Daily Telegraph: Hurricanes leave behind £4bn bill for oil giants: “Similar problems are likely to dent Shell's third-quarter figures with production from the Gulf down from 450,000 boepd to 160,000 boepd because of the storms at the end of last month.”: Wednesday 5 October 2005
By Christopher Hope, Business Correspondent (Filed: 05/10/2005)
The world's biggest oil and gas companies are facing a $7.5billion (£4.3billion) bill from the hurricanes that lashed the Gulf of Mexico.
The news emerged as BP, the world's number two oil and gas company, said the impact of hurricanes Rita and Katrina had knocked $700m (£400m) off its third-quarter profits.
Analysts at Wood MacKenzie estimated that 45m barrels of oil and 220billion cubic feet of gas, worth between $4billion and $5billion in lost revenues, had been "shut in" by the storms.
With production slow to come back on stream, the energy consultancy said that the figure could grow by another $2.5billion by the end of the year.
Ian Ashcroft, a Wood MacKenzie analyst, said: "This is a bad one. I can't recall it being this bad and I have been doing this for 20 years."
Mr Ashcroft said the slow speed at which big companies such as BP, Shell, Chevron and Exxon were building up production after the storms was remarkable. He said: "It has been slower than you might imagine."
BP said the storms had disrupted output between June and September, forcing daily production down from 4.1m barrels of oil and gas equivalent per day (boepd) in the last quarter to 3.8m boepd.
Normal production from the Gulf region - 500,000 boepd - was down to 175,000 boepd. The company is now unlikely to meet its 2005 production goal of 4.1m to 4.2m boepd.
However, the $700m figure is likely barely to make a dent in BP's forecast pre-tax profits of $31billion, more than twice last year's $15billion.
Bruce Evers, an analyst at Investec, said: "It is a big hit but BP is a pretty big company. It is more of a blip than anything else."
Mr Evers warned that BP could take another $650m hit before the end of the year as production slowly ramps up.
BP also lost output to planned maintenance, mainly in the North Sea, which like the Gulf of Mexico is an area of high margins for the company.
BP added it would incur costs of $100m to secure and repair its massive Thunder Horse platform in the Gulf of Mexico, which was badly damaged by Hurricane Dennis in July.
A further update is due later this month. BP shares fell 18 to 655½p.
Similar problems are likely to dent Shell's third-quarter figures with production from the Gulf down from 450,000 boepd to 160,000 boepd because of the storms at the end of last month. Shell's shares were down 50p at £19.19.
The news came as the US government said that Gulf Coast refineries left reeling by the hurricanes would take up to a month to resume full operations.
About 3m barrels a day of refining capacity remained shut down, it said.
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