|
|
 | | | |
- close
- close
- close
- close
These excerpts taken from the DVN 10-K filed Feb 27, 2009. Hurricane
Contingencies
Prior to September 1, 2006, Devon maintained a
comprehensive insurance program that included coverage for
physical damage to its offshore facilities caused by hurricanes.
This program also included substantial business interruption
coverage, which entitled Devon to be reimbursed for the portion
of production suspended longer than forty-five days, subject to
upper limits to oil and gas prices. Also, the terms of the
historical insurance included a standard, per-event deductible
of $1 million for offshore losses as well as a
$15 million aggregate annual deductible.
Devon suffered insured damages in the third quarter of 2005
related to hurricanes that struck the Gulf of Mexico. During
2006 and 2007, Devon received $480 million as a full
settlement of the amount due from its primary insurers and
certain of its secondary insurers. During the fourth quarter of
2008, Devon received $106 million as full settlement of the
amount due from its remaining secondary insurers. Devon’s
claims under its then existing insurance arrangements included
both physical damages and business interruption claims. As of
December 31, 2008, Devon had used $424 million of
these proceeds as reimbursement of repair costs and deductible
amounts, resulting in excess recoveries. The $162 million
of excess recoveries was recorded as other income in the
accompanying statement of operations during 2008.
The policy underlying the insurance program terms described
above expired on August 31, 2006. Due to significant
changes in the insurance marketplace, Devon no longer has
coverage for damage that may be caused by named windstorms from
the Gulf of Mexico. As a result, Devon’s current insurance
program includes coverage for physical damage and business
interruption but does not have such coverage for damages or
business interruption caused from named windstorms.
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
During the third quarter of 2008, Hurricanes Ike and Gustav
damaged certain of Devon’s oil and gas facilities and
transportation systems in the Gulf of Mexico. These damages
relate to both production operations that will be repaired and
restored and production operations that will not be restored.
These damages are uninsured losses because they resulted from
named windstorms.
For the damaged facilities and transportation systems for which
Devon intends to resume operations after repairs have been made,
a loss of $31 million was recognized in 2008. This loss is
included in lease operating expenses in the accompanying
statement of operations.
The facilities for which Devon will not restore production
operations consist of certain platforms that were completely
destroyed. Devon has begun performing asset retirement
activities associated with the destroyed platforms and related
wells. The time and effort required to complete such activities
is expected to be significant due to the hazardous conditions
created by the hurricanes. As a result, the estimated costs to
complete the asset retirement activities are $82 million
higher than Devon’s previously estimated asset retirement
obligations related to the destroyed platforms and related
wells. Therefore, in 2008, Devon increased its asset retirement
obligations by $82 million with a corresponding increase to
oil and gas property and equipment in the accompanying balance
sheet. Based on the projected timing of the retirement
activities, half of this asset retirement obligation increase
was recorded to the current portion and half was recorded to the
long-term portion.
Hurricane
Contingencies
Prior to September 1, 2006, Devon maintained a
comprehensive insurance program that included coverage for
physical damage to its offshore facilities caused by hurricanes.
This program also included substantial business interruption
coverage, which entitled Devon to be reimbursed for the portion
of production suspended longer than forty-five days, subject to
upper limits to oil and gas prices. Also, the terms of the
historical insurance included a standard, per-event deductible
of $1 million for offshore losses as well as a
$15 million aggregate annual deductible.
Devon suffered insured damages in the third quarter of 2005
related to hurricanes that struck the Gulf of Mexico. During
2006 and 2007, Devon received $480 million as a full
settlement of the amount due from its primary insurers and
certain of its secondary insurers. During the fourth quarter of
2008, Devon received $106 million as full settlement of the
amount due from its remaining secondary insurers. Devon’s
claims under its then existing insurance arrangements included
both physical damages and business interruption claims. As of
December 31, 2008, Devon had used $424 million of
these proceeds as reimbursement of repair costs and deductible
amounts, resulting in excess recoveries. The $162 million
of excess recoveries was recorded as other income in the
accompanying statement of operations during 2008.
