Tropical Storm Isidore may not have gained the speed that Hurricane Lili is producing, but it was strong enough to blow a hole into BP plc’s production forecast for 2002. The company, which will still have to tally Lili’s consequences, blamed the September storm for a predicted year-end production growth of 4% over a year ago, which is 1% less than its forecast a month ago.

Isidore shut in oil and gas production across the Gulf of Mexico during the final week of the third quarter, and in the Gulf, BP’s rig count is about one-seventh of its worldwide production. BP, which offered a trading update on Wednesday, also warned that the storm (without Hurricane Lili) would cause “some knock on effects into the fourth quarter,” but did not expand on the statement. It still is holding to a forecast to grow about 5.5% between 2000 and 2005, with 2002 output growth 4%.

“The principal uncertainties which could adversely affect Q4 production include the outcome of the Gulf of Mexico hurricane season, the pace of resolution of recent operational difficulties in the North Sea, Alaska and elsewhere, and a mild Northern Hemisphere winter,” BP said in a statement.

BP said in early September that its third quarter production was expected to already be lower than planned because of “operational difficulties in the North Sea and North America.” However, its third quarter liquids production is “likely to grow around 5% and gas production around 2%” over the third quarter of 2001, “reflecting new production from Alaska, deep water Gulf of Mexico, Trinidad, Angola and China; and from deepening our position in Russia.”

Despite operational difficulties, BP said that new projects are continuing to come on stream “broadly as planned.” Expected to contribute to production in the second half of the year, and already in production are King, King’s Peak and Trinidad LNG [liquefied natural gas] train 2, as well as Horn Mountain, Aspen and Princess in the Gulf of Mexico.

U.S. gas prices are expected to fall by about 35 cents/MMBtu from the second quarter level, “a larger decline than the 22 cents/MMBtu decline in Henry Hub gas prices, primarily driven by continued transportation capacity restrictions and weak local demand in the Rockies region,” BP said. Also, third quarter gas marketing profits “are expected to be substantially down versus 2Q as a result of lower margins in North America, reduced volumes and margins as a result of the UK Interconnector shutdown, and the sale of BP’s interest in Ruhrgas. North American natural gas liquid (NGL) margins were improved compared to 2Q.”

Following the update, Standard & Poor’s Ratings Services (S&P) said that its ratings on BP PLC (“AA+/Stable/A-1+”) remain unchanged. The current ratings, it said, had already anticipated 2002 hydrocarbon production growth below BP’s 2000-2005 forecast of 5.5% growth.

“While the 5.5% target was reaffirmed by the company today, Standard & Poor’s rating does not hinge on the company’s reaching it precisely. Gearing levels were broadly unchanged during third-quarter 2002 and remain in line with BP’s expected normalized credit metrics, although financial flexibility is only moderate at current rating levels,” S&P said.

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