VOLUMES: 6.1 MBOE/d
HOUSTON and LAFAYETTE, La., May 3, 2018 /PRNewswire/ -- Talos Energy LLC ("Talos") and Stone Energy Corporation (NYSE: SGY); ("Stone") today announced that a majority of the stockholders of Stone have approved and adopted the previously announced transaction agreement under which Talos and Stone will combine in an all-stock transaction. As a result, no further action by any Stone stockholder is required under applicable law or otherwise to adopt the transaction agreement.
Subject to satisfaction or waiver of the remaining customary closing conditions in the transaction agreement, the transaction is expected to close on or about May 10, 2018, at which time the common stock of Stone will cease to be traded on the New York Stock Exchange ("NYSE"). The combined company will be named Talos Energy Inc. and is expected to trade on the NYSE under the new ticker symbol "TALO."
About Talos Energy LLC
Talos Energy LLC is a technically driven, independent oil and gas exploration and production company with operations in the United States Gulf of Mexico and in the shallow waters off the coast of Mexico. Talos's expertise in the United States Gulf of Mexico is based on exploring, acquiring, exploiting and developing primarily Deepwater assets near existing infrastructure. The shallow waters off the coast of Mexico provide Talos with high impact exploration opportunities in an emerging basin. The company's website is located at www.talosenergyllc.com.
About Stone Energy Corporation
Stone Energy Corporation is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. The company's website is located at www.stoneenergy.com.
Cautionary Statement Regarding Forward-Looking Information
This communication may contain certain forward-looking statements, including certain plans, expectations, goals, projections, and statements about the expected benefits of the proposed transaction, Talos's and Stone's plans, objectives, expectations and intentions, the expected timing of completion of the transaction, and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, project, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements including: the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks; political and regulatory developments and legislation, including developments and legislation relating to Talos's and Stone's operations in the Gulf of Mexico basin; the possibility that the proposed transaction does not close when expected or at all because required regulatory or other approvals are not received or other conditions to the closing, including the successful completion of the notes exchange, are not satisfied or waived on a timely basis or at all; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; uncertainties as to the timing of the transaction; competitive responses to the transaction; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the ability to complete the combination and integration of Talos and Stone successfully; litigation relating to the transaction; and other factors that may affect future results of Talos and Stone. Additional factors that could cause results to differ materially from those described above can be found in Stone's Annual Report on Form 10-K for the year ended December 31, 2017, which is on file with the SEC and available in the "Investor Center" section of Stone's website, www.stoneenergy.com under the heading "SEC Filings" and in other documents Stone files with the SEC.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Talos nor Stone assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Contact
Sergio Maiworm
Director of Investor Relations and Strategic Planning
(713) 328-3008
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SOURCE Talos Energy
LAFAYETTE, La., May 1, 2018 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced that the Company closed the transaction contemplated under the previously announced Asset Purchase Agreement dated April 27, 2018 to purchase a 100% working interest in the Ram Powell Unit, and related assets, from Shell Offshore Inc., Exxon Mobil Corporation, and Anadarko US Offshore LLC.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities or results that Stone plans, expects, believes, projects, estimates, or anticipates will, should, or may occur in the future, including future production of oil and gas, future capital expenditures and drilling and completion of wells, and future financial or operating results are forward-looking statements. All forward-looking numbers are approximate. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; risks related to our previously announced combination with Talos Energy LLC; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K as filed with the Securities and Exchange Commission ("SEC"). For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-announces-close-of-ram-powell-field-acquisition-300640474.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., April 24, 2018 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced that the Derbio exploration well (Mississippi Canyon Block 72 #3 well) reached total depth and encountered reservoir-quality sands in the targeted objective that did not contain commercial saturations of hydrocarbons. The partners are now evaluating the possible development of the Rampart Deep well as a single-well tieback. Working interest partners in the Derbio prospect are Stone with 40%, Deep Gulf Energy III, LLC with 30%, and two entities managed by Ridgewood Energy Corporation, Ridgewood Rampart, LLC and ILX Prospect Rampart, LLC, each owning 15%.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities or results that Stone plans, expects, believes, projects, estimates, or anticipates will, should, or may occur in the future, including future production of oil and gas, future capital expenditures and drilling and completion of wells, and future financial or operating results are forward-looking statements. All forward-looking numbers are approximate. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; risks related to our previously announced combination with Talos; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K as filed with the Securities and Exchange Commission ("SEC"). For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-announces-derbio-drilling-results-300635796.html
SOURCE Stone Energy Corporation
DENVER, Feb. 15, 2018 /PRNewswire/ -- EnerCom's Texas-based oil and gas investment conference—EnerCom Dallas—will feature presentations from C-level executives at publicly traded and private oil and natural gas companies, as well as energy economists and other experts who will discuss global energy trends and projected economics for the industry in 2018 and 2019.
EnerCom has posted the work-in-progress agenda of presenters on the EnerCom Dallas website, subject to change.
Wednesday, 2/21/2018 |
|
EnerCom, Inc. |
|
Vermilion Energy |
|
Earthstone Energy |
|
Panhandle Oil & Gas |
|
Goodrich Petroleum |
|
Surge Energy |
|
Alta Mesa Resources |
|
Evolution Petroleum |
|
Federal Reserve Bank of Dallas – Mine Yücel |
|
Lunch Presentation |
|
Emerson |
|
Lonestar Resources |
|
BetaZi LLC |
|
Lilis Energy |
|
PetroShare Corp |
|
Razor Energy Corp |
|
EcoStim Energy Solutions, Inc. |
|
Tamarack Valley Energy |
|
Cocktail Reception and Networking Sponsored by Preng & Associates |
5:45pm |
Thursday, 2/22/2018 |
|
RS Energy |
|
Raging River Exploration |
|
GeoPark Limited |
|
Core Laboratories |
|
Flotek Industries |
|
PetroQuest Energy |
|
Comstock Resources |
|
Northern Oil & Gas |
|
Consulate General of Canada in Dallas – Delon Chan |
|
Lunch Presentation |
|
EIA – Industry Economist Jeffrey Barron |
|
Elk Petroleum |
|
Superior Drilling Products, Inc. |
|
Rosehill Resources |
EnerCom Dallas Conference Dates and Location: The EnerCom Dallas oil and gas investment conference is being held at the Tower Club in downtown Dallas on February 21-22, 2018.
Conference Registration: EnerCom is taking online registrations to attend EnerCom Dallas from the professional buyside investment community at the conference website.
EnerCom Dallas Presenting Companies
The EnerCom Dallas daily agenda of speakers has been posted on the conference website. The agenda of presenters is subject to change. Please refer to the conference website frequently for updates.
EnerCom Dallas conference presenters include, but are not limited to:
Publicly traded companies: |
|
NASDAQ: AMR |
Alta Mesa Resources |
NYSE: CLB |
Core Laboratories |
NYSE: CRK |
Comstock Resources, Inc. |
ASX: ELK |
Elk Petroleum |
NYSE: EMR |
Emerson Process Management |
NYSE: EPM |
Evolution Petroleum Corporation, Inc. |
NASDAQ: ESES |
EcoStim Energy Solutions, Inc. |
NYSE: ESTE |
Earthstone Energy, Inc. |
NYSE: FTK |
Flotek Industries |
NYSE: GDP |
Goodrich Petroleum Corporation |
NYSE: GPRK |
GeoPark Limited |
NYSE: LLEX |
Lilis Energy, Inc. |
NASDAQ: LONE |
Lonestar Resources |
NYSE: NOG |
Northern Oil & Gas, Inc. |
NYSE: PHX |
Panhandle Oil and Gas Inc. |
NYSE: PQ |
PetroQuest Energy, Inc. |
OTCMKTS: PRHR |
PetroShare Corp. |
NASDAQ: ROSE |
Rosehill Resources Inc. |
TSE: RRX |
Raging River Exploration Inc. |
TSX-V: RZE |
Razor Energy Corporation |
NYSE: SDPI |
Superior Drilling Products |
TSE: SGY |
Surge Energy, Inc. |
TSE: TVE |
Tamarack Valley Energy Ltd |
NYSE: VET |
Vermilion Energy Inc. |
Private companies: |
|
BetaZi, LLC |
|
RS Energy Group |
Institutional buyside investors who attend EnerCom Dallas will be able to hear and meet with senior management teams from leading independent E&Ps, including U.S., Canadian and international producers and the oilfield service companies supporting them.
Online Registration for EnerCom Dallas is Open
Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now for the EnerCom Dallas investment conference.
The EnerCom Dallas conference follows EnerCom's familiar 25-minute CEO presentation format, followed by 50-minute Q&A opportunities in separate breakout rooms, one-on-one meeting opportunities for buyside investors to meet company management teams, networking opportunities and global insight delivered by leading energy economists and strategists.
EnerCom Dallas is in its second year. Last year's EnerCom Dallas conference featured over 600 investment community and oil and gas industry attendees.
Conference Details: Modeled after EnerCom's The Oil & Gas Conference® in Denver, EnerCom Dallas offers investment professionals a unique opportunity to listen to oil and gas company senior management teams update investors on their operational and financial strategies and learn how the leading energy companies are building value in 2018.
The event also provides energy industry professionals a venue to learn about important energy topics affecting the global oil and gas industry. The conference offers healthy dialogue and informal networking opportunities for attendees and presenters.
Conference Location: Tower Club Dallas, 1601 Elm Street, Thanksgiving Tower, 48th Floor, Dallas, Texas 75201
Who Attends the Conference: Institutional and hedge fund investors, private equity investors, energy research analysts, broker/dealers, trust officers, high net worth investors, commercial energy bankers and other energy industry professionals will gather in Dallas for the conference.
One-on-One Meetings: EnerCom works in advance with presenting company management teams to arrange one-on-one meetings with the attending institutional investors and research analysts at the conference venue.
History and Sponsors: EnerCom, Inc. hosted its original energy-focused investment conference, The Oil & Gas Conference®, in 1996 in Denver. 2018 marks EnerCom's 23rd annual Denver oil and gas financial conference. Since its founding, EnerCom has hosted more than 40 successful oil and gas investment conferences in Denver, London, Dallas, Boston and San Francisco.
