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BP Faults Storms' Effects on Lower 4Q Output, Profits

The aftermath of last summer's devastating hurricanes in the Gulf of Mexico continued to play havoc with London-based BP plc's production in the final quarter of 2005, with output down from a year ago and lost profits and repairs costing nearly $1 billion.

In a trading statement issued Wednesday, the world's second largest oil and gas company said 4Q2005 output averaged 4.01 million boe/d, below the 4.095 million boe/d pumped in 4Q2004. Production was sequentially higher than in 3Q2005, when BP averaged 3.824 million boe/d. BP is expecting average production in 2005 to average about 4.0 million boe/d -- below the 4.1-4.2 million boe/d it had forecast before hurricanes stormed through the Gulf last summer.

Hurricanes Katrina and Rita cost the company an estimated 160,000 boe/d in 3Q2005. However, BP also was hit particularly hard by Hurricane Dennis last July, which slammed into its offshore Thunder Horse platform, causing the platform to begin listing. Those repairs, still not completed, are expected to cost at least another $130 million and delay ramp up, BP said (see NGI, Dec. 5, 2005).

Another hit to BP's bottom line came from refinery problems in Texas City, TX. An explosion at an oil refinery last fall killed several people, and BP was slapped with a $21.3 million fine by the Occupational Safety and Health Administration, which discovered more than 300 health and safety violations at the plant. Storm-related supply disruptions also forced a refinery there to shut down throughout the final quarter. Taken together, the refinery problems and the hurricane damages cost BP more than $900 million in lost profits, the company said. BP claimed about $400 million in losses in 3Q2005.

BP is expected to issue its quarterly results on Feb. 7.

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