Oil and Gas Production
All offshore activities were suspended as of Thursday, September 22, 2005, with all operations personnel safely evacuated. Net daily production of approximately 100 million cubic feet of natural gas equivalent (MMcfe) (down from pre-Hurricane Katrina volumes of 110 MMcfe/day) was shut in. Energy Resource Technology (ERT), our oil and gas production subsidiary, conducted flyovers of its properties after the hurricane which indicated that one producing platform has been significantly damaged and two non-producing platforms have been lost. Several other producing platforms sustained damage that appears to be repairable within the short term. The repair cost, net of insurance proceeds, is expected to be less than $10 million.
ERT estimates that daily production will be brought back on line according to the following time line, subject to the availability of third party pipelines:
By 9/30 50 MMcfe By 10/15 65 MMcfe By 10/31 85 MMcfe By 12/31 100 MMcfe Production FacilitiesA flyover of the Marco Polo platform indicated no significant damage and an announcement is expected soon from the operator, concerning the resumption of production.
Owen Kratz, Chairman and Chief Executive Officer, stated, "Hurricanes Katrina and Rita have added meaningfully to the already robust demand for Marine Contracting services, offsetting impact on our Oil and Gas Production and Production Facility businesses.
"Based on this situation, we reaffirm our previously released earnings guidance of $2.80 to $3.20/share for 2005 and currently believe earnings will come in near the high end of that range. We will further refine this estimate in our third quarter earnings release scheduled for November 1, 2005."
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