Global sponsors of EnerCom's Conferences are Netherland, Sewell & Associates; Preng & Associates; Moss Adams LLP; and RS Energy Group. Sponsors of EnerCom Dallas also include: DNB Bank ASA; Haynes and Boone; Fifth Third Bancorp, CIBC and AssuredPartners.
About EnerCom, Inc.
Founded in 1994, EnerCom, Inc. is a nationally recognized management consultancy advising and serving energy-centric clients on corporate strategy, asset valuations, investor relations, media and corporate communications and visual communications design. EnerCom's professionals have more than 170 years of industry and business experience and a proven track record of success. Headquartered in Denver, with senior consultants in Dallas and Houston, EnerCom uses the team approach for delivering its wide range of services to public and private companies, large and small, operating in the global exploration and production, OilService, capital markets, and associated advanced-technology industries.
EnerCom's upcoming oil and gas investment conferences include:
EnerCom Dallas – Feb. 21-22, 2018
EnerCom Denver (The Oil & Gas Conference®) – August 19-22, 2018
For more information about EnerCom and its services, please visit http://www.enercominc.com/ or call +1 303-296-8834 to speak with the management team or one of our consultants.
About Netherland, Sewell & Associates, Inc.
Netherland, Sewell & Associates, Inc. (NSAI) was founded in 1961 to provide the highest quality engineering and geological consulting to the petroleum industry. Today they are recognized as the worldwide leader of petroleum property analysis to industry and financial organizations and government agencies. With offices in Dallas and Houston, NSAI provides a complete range of geological, geophysical, petrophysical, and engineering services and has the technical experience and ability to perform these services in any of the onshore and offshore oil and gas producing areas of the world. They provide reserves reports and audits, acquisition and divestiture evaluations, simulation studies, exploration resources assessments, equity determinations, and management and advisory services. For a complete list of services or to learn more about Netherland, Sewell & Associates, Inc. please visit www.netherlandsewell.com.
For more information about NSAI, call C.H. (Scott) Rees, Chief Executive Officer, at 214-969-5401 or send an email to info@nsai-petro.com.
About Preng & Associates
Preng & Associates, founded in 1980, is the only retainer-based, international executive search firm specializing solely in the energy industry. Its number one priority is to assist clients with their executive selection, organization development, and human resource needs by providing the highest quality service. Preng's record of accomplishment is directly attributable to their experienced staff, worldwide network of industry contacts, proven search methodology, and high standards of professionalism. Preng has conducted over 3000 searches for board, executive, management, and professional positions in its 35-year history and has the highest success and repeat client track record.
Preng's practice is based on the premise that the search process is most effective when conducted by professionals with significant search industry experience. The company has earned a reputation for combining professional search disciplines with an in-depth industry and market understanding and has succeeded in some of the industry's most challenging and high-profile searches. Preng's international reach allows it to effectively conduct global engagements; and as a member of the Association of Executive Search Consultants, Preng practices and promotes its high standards of conduct and professionalism.
For more information about Preng & Associates, contact Charles Carpenter, Partner at 713-243-2610 or ccarpenter@preng.com.
About Moss Adams LLP
For more than 30 years, Hein & Associates has been recognized throughout the industry as a leading oil and gas accounting and advisory firm. In late 2017, Hein combined with Moss Adams LLP, one of the largest accounting, consulting and wealth management firms in the nation, creating a $600 million middle-market accounting/tax/audit leader in the western U.S. with a strong oil & gas practice group.
With more than 2,900 professionals and staff across more than 25 locations in the West and beyond, Moss Adams works with many of the world's most innovative companies and leaders. Our strength in the middle market enables us to advise clients at all intervals of development—from start-up, to rapid growth and expansion, to transition. Today, we help over 2,300 companies doing business in more than 100 countries and territories.
For more information, please contact Joe Blice, Partner, National Practice Leader, Oil & Gas, CPA
joe.blice@mossadams.com, (972) 687-7818.
Moss Adams LLP provides details at https://www.mossadams.com/home .
About RS Energy Group
RS Energy Group (RSEG) provides data-driven intelligence: evaluate assets, weigh valuable M&A opportunities and benchmark your business for more precise decision-making.
RSEG officially released its data solution in April 2017. RS Data™ provides clients with corrected, multi-sourced permit, completion and production data of unparalleled completeness and quality.
Today, RSEG's intelligence covers more than 150 companies operating in every key North American and many international energy plays with a powerful combination of practical insights at the asset level and a long-standing participation in capital markets. RSEG's independent, unbiased and accurate analysis forms a foundation of trust with its clients. Its collaborative approach, both internally and as an extension of its clients' research efforts, promotes innovation and fosters intimate, long term partnerships.
RS Energy Group (RSEG) is headquartered in Calgary, Alberta, with strategic locations in Houston, New York City, Philadelphia, San Francisco and Los Angeles. Contact RS Energy Group by phone at (403) 294-9111, or email info@rseg.com.
About DNB ASA
DNB is Norway's largest financial services provider, with total assets approaching $400 billion. The bank has for years been a major provider of capital to the oil & gas industry, growing up literally side by side with the highly prolific fields developed in the Norwegian Sector of the North Sea. The Oslo Energy Office maintains a global financing strategy, and serves this market through multiple offices around the world including Houston, London and Singapore.
Energy Americas, based in Houston, comprises approximately 20 seasoned energy finance professionals. Aside from facilitating the bank's global business strategies, the office concentrates primarily on serving middle market and larger customers in the four principal oil & gas sectors — upstream, midstream, downstream and service — as well as in Power and Renewables. The bank offers a variety of financial products, from traditional oil & gas reserve financing, to longer-term capital markets transactions and merger/acquisition advisory services through its broker-dealer arm, DNB Markets, Inc. Ancillary service capabilities include cash management/depository services, as well as commodity and interest rate hedging.
For information on DNB's energy services, please visit the DNB energy website.
About Haynes and Boone
Haynes and Boone, LLP is an energy-focused corporate law firm, providing a full spectrum of legal services to our clients across the oil and gas industry, including the upstream, midstream, and downstream sectors. We serve energy clients from our offices in Texas, Colorado, New York, California, Washington, D.C., London, Mexico City and Shanghai. We work as a team representing U.S. and foreign public and private companies engaged in the dynamic day-to-day work of finding and extracting oil and gas, and the banks, investment funds and other investors that support them.
Our team of more than 100 energy lawyers and landmen understands the U.S. and international physical and financial energy markets, and the firm has been helping operators and lenders complete some of the largest financings and M&A transactions in recent years. With more than 600 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by The National Law Journal, and our energy lawyers have been ranked by publications such as Best Lawyers in America, Chambers and Partners and Who's Who in Energy.
For more info, please visit www.haynesboone.com.
About Fifth Third Bancorp
Fifth Third Bank is a diversified financial services company with over $120 billion in assets. The Bank's energy group is comprised of experienced and knowledgeable individuals that can assist in providing and structuring financial solutions to meet their clients' needs across the upstream, midstream, downstream and services sectors. Solutions and capabilities include commodity hedging, interest rate management, foreign exchange, debt capital markets, treasury management, and depository/investment products.
For more information, please contact Richard Butler at 713-401-6101 or richard.butler@53.com.
About CIBC
CIBC is a leading North American bank headquartered in Canada and with offices around the world. CIBC was originally founded nearly 150 years ago, and has supported and financed the energy industry for many decades. CIBC was recently ranked as the strongest publicly traded bank in North America by Bloomberg, and is rated A+/Aa3 by S&P and Moody's, respectively.
Our energy specialists draw on the breadth of CIBC's capabilities to provide market insights and creative solutions for our clients. Services include corporate banking, commodity and interest rate hedging and strategy, A&D advisory, and capital markets.
CIBC is publicly traded on the NYSE and Toronto Stock Exchange under the symbol "CM" and has a market cap of $36 billion and nearly $400 billion in total assets. For more information, please visit the CIBC energy website.
About Assured Partners
AssuredPartners Colorado (AP CO) combines 30+ years of experience with leading-edge products to provide exceptional service and value to our customers. We provide a full range of brokerage services including employee benefits, property and casualty, and retirement. Headquartered in Colorado, we think globally but act locally, with personal services designed specifically for each individual client. AP CO utilizes resources with national networks of brokers to ensure we can meet your every need and find answers to your questions quickly and efficiently.
Our goal is to achieve a long-term relationship focused on bringing value to your employee benefits management and insurance programs. We are committed to utilizing our collective talent to support your insurance goals. We work to identify activities that drive claim frequency, and implement an action plan to control health care costs and promote a healthy work environment for your employees.
Securing the best insurance package for your business begins with planning. Analyzing all your risks is critical to successful implementation of your insurance plan. AP CO will partner with you by providing ongoing assistance, consultation and service that will help you control your insurance expenses, choose the best plan to fit your company's needs and promote health care consumerism.
For more information on Assured Partners, please visit the website, call (800) 322-9773 or email info@assuredptrco.com.
View original content:http://www.prnewswire.com/news-releases/presenter-agenda-posted-for-enercom-dallas-oil--gas-investment-conference-feb-21-22-2018-300599233.html
SOURCE EnerCom, Inc.
DENVER, Jan. 31, 2018 /PRNewswire/ -- EnerCom's Texas-based oil and gas investment conference—EnerCom Dallas—will feature presentations from C-level executives at publicly traded and private oil and natural gas companies, as well as energy economists and other experts who will discuss global energy trends and projected economics for the industry in 2018 and 2019.
EnerCom Dallas Conference Dates and Location: The EnerCom Dallas oil and gas investment conference is being held at the Tower Club in downtown Dallas on February 21-22, 2018.
Conference Registration: EnerCom is taking online registrations to attend EnerCom Dallas from the professional buyside investment community at the conference website.
EnerCom Dallas Presenting Companies - Agenda of Speakers is Posted to Conference Website
The EnerCom Dallas daily agenda of speakers has been posted on the conference website. The agenda of presenters is subject to change. Please refer to the conference website frequently for updates.
