New York — Shell Midstream Partners’ revenue in the third quarter took a $10 million hit during the U.S. Gulf of Mexico storm season and is expected cause further financial damage through the end of the year, company executives said on Friday.
Revenue decreased to $110 million in the three months to Sept. 30, down $10 million from the previous three months, largely due to a series of destructive storms that have forced multiple rounds of oil production shut-ins, Shell Midstream said on an earnings call.
Offshore oil pipeline volumes continued to slip, falling to 1.83 million barrels per day (bpd) in the third quarter compared to 2.02 million bpd the previous three months, the Houston-based affiliate of Royal Dutch Shell said.
“We continue to live through an unprecedented time with the pandemic as well as one of the most active hurricane seasons that I can remember and certainly since 2005,” said Kevin Nichols, Shell Midstream’s chief executive officer. “These combined events have impacted our communities, our staff, customers and our investors.”
The company’s 2020 capital expenditures have been chopped back by $21 million compared to its original estimates as the coronavirus pandemic slashes global fuel demand.
In the fourth financial quarter, Shell Midstream expects an additional $15 million hit to its net income and cash available for distribution by Hurricanes Delta and Zeta as well as planned maintenance.
Shell records $200m depreciation in Q4 2020
Eight named storms have entered the U.S. Gulf this year, some turning into violent hurricanes.
Despite storm volatility, executives of the company said they plan to focus on Gulf of Mexico oil production and continue to pursue an expansion of its 163-mile (262-km) Mars crude oil pipeline system.
The system currently transports up to 600,000 barrels per day from the Mississippi Canyon-area production platforms in the U.S. Gulf of Mexico to storage caverns in Clovelly, Louisiana.
(Reporting by Laila Kearney; Editing by David Gregorio)