Energy Partners Says Hurricane Ike Impact Minimal

Energy Partners, Ltd. provided an operational update regarding the impact of Hurricane Ike on its production operations, including its preliminary damage assessment.

EPL safely evacuated all offshore personnel and shut in all production prior to the arrival of Hurricane Ike. The Company has completed an initial assessment of damage to its operated platforms in the Gulf of Mexico ("GOM") following the hurricane. Indications are that EPL's producing properties have suffered, at most, minor damage such as missing handrails, grating, navigational aids and instrumentation panels as a result of Hurricane Ike. Efforts to resume production from the Company's fields are underway, however the fields are in many cases awaiting acceptance of production by third party pipelines and processing facilities. EPL expects to provide further updates on its operations and production timing as additional information becomes available.

In the Company's South Timbalier ("ST") area, most producing wells, platforms and facilities sustained minimal damage due to Hurricane Ike. The ST 46 field area suffered no damage due to Hurricane Gustav or Hurricane Ike and is ready to resume production, delayed only by damage to a third party pipeline. EPL is currently awaiting word from the operator of the pipeline when pipeline access will be restored. At the ST 26 and 41 field areas, the Company has begun necessary repairs primarily caused by Hurricane Gustav to allow production to resume. Once EPL completes these repairs, ST 26 has been cleared to resume oil production by the operator of the third party pipeline into which it flows, while production from ST 41 will be dependent on the same third party pipeline repair required for production to resume at ST 46.

The Company's physical inspections in its East Bay field have indicated only minor repairs are needed to certain structures and pipelines in the field to enable production to resume. Crews are on location making the necessary repairs, which should allow production to begin ramping up this 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 is waiting on clearances from third party pipelines and processing facilities to resume flow.

EPL maintains insurance coverage for property damage due to windstorms with a per-storm deductible of $10 million. The Company believes that the repair costs associated with damage to EPL properties from both Hurricanes Gustav and Ike will each be less than the per-storm deductibles. 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.

EPL also commented that the Company has no natural gas hedges and only minimal crude oil financially settled hedges in place during this storm season. EPL also said that it has no counter-party exposure with Lehman Brothers.

Read more on the aftermath of Hurricane Ike in Rigzone's Special Coverage After the Storm.