EnerCom Dallas conference presenters include, but are not limited to:
Publicly traded companies: |
||
NYSE: CLB |
Core Laboratories |
|
NYSE: CRK |
Comstock Resources, Inc. |
|
ASX: ELK |
Elk Petroleum |
|
NYSE: EMR |
Emerson Process Management |
|
NYSE: EPM |
Evolution Petroleum Corporation, Inc. |
|
NASDAQ: ESES |
EcoStim Energy Solutions, Inc. |
|
NYSE: ESTE |
Earthstone Energy, Inc. |
|
NYSE: FTK |
Flotek Industries |
|
NYSE: GDP |
Goodrich Petroleum Corporation |
|
NYSE: GPRK |
GeoPark Limited |
|
TSE: GXO |
Granite Oil Corp. |
|
NYSE: LLEX |
Lilis Energy, Inc. |
|
NASDAQ: LONE |
Lonestar Resources |
|
NYSE: NOG |
Northern Oil & Gas, Inc. |
|
NYSE: PHX |
Panhandle Oil and Gas Inc. |
|
NYSE: PQ |
PetroQuest Energy, Inc. |
|
OTCMKTS: PRHR |
PetroShare Corp. |
|
NASDAQ: ROSE |
Rosehill Resources Inc. |
|
TSE: RRX |
Raging River Exploration Inc. |
|
TSX-V: RZE |
Razor Energy Corporation |
|
NYSE: SDPI |
Superior Drilling Products |
|
TSE: SGY |
Surge Energy, Inc. |
|
TSE: TVE |
Tamarack Valley Energy Ltd |
|
NYSE: VET |
Vermilion Energy Inc. |
|
Private companies: |
||
Alta Mesa Holdings, LP |
||
BetaZi, LLC |
||
RS Energy Group |
EnerCom Dallas presenting companies, experts will discuss plans, expectations for 2018
Executives from approximately 40 public and private energy companies and related oilfield service and technology organizations with operations spanning six continents will present their unique strategies for creating value in 2018 and beyond.
Energy economists and other experts representing the U.S. Energy Information Administration, the Federal Reserve Bank of Dallas and the Canadian Consulate in Dallas will provide their insights on a wide range of oil and gas financial topics including U.S. and Canadian petroleum and natural gas exports, global oil and gas supply/demand metrics and economic expectations for the oil and gas sector in 2018-2019.
Institutional buyside investors who attend EnerCom Dallas will be able to hear and meet with senior management teams from leading independent E&Ps, including U.S., Canadian and international producers and the oilfield service companies supporting them.
Online Registration for EnerCom Dallas is Open
Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now for the EnerCom Dallas investment conference.
The EnerCom Dallas conference follows EnerCom's familiar 25-minute CEO presentation format, followed by 50-minute Q&A opportunities in separate breakout rooms, one-on-one meeting opportunities for buyside investors to meet company management teams, networking opportunities and global insight delivered by leading energy economists and strategists.
EnerCom Dallas is in its second year. Last year's EnerCom Dallas conference featured over 600 investment community and oil and gas industry attendees.
Conference Details: Modeled after EnerCom's The Oil & Gas Conference® in Denver, EnerCom Dallas offers investment professionals a unique opportunity to listen to oil and gas company senior management teams update investors on their operational and financial strategies and learn how the leading energy companies are building value in 2018.
The event also provides energy industry professionals a venue to learn about important energy topics affecting the global oil and gas industry. The conference offers healthy dialogue and informal networking opportunities for attendees and presenters.
Conference Location: Tower Club Dallas, 1601 Elm Street, Thanksgiving Tower, 48th Floor, Dallas, Texas 75201
Who Attends the Conference: Institutional and hedge fund investors, private equity investors, energy research analysts, broker/dealers, trust officers, high net worth investors, commercial energy bankers and other energy industry professionals will gather in Dallas for the conference.
One-on-One Meetings: EnerCom works in advance with presenting company management teams to arrange one-on-one meetings with the attending institutional investors and research analysts at the conference venue.
History and Sponsors: EnerCom, Inc. hosted its original energy-focused investment conference, The Oil & Gas Conference®, in 1996 in Denver. 2018 marks EnerCom's 23rd annual Denver oil and gas financial conference. Since its founding, EnerCom has hosted more than 40 successful oil and gas investment conferences in Denver, London, Dallas, Boston and San Francisco.
Global sponsors of EnerCom's Conferences are Netherland, Sewell & Associates; Preng & Associates; Moss Adams LLP; and RS Energy Group. Sponsors of EnerCom Dallas also include: DNB Bank ASA; Haynes and Boone; Fifth Third Bancorp, CIBC and AssuredPartners.
About EnerCom, Inc.
Founded in 1994, EnerCom, Inc. is a nationally recognized management consultancy advising and serving energy-centric clients on corporate strategy, asset valuations, investor relations, media and corporate communications and visual communications design. EnerCom's professionals have more than 170 years of industry and business experience and a proven track record of success. Headquartered in Denver, with senior consultants in Dallas and Houston, EnerCom uses the team approach for delivering its wide range of services to public and private companies, large and small, operating in the global exploration and production, OilService, capital markets, and associated advanced-technology industries.
EnerCom's upcoming oil and gas investment conferences include:
For more information about EnerCom and its services, please visit http://www.enercominc.com/ or call +1 303-296-8834 to speak with the management team or one of our consultants.
About Netherland, Sewell & Associates, Inc.
Netherland, Sewell & Associates, Inc. (NSAI) was founded in 1961 to provide the highest quality engineering and geological consulting to the petroleum industry. Today they are recognized as the worldwide leader of petroleum property analysis to industry and financial organizations and government agencies. With offices in Dallas and Houston, NSAI provides a complete range of geological, geophysical, petrophysical, and engineering services and has the technical experience and ability to perform these services in any of the onshore and offshore oil and gas producing areas of the world. They provide reserves reports and audits, acquisition and divestiture evaluations, simulation studies, exploration resources assessments, equity determinations, and management and advisory services. For a complete list of services or to learn more about Netherland, Sewell & Associates, Inc. please visit www.netherlandsewell.com.
For more information about NSAI, call C.H. (Scott) Rees, Chief Executive Officer, at 214-969-5401 or send an email to info@nsai-petro.com.
About Preng & Associates
Preng & Associates, founded in 1980, is the only retainer-based, international executive search firm specializing solely in the energy industry. Its number one priority is to assist clients with their executive selection, organization development, and human resource needs by providing the highest quality service. Preng's record of accomplishment is directly attributable to their experienced staff, worldwide network of industry contacts, proven search methodology, and high standards of professionalism. Preng has conducted over 3000 searches for board, executive, management, and professional positions in its 35-year history and has the highest success and repeat client track record.
Preng's practice is based on the premise that the search process is most effective when conducted by professionals with significant search industry experience. The company has earned a reputation for combining professional search disciplines with an in-depth industry and market understanding and has succeeded in some of the industry's most challenging and high-profile searches. Preng's international reach allows it to effectively conduct global engagements; and as a member of the Association of Executive Search Consultants, Preng practices and promotes its high standards of conduct and professionalism.
For more information about Preng & Associates, contact Charles Carpenter, Partner at 713-243-2610 or ccarpenter@preng.com.
About Moss Adams LLP
For more than 30 years, Hein & Associates has been recognized throughout the industry as a leading oil and gas accounting and advisory firm. In late 2017, Hein combined with Moss Adams LLP, one of the largest accounting, consulting and wealth management firms in the nation, creating a $600 million middle-market accounting/tax/audit leader in the western U.S. with a strong oil & gas practice group.
With more than 2,900 professionals and staff across more than 25 locations in the West and beyond, Moss Adams works with many of the world's most innovative companies and leaders. Our strength in the middle market enables us to advise clients at all intervals of development—from start-up, to rapid growth and expansion, to transition. Today, we help over 2,300 companies doing business in more than 100 countries and territories.
For more information, please contact Joe Blice, Partner, National Practice Leader, Oil & Gas, CPA joe.blice@mossadams.com, (972) 687-7818.
Moss Adams LLP provides details at https://www.mossadams.com/home.
About RS Energy Group
RS Energy Group (RSEG) provides data-driven intelligence: evaluate assets, weigh valuable M&A opportunities and benchmark your business for more precise decision-making.
RSEG officially released its data solution in April 2017. RS Data™ provides clients with corrected, multi-sourced permit, completion and production data of unparalleled completeness and quality.
Today, RSEG's intelligence covers more than 150 companies operating in every key North American and many international energy plays with a powerful combination of practical insights at the asset level and a long-standing participation in capital markets. RSEG's independent, unbiased and accurate analysis forms a foundation of trust with its clients. Its collaborative approach, both internally and as an extension of its clients' research efforts, promotes innovation and fosters intimate, long term partnerships.
RS Energy Group (RSEG) is headquartered in Calgary, Alberta, with strategic locations in Houston, New York City, Philadelphia, San Francisco and Los Angeles. Contact RS Energy Group by phone at (403) 294-9111, or email info@rseg.com.
About DNB ASA
DNB is Norway's largest financial services provider, with total assets approaching $400 billion. The bank has for years been a major provider of capital to the oil & gas industry, growing up literally side by side with the highly prolific fields developed in the Norwegian Sector of the North Sea. The Oslo Energy Office maintains a global financing strategy, and serves this market through multiple offices around the world including Houston, London and Singapore.
Energy Americas, based in Houston, comprises approximately 20 seasoned energy finance professionals. Aside from facilitating the bank's global business strategies, the office concentrates primarily on serving middle market and larger customers in the four principal oil & gas sectors -- upstream, midstream, downstream and service -- as well as in Power and Renewables. The bank offers a variety of financial products, from traditional oil & gas reserve financing, to longer-term capital markets transactions and merger/acquisition advisory services through its broker-dealer arm, DNB Markets, Inc. Ancillary service capabilities include cash management/depository services, as well as commodity and interest rate hedging.
For information on DNB's energy services, please visit the DNB energy website.
