Fitch ups Kerr-McGee view to positive

Fitch Ratings said it has revised the outlook on the debt of Kerr-McGee Corp. to positive from stable and raised the company's issuer default rating to BB- from B.

Fitch said it also affirmed the company's senior secured ratings and commercial paper rating, including senior secured credit facility at BB, senior secured term loans at BB, senior secured notes at BB and commercial paper at B.

The action reflects the rapidly improving credit profile of Kerr-McGee in recent weeks as the company continues to reduce its term loan balances through the proceeds from asset sales, Fitch said.

But Fitch said it has concerns about the company's long-term ability to find new reserves at economic costs. While the expected 2005 reserve results reflect a marked improvement over prior years, organic replacement totaled only 24% between 2002 and 2004 at cost of more than $30 billion.

Fitch said it also expects that future acquisitions remain likely as Kerr-McGee has entered into several major transactions in recent years to offset the poor results through the drill bit.

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