Devon Energy Expects to Restore 20,000 BOE of Production by Year End
Devon Energy reports that it has restored approximately 50,000 equivalent barrels of oil (Boe) per day of offshore oil and gas production that was suspended in preparation for hurricanes. Another 20,000 Boe per day is expected to be restored by the end of the year. Restoration of the remaining volumes is dependent upon further damage assessments and repairs to Devon and third-party-operated facilities. The volumes that are expected to remain suspended beyond year-end represent 10 to 15 percent of Devon's Gulf of Mexico production, or less than three percent of its company-wide production.
Devon initially forecast production for the third and fourth quarters of 2005 to approximate 56 million Boe per quarter. Because of the hurricanes, Devon subsequently lowered its third quarter 2005 company-wide production estimate to 54.6 million Boe. After considering the ongoing impact of the hurricanes, the company now expects fourth quarter 2005 production to be about 53 million Boe.
Devon is insured against physical damage to its offshore facilities caused
by the hurricanes. Its insurance program also includes substantial business
interruption coverage which Devon will utilize to recover costs associated
with the suspended production. Business interruption insurance is subject to
a standard waiting period, upper limits to oil and natural gas prices and a
per event maximum.
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