About Haynes and Boone
Haynes and Boone, LLP is an energy-focused corporate law firm, providing a full spectrum of legal services to our clients across the oil and gas industry, including the upstream, midstream, and downstream sectors. We serve energy clients from our offices in Texas, Colorado, New York, California, Washington, D.C., London, Mexico City and Shanghai. We work as a team representing U.S. and foreign public and private companies engaged in the dynamic day-to-day work of finding and extracting oil and gas, and the banks, investment funds and other investors that support them.
Our team of more than 100 energy lawyers and landmen understands the U.S. and international physical and financial energy markets, and the firm has been helping operators and lenders complete some of the largest financings and M&A transactions in recent years. With more than 600 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by The National Law Journal, and our energy lawyers have been ranked by publications such as Best Lawyers in America, Chambers and Partners and Who's Who in Energy.
For more info, please visit www.haynesboone.com.
About Fifth Third Bancorp
Fifth Third Bank is a diversified financial services company with over $120 billion in assets. The Bank's energy group is comprised of experienced and knowledgeable individuals that can assist in providing and structuring financial solutions to meet their clients' needs across the upstream, midstream, downstream and services sectors. Solutions and capabilities include commodity hedging, interest rate management, foreign exchange, debt capital markets, treasury management, and depository/investment products.
For more information, please contact Richard Butler at 713-401-6101 or richard.butler@53.com.
About CIBC
CIBC is a leading North American bank headquartered in Canada and with offices around the world. CIBC was originally founded nearly 150 years ago, and has supported and financed the energy industry for many decades. CIBC was recently ranked as the strongest publicly traded bank in North America by Bloomberg, and is rated A+/Aa3 by S&P and Moody's, respectively.
Our energy specialists draw on the breadth of CIBC's capabilities to provide market insights and creative solutions for our clients. Services include corporate banking, commodity and interest rate hedging and strategy, A&D advisory, and capital markets.
CIBC is publicly traded on the NYSE and Toronto Stock Exchange under the symbol "CM" and has a market cap of $36 billion and nearly $400 billion in total assets. For more information, please visit the CIBC energy website.
About AssuredPartners
AssuredPartners Colorado (AP CO) combines 30+ years of experience with leading-edge products to provide exceptional service and value to our customers. We provide a full range of brokerage services including employee benefits, property and casualty, and retirement. Headquartered in Colorado, we think globally but act locally, with personal services designed specifically for each individual client. AP CO utilizes resources with national networks of brokers to ensure we can meet your every need and find answers to your questions quickly and efficiently.
Our goal is to achieve a long-term relationship focused on bringing value to your employee benefits management and insurance programs. We are committed to utilizing our collective talent to support your insurance goals. We work to identify activities that drive claim frequency, and implement an action plan to control health care costs and promote a healthy work environment for your employees.
Securing the best insurance package for your business begins with planning. Analyzing all your risks is critical to successful implementation of your insurance plan. AP CO will partner with you by providing ongoing assistance, consultation and service that will help you control your insurance expenses, choose the best plan to fit your company's needs and promote health care consumerism.
For more information on AssuredPartners, please visit the website, call (800) 322-9773 or email info@assuredptrco.com.
View original content:http://www.prnewswire.com/news-releases/conference-agenda-has-been-posted-for-2018-enercom-dallas-oil--gas-investment-conference-300591406.html
SOURCE EnerCom, Inc.
LAFAYETTE, La., Jan. 30, 2018 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced its estimated proved reserves, production volumes, and liquidity for year-end December 31, 2017, its capital expenditure budget for 2018, and production guidance for the first quarter of 2018. Some highlights include:
Interim Chief Executive Officer and President James M. Trimble stated, "We exited 2017 with solid operational results and a strong financial position, and with several prospective near-term, deep water drilling opportunities. We drilled a successful development well at Mt. Providence in December 2017 and expect it to be tied into our Pompano facility by the third quarter of 2018. We currently expect to spud the Stone-generated Derbio exploration prospect in late-February 2018 and could have another non-operated drilling opportunity in the first half of 2018. Our strong liquidity position provides us with financial flexibility for 2018. In addition, we continue to advance the previously announced combination of Stone with Talos Energy LLC, which we believe will create incremental long-term value for our shareholders."
Year-End 2017 Estimated Proved Reserves
Estimated proved reserves as of December 31, 2017 totaled approximately 32.5 million barrels of oil equivalent ("MMBoe"), compared to approximately 35.4 MMBoe of estimated proved reserves for the Gulf of Mexico ("GOM") at year-end 2016, which excludes reserves from the Appalachia properties that Stone sold on February 27, 2017. The year-end 2017 estimated proved reserves were 67% oil, 26% natural gas, and 7% natural gas liquids ("NGLs"), on an equivalent basis. The changes in GOM estimated proved reserves from year-end 2016 to year-end 2017 included production of approximately 7.0 MMBoe, net upward performance revisions of approximately 4.0 MMBoe, and pricing-related revisions of approximately 0.1 MMBoe. In the GOM, due primarily to the upward revisions of previous estimates, Stone replaced approximately 59% of 2017 production.
The year-end 2017 estimated proved reserves included proved developed reserves of approximately 28.3 MMBoe and proved undeveloped reserves of approximately 4.2 MMBoe. In addition to proved reserves, estimated probable reserves totaled approximately 20.8 MMBoe and estimated possible reserves totaled approximately 35.4 MMBoe at December 31, 2017.
All of Stone's year-end 2017 estimated proved, probable, and possible reserves were independently engineered by Netherland, Sewell & Associates, Inc.
2017 Production Results and First Quarter 2018 Production Guidance
Net daily production during the fourth quarter of 2017 averaged approximately 17.6 thousand barrels of oil equivalent ("MBoe") per day, compared to net daily production of approximately 19.2 MBoe per day for the quarter ended September 30, 2017. Fourth quarter 2017 volumes included five full days of downtime from Hurricane Nate and a ten day planned shut-in of the Pompano platform in November to replace a compressor engine. The production mix for the fourth quarter of 2017 was approximately 72% oil, 21% natural gas, and 7% NGLs. Net daily production volumes from the GOM for full year 2017 averaged 19.2 MBoe per day, which excludes production from the Appalachia properties that Stone sold on February 27, 2017. We expect production rates to range from 17.5 MBoe per day to 18.0 MBoe per day for the first quarter of 2018.
2018 Capital Expenditure Budget
Stone's Board of Directors has authorized a full-year 2018 capital expenditure budget of up to $212 million, which excludes acquisitions and capitalized SG&A and interest, and does not give effect to the potential Talos combination. The budget is spread across Stone's major areas of investment with approximately 36% allocated to exploration, 27% to development, and 37% to P&A expenditures. The allocation of capital across the various areas is subject to change based on several factors, including permitting times, rig availability, non-operator decisions, farm-in opportunities, and commodity pricing.
Liquidity Update
As of December 31, 2017, Stone's liquidity approximated $369.6 million, which included approximately $87.4 million of undrawn capacity under the Company's revolving credit facility plus approximately $263.5 million in cash on hand and approximately $18.7 million in cash being held in a restricted account to satisfy near-term plugging and abandonment activities.
As of December 31, 2017, Stone's outstanding debt totaled approximately $235.5 million, consisting of $225.0 million of 7.50% Senior Second Lien Notes due 2022 and approximately $10.5 million outstanding under a building loan. Further, the Company had no outstanding borrowings and outstanding letters of credit of approximately $12.6 million under its $100 million borrowing base.
We expect that cash flows from operating activities, cash on hand, and availability under our revolving credit facility will be adequate to meet the current 2018 operating and capital expenditure needs of the Company.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities or results that Stone plans, expects, believes, projects, estimates, or anticipates will, should, or may occur in the future, including future production of oil and gas, future capital expenditures and drilling and completion of wells, and future financial or operating results are forward-looking statements. All forward-looking numbers are approximate. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; risks related to our previously announced combination with Talos Energy LLC; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
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SOURCE Stone Energy Corporation
DENVER, Jan. 24, 2018 /PRNewswire/ -- EnerCom's Texas-based oil and gas investment conference—EnerCom Dallas—will feature presentations from C-level executives at publicly traded and private oil and natural gas companies, as well as energy economists and other experts who will discuss global energy trends and projected economics for the industry in 2018 and 2019.
EnerCom Dallas Conference Dates and Location: The EnerCom Dallas oil and gas investment conference is being held at the Tower Club in downtown Dallas on February 21-22, 2018.
Conference Registration: EnerCom is taking online registrations to attend EnerCom Dallas from the professional buyside investment community at the conference website.
Presenting companies, experts will discuss plans, expectations for 2018
Executives from approximately 40 public and private energy companies and related organizations with operations spanning six continents will present their unique strategies for creating shareholder value in 2018 and beyond.
Energy economists and other experts representing the U.S. Energy Information Administration, the Federal Reserve Bank of Dallas and the Canadian Consul will provide their insights on a wide range of oil and gas financial topics including U.S. and Canadian petroleum and natural gas exports, global oil and gas supply/demand metrics and economic expectations for the oil and gas sector in 2018-2019.
EnerCom Dallas is a financial conference that allows institutional investors an early 2018 opportunity to hear and meet CEOs from leading independent E&Ps, including U.S., Canadian and international producers and the oilfield service companies supporting them.
EnerCom Dallas Presenting Companies
EnerCom Dallas conference presenters include, but are not limited to:
Publicly traded companies:
|
|
NYSE: CLB |
Core Laboratories |
NYSE: CRK |
Comstock Resources, Inc. |
ASX: ELK |
Elk Petroleum |
NYSE: EMR |
Emerson Process Management |
NYSE: EPM |
Evolution Petroleum Corporation, Inc. |
NASDAQ: ESES |
EcoStim Energy Solutions, Inc. |
NYSE: ESTE |
Earthstone Energy, Inc. |
NYSE: FTK |
Flotek Industries |
NYSE: GDP |
Goodrich Petroleum Corporation |
NYSE: GPRK |
GeoPark Limited |
TSE: IBR |
Iron Bridge Resources, Inc. |
NYSE: LLEX |
Lilis Energy, Inc. |
NASDAQ: LONE |
Lonestar Resources |
NYSE: NOG |
Northern Oil & Gas, Inc. |
NYSE: PHX |
Panhandle Oil and Gas Inc. |
NYSE: PQ |
PetroQuest Energy, Inc. |
OTCMKTS: PRHR |
PetroShare Corp. |
NASDAQ: ROSE |
Rosehill Resources Inc. |
TSE: RRX |
Raging River Exploration Inc. |
TSX-V: RZE |
Razor Energy Corporation |
NYSE: SDPI |
Superior Drilling Products |
TSE: SGY |
Surge Energy, Inc. |
TSE: TVE |
Tamarack Valley Energy Ltd |
NYSE: VET |
Vermilion Energy Inc. |
Private companies:
| |
Alta Mesa Holdings, LP | |
BetaZi, LLC | |
RS Energy Group |
The EnerCom Dallas presenter list will be updated on the conference website.
