Energy Partners Ltd. Says Damage Minimal from Rita
Energy Partners, Ltd. has completed an initial assessment of its operated platforms and rigs and indications are that EPL's facilities suffered only minor damage and its rigs under contract are in their pre-storm locations. The Company also provided further details on its production outlook and insurance coverage.
EPL safely evacuated all offshore personnel prior to Hurricane Rita. The initial flyovers, boat inspections, and manning of platforms to assess damage to the Company's operations in its Western, Central, Eastern and onshore areas were completed earlier today. All producing structures and facilities appeared intact with only minor damage due to Hurricane Rita.
In the Western area of EPL's Gulf of Mexico Shelf operations, the Company has surveyed fields representing a majority of its operated production and found no significant structural damage. The Company has begun restarting production from its fields in the Western area, and in the coming days expects to address any further issues in re-establishing pre-storm production levels.
In EPL's Central area, the Company's main producing assets appear to have sustained only minimal damage. EPL expects to restore the majority of production from the Central area in the next several days, with production expected to return to pre-Hurricane Katrina levels by mid October as third party pipeline issues are resolved.
In the Eastern area, EPL has identified no significant incremental damage from Hurricane Rita. The Company is returning temporary quarters barges to the East Bay field that had been placed there to replace the crew quarters that were lost to Hurricane Katrina. Work is proceeding to restore the field to full production, subject to third party transportation and processing constraints downstream from the field. Production in the Eastern area had not re-started post Hurricane Katrina, and the Company said it is continuing to work on a timeline to restore production from the East Bay field.
In the Company's onshore South Louisiana operations, producing fields and structures sustained minimal damage, mainly associated with high water, and production is expected to return to pre-storm levels in the next several days.
Prior to shut-ins for Hurricane Rita, EPL's production had ramped up to nearly 60% of its production capacity of approximately 30,000 barrels of oil equivalent per day prior to Hurricane Katrina. At the current time, the Company is developing a timeline, contingent upon third party transportation arrangements, to fully restore production across its entire operations. EPL expects to issue an update on production guidance for the remainder of 2005 in the coming weeks.
EPL maintains insurance coverage for property damage due to hurricanes and tropical storms with a per-storm deductible of $1.0 million for the East Bay field and $500 thousand collectively for its other properties.
EPL also maintains business interruption insurance on its significant properties. Given that the Company does not expect production from East Bay to re-commence within the 45 day waiting period provided under its policy, EPL expects to begin accruing recoveries under the policy in mid-October. These recoveries will continue until full production is restored, subject to policy limits that are not expected to be reached at this time. EPL said at this time it expects to restore production from all other operated properties before the end of the insurance waiting period, so it does not expect to recover under its business interruption insurance on any other properties.
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