Stone Energy Corporation has provided an update on the impact of Hurricane Gustav on its operations and production, as well as its platform evacuation plans for Hurricane Ike.
Confirming initial inspections, there was minimal damage to the Stone properties from Hurricane Gustav and virtually all fields are ready to return to production, awaiting approval from downstream pipelines and third party facilities.
As previously disclosed, substantially all of Stone's approximately 310 million cubic feet of natural gas equivalent (Mmcfe) per day was shut-in as of Saturday, August 30. On Wednesday, September 3, initial production was brought back on-line, and by Tuesday, September 9, volumes were estimated at over 120 Mmcfe per day. Stone estimates a substantial portion of its production would have returned this week as pipelines completed their safety checks and onshore facilities had power restored. Another approximately 50 Mmcfe per day is subject to third party downstream repairs which may last several weeks.
However, Hurricane Ike has caused another round of third party shut-downs and evacuations by pipelines and onshore facilities. Stone has already evacuated non-essential personnel and will evacuate and shut down its facilities today, although some minimal volumes are expected to continue to flow. Management will continue to closely monitor the path of Hurricane Ike and make a determination as to when to redeploy its personnel.
Stone expects the incremental operating cost and the repair cost for these two storms will not be covered by insurance as this amount is projected to be under the company's deductible and Stone does not maintain coverage for business interruption.
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