Online Registration for EnerCom Dallas is Open
Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now for the EnerCom Dallas investment conference.
The EnerCom Dallas conference follows EnerCom's familiar 25-minute CEO presentation format, followed by 50-minute Q&A opportunities in separate breakout rooms, one-on-one meeting opportunities for buyside investors to meet company management teams, networking opportunities and global insight delivered by leading energy economists and strategists.
EnerCom Dallas is in its second year. Last year's EnerCom Dallas conference featured over 600 investment community and oil and gas industry attendees.
Conference Details: Modeled after EnerCom's The Oil & Gas Conference® in Denver, EnerCom Dallas offers investment professionals a unique opportunity to listen to oil and gas company senior management teams update investors on their operational and financial strategies and learn how the leading energy companies are building value in 2018.
The event also provides energy industry professionals a venue to learn about important energy topics affecting the global oil and gas industry. The conference offers healthy dialogue and informal networking opportunities for attendees and presenters.
Conference Location: Tower Club Dallas, 1601 Elm Street, Thanksgiving Tower, 48th Floor, Dallas, Texas 75201
Who Attends the Conference: Institutional and hedge fund investors, private equity investors, energy research analysts, broker/dealers, trust officers, high net worth investors, commercial energy bankers and other energy industry professionals will gather in Dallas for the conference.
One-on-One Meetings: EnerCom works in advance with presenting company management teams to arrange one-on-one meetings with the attending institutional investors and research analysts at the conference venue.
History and Sponsors: EnerCom, Inc. hosted its original energy-focused investment conference, The Oil & Gas Conference®, in 1996 in Denver. 2018 marks EnerCom's 23rd annual Denver oil and gas financial conference. Since its founding, EnerCom has hosted more than 40 successful oil and gas investment conferences in Denver, London, Dallas, Boston and San Francisco.
Global sponsors of EnerCom's Conferences are Netherland, Sewell & Associates; Preng & Associates; Moss Adams LLP; and RS Energy Group. Sponsors of EnerCom Dallas also include: DNB Bank ASA; Haynes and Boone; and CIBC.
About EnerCom, Inc.
Founded in 1994, EnerCom, Inc. is a nationally recognized management consultancy advising and serving energy-centric clients on corporate strategy, asset valuations, investor relations, media and corporate communications and visual communications design. EnerCom's professionals have more than 170 years of industry and business experience and a proven track record of success. Headquartered in Denver, with senior consultants in Dallas and Houston, EnerCom uses the team approach for delivering its wide range of services to public and private companies, large and small, operating in the global exploration and production, OilService, capital markets, and associated advanced-technology industries.
EnerCom's upcoming oil and gas investment conferences include:
For more information about EnerCom and its services, please visit http://www.enercominc.com/ or call +1 303-296-8834 to speak with the management team or one of our consultants.
About Netherland, Sewell & Associates, Inc.
Netherland, Sewell & Associates, Inc. (NSAI) was founded in 1961 to provide the highest quality engineering and geological consulting to the petroleum industry. Today they are recognized as the worldwide leader of petroleum property analysis to industry and financial organizations and government agencies. With offices in Dallas and Houston, NSAI provides a complete range of geological, geophysical, petrophysical, and engineering services and has the technical experience and ability to perform these services in any of the onshore and offshore oil and gas producing areas of the world. They provide reserves reports and audits, acquisition and divestiture evaluations, simulation studies, exploration resources assessments, equity determinations, and management and advisory services. For a complete list of services or to learn more about Netherland, Sewell & Associates, Inc. please visit www.netherlandsewell.com.
For more information about NSAI, call C.H. (Scott) Rees, Chief Executive Officer, at 214-969-5401 or send an email to info@nsai-petro.com.
About Preng & Associates
Preng & Associates, founded in 1980, is the only retainer-based, international executive search firm specializing solely in the energy industry. Its number one priority is to assist clients with their executive selection, organization development, and human resource needs by providing the highest quality service. Preng's record of accomplishment is directly attributable to their experienced staff, worldwide network of industry contacts, proven search methodology, and high standards of professionalism. Preng has conducted over 3000 searches for board, executive, management, and professional positions in its 35-year history and has the highest success and repeat client track record.
Preng's practice is based on the premise that the search process is most effective when conducted by professionals with significant search industry experience. The company has earned a reputation for combining professional search disciplines with an in-depth industry and market understanding and has succeeded in some of the industry's most challenging and high-profile searches. Preng's international reach allows it to effectively conduct global engagements; and as a member of the Association of Executive Search Consultants, Preng practices and promotes its high standards of conduct and professionalism.
For more information about Preng & Associates, contact Charles Carpenter, Partner at 713-243-2610 or ccarpenter@preng.com.
About Moss Adams LLP
For more than 30 years, Hein & Associates has been recognized throughout the industry as a leading oil and gas accounting and advisory firm. In late 2017, Hein combined with Moss Adams LLP, one of the largest accounting, consulting and wealth management firms in the nation, creating a $600 million middle-market accounting/tax/audit leader in the western U.S. with a strong oil & gas practice group.
With more than 2,900 professionals and staff across more than 25 locations in the West and beyond, Moss Adams works with many of the world's most innovative companies and leaders. Our strength in the middle market enables us to advise clients at all intervals of development—from start-up, to rapid growth and expansion, to transition. Today, we help over 2,300 companies doing business in more than 100 countries and territories.
For more information, please contact Joe Blice, Partner, National Practice Leader, Oil & Gas, CPA joe.blice@mossadams.com, (972) 687-7818.
Moss Adams LLP provides details at https://www.mossadams.com/home .
About RS Energy Group
RS Energy Group (RSEG) provides data-driven intelligence: evaluate assets, weigh valuable M&A opportunities and benchmark your business for more precise decision-making.
RSEG officially released its data solution in April 2017. RS Data™ provides clients with corrected, multi-sourced permit, completion and production data of unparalleled completeness and quality.
Today, RSEG's intelligence covers more than 150 companies operating in every key North American and many international energy plays with a powerful combination of practical insights at the asset level and a long-standing participation in capital markets. RSEG's independent, unbiased and accurate analysis forms a foundation of trust with its clients. Its collaborative approach, both internally and as an extension of its clients' research efforts, promotes innovation and fosters intimate, long term partnerships.
RS Energy Group (RSEG) is headquartered in Calgary, Alberta, with strategic locations in Houston, New York City, Philadelphia, San Francisco and Los Angeles. Contact RS Energy Group by phone at (403) 294-9111, or email info@rseg.com.
About DNB ASA
DNB is Norway's largest financial services provider, with total assets approaching $400 billion. The bank has for years been a major provider of capital to the oil & gas industry, growing up literally side by side with the highly prolific fields developed in the Norwegian Sector of the North Sea. The Oslo Energy Office maintains a global financing strategy, and serves this market through multiple offices around the world including Houston, London and Singapore.
Energy Americas, based in Houston, comprises approximately 20 seasoned energy finance professionals. Aside from facilitating the bank's global business strategies, the office concentrates primarily on serving middle market and larger customers in the four principal oil & gas sectors -- upstream, midstream, downstream and service -- as well as in Power and Renewables. The bank offers a variety of financial products, from traditional oil & gas reserve financing, to longer-term capital markets transactions and merger/acquisition advisory services through its broker-dealer arm, DNB Markets, Inc. Ancillary service capabilities include cash management/depository services, as well as commodity and interest rate hedging.
For information on DNB's energy services, please visit the DNB energy website.
About Haynes and Boone
Haynes and Boone, LLP is an energy-focused corporate law firm, providing a full spectrum of legal services to our clients across the oil and gas industry, including the upstream, midstream, and downstream sectors. We serve energy clients from our offices in Texas, Colorado, New York, California, Washington, D.C., London, Mexico City and Shanghai. We work as a team representing U.S. and foreign public and private companies engaged in the dynamic day-to-day work of finding and extracting oil and gas, and the banks, investment funds and other investors that support them.
Our team of more than 100 energy lawyers and landmen understands the U.S. and international physical and financial energy markets, and the firm has been helping operators and lenders complete some of the largest financings and M&A transactions in recent years. With more than 600 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by The National Law Journal, and our energy lawyers have been ranked by publications such as Best Lawyers in America, Chambers and Partners and Who's Who in Energy.
For more info, please visit www.haynesboone.com.
About CIBC
CIBC is a leading North American bank headquartered in Canada and with offices around the world. CIBC was originally founded nearly 150 years ago, and has supported and financed the energy industry for many decades. CIBC was recently ranked as the strongest publicly traded bank in North America by Bloomberg, and is rated A+/Aa3 by S&P and Moody's, respectively.
Our energy specialists draw on the breadth of CIBC's capabilities to provide market insights and creative solutions for our clients. Services include corporate banking, commodity and interest rate hedging and strategy, A&D advisory, and capital markets.
CIBC is publicly traded on the NYSE and Toronto Stock Exchange under the symbol "CM" and has a market cap of $36 billion and nearly $400 billion in total assets. For more information, please visit the CIBC energy website.
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SOURCE EnerCom, Inc.
DENVER, Jan. 18, 2018 /PRNewswire/ -- EnerCom's Texas-based oil and gas investment conference—EnerCom Dallas—will kick off on Feb. 21, 2018.
EnerCom Dallas will feature presentations from C-level executives at publicly traded and private oil and natural gas companies, as well as energy experts and analysts who will discuss global energy trends and projected economics of the industry in 2018 and 2019.
