Hee-Won Han shot a 3-under 69 and is alone in third place at 12-under-par 204. Karen Stupples posted a 4-under 68 and owns fourth place at 10-under-par 206.
Kung started quickly on Saturday with a 10-foot birdie putt at the first and a two-putt birdie at the par-5 fourth hole. She missed the green short with a 7-iron at the par-3 fifth and left with a bogey but still held a five-shot lead.
Kung dropped shots to par at nine and 11 and that opened the door for Davies. Davies sank a three-foot birdie putt at the first, drained a six-foot birdie putt at four and holed a bunker shot for eagle at the 531-yard, par-5 eighth hole.
Davies, one of the longest hitters on the LPGA Tour, reached the par-5 12th green in two and two-putted for birdie from 20 feet. That birdie tied her for first with Kung and Davies knocked it on in two at the 15th, and two-putted from 35 feet for another birdie and a round of 66.
Kung had some strong golf left in her. She canned a 15-footer for birdie at the 12th and ran home a 30-footer for birdie at the next hole to reclaim her one-shot margin.
'I wasn't worried about how many shots ahead or behind I was,' said Kung, a two-time winner in 2003 including last week's Wachovia LPGA Classic. 'I just wanted to go out there and play golf. I missed some shots, but I wasn't worried.'
Perhaps Kung wasn't worried on Saturday but with Davies, a 20-time winner on the LPGA Tour, in the same group, Kung had better play her finest golf if she is to join Se Ri Pak and Annika Sorenstam as the tour's only three-time winners in 2003.
'Tomorrow, I'll try to birdie every hole and we'll see how it goes,' said Kung. 'I've never played with her before. I didn't hit it as well today. I still made birdies, but I missed some short putts.'
Davies conceded that her experience might give her an advantage over her younger opponents, but acknowledges that she is not the one playing best among the leaders.
'She (Kung) has won twice since I won my last one,' said Davies, who last won on tour at the Wegmans Rochester International in June of 2001. 'She is the one who is playing very well, her and Hee-Won Han. I don't know if they will be nervous or not, all I know is that I will be and I am looking forward to it.'
Kristi Albers (66), Tammie Green (68), Grace Park (68) and Rosie Jones (71) share fifth place at 9-under-par 207.
Jennifer Rosales was tied with Davies at 13-under par but ran into serious trouble at the par-3 16th. She put two balls in the water and left with a quadruple-bogey seven.
Rosales carded a 1-over 73 and is tied for ninth place with Se Ri Pak (69), Young Kim (67), Dorothy Delasin (69) and Pat Hurst (71) at 8-under-par 208.