of  assets.  Included  in
nonoperating expense is net interest expense.

The provision for income taxes was $28.1 million and $72.4 million for the third
quarter and first nine months of 1996,  respectively,  compared  with income tax
benefits of $88.1 million and $59 million for the respective  1995 periods.  The
1995 amounts include tax benefits resulting from the asset impairment.




SEGMENT OPERATIONS

Following is a summary of sales and  operating  profit and a discussion of major
factors  influencing the results of each of the company's  business segments for
the third quarter and first nine months of 1996,  compared with the same periods
last year.
<TABLE>
<CAPTION>

                                                    Three Months Ended                 Nine Months Ended
                                                        September 30,                    September 30,
(Millions of dollars)                                1996            1995(1)          1996           1995(1)
                                                  -----------------------          ----------------------   

<S>                                               <C>           <C>                <C>          <C>
Sales
    Exploration and production(2)                 $ 217.0       $   176.4          $   612.4    $   518.3
    Chemicals                                       171.7           169.0              520.1        546.5
    Coal                                             98.8            96.1              279.8        270.7
    Other                                              .1             2.6                 .3          2.8
                                                  -------       ---------          ---------    ---------
        Total Sales                               $ 487.6       $   444.1          $ 1,412.6    $ 1,338.3
                                                  =======       =========          =========    =========

Operating Profit (Loss)
    Exploration and production                    $  50.9       $  (199.3)         $   121.6    $  (140.0)
    Chemicals                                        15.5            29.1               72.2         94.1
    Coal                                             21.9            (3.1)              58.1         29.9
    Other                                              .7             (.5)               5.1          (.6)
                                                  -------       ---------          ---------    ---------
        Total Operating Profit (Loss)                89.0          (173.8)             257.0        (16.6)
Nonoperating Income (Expense)                         1.4           (47.2)             (23.7)      (103.3)
                                                  -------       ---------          ---------    ---------
Income (Loss) from Continuing Operations
    before Income Taxes                              90.4          (221.0)             233.3       (119.9)
Provision (Benefit) for Income Taxes                 28.1           (88.1)              72.4        (59.0)
                                                  -------       ---------          ---------    ---------
Income (Loss) from Continuing Operations             62.3          (132.9)             160.9        (60.9)
Discontinued Operations, Net of Tax                     -           (10.2)                 -           .2
                                                  -------       ---------          ---------    ---------
Net Income (Loss)                                 $  62.3       $  (143.1)         $   160.9    $   (60.7)
                                                  =======       =========          =========    =========


(1)The  1995  amounts  have  been  restated  to  conform  with the  current-year
presentation.

(2)Includes  sales of  primarily  crude oil to  discontinued  operations  in the
amounts  of $25.8  and  $112.1  million  for the  three  and nine  months  ended
September 30, 1995, respectively.
</TABLE>



<PAGE>


Exploration and Production -

Exploration  and  production  had an operating  profit of $50.9  million for the
third quarter 1996,  compared with an operating  loss of $199.3  million for the
same 1995 quarter.  For the first nine months of 1996,  operating profit totaled
$121.6  million,  compared  with an  operating  loss of $140  million last year.
Operating  profit was  adversely  affected  by unusual  items of $10 million for
relocation  costs in the 1996 periods and $209.6 million for the adoption of FAS
No.  121 and  the  write-downs  and  restructuring  costs  associated  with  the
divestiture  of certain oil and natural gas  properties in the 1995 periods (see
Note F). In addition to the impact of the unusual  charges,  1996  third-quarter
operating  profit improved over the same 1995 period due to higher crude oil and
natural gas sales  prices,  lower  exploration  expense and higher crude oil and
natural gas sales  volumes.  Operating  profit for the first nine months of 1996
increased  due  to  higher  crude  oil  and  natural  gas  sales  prices,  lower
depreciation  and depletion,  and lower operating  expense,  partially offset by
lower crude oil and natural gas sales volumes.

Revenues  were $217  million  and  $176.4  million  for the three  months  ended
September 30, 1996 and 1995, respectively, and $612.4 million and $518.3 million
for the first nine months of 1996 and 1995,  respectively.  The following  table
shows the  company's  average crude oil and natural gas sales prices and volumes
for both the third quarter and first nine months of 1996 and 1995.



