Helix Energy Solutions Group reported that efforts to restore Gulf of Mexico oil and gas production following hurricanes Gustav and Ike are progressing, with a return to pre-hurricane production rates expected by the end of the year, as previously forecasted.
As of November 19, 2008, oil and gas production by Helix has increased to approximately 50 percent of its 160 mmcfe/day production levels prior to hurricanes Gustav and Ike, with restoration to pre-storm levels expected by the end of December. This is an increase from the production levels of approximately 30 percent of pre-storm levels reported by Helix in late October.
The Company's ability to restore production is subject, for the most part, to the repair and restoration of third party pipelines and onshore production facilities. The production required to reach pre-storm rates stands ready as the pipelines reopen. Progress on restoring these pipelines has been made, and continues to be made, but presently one oil and one gas pipeline are offline, and two other gas pipelines are permitting less than maximum throughput.
Based on these production restoration estimates, the Company reiterates its expectation of fourth quarter 2008 production to be in the range of 7.5 to 8.0 bcfe, with a return to 100 percent of pre-storm production levels on or before December 31, and production in the first quarter of 2009 expected to surpass second quarter 2008 levels as a result of incremental production anticipated from the Noonan gas discovery.
Overall, Helix remains focused on generating free cash flow and reducing net debt levels. As production is returned and our major capital projects reach completion, the Company expects to generate free cash flow in 2009.
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