The Wall Street Journal: Storms to Hurt Chevron's Profit: "Related Video: Shell Oil President John Hofmeister discusses efforts to bring hurricane-affected plants back online.": Posted Friday 30 September 2005
By JOHN M. BIERS and RUSSELL GOLD
Hurricane Katrina and other storms will cost Chevron Corp. more than $350 million in third-quarter profit and more than 75,000 barrels of oil equivalent of production, the company said, though high commodity prices are expected to help offset the impact.
The oil giant indicated that the hit will be even more substantial because the figures released yesterday don't include estimates for the financial impact of Hurricane Rita. Chevron is one of the leading energy producers in the Gulf.
Its results will include costs related to facilities damage, cleanup and repairs, as well as profits forgone due to lost production, the company said. It also said it wouldn't capture the full benefits of higher industry refinery margins -- the gross-profit margin between the cost of a barrel of crude oil and the price of selling refined products -- due to refinery downtime.
Still, through Sept. 23, crude prices for the quarter are more than 40% higher than for the third quarter of 2004, while natural-gas prices are nearly 50% above that level, according to Chevron data. In last year's third quarter, Chevron reported net income of $3.2 billion, or $1.51 a share, on revenue of $40.72 billion.
Separately, Chevron said its giant Gulf of Mexico platform, Typhoon, is floating upside down after the deep-water facility took a direct hit from Rita. The company had previously reported the facility suffered damage. Chevron spokesman Mickey Driver says they are assessing Typhoon and haven't determined yet whether it can be salvaged. However, industry officials said it could be a total loss since its engines, pumps and living quarters likely suffered extensive damage. Typhoon, owned equally by Chevron and BHP Billiton Ltd., was installed in July 2001. Chevron, the operator, said the commercial life of the field was only five to eight years long.
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