The policy underlying the insurance program terms described
above expired on August 31, 2006. Due to significant
changes in the insurance marketplace, Devon no longer has
coverage for damage that may be caused by named windstorms from
the Gulf of Mexico. As a result, Devon’s current insurance
program includes coverage for physical damage and business
interruption but does not have such coverage for damages or
business interruption caused from named windstorms.
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
During the third quarter of 2008, Hurricanes Ike and Gustav
damaged certain of Devon’s oil and gas facilities and
transportation systems in the Gulf of Mexico. These damages
relate to both production operations that will be repaired and
restored and production operations that will not be restored.
These damages are uninsured losses because they resulted from
named windstorms.
For the damaged facilities and transportation systems for which
Devon intends to resume operations after repairs have been made,
a loss of $31 million was recognized in 2008. This loss is
included in lease operating expenses in the accompanying
statement of operations.
The facilities for which Devon will not restore production
operations consist of certain platforms that were completely
destroyed. Devon has begun performing asset retirement
activities associated with the destroyed platforms and related
wells. The time and effort required to complete such activities
is expected to be significant due to the hazardous conditions
created by the hurricanes. As a result, the estimated costs to
complete the asset retirement activities are $82 million
higher than Devon’s previously estimated asset retirement
obligations related to the destroyed platforms and related
wells. Therefore, in 2008, Devon increased its asset retirement
obligations by $82 million with a corresponding increase to
oil and gas property and equipment in the accompanying balance
sheet. Based on the projected timing of the retirement
activities, half of this asset retirement obligation increase
was recorded to the current portion and half was recorded to the
long-term portion.
Hurricane Contingencies Prior to September 1, 2006, Devon maintained a comprehensive insurance program that included coverage for physical damage to its offshore facilities caused by hurricanes. This program also included substantial business interruption coverage, which entitled Devon to be reimbursed for the portion of production suspended longer than forty-five days, subject to upper limits to oil and gas prices. Also, the terms of the historical insurance included a standard, per-event deductible of $1 million for offshore losses as well as a $15 million aggregate annual deductible. Devon suffered insured damages in the third quarter of 2005 related to hurricanes that struck the Gulf of Mexico. During 2006 and 2007, Devon received $480 million as a full settlement of the amount due from its primary insurers and certain of its secondary insurers. During the fourth quarter of 2008, Devon received $106 million as full settlement of the amount due from its remaining secondary insurers. Devon’s claims under its then existing insurance arrangements included both physical damages and business interruption claims. As of December 31, 2008, Devon had used $424 million of these proceeds as reimbursement of repair costs and deductible amounts, resulting in excess recoveries. The $162 million of excess recoveries was recorded as other income in the accompanying statement of operations during 2008. The policy underlying the insurance program terms described above expired on August 31, 2006. Due to significant changes in the insurance marketplace, Devon no longer has coverage for damage that may be caused by named windstorms from the Gulf of Mexico. As a result, Devon’s current insurance program includes coverage for physical damage and business interruption but does not have such coverage for damages or business interruption caused from named windstorms.
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During the third quarter of 2008, Hurricanes Ike and Gustav damaged certain of Devon’s oil and gas facilities and transportation systems in the Gulf of Mexico. These damages relate to both production operations that will be repaired and restored and production operations that will not be restored. These damages are uninsured losses because they resulted from named windstorms. For the damaged facilities and transportation systems for which Devon intends to resume operations after repairs have been made, a loss of $31 million was recognized in 2008. This loss is included in lease operating expenses in the accompanying statement of operations. The facilities for which Devon will not restore production operations consist of certain platforms that were completely destroyed. Devon has begun performing asset retirement activities associated with the destroyed platforms and related wells. The time and effort required to complete such activities is expected to be significant due to the hazardous conditions created by the hurricanes. As a result, the estimated costs to complete the asset retirement activities are $82 million higher than Devon’s previously estimated asset retirement obligations related to the destroyed platforms and related wells. Therefore, in 2008, Devon increased its asset retirement obligations by $82 million with a corresponding increase to oil and gas property and equipment in the accompanying balance sheet. Based on the projected timing of the retirement activities, half of this asset retirement obligation increase was recorded to the current portion and