Amerada Hess '05 Forecasts No Longer Includes Libya
HOUSTON, Oct 27, 2005 (Dow Jones Commodities News Select via Comtex)
When Amerada Hess Corp. (AHC) planned its 2005 drilling program, the company was confident enough of a quick return to Libya that it included money for the endeavor in its capital budget.
But after months of negotiations, Amerada Hess once again reported no significant progress Wednesday in finalizing commercial terms to reenter the North African country. Amerada Hess has dropped Libyan crude from its 2005 production forecast after initially including it.
Amerada Hess Chief Executive John Hess, employing similar language as in the last two quarterly conference calls, said talks with the Libyan government have been "ongoing" since the Libyan national oil company signed off on a deal in December 2004.
"Since December, it's been in the government's lap to give us approval, and since then, discussions are ongoing," Hess told investors on a conference call.
Amerada Hess is one of three U.S. oil companies that were part of the Oasis Group, which left Libya following 1986 sanctions were imposed on the country by the U.S. The U.S. lifted the sanctions last year after Libya agreed to disarm weapons of mass destruction. The other two Oasis companies are ConocoPhillips (COP) and Marathon Oil Co. (MRO)
ConocoPhillips Chief Executive James Mulva said Wednesday the companies are in "good dialogue" with the Libyans, but offered no timetable for returning.
"It's taken us quite a bit more time, and hopefully in the next several months we'll have something positive to report," Mulva told investors on a conference call.
Occidental Petroleum Corp. (OXY), another U.S. oil company that left in 1986 due to sanctions, resumed Libyan production in July after reaching an agreement with the government. Occidental has estimated daily Libyan production at 12,000-15,000 barrels of oil per day.
In January, Amerada Hess officials described an agreement with Libya as imminent and reported that its 2005 budget included an unspecified amount for Libya. The 2005 production forecast at that point was for 350,000 barrels of oil equivalent per day, with 20,000-25,000 coming from Libya. Amerada Hess produced 342,000 barrels per day in 2004.
Amerada Hess now expects to pump 335,000-340,000 for 2005, spokesman Jay Wilson said Wednesday. The revision incorporates lower production from the Gulf of Mexico, where the company has restored about half the 51,000 barrels of oil equivalent it normally produces following Hurricanes Katrina and Rita.
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