Bloom with a Bang

"When you pull yourself up by your bootstraps," says Dean McGee, president of Oklahoma's Kerr-McGee Oil Industries, Inc., "it's like a flower opening up--slowly at first, and then it finally spreads out." A small independent, Kerr-McGee spent 20 years pulling itself up to a $15 million annual business. Then, in the past five years, it trebled in size. Last week, Kerr-McGee spread itself still wider. It put together a combine with uranium ore reserves estimated at some 5,000,000 tons on the Colorado Plateau (total U.S. reserves: 30 million tons), worth some $200 million. If Kermac builds a $20 million processing mill next year, it may well become the second biggest (next to Anaconda Co.) uranium producer in the U.S.

Reserves & Rawhide. Uranium is nothing new to Kermac, whose founder and board chairman is Oklahoma's Oilman-Senator Robert S. Kerr. As far back as 1951, the company was the first oil producer to decide that uranium, instead of being competitive with oil, was a supplemental and profitable field. In 1952, with $700,000, Kermac bought New Mexico's small Navajo Uranium Co., built a mill at Shiprock, N. Mex., did so well that it has expanded operations to a total of $3.3 million. By spending $100,000 a month for more exploration, it uncovered sizable reserves near Grants, N. Mex., thus became a major producer.

Last week's combine makes it a giant. As operator and controlling owner (more than 50%) of Kermac Nuclear Fuels Inc., the company will pool the reserves of two other companies with its own into one big combine, process the ore, split the profits on a pro-rata basis.

Credit for Kermac's climb goes largely to President McGee, 52, a tall, rawhide-tough wildcatter aad geologist (University of Kansas, '26) who first went to work for Phillips Petroleum, was its chief geologist by the time he was 30. McGee did so well that when he left the company to hook up with Oilman Bob Kerr in 1937 Phillips hated to let him go, in 1943 agreed to an unusual deal to keep a string on his talents. It promised to underwrite 75% of the company's drilling costs in return for only a 50-50 share in the oil profits.

Phillips knew what it was doing. With plenty of cash McGee soon had a string of wells in the rich-paying Gulf Coast zone in Louisiana. Then Kerr-McGee started operating on its own in an area where few oilmen had yet ventured: the Louisiana tidelands. Says McGee: "It looked better to us than staying on land, where the first-class spots were already leased and drilled. Some said it took courage. Others just said we were foolish."

Courage or crapshooter's luck, the gamble paid off. In 1947, in 18 ft. of water ten miles off Louisiana, Kermac brought in the first big tidelands well out of sight of land and developed by crews living on the rig. What's more, Oilman McGee & Co. did it cheaply. Where most big companies planned huge, $1,000,000 floating platforms with rig, crew quarters and space for drilling supplies, Kermac's equipment cost only $250,000. The platform was barely big enough for the drilling rig: floating tenders moored alongside housed the crew and stored the supplies.

Fertilizer & Rockets. With solid backing from Chairman Kerr, President McGee expanded all along the line. He added wells, a refinery, and, with the purchase of Deep Rock Oil Corp., 800 filling stations in 23 states. Thus, Kerr-McGee became a fully integrated oil company. Estimated 1956 business: a 100% jump over 1955 to a gross of $87.9 million, profits of $4,750,000.

But for Oilmen McGee and Kerr, petroleum and uranium are only part of the total-energy picture of the future. Kermac already has a 25% interest in a huge potash deposit near Carlsbad, N. Mex., plans to spend $15 million developing it, not only as a source of fertilizer, but also as a base for a new series of inorganic "super fuels" for space-traveling rocketships. Chairman Bob Kerr firmly believes that he will be offered a trip to the moon in his lifetime--and in a rocket using Kerr-McGee fuel.

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