half was recorded to the long-term portion. Hurricane Contingencies Prior to September 1, 2006, Devon maintained a comprehensive insurance program that included coverage for physical damage to its offshore facilities caused by hurricanes. This program also included substantial business interruption coverage, which entitled Devon to be reimbursed for the portion of production suspended longer than forty-five days, subject to upper limits to oil and gas prices. Also, the terms of the historical insurance included a standard, per-event deductible of $1 million for offshore losses as well as a $15 million aggregate annual deductible. Devon suffered insured damages in the third quarter of 2005 related to hurricanes that struck the Gulf of Mexico. During 2006 and 2007, Devon received $480 million as a full settlement of the amount due from its primary insurers and certain of its secondary insurers. During the fourth quarter of 2008, Devon received $106 million as full settlement of the amount due from its remaining secondary insurers. Devon’s claims under its then existing insurance arrangements included both physical damages and business interruption claims. As of December 31, 2008, Devon had used $424 million of these proceeds as reimbursement of repair costs and deductible amounts, resulting in excess recoveries. The $162 million of excess recoveries was recorded as other income in the accompanying statement of operations during 2008. The policy underlying the insurance program terms described above expired on August 31, 2006. Due to significant changes in the insurance marketplace, Devon no longer has coverage for damage that may be caused by named windstorms from the Gulf of Mexico. As a result, Devon’s current insurance program includes coverage for physical damage and business interruption but does not have such coverage for damages or business interruption caused from named windstorms.
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During the third quarter of 2008, Hurricanes Ike and Gustav damaged certain of Devon’s oil and gas facilities and transportation systems in the Gulf of Mexico. These damages relate to both production operations that will be repaired and restored and production operations that will not be restored. These damages are uninsured losses because they resulted from named windstorms. For the damaged facilities and transportation systems for which Devon intends to resume operations after repairs have been made, a loss of $31 million was recognized in 2008. This loss is included in lease operating expenses in the accompanying statement of operations. The facilities for which Devon will not restore production operations consist of certain platforms that were completely destroyed. Devon has begun performing asset retirement activities associated with the destroyed platforms and related wells. The time and effort required to complete such activities is expected to be significant due to the hazardous conditions created by the hurricanes. As a result, the estimated costs to complete the asset retirement activities are $82 million higher than Devon’s previously estimated asset retirement obligations related to the destroyed platforms and related wells. Therefore, in 2008, Devon increased its asset retirement obligations by $82 million with a corresponding increase to oil and gas property and equipment in the accompanying balance sheet. Based on the projected timing of the retirement activities, half of this asset retirement obligation increase was recorded to the current portion and half was recorded to the long-term portion. These excerpts taken from the DVN 10-K filed Jun 9, 2008. Hurricane
Contingencies
Historically, Devon maintained a comprehensive insurance program
that included coverage for physical damage to its offshore
facilities caused by hurricanes. Devon’s historical
insurance program also included substantial business
interruption coverage, which Devon is utilizing to recover costs
associated with the suspended production related to hurricanes
that struck the Gulf of Mexico in the third quarter of 2005.
Under the terms of this insurance program, Devon was entitled to
be reimbursed for the portion of production suspended longer
than forty-five days, subject to upper limits to oil and natural
gas prices. Also, the terms of the insurance include a standard,
per-event deductible of $1 million for offshore losses as
well as a $15 million aggregate annual deductible.
Based on current estimates of physical damage and the
anticipated length of time Devon will have had production
suspended, Devon expects its policy recoveries will exceed
repair costs and deductible amounts. This expectation is based
upon several variables, including the $467 million received
in 2006 as a full settlement of the amount due from Devon’s
primary insurers and $13 million received in 2007 as a full
settlement of the amount due from certain of Devon’s
secondary insurers. As of December 31, 2007,
$330 million of these proceeds had been utilized as
reimbursement of past repair costs and deductible amounts. The
remaining proceeds of $150 million will be utilized as
reimbursement of Devon’s anticipated future repair costs.
Devon continues to negotiate with its other secondary insurers
and expects to receive additional policy recoveries as a result
of such negotiations.
Should Devon’s total policy recoveries, including the
partial settlements already received from Devon’s primary
and secondary insurers, exceed all repair costs and deductible
amounts, such excess will be recognized as other income in the
statement of operations in the period in which such
determination can be made.
