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These excerpts taken from the APA 10-K filed Mar 2, 2009. Hurricanes
Production — Wells shut-in as a result of the
hurricanes reduced 2008 production by an estimated
54.6 MMcf/d
and 6,941 b/d. A substantial part of Apache’s net
production shut-in by the storm was restored by the end of 2008,
with only 7,700 b/d and
83 MMcf/d
remaining offline. While we plan to restore nearly all of the
production by mid-year 2009, the timing in many instances is
beyond our control since we
Table of Contents
are awaiting repairs to third-party pipelines and facilities.
All but approximately 1,100 boe per day of production will
ultimately be restored.
Financial Results — The impact of the
hurricanes on our 2008 financial results was an estimated
$410 million of lower crude oil and natural gas revenues.
We also incurred approximately $75 million of expenditures
for repair, redevelopment and abandonment of properties damaged
by the hurricanes. The Company anticipates an additional $170 to
$190 million of costs, most of which are likely to occur in
2009. A majority of these costs will be recovered through
insurance, as discussed below.
Insurance Coverage — The Company carries
property damage insurance through Oil Insurance Limited (OIL)
for windstorm damage in the Gulf of Mexico of $250 million
after reaching a $100 million deductible per event. The
deductible will be scaled down based on the Company’s
working interest in the damaged properties and is anticipated to
be $80 million. The $250 million in coverage will be
prorated downward if total claims received by OIL for Hurricane
Ike exceed their aggregate limit per event of $750 million.
In December 2008, OIL indicated that losses for Hurricane
Ike will likely exceed the aggregate limit by an amount that
would cause insurance payments to be 80 percent of amounts
claimed; however, the final percentage will not be known until
all claims have been submitted to OIL. In addition, Apache has
$150 million of property damage and business interruption
insurance through the London market subject to a
$350 million deductible that can be met with property
damage and qualifying business interruption losses.
Hurricanes
Production — Wells shut-in as a result of the hurricanes reduced 2008 production by an estimated 54.6 MMcf/d and 6,941 b/d. A substantial part of Apache’s net production shut-in by the storm was restored by the end of 2008, with only 7,700 b/d and 83 MMcf/d remaining offline. While we plan to restore nearly all of the production by mid-year 2009, the timing in many instances is beyond our control since we
Table of Contentsare awaiting repairs to third-party pipelines and facilities. All but approximately 1,100 boe per day of production will ultimately be restored. Financial Results — The impact of the hurricanes on our 2008 financial results was an estimated $410 million of lower crude oil and natural gas revenues. We also incurred approximately $75 million of expenditures for repair, redevelopment and abandonment of properties damaged by the hurricanes. The Company anticipates an additional $170 to $190 million of costs, most of which are likely to occur in 2009. A majority of these costs will be recovered through insurance, as discussed below. Insurance Coverage — The Company carries property damage insurance through Oil Insurance Limited (OIL) for windstorm damage in the Gulf of Mexico of $250 million after reaching a $100 million deductible per event. The deductible will be scaled down based on the Company’s working interest in the damaged properties and is anticipated to be $80 million. The $250 million in coverage will be prorated downward if total claims received by OIL for Hurricane Ike exceed their aggregate limit per event of $750 million. In December 2008, OIL indicated that losses for Hurricane Ike will likely exceed the aggregate limit by an amount that would cause insurance payments to be 80 percent of amounts claimed; however, the final percentage will not be known until all claims have been submitted to OIL. In addition, Apache has $150 million of property damage and business interruption insurance through the London market subject to a $350 million deductible that can be met with property damage and qualifying business interruption losses. | EXCERPTS ON THIS PAGE:
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