EPL Suffers Minor Damage from Gustav, Prepares for Ike's GOM Entry

Energy Partners, Ltd. has provided an operational update regarding the impact of Hurricane Gustav on its production operations, including its preliminary damage assessment. The Company also commented on its preparations for Hurricane Ike.

EPL safely evacuated all offshore personnel and shut in all production prior to the arrival of Hurricane Gustav. The Company has completed an initial assessment of damage to its operated platforms following the hurricane. Indications are that the majority of EPL's facilities, which are located in the central GOM, have suffered, at most, minor damage such as missing handrails, grating, navigational aids and instrumentation panels.

In the Company's South Timbalier area, most producing wells, platforms and facilities sustained minimal or no damage, including the South Timbalier ("ST") 46 field which was brought back on line this past weekend. The storm did cause physical damage to the ST 41 A and ST 26 G platforms and to one EPL-owned gas sales pipeline departing ST 26, but the damage at this point is believed to be repairable. The Company has secured the necessary equipment and supplies to undertake these repairs.

The Company's initial fly-over and subsequent physical inspections in its East Bay field have so far indicated only minor repairs are needed to certain structures and pipelines in the field to enable production to resume. The necessary repairs began this past weekend. Minimal impact to EPL's western GOM area has been reported, and most of the Company's production from its operated fields in this area has been restored. Production in the Western area began ramping up last Friday.

EPL maintains insurance coverage for property damage due to windstorms with a per-storm deductible of $10 million. At this time, the Company believes that the repair costs associated with Hurricane Gustav related damage to EPL properties will be less than this deductible. EPL also maintains business interruption insurance on its ST 41, 42 and 46 properties, although the Company at this time does not anticipate making a claim as repairs are expected to be completed during the no claim period provided for under the policy.

Further efforts to resume production in the Company's fields will continue as conditions allow, which is in many cases awaiting acceptance of production by third party pipelines and processing facilities. The Company is monitoring Hurricane Ike in anticipation of its arrival in the GOM this week. Preparations to secure platforms, facilities and equipment in or near the storm's projected path are underway.

Read more on preparations for Hurricane Ike in Rigzone's Special Coverage Preparing for Ike to Strike.