The policy underlying the insurance program terms described
above expired on August 31, 2006. Devon’s current
insurance program includes business interruption and physical
damage coverage for its business. However, due to significant
changes in the insurance marketplace, Devon has only been able
to obtain a de minimis amount of coverage for any damage
that may be caused by named windstorms in the Gulf of Mexico.
Devon has not experienced any losses under this new insurance
arrangement through December 31, 2007.
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
Hurricane Contingencies Historically, Devon maintained a comprehensive insurance program that included coverage for physical damage to its offshore facilities caused by hurricanes. Devon’s historical insurance program also included substantial business interruption coverage, which Devon is utilizing to recover costs associated with the suspended production related to hurricanes that struck the Gulf of Mexico in the third quarter of 2005. Under the terms of this insurance program, Devon was entitled to be reimbursed for the portion of production suspended longer than forty-five days, subject to upper limits to oil and natural gas prices. Also, the terms of the insurance include a standard, per-event deductible of $1 million for offshore losses as well as a $15 million aggregate annual deductible. Based on current estimates of physical damage and the anticipated length of time Devon will have had production suspended, Devon expects its policy recoveries will exceed repair costs and deductible amounts. This expectation is based upon several variables, including the $467 million received in 2006 as a full settlement of the amount due from Devon’s primary insurers and $13 million received in 2007 as a full settlement of the amount due from certain of Devon’s secondary insurers. As of December 31, 2007, $330 million of these proceeds had been utilized as reimbursement of past repair costs and deductible amounts. The remaining proceeds of $150 million will be utilized as reimbursement of Devon’s anticipated future repair costs. Devon continues to negotiate with its other secondary insurers and expects to receive additional policy recoveries as a result of such negotiations. Should Devon’s total policy recoveries, including the partial settlements already received from Devon’s primary and secondary insurers, exceed all repair costs and deductible amounts, such excess will be recognized as other income in the statement of operations in the period in which such determination can be made. The policy underlying the insurance program terms described above expired on August 31, 2006. Devon’s current insurance program includes business interruption and physical damage coverage for its business. However, due to significant changes in the insurance marketplace, Devon has only been able to obtain a de minimis amount of coverage for any damage that may be caused by named windstorms in the Gulf of Mexico. Devon has not experienced any losses under this new insurance arrangement through December 31, 2007.
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) These excerpts taken from the DVN 10-K filed Feb 28, 2008. Hurricane
Contingencies
Historically, Devon maintained a comprehensive insurance program
that included coverage for physical damage to its offshore
facilities caused by hurricanes. Devon’s historical
insurance program also included substantial business
interruption coverage, which Devon is utilizing to recover costs
associated with the suspended production related to hurricanes
that struck the Gulf of Mexico in the third quarter of 2005.
Under the terms of this insurance program, Devon was entitled to
be reimbursed for the portion of production suspended longer
than forty-five days, subject to upper limits to oil and natural
gas prices. Also, the terms of the insurance include a standard,
per-event deductible of $1 million for offshore losses as
well as a $15 million aggregate annual deductible.
Based on current estimates of physical damage and the
anticipated length of time Devon will have had production
suspended, Devon expects its policy recoveries will exceed
repair costs and deductible amounts. This expectation is based
upon several variables, including the $467 million received
in 2006 as a full settlement of the amount due from Devon’s
primary insurers and $13 million received in 2007 as a full
settlement of the amount due from certain of Devon’s
secondary insurers. As of December 31, 2007,
$330 million of these proceeds had been utilized as
reimbursement of past repair costs and deductible amounts. The
remaining proceeds of $150 million will be utilized as
reimbursement of Devon’s anticipated future repair costs.
Devon continues to negotiate with its other secondary insurers
and expects to receive additional policy recoveries as a result
of such negotiations.
Should Devon’s total policy recoveries, including the
partial settlements already received from Devon’s primary
and secondary insurers, exceed all repair costs and deductible
amounts, such excess will be recognized as other income in the
statement of operations in the period in which such
determination can be made.
The policy underlying the insurance program terms described
above expired on August 31, 2006. Devon’s current
insurance program includes business interruption and physical
damage coverage for its business. However, due to significant
changes in the insurance marketplace, Devon has only been able
to obtain a de minimis amount of coverage for any damage
that may be caused by named windstorms in the Gulf of Mexico.
