Monday PM August 20th, 2007
by: Ed Mayberry, August 20, 2007 5:08:00 am
Mexico's state oil company Pemex has decided to evacuate all 14,000 workers and shut down production on the offshore rigs in the Bay of Campeche. Those are the rigs that extract most of Mexico's oil. The move is being made as Hurricane Dean roars toward the Yucatan Peninsula. It's expected to cross that peninsula--possibly entering as a strong Category 5 hurricane--before emerging into the Gulf. The Bay of Campeche produces two million barrels of oil a day, and is responsible for about 1.5 million barrels per day of refined product exports, most of which is exported to the United States.
A few dozen rigs under contract with Pemex are owned by Houston's Pride International and Noble Corporation. According to the Houston Chronicle, Pride International has 14 rigs in Mexican waters, and Noble has eight. Houston-based Diamond Offshore has three, and Hercules Offshore has two.
Royal Dutch Shell and Chevron say production at their deepwater drilling rigs and oil platforms in the Gulf of Mexico would remain at normal levels--even though nonessential personnel are being removed. Shell suspended any further personnel evacuations after 380 evacuated on Saturday and 200 on Sunday. Shell has been operating production shut-in of about 39,000 barrels of oil and 97.5 million cubic feet of natural gas per day. No further production shut-ins are expected, but the company says it has sufficient resources and time available to resume evacuations, if Dean takes an unexpected turn. Transocean has evacuated 400 workers from nine drilling units in the Gulf's U.S. waters.
Energy prices slumped as Hurricane Dean muscled its way toward Mexico's Gulf Coast. That's because energy analysts see the storm posing little risk to major U.S. oil rigs and refineries in the northeastern Gulf of Mexico. Last week, prospects that the developing storm could threaten the U.S. Gulf Coast led traders to push oil prices up over $73 a barrel. Light, sweet crude for September delivery fell 97 cents to $71.01 a barrel in midmorning trading on the New York Mercantile Exchange. Gasoline futures lost 8.68 cents to $1.952 a gallon.
A Texas oilman at the center of a scheme that paid millions of dollars in secret kickbacks to Saddam Hussein's Iraqi regime faces sentencing in November after pleading guilty to a federal charge of conspiracy to commit wire fraud. David Chalmers could have faced more than 60 years in prison if convicted on all charges. Under a plea deal, prosecutors have said they will recommend a sentence of 37 to 46 months. Chalmers said a barely audible "guilty'' when asked to enter his plea last Friday. Under the plea agreement, Chalmers also agreed to pay $9 million in restitution. Prosecutors said Chalmers enjoyed a cozy relationship with Iraq in the 1980s and used that to secure oil allocations. Chalmers, the sole shareholder of Houston-based Bayoil USA, was accused of paying secret and illegal surcharges to Iraq to receive allotments of oil. He was arrested more than two years ago and originally pleaded not guilty.
Dell's internal investigation into its accounting problems is over, leaving up to a $150 million hit on earnings in its wake. Now, it may be the Feds' turn. Analysts say that because federal regulators have yet to weigh in, Dell's mistake could continue to distract the computer maker as it seeks to boost its flagging business. Dell concluded Thursday that some employees had misled its auditors and manipulated results to meet performance goals for more than four years. As a result, Dell said net income for all of fiscal 2003 through 2006 and the first quarter of fiscal 2007 would be reduced by $50 to $150 million. That's two cents to seven cents per share. Though the amounts are relatively small for a $55 billion company, analysts say the admission points to the constant challenge companies face to meet earnings goals.