<TABLE>
<CAPTION>




                                                      Three Months Ended               Percent
                                                         September 30,                 Increase
                                                       1996            1995           (Decrease)
                                                    --------------------------------------------

<S>                                                 <C>            <C>                    <C>
Crude oil sales (thousands of bbls/day)
    United States                                      34.4            28.5                21
    Canada                                              3.0             4.7               (36)
    North Sea                                          28.7            36.9               (22)
    China                                               4.9               -                NM
                                                    -------        --------
        Total                                          71.0            70.1                 1
                                                    =======        ========

Average crude oil sales price (per barrel)
    United States                                   $ 19.82        $  15.46                28
    Canada                                            17.99           16.08                12
    North Sea                                         19.14           15.89                20
    China                                             18.58               -                NM
        Average                                     $ 19.38        $  15.73                23

Natural gas sold (MMCF/day)
    United States                                       258             222                16
    Canada                                               24              44               (45)
    North Sea                                            17              17                 -
                                                    -------        --------
        Total                                           299             283                 6
                                                    =======        ========

Average natural gas sales price (per MCF)
    United States                                   $  1.90        $   1.49                28
    Canada                                             1.07             .77                39
    North Sea                                          2.60            2.50                 4
        Average                                     $  1.87        $   1.44                30
</TABLE>




<TABLE>
<CAPTION>


                                                       Nine Months Ended               Percent
                                                         September 30,                 Increase
                                                       1996            1995           (Decrease)
                                                    --------------------------------------------

<S>                                                 <C>            <C>                    <C>
Crude oil sales (thousands of bbls/day)
    United States                                      29.6            29.2                 1
    Canada                                              3.6             4.6               (22)
    North Sea                                          30.5            37.3               (18)
    China                                               3.2               -                NM
                                                    -------        --------
        Total                                          66.9            71.1                (6)
                                                    =======        ========

Average crude oil sales price (per barrel)
    United States                                   $ 18.43        $  15.76                17
    Canada                                            17.10           15.77                 8
    North Sea                                         18.15           16.42                11
    China                                             18.53               -                NM
        Average                                     $ 18.24        $  16.10                13

Natural gas sold (MMCF/day)
    United States                                       215             230                (7)
    Canada                                               30              47               (36)
    North Sea                                            26              18                44
                                                    -------        --------
        Total                                           271             295                (8)
                                                    =======        ========

Average natural gas sales price (per MCF)
    United States                                   $  1.90        $   1.48                28
    Canada                                             1.07             .84                27
    North Sea                                          2.45            2.67                (8)
        Average                                     $  1.86        $   1.45                28

</TABLE>


<PAGE>



Chemicals -


Third-quarter  1996 operating profit totaled $15.5 million on revenues of $171.7
million,  compared  with  operating  profit of $29.1 million on revenues of $169
million  for the 1995  quarter.  For the  first  nine  months  of 1996 and 1995,
operating  profit was $72.2  million  and $94.1  million,  on revenues of $520.1
million and $546.5  million,  respectively.  Revenues for the 1996 third quarter
did not change  significantly  from the same period last year.  Revenues for the
first  nine  months of 1996  decreased  due to lower  pigment  sales  prices and
volumes.  Operating  profit for both 1996  periods  decreased  due  primarily to
higher feedstock and energy costs for pigment  operations and the unusual charge
for the anticipated  shutdown of a  crosstie-treatment  facility.  For the first
nine months of 1996, operating profit also declined due to lower revenues.

Coal -

Third-quarter  1996  operating  profit  was  $21.9  million,  compared  with  an
operating  loss of $3.1  million for the same 1995  quarter.  For the first nine
months of 1996,  operating profit was $58.1 million,  compared with an operating
profit of $29.9  million  last year.  The 1995 amounts  include a $22.9  million
charge for the adoption of FAS No. 121 (see Note F). Revenues were $98.8 million
and $96.1  million  for the third  quarter of 1996 and 1995,  respectively,  and
$279.8  million  and $270.7  million for the first nine months of 1996 and 1995,
respectively. Revenues for the first nine months of 1996 increased due to higher
sales volumes,  partially offset by lower sales prices. Operating profit in both
1996  periods  increased  due to lower  per-unit  production  costs and the 1995
unusual  charge.  For the first  nine  months  of 1996,  operating  profit  also
increased due to higher revenues.



Financial Condition

At September 30, 1996,  the company's  net working  capital  position was $257.3
million,  compared with $189.3  million at December 31, 1995.  The current ratio
was 1.5 to 1 at September 30, 1996,  compared with 1.3 to 1 at both December 31,
1995,  and September 30, 1995.  The company's  percentage of total debt to total
capitalization  was 36% at  September  30,  1996,  compared  with 35% and 32% at
December  31, 1995 and  September  30,  1995,  respectively.  For the first nine
months of 1996, net cash provided by operating  activities  was $482.8  million,
compared with $307.8 million for the same 1995 period.