EnerCom Dallas Conference Dates and Location: The EnerCom Dallas oil and gas investment conference is being held at the Tower Club in downtown Dallas on February 21-22, 2018.
Conference Registration: EnerCom is taking registrations to attend EnerCom Dallas from the professional buyside investment community at the conference website.
Presenting companies, experts will discuss plans, expectations for 2018
Executives from approximately 40 public and private energy companies and related organizations with operations spanning six continents will present their unique strategies for creating shareholder value in 2018 and beyond.
In addition to company management teams, energy economists from the U.S. Energy Information Administration and the Federal Reserve Bank of Dallas will provide their insights on global supply/demand, market forces affecting the oil and gas industry and expectations for the oil and gas sector in 2018-2019.
EnerCom Dallas is a financial conference that allows institutional investors an early 2018 opportunity to hear and meet CEOs from leading independent E&Ps, including U.S., Canadian and international producers and the oilfield service companies supporting them.
EnerCom Dallas Presenting Companies
EnerCom Dallas conference presenters include, but are not limited to:
Publicly traded companies:
NYSE: CLB |
Core Laboratories |
NYSE: CRK |
Comstock Resources, Inc. |
ASX: ELK |
Elk Petroleum |
NYSE: EPM |
Evolution Petroleum Corporation, Inc. |
NASDAQ: ESES |
EcoStim Energy Solutions, Inc. |
NYSE: ESTE |
Earthstone Energy, Inc. |
NYSE: FTK |
Flotek Industries |
NYSE: GDP |
Goodrich Petroleum Corporation |
NYSE: GPRK |
GeoPark Limited |
NYSE: LLEX |
Lilis Energy, Inc. |
NASDAQ: LONE |
Lonestar Resources |
NYSE: PHX |
Panhandle Oil and Gas Inc. |
NYSE: PQ |
PetroQuest Energy, Inc. |
OTCMKTS: PRHR |
PetroShare Corp. |
NASDAQ: ROSE |
Rosehill Resources Inc. |
TSE: RRX |
Raging River Exploration Inc. |
TSX-V: RZE |
Razor Energy Corporation |
NYSE: SDPI |
Superior Drilling Products |
TSE: SGY |
Surge Energy, Inc. |
TSE: TVE |
Tamarack Valley Energy Ltd |
NYSE: VET |
Vermilion Energy Inc. |
Private companies:
Alta Mesa Holdings, LP | |
BetaZi, LLC | |
RS Energy Group |
The EnerCom Dallas presenter list will be updated on the conference website.
Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now for the EnerCom Dallas investment conference.
Online Registration for EnerCom Dallas is Open
The EnerCom Dallas conference follows EnerCom's familiar 25-minute CEO presentation format, followed by 50-minute Q&A opportunities in separate breakout rooms, one-on-one meeting opportunities for buyside investors to meet company management teams, networking opportunities and global insight delivered by leading energy economists and strategists.
EnerCom Dallas is in its second year. Last year's EnerCom Dallas conference featured over 600 investment community and oil and gas industry attendees.
Conference Details: Modeled after EnerCom's The Oil & Gas Conference® in Denver, EnerCom Dallas offers investment professionals a unique opportunity to listen to oil and gas company senior management teams update investors on their operational and financial strategies and learn how the leading energy companies are building value in 2018.
The event also provides energy industry professionals a venue to learn about important energy topics affecting the global oil and gas industry. The conference offers healthy dialogue and informal networking opportunities for attendees and presenters.
Conference Location: Tower Club Dallas, 1601 Elm Street, Thanksgiving Tower, 48th Floor, Dallas, Texas 75201
Who Attends the Conference: Institutional and hedge fund investors, private equity investors, energy research analysts, broker/dealers, trust officers, high net worth investors, commercial energy bankers and other energy industry professionals will gather in Dallas for the conference.
One-on-One Meetings: EnerCom works in advance with presenting company management teams to arrange one-on-one meetings with the attending institutional investors and research analysts at the conference venue.
History and Sponsors: EnerCom, Inc. hosted its original energy-focused investment conference, The Oil & Gas Conference®, in 1996 in Denver. 2018 marks EnerCom's 23rd annual Denver oil and gas financial conference. Since its founding, EnerCom has hosted more than 40 successful oil and gas investment conferences in Denver, London, Dallas, Boston and San Francisco.
Global sponsors of EnerCom's Conferences are Netherland, Sewell & Associates; Credit Agricole Corporate & Investment Bank; Preng & Associates; Moss Adams LLP; and RS Energy Group. Sponsors of EnerCom Dallas also include: DNB Bank ASA; Haynes and Boone; and CIBC.
About EnerCom, Inc.
Founded in 1994, EnerCom, Inc. is a nationally recognized management consultancy advising and serving energy-centric clients on corporate strategy, asset valuations, investor relations, media and corporate communications and visual communications design. EnerCom's professionals have more than 170 years of industry and business experience and a proven track record of success. Headquartered in Denver, with senior consultants in Dallas and Houston, EnerCom uses the team approach for delivering its wide range of services to public and private companies, large and small, operating in the global exploration and production, OilService, capital markets, and associated advanced-technology industries.
EnerCom's upcoming oil and gas investment conferences include:
For more information about EnerCom and its services, please visit http://www.enercominc.com/ or call +1 303-296-8834 to speak with the management team or one of our consultants.
About Credit Agricole Corporate and Investment Bank
Credit Agricole Corporate and Investment Bank is the corporate and investment banking arm of the Credit Agricole Group, the world's eighth largest bank by total assets (The Banker, July 2014). Credit Agricole CIB offers its clients a comprehensive range of products and services in capital markets, brokerage, investment banking, structured finance, corporate banking, and international private banking.
The Bank provides support to clients in large international markets through its network, with a presence in major countries in Europe, the Americas, Asia and the Middle East.
With headquarters in New York City, and U.S. offices in Houston and Chicago, Credit Agricole CIB Americas offers its corporate and institutional clients financial products and services and made-to-order structuring, origination and distribution, through both its banking unit Credit Agricole CIB, and the full-service broker-dealer Credit Agricole Securities (USA) Inc., which is a member of the NYSE and NASD. Credit Agricole CIB is also present in Montreal, Canada, and in Latin America with offices in Argentina, Brazil, and Mexico.
The Energy Industry represents the single largest concentration of industry exposure at Credit Agricole Corporate and Investment Bank, whose specialty focus dates back over 100 years. Our Energy practice for North America, located in Houston, focuses on all segments of the business and covers it on a truly global basis.
For more information, visit www.ca-cib.com.
About Netherland, Sewell & Associates, Inc.
Netherland, Sewell & Associates, Inc. (NSAI) was founded in 1961 to provide the highest quality engineering and geological consulting to the petroleum industry. Today they are recognized as the worldwide leader of petroleum property analysis to industry and financial organizations and government agencies. With offices in Dallas and Houston, NSAI provides a complete range of geological, geophysical, petrophysical, and engineering services and has the technical experience and ability to perform these services in any of the onshore and offshore oil and gas producing areas of the world. They provide reserves reports and audits, acquisition and divestiture evaluations, simulation studies, exploration resources assessments, equity determinations, and management and advisory services. For a complete list of services or to learn more about Netherland, Sewell & Associates, Inc. please visit www.netherlandsewell.com.
For more information about NSAI, call C.H. (Scott) Rees, Chief Executive Officer, at 214-969-5401 or send an email to info@nsai-petro.com.
About Preng & Associates
Preng & Associates, founded in 1980, is the only retainer-based, international executive search firm specializing solely in the energy industry. Its number one priority is to assist clients with their executive selection, organization development, and human resource needs by providing the highest quality service. Preng's record of accomplishment is directly attributable to their experienced staff, worldwide network of industry contacts, proven search methodology, and high standards of professionalism. Preng has conducted over 3000 searches for board, executive, management, and professional positions in its 35-year history and has the highest success and repeat client track record.
Preng's practice is based on the premise that the search process is most effective when conducted by professionals with significant search industry experience. The company has earned a reputation for combining professional search disciplines with an in-depth industry and market understanding and has succeeded in some of the industry's most challenging and high-profile searches. Preng's international reach allows it to effectively conduct global engagements; and as a member of the Association of Executive Search Consultants, Preng practices and promotes its high standards of conduct and professionalism.
For more information about Preng & Associates, contact Charles Carpenter, Partner at 713-243-2610 or ccarpenter@preng.com.
About Moss Adams LLP
For more than 30 years, Hein & Associates has been recognized throughout the industry as a leading oil and gas accounting and advisory firm. In late 2017, Hein combined with Moss Adams LLP, one of the largest accounting, consulting and wealth management firms in the nation, creating a $600 million middle-market accounting/tax/audit leader in the western U.S. with a strong oil & gas practice group.
With more than 2,900 professionals and staff across more than 25 locations in the West and beyond, Moss Adams works with many of the world's most innovative companies and leaders. Our strength in the middle market enables us to advise clients at all intervals of development—from start-up, to rapid growth and expansion, to transition. Today, we help over 2,300 companies doing business in more than 100 countries and territories.
For more information, please contact Joe Blice, Partner, National Practice Leader, Oil & Gas, CPA joe.blice@mossadams.com, (972) 687-7818.
Moss Adams LLP provides details at https://www.mossadams.com/home .
About RS Energy Group
RS Energy Group (RSEG) provides data-driven intelligence: evaluate assets, weigh valuable M&A opportunities and benchmark your business for more precise decision-making.
RSEG officially released its data solution in April 2017. RS Data™ provides clients with corrected, multi-sourced permit, completion and production data of unparalleled completeness and quality.
Today, RSEG's intelligence covers more than 150 companies operating in every key North American and many international energy plays with a powerful combination of practical insights at the asset level and a long-standing participation in capital markets. RSEG's independent, unbiased and accurate analysis forms a foundation of trust with its clients. Its collaborative approach, both internally and as an extension of its clients' research efforts, promotes innovation and fosters intimate, long term partnerships.