Devon has not experienced any losses under this new insurance
arrangement through December 31, 2007.
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
Hurricane Contingencies Historically, Devon maintained a comprehensive insurance program that included coverage for physical damage to its offshore facilities caused by hurricanes. Devon’s historical insurance program also included substantial business interruption coverage, which Devon is utilizing to recover costs associated with the suspended production related to hurricanes that struck the Gulf of Mexico in the third quarter of 2005. Under the terms of this insurance program, Devon was entitled to be reimbursed for the portion of production suspended longer than forty-five days, subject to upper limits to oil and natural gas prices. Also, the terms of the insurance include a standard, per-event deductible of $1 million for offshore losses as well as a $15 million aggregate annual deductible. Based on current estimates of physical damage and the anticipated length of time Devon will have had production suspended, Devon expects its policy recoveries will exceed repair costs and deductible amounts. This expectation is based upon several variables, including the $467 million received in 2006 as a full settlement of the amount due from Devon’s primary insurers and $13 million received in 2007 as a full settlement of the amount due from certain of Devon’s secondary insurers. As of December 31, 2007, $330 million of these proceeds had been utilized as reimbursement of past repair costs and deductible amounts. The remaining proceeds of $150 million will be utilized as reimbursement of Devon’s anticipated future repair costs. Devon continues to negotiate with its other secondary insurers and expects to receive additional policy recoveries as a result of such negotiations. Should Devon’s total policy recoveries, including the partial settlements already received from Devon’s primary and secondary insurers, exceed all repair costs and deductible amounts, such excess will be recognized as other income in the statement of operations in the period in which such determination can be made. The policy underlying the insurance program terms described above expired on August 31, 2006. Devon’s current insurance program includes business interruption and physical damage coverage for its business. However, due to significant changes in the insurance marketplace, Devon has only been able to obtain a de minimis amount of coverage for any damage that may be caused by named windstorms in the Gulf of Mexico. Devon has not experienced any losses under this new insurance arrangement through December 31, 2007.
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) This excerpt taken from the DVN 10-K filed Feb 28, 2007. Hurricane
Contingencies
Historically, Devon maintained a comprehensive insurance program
that included coverage for physical damage to its offshore
facilities caused by hurricanes. Devon’s historical
insurance program also included substantial business
interruption coverage which Devon is utilizing to recover costs
associated with the suspended production related to hurricanes
that struck the Gulf of Mexico in the third quarter of 2005.
Under the terms of this insurance program, Devon was entitled to
be reimbursed for the portion of production suspended longer
than forty-five days, subject to upper limits to oil and natural
gas prices. Also, the terms of the insurance include a standard,
per-event deductible of $1 million for offshore losses as
well as a $15 million aggregate annual deductible.
Based on current estimates of physical damage and the
anticipated length of time Devon will have production suspended,
Devon expects its policy recoveries will exceed repair costs and
deductible amounts. This expectation is based upon several
variables, including the $467 million received in the third
quarter of 2006 as a full settlement of the amount due from
Devon’s primary insurers. As of December 31, 2006,
$154 million of these proceeds had been utilized as
reimbursement of past repair costs and deductible amounts. The
remaining proceeds of $313 million will be utilized as
reimbursement of Devon’s anticipated future repair costs.
Devon has not yet received any settlements related to claims
filed with its secondary insurers.
Should Devon’s total policy recoveries, including the
partial settlements already received from Devon’s primary
insurers, exceed all repair costs and deductible amounts, such
excess will be recognized as other income in the statement of
operations in the period in which such determination can be made.
The policy underlying the insurance program terms described
above expired on August 31, 2006. During the third quarter
of 2006, Devon was able to re-establish a comprehensive
insurance program that includes business interruption and
physical damage coverage for its business. However, due to
significant changes in the marketplace, Devon was only able to
obtain a de minimis amount of coverage for any damage
that may be caused by named windstorms in the Gulf of Mexico.
Devon has not experienced any losses under this new insurance
arrangement through December 31, 2006.
| EXCERPTS ON THIS PAGE:
RELATED TOPICS for DVN: |
| |||||||
