Weather causes Cal Dive to lower earnings forecastNews // October 11, 2002
In addition, oil and gas production of Energy Resource Technology was shut in or significantly reduced for nearly a full week in September as ERT platforms were evacuated in advance of Tropical Storm Isidore.
As a result, Cal Dive now estimates third quarter earnings per share in a range of 8 cents to 11 cents in contrast to First Call consensus estimates of 23 cents. The company also announced that fourth quarter earnings could vary between 22 cents and 29 cents depending upon the impact of Hurricane Lili on October results.
S James Nelson, Jr, Vice Chairman, stated, "Customers are typically required to pay weather charges if marine contracting activities are interrupted by named tropical storms. In the soft subsea construction market which presently exists in the Gulf of Mexico, our customers will not mobilize projects when there is the threat of tropical weather. Isidore, following on the heels of tropical storms Hanna, Edouard and Bertha, not only restricted utilization of CDI vessels working in the Gulf, but also interrupted operations of three DP vessels working offshore Trinidad and even shut down the Uncle John in the Bay of Campeche. Evacuation of 20 ERT platforms and the shut-in of oil and gas production from the 26 fields which we operate alone had the effect ofreducing third quarter earnings by an estimated four to five cents."
Mr. Nelson continued, "The wide range of fourth quarter guidance reflects uncertainty as to what Hurricane Lili will bring. The low end of the range assumes an Isidore-type storm, that is, lower vessel utilization and ERT production shut-in for a week. Should the hurricane cause damage to offshore facilities, the associated repair work would move earnings to the higher end of guidance. We will provide a fourth quarter update and have a much better fix on the impact of Hurricane Lili during our Q3 investor conference call on November 1st. Longer term, the business fundamentals for Cal Dive are unaffected, with future expectations remaining unchanged."