RS Energy Group (RSEG) is headquartered in Calgary, Alberta, with strategic locations in Houston, New York City, Philadelphia, San Francisco and Los Angeles. Contact RS Energy Group by phone at (403) 294-9111, or email info@rseg.com.
About DNB ASA
DNB is Norway's largest financial services provider, with total assets approaching $400 billion. The bank has for years been a major provider of capital to the oil & gas industry, growing up literally side by side with the highly prolific fields developed in the Norwegian Sector of the North Sea. The Oslo Energy Office maintains a global financing strategy, and serves this market through multiple offices around the world including Houston, London and Singapore.
Energy Americas, based in Houston, comprises approximately 20 seasoned energy finance professionals. Aside from facilitating the bank's global business strategies, the office concentrates primarily on serving middle market and larger customers in the four principal oil & gas sectors -- upstream, midstream, downstream and service -- as well as in Power and Renewables. The bank offers a variety of financial products, from traditional oil & gas reserve financing, to longer-term capital markets transactions and merger/acquisition advisory services through its broker-dealer arm, DNB Markets, Inc. Ancillary service capabilities include cash management/depository services, as well as commodity and interest rate hedging.
For information on DNB's energy services, please visit the DNB energy website.
About Haynes and Boone
Haynes and Boone, LLP is an energy-focused corporate law firm, providing a full spectrum of legal services to our clients across the oil and gas industry, including the upstream, midstream, and downstream sectors. We serve energy clients from our offices in Texas, Colorado, New York, California, Washington, D.C., London, Mexico City and Shanghai. We work as a team representing U.S. and foreign public and private companies engaged in the dynamic day-to-day work of finding and extracting oil and gas, and the banks, investment funds and other investors that support them.
Our team of more than 100 energy lawyers and landmen understands the U.S. and international physical and financial energy markets, and the firm has been helping operators and lenders complete some of the largest financings and M&A transactions in recent years. With more than 600 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by The National Law Journal, and our energy lawyers have been ranked by publications such as Best Lawyers in America, Chambers and Partners and Who's Who in Energy.
For more info, please visit www.haynesboone.com.
About CIBC
CIBC is a leading North American bank headquartered in Canada and with offices around the world. CIBC was originally founded nearly 150 years ago, and has supported and financed the energy industry for many decades. CIBC was recently ranked as the strongest publicly traded bank in North America by Bloomberg, and is rated A+/Aa3 by S&P and Moody's, respectively.
Our energy specialists draw on the breadth of CIBC's capabilities to provide market insights and creative solutions for our clients. Services include corporate banking, commodity and interest rate hedging and strategy, A&D advisory, and capital markets.
CIBC is publicly traded on the NYSE and Toronto Stock Exchange under the symbol "CM" and has a market cap of $36 billion and nearly $400 billion in total assets. For more information, please visit the CIBC energy website.
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SOURCE EnerCom, Inc.
LAFAYETTE, La., Jan. 10, 2018 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced drilling success at the deep water Mt. Providence development well at Mississippi Canyon Block 28. Stone generated the prospect and owns a 100% working interest in the well.
The Mt. Providence well (the MC 28 #4 well) encountered approximately 153 net feet of high quality, primarily oil pay in one Miocene interval with no visible water level, which exceeded pre-drill expectations. Completion operations on the Mt. Providence well will commence in the second quarter of 2018 with first production expected early in the third quarter of 2018. The well is expected to have an initial production rate of approximately 3,000 to 5,000 barrels of oil equivalent per day and will be tied back to the 100% Stone owned Pompano platform through existing subsea infrastructure.
Interim Chief Executive Officer and President James M. Trimble stated, "We are excited about the Mt. Providence drilling results. This successful well will quickly generate additional production and cash flow with minimal incremental operating cost since we can capitalize on existing subsea infrastructure and available capacity at our Pompano platform. I appreciate the efforts of the entire Stone team that contributed to this success."
Separately, the Derbio well (the MC 72 #3 well) is now expected to spud in late January 2018 with results expected early in the second quarter of 2018. Derbio is a Stone-generated prospect and follows the Rampart Deep success announced in September 2017. If successful, the Rampart Deep/Derbio project could be a multi-well tie back to the Stone 100% owned Pompano platform, with first production expected by late 2019. Working interest partners in the Derbio prospect are Stone with 40%, Deep Gulf Energy III, LLC with 30% (Operator) and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities or results that Stone plans, expects, believes, projects, estimates, or anticipates will, should, or may occur in the future, including future production of oil and gas, future capital expenditures and drilling and completion of wells, and future financial or operating results are forward-looking statements. All forward-looking numbers are approximate. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; risks related to our previously announced combination with Talos Energy LLC; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
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SOURCE Stone Energy Corporation
LAFAYETTE, La., Dec. 6, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that James M. Trimble, interim Chief Executive Officer and President, will be presenting at the Capital One Securities, Inc. 12th Annual Energy Conference in New Orleans, LA at 11:00 a.m. Central Time on Thursday, December 7, 2017. The presentation material will be available in the "Events and Presentations" section of the Company's website, www.StoneEnergy.com within 24 hours of the presentation.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
NEW YORK, Nov. 28, 2017 /PRNewswire/ -- WeissLaw LLP is investigating possible breaches of fiduciary duty and other violations of law by the Board of Directors of Stone Energy Corp. ("SGY" or the "Company") (NYSE: SGY) in connection with the proposed acquisition of the Company by Talos Energy LLC ("Talos"). Under the terms of the acquisition agreement, each outstanding share of SGY will be exchanged for one Talos share.
WeissLaw is investigating whether SGY's Board acted to maximize shareholder value prior to entering into the agreement. Notably, the acquisition announcement highlights some of the numerous benefits Talos will gain from this deal, including:
Moreover, according to Talos' CEO, "[t]his combination represents an important step in [Talos'] goal of becoming the premier offshore exploration and production [] company."
Finally, SGY shareholders' interest in the surviving entity will be diluted with issuance of approximately 34.2 million additional Talos shares to current Talos shareholders, who will own a whopping 63% of the newly combined company compared to the 37% left over for SGY shareholders.
Given these facts, WeissLaw is investigating whether SGY shareholders will obtain their fair and proportionate share of the Company's continued success and future growth prospects. If you own SGY shares and would like more information about your rights or our investigation, or if you have information to share with us, please contact Joshua Rubin by telephone at (888) 593-4771 or by email at stockinfo@weisslawllp.com.
WeissLaw LLP has litigated hundreds of stockholder class and derivative actions for violations of corporate and fiduciary duties. We have recovered over a billion dollars for defrauded clients and obtained important corporate governance relief in many of these cases. If you have information or would like legal advice concerning possible corporate wrongdoing (including insider trading, waste of corporate assets, accounting fraud, or materially misleading information), consumer fraud (including false advertising, defective products, or other deceptive business practices), or anti-trust violations, please email us at stockinfo@weisslawllp.com or fill out the form on our website, http://www.weisslawllp.com/stone-energy-corp/
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SOURCE WeissLaw LLP
NEW YORK, Nov. 21, 2017 /PRNewswire/ -- Rowley Law PLLC is investigating potential claims against Stone Energy Corporation (NYSE: SGY) and its board of directors for breach of fiduciary duty concerning the proposed merger of the company with Talos Energy LLC. Stone Energy Corporation will own 37% of the combined company, Talos Energy, Inc., which will have an enterprise value of approximately $2.5 billion. The merger is expected to close in the first or second quarter of 2018.
If you are a shareholder of Stone Energy Corporation and are interested in obtaining additional information regarding this investigation, please visit us at: http://www.rowleylawpllc.com/investigation/stone. You may also contact Shane Rowley, Esq. at Rowley Law PLLC, 50 Main Street Suite 1000, White Plains, NY 10606, by email at info@rowleylawpllc.com, or by telephone at 914-400-1920 or 844-400-4643 (toll-free).
Rowley Law PLLC represents shareholders nationwide in class actions and derivative lawsuits in complex corporate litigation. For more information about the firm and its attorneys, please visit http://www.rowleylawpllc.com.
Attorney Advertising. Prior results do not guarantee a similar outcome.
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SOURCE Rowley Law PLLC
HOUSTON and LAFAYETTE, La., Nov. 21, 2017 /PRNewswire/ -- Talos Energy LLC ("Talos") and Stone Energy Corporation (NYSE: SGY; "Stone") today announced that their Boards of Directors have unanimously approved the combination of Talos and Stone in an all-stock transaction that will create a premier offshore-focused exploration and production company. The company will be named Talos Energy, Inc. and is expected to trade on the New York Stock Exchange ("NYSE") under the new ticker symbol "TALO."
Highlights of the combined company will include:
Under the terms of the transaction, each outstanding share of Stone common stock will be exchanged for one share of Talos Energy, Inc. common stock and the current Talos stakeholders will be issued an aggregate of approximately 34.2 million common shares. At closing, Talos stakeholders will own 63% of the combined company, with Stone shareholders owning the remaining 37%. Based on Stone's stock price of $35.49 on November 20, 2017 and the terms of the proposed transaction, Talos Energy, Inc. will have an initial equity market capitalization of approximately $1.9 billion and an enterprise value of approximately $2.5 billion.
"This combination represents an important step in our goal of becoming the premier offshore exploration and production ("E&P") company. We will have two core areas in the Deepwater U.S. Gulf of Mexico Deepwater and the outstanding new Zama discovery located in the shallow waters of offshore Mexico," stated Timothy S. Duncan, Talos's Chief Executive Officer. "The combined talent, technical resources and balance sheet of the resulting company will allow us to accelerate development of our own robust project inventory while also giving us the horsepower to pursue compelling transactional and exploration opportunities. We fully expect to achieve material operating synergies and maximize capital efficiency going forward. This transaction is a tremendous opportunity for both Talos and Stone as we create a Gulf of Mexico frontrunner."
Neal P. Goldman, Stone's Chairman, stated, "This transaction represents the successful culmination of Stone's previously announced strategic review process and is a compelling opportunity for our shareholders to benefit from the significant upside and synergies of the combined company. Talos Energy, Inc. will have substantial scale, important asset diversification and a talented management team, along with the strong financial position to continue to grow value for our combined shareholder base. I am very proud of Stone's success in growing shareholder value since its financial restructuring in February 2017 and I am confident Tim will lead the combined company to even greater success."