The company had unused lines of credit and revolving  credit  facilities of $651
million at September 30, 1996. Of this amount, $300 million and $230 million can
be used to support  commercial paper borrowings of Kerr-McGee Credit Corporation
and Kerr-McGee Oil (U.K.) PLC, respectively.

The company's wholly owned  subsidiary,  Kerr-McGee Canada Ltd., has amended the
revolving credit agreements with three banks that previously  provided for lines
of credit of $25  million  available  under  each  agreement,  or a total of $75
million.  Two of the  agreements  were  amended  during  September to reduce the
committed  limit of credit to $20 million and $15 million  available  under each
agreement,  or a total of $60 million  available  under the three  agreements at
September 30, 1996. The third agreement was amended during October to reduce its
committed  line of credit to $20  million,  or a total of $55 million  available
under the three agreements.

                                                          Amount Outstanding
   Date of Agreement          Termination Date           (millions of dollars)

   September 20, 1993         September 17, 1997                $7.5
   October 4, 1993            September 25, 1997                 4.5
   October 20, 1993           October 16, 1997                   5.0

Cash  capital  expenditures  for the first nine  months of 1996  totaled  $298.2
million, compared with $368.9 million for the same 1995 period.  Exploration and
production  expenditures,  principally  in the Gulf of Mexico,  North  Sea,  and
offshore China, were 67% of the 1996 amount.  Chemicals expenditures were 25% of
the  total.  Management  anticipates  that  the cash  requirements  for the next
several years can be provided through  internally  generated funds and selective
long- and/or short-term borrowings.

During the third quarter 1996, the company purchased 930,000 shares of its stock
at a cost of $55.6 million.  Since initiation of the stock repurchase program in
October 1995 through  September 30, 1996, 3.5 million shares were purchased at a
cost of $211.4 million.

The  properties  to be  merged  with  Devon  (see Note G)  represent  18% of the
company's  beginning  1996  oil and gas  reserves,  22% of  current  oil and gas
production  volumes,  and less than 10% of the  company's  annual cash flow from
operations.  The  company  will  report its  proportionate  share of Devon's net
income as  nonoperating  income and receive  cash  dividends on the Devon stock,
currently  $.12 per share  (annually).  The  current  market  value of the Devon
common stock to be received by the company is approximately $350 million.

In July 1996, KMCC settled all of the pending  personal injury lawsuits  related
to the  closed  facility  in  West  Chicago,  Illinois,  for  $21  million.  The
settlement  was accrued in the second quarter of 1996. The plaintiffs had sought
compensation  for illnesses  allegedly caused by exposure to thorium wastes from
the closed facility.  The settlements  require a cash payment to each individual
plaintiff, of which the majority has been paid during the third quarter.

The company has been  litigating  claims for  environmental  coverage  against a
number of its insurance carriers. During the 1996 second and third quarters, the
company  entered into settlement  agreements with certain  carriers that totaled
$65.3  million,  of which $43.7 million was received in the 1996 third  quarter.
Litigation is still pending and negotiations  will continue with other insurance
carriers.


<PAGE>


                           PART II - OTHER INFORMATION

Item 1.      Legal Proceedings.

      The company  continues  its efforts to obtain the  necessary  approvals to
      decommission a facility located in West Chicago, Illinois, which processed
      thorium ores and was closed in 1973. Currently,  the State of Illinois has
      jurisdiction of this site, and the company has agreed to offsite  disposal
      of the waste material.

      For a discussion of contingencies,  including a detailed discussion of the
      West Chicago matter, reference is made to Part 1, Item 3, of the company's
      Form 10-K for the year  ended  December  31,  1995.  For the report on the
      current  status  of  these  matters,  reference  is  made to Note G to the
      Consolidated Financial Statements of this Form 10-Q.

Item 6.      Exhibits and Reports on Form 8-K.

      (a)    Exhibits -

                  27.0 Financial Data Schedule

      (b)    Reports on Form 8-K

                  None

                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                             KERR-McGEE CORPORATION

Date  November 14, 1996                    By:   (Deborah A. Kitchens)
                                                 ---------------------
                                                  Deborah A. Kitchens
                                                   Vice President and Controller
                                                   and Chief Accounting Officer