Energy Partners Says Third Quarter Production Will Be Lower
Energy Partners Ltd. said that production is currently near 11,000 barrels of oil equivalent (Boe) per day, or approximately 37% of the pre-Hurricane Katrina level. Based on estimates for deferred production due to Hurricanes Katrina and Rita, EPL expects third quarter production to fall between 18,500 and 19,500 Boe per day.
The critical tasks necessary to restore production to full capacity include repairs to third party pipelines and processing plants, and, to a lesser extent, repairs to EPL-owned pipelines in the Company's Central and Eastern areas which are currently underway. As such, EPL's fourth quarter production levels will be highly dependent on the ability of downstream third parties to accept delivery of produced oil and natural gas. At this time, the Company's best estimates are that fourth quarter 2005 production will fall between 16,500 and 21,500 Boe per day.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "Before Hurricane Katrina, EPL was on track to deliver the 25% to 35% annual production growth we had projected since the start of the year. After the shut-ins due to Katrina and Rita, much of that growth will now be deferred into 2006. Our best estimates now are that 2005 production will range from zero to 5% growth over 2004 levels, which would be a remarkable success given this season's storm activity. Also, early in the fourth quarter we will begin accruing recoveries under our business interruption insurance, so while our volume growth will be significantly reduced, the impact on our second half cash flow will not be as great."
EPL said that the guidance it had previously given on its cost metrics will also have to be changed, and that it expects to update its estimates on the Company's third quarter 2005 earnings conference call.
Bachmann continued, "While the two back-to-back hurricanes in the
past month have been very disruptive, we are fortunate and pleased
that the damages to our facilities have been relatively minor. With
the exception of East Bay, we expect all our fields to return to full
production in the fourth quarter."
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