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Richard Bachmann can speak on crisis management. The chairman and chief executive of New Orleans-based Energy Partners Ltd. (NYSE: EPL) has moved headquarters to Houston and operational offices to Baton Rouge for now, while waiting to know when the company can return home. The New Orleanian told the pure-play Gulf of Mexico company's story at the IPAA's OGIS-West conference in San Francisco recently. There was the Katrina blow and then the Rita blow. "South Louisiana has become part of the Gulf of Mexico now," he said. "It's kind of hard to distinguish the beach." The company's balance sheet was beat up too; the storms "literally took out the entire month of September." The company will experience flat to 5% growth in 2005 despite the storms. "Basically, we'll see the growth forecast for 2005 swing over to 2006." Its Western Gulf production is 26% of total output and 100% gas; Rita hit it. Its Central Gulf production is 36% of the total and 50/50 oil/gas; it was hit by Rita and Katrina. Its Eastern Gulf output is 23% of the total and almost 100% oil; it was hit by Katrina and disrupted by Rita. Total output prior to the storms was 30,000 BOE per day, 62% gas. "Despite the hurricanes, Energy Partners is up and running," he said. The company didn't lose any production assets. Its East Bay Field at the mouth of the Mississippi River was cleared of living quarters, though. "Today, you can't find it." The field was under 12 feet of water, "so anything with an electrical component was fried or needs to be rebuilt." East Bay Field facilities were hit by a rig that traveled 125 miles across the Gulf during one of the storms. Energy Partners' production facilities were plastered with another oil company's signs. The signs fell off rigs for that company as the rigs bounced off the Energy Partners assets. Trailers were brought in to get back to work in East Bay Field. "We're totally back at East Bay 100% (now)." But, the company was waiting for pipe. "Pipe is sitting at Port Fourchon (Louisiana)...It's going to go a little bit slower than anyone's talking about." Worsening matters, at the time of his presentation, some Gulf operations had been re-evacuated or camped onshore while Hurricane Stan moved into Mexico and made high seas in the Gulf. Energy Partners has a $1-million insurance deductible on its East Bay facilities, which Bachmann estimates experienced $7- to $8 million of damage. Other company assets carry a $500,000 deductible but Bachmann estimates none experienced that much damage. Its business-interruption insurance will kick in at East Bay Field too. The insurance will pay for lost output up to $52 per bbl. of oil. "Yes, we're looking at losing $10 (versus the spot price) but we're getting the full impact of East Bay, (approximately) 7,000 BOE per day (meanwhile)." The three rigs working for Energy Partners were not damaged, so drilling can resume as soon as contractors are ready for work, he added. The company's many prospects-it plans 50 exploratory wells next year-include the Denali well, which Bachmann called "a geologist's dream." The target is 20,000 feet below the surface in East Bay Field. Bachmann expects it will hold 1- to 3 trillion cu. ft. of potential reserves. The drilling contract was to be announced Aug. 29, the day Katrina arrived. "We're within weeks of announcing (rates, etc.) again." The company entered this hurricane season in a good position, he added. "We're cash-rich at this time, sitting on $30 million." The company can be reached at 713-228-0711.
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