Aug 28, 2013, 11:46am CDT
Deon Daugherty, Reporter-
Black Elk Energy Offshore Operations LLC hopes to bring its West Delta 32 oil platform back into production as early as next week, company executives said Wednesday during a conference call with investors.
The platform was the site of an explosion in November that resulted in the death of three contract workers in the Gulf of Mexico, 17 miles off the coast of Louisiana.
Art Garza, chief technical officer at Houston-based Black Elk, said he expects a final walk-through with federal regulators this week and that the Bureau of Safety Environmental Enforcement officials will permit the platform to return to service. Garza said that by next week, production could be up to 300 barrels of oil per day. In the following weeks, the company anticipates getting production closer to the 650 barrel per day mark.
Last week, a report commissioned by Black Elk said it was actions taken by poorly trained subcontract workers hired by a contractor, in violation of a construction contract, that led to the deadly explosion.
The platform’s return to work comes at a crucial time for the company. Black Elk reported first quarter revenue was down $22 million compared to the first quarter of 2012, and revenue for the first six months of 2013 was down $55 million compared to the same period a year earlier.
Bruce Koch, Black Elk’s CFO, said production was down from last year’s 15,000 barrels of oil equivalent per day to about 10,000 barrels in the second quarter 2013. The company is moving toward producing closer to 13,000 per day or more by the end of the third quarter.
Garza said bringing West Delta back online will help to mitigate the declines. The company also expects to benefit from a $50 million capital program signed in March with Platinum Partners Value Arbitrage Fund LP, as well as its $50 million sale of four noncore Gulf of Mexico properties to Renaissance Offshore LLC in Houston.
What’s more, the company is reducing its general and administrative staff by 25 jobs in August – a savings of about $4.5 million, Koch said. That leaves about 120 people left at the company.
Deon Daugherty covers energy and law for the Houston Business Journal..
Special thanks to Richard Charter