James M. Trimble, Stone's Interim Chief Executive Officer and President, stated, "I want to thank our employees for their focus and dedication in positioning Stone for this important transaction. The team's management of Stone's assets and business in a safe and environmentally responsible manner will continue our success for the combined shareholder base. The combined company will be strategically positioned to drive meaningful production growth through complementary acreage positions. We look forward to this partnership with Tim and the Talos team."
Combination Benefits and Pro Forma Position
The combination will create a leading offshore independent E&P company and a leader in the Gulf of Mexico with a large, high quality asset base and leading cost profile. The combined company will have estimated 2017 average daily production of approximately 47 Mboe and proved reserves of 136 MMboe as of June 30, 2017 based on SEC prices.
The combined company will also benefit from a deep inventory of identified exploration and development prospects and a significant acreage footprint in the Gulf of Mexico, including over 1.2 million combined gross acres, of which approximately 160,000 acres is offshore Mexico. The Zama oil discovery, operated by Talos, was the first private sector offshore exploration well in the history of Mexico and was previously disclosed as having between 1.4 billion and 2.0 billion gross barrels of original oil in place. Additionally, the combined company expects to achieve up to $25 million in annual pre-tax synergies from supply chain management and other operational efficiencies by year end 2018.
The new company will have increased financial flexibility, in part through its expected new $1 billion credit facility with an expected $600 million in initial borrowing capacity, and no material long term note maturities until 2022. Upon closing, the combined company's pro forma unrestricted cash, undrawn credit facility and ability to access public capital markets will provide flexibility to pursue additional attractive growth opportunities. The combined company is expected to have a pro forma net debt-to-2017E EBITDA ratio of 1.4x and approximately $325 million to $375 million in liquidity at closing. Talos Energy, Inc. will be well-positioned as the counterparty of choice for drilling and consolidation opportunities in the Deepwater Gulf of Mexico.
Transaction Details
Under the terms of the definitive agreement, Talos and Stone will both become wholly-owned subsidiaries of a new holding company, which at closing will become a publicly traded entity. The new, combined company will be named Talos Energy, Inc. and is expected to trade on the NYSE under the new ticker symbol "TALO." At closing, Talos stakeholders will own 63% and Stone shareholders will own 37% of the combined company. Outstanding warrants to acquire Stone common stock will become warrants to acquire Talos Energy, Inc. common stock with terms and conditions substantially identical to their existing terms and conditions.
Leadership and Corporate Governance
Timothy S. Duncan, Talos's Chief Executive Officer, will be Chief Executive Officer of Talos Energy, Inc. with additional members of current Talos and Stone management serving in other key leadership roles.
The combined company's Board of Directors will be comprised of ten members, including six members designated by Talos and four members designated by Stone from its current Board of Directors. Neal P. Goldman will serve as Non-Executive Chairman of the Board of Directors.
Talos Energy, Inc. will be headquartered in Houston, with additional offices in Lafayette and New Orleans.
Approvals and Shareholder Agreements
Completion of the transaction is subject to the approval of Stone shareholders, consent of a majority of the unaffiliated holders of Stone's 7.50% Senior Secured Notes due 2022 and successful completion of an exchange of the Stone notes for Talos notes, certain regulatory approvals and other customary conditions.
Franklin Advisers, Inc. and MacKay Shields LLC, as investment managers for approximately 53% of the outstanding shares of Stone as of September 30, 2017, have entered into voting agreements to vote in favor of the transaction, subject to certain conditions.
The transaction is expected to close in late first quarter or early in the second quarter of 2018.
Advisors
Citigroup acted as lead financial advisor and UBS Investment Bank as financial advisor to Talos in the transaction. Vinson & Elkins LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel to Talos.
Petrie Partners Securities, LLC acted as financial advisor to Stone in the transaction and Akin Gump Strauss Hauer & Feld LLP acted as legal counsel to Stone.
Conference Call and Presentation
Talos and Stone will host a joint conference call on November 21, 2017, at 8:45 a.m. (ET) to discuss the transaction. A live webcast of the call will be available via the "Investor Center" section of Stone's website, www.stoneenergy.com. The conference call dial-in number is (844) 632-7353 or (614) 999-9301(international), with the passcode 5996769. A taped replay of the conference call will be available shortly after the conclusion of the call. To access the replay dial (855) 859-2056 or (404) 537-3406 (international), with the passcode 5996769. An archived version of the presentation will be available in the "Investor Center" section of Stone's website, www.stoneenergy.com, in addition to the "Investor Relations" section of Talos's website, www.talosenergyllc.com. The presentation will be filed with the Securities and Exchange Commission (the "SEC") and will be posted to the SEC website, www.sec.gov.
About Talos Energy LLC
Talos Energy LLC is a technically driven, independent oil and gas exploration and production company with operations in the United States Gulf of Mexico and in the shallow waters off the coast of Mexico. Talos's expertise in the United States Gulf of Mexico is based on exploring, acquiring, exploiting and developing primarily Deepwater assets near existing infrastructure. The shallow waters off the coast of Mexico provide Talos with high impact exploration opportunities in an emerging basin. The company's website is located at www.talosenergyllc.com.
About Stone Energy Corporation
Stone Energy Corporation is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. The company's website is located at www.stoneenergy.com.
Proved Reserve Data
The proved reserves, as of June 30, 2017, have been prepared on the same basis as the proved reserves for year end 2016 for each of Talos and Stone that were audited or prepared by an independent engineering firm, but the proved reserves as of June 30, 2017 for each of Talos and Stone are based on company-engineered reserve reports of Talos and Stone, respectively, calculated in accordance with SEC rules and regulations that have not been audited by an independent engineering firm.
Cautionary Statement Regarding Forward-Looking Information
This communication may contain certain forward-looking statements, including certain plans, expectations, goals, projections, and statements about the expected benefits of the proposed transaction, Talos's and Stone's plans, objectives, expectations and intentions, the expected timing of completion of the transaction, and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, project, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements including: the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks; political and regulatory developments and legislation, including developments and legislation relating to Talos's and Stone's operations in the Gulf of Mexico basin; the possibility that the proposed transaction does not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing, including the successful completion of the notes exchange, are not satisfied or waived on a timely basis or at all; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; uncertainties as to the timing of the transaction; competitive responses to the transaction; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the ability to complete the combination and integration of Talos and Stone successfully; litigation relating to the transaction; and other factors that may affect future results of Talos and Stone. Additional factors that could cause results to differ materially from those described above can be found in Stone's Annual Report on Form 10-K for the year ended December 31, 2016 and in its subsequent Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017, and September 30, 2017, each of which is on file with the SEC and available in the "Investor Center" section of Stone's website, www.stoneenergy.com under the heading "SEC Filings" and in other documents Stone files with the SEC.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Talos nor Stone assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Important Additional Information
In connection with the proposed transaction, Sailfish Energy Holdings Corporation, a subsidiary of Stone that will be renamed Talos Energy, Inc. as of the closing of the proposed transaction ("Newco"), will file with the SEC a registration statement on Form S-4 that will include a consent solicitation/prospectus of Newco and Stone, as well as other relevant documents concerning the proposed transaction. Stone will mail the consent solicitation/prospectus to its shareholders. This communication is not a substitute for any proxy statement, registration statement, proxy statement/prospectus or other documents Stone and/or Newco may file with the SEC in connection with the proposed transaction. INVESTORS AND SHAREHOLDERS OF STONE ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE REGISTRATION STATEMENT AND THE CONSENT SOLICITATION/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain a free copy of the consent solicitation/prospectus, as well as other filings containing information about Talos, Stone and/or Newco, without charge, at the SEC's website (http://www.sec.gov). Copies of the consent solicitation/prospectus and the filings with the SEC that will be incorporated by reference in the consent solicitation/prospectus can also be obtained, without charge, from Stone by going to the "Investor Center" section of Stone's website, www.stoneenergy.com or from Talos by directing a request to talos@fticonsulting.com.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, the solicitation of an offer to subscribe for, buy or sell or an invitation to subscribe for, buy or sell any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
Participants in the Solicitation
Talos, Stone, Newco and certain of their respective directors, executive officers and members of management and employees may be deemed to be participants in the solicitation of written consents in respect of the proposed transaction. Information regarding Stone's directors and executive officers is set forth in Stone's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Information regarding Talos's directors and executive officers and more detailed information regarding the identity of all potential participants, and their direct and indirect interests, by security holdings or otherwise, will be set forth in the consent solicitation/prospectus and other relevant materials filed with the SEC. Free copies of these documents may be obtained from the sources indicated above.
Contact
Marc Cunningham or Jeffrey Spittel
FTI Consulting
(212) 850-5602
talos@fticonsulting.com
View original content:http://www.prnewswire.com/news-releases/talos-energy-llc-to-combine-with-stone-energy-corporation-300560195.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., Nov. 1, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced financial and operational results for the third quarter of 2017. Some items of note include:
Interim Chief Executive Officer and President James M. Trimble stated, "We are pleased to be progressing our deep water drilling program and are encouraged by the Rampart Deep results. We are also excited about the December 2017 spud of Mt. Providence and the 2018 spud of Derbio. In addition, we are working with partners to evaluate several other near-term drilling prospects, both in our portfolio and outside-generated ideas, and we continue to review a number of asset acquisition opportunities. Our balance sheet, which includes over $245 million in unrestricted cash at quarter end, and an undrawn bank facility allow us the flexibility to pursue a variety of tactical and strategic options."
Financial Results
For the quarter ended September 30, 2017, Stone reported net income of $1.3million on oil and gas revenue of $69.8 million, which included $7.9 million of non-cash derivative expense. Net cash provided by operating activities for the third quarter of 2017 totaled $42.5 million, while discretionary cash flow for the same period totaled $45.5 million. See the "Non-GAAP Financial Measure" schedules and the accompanying financial statements for reconciliations of discretionary cash flow, a non-GAAP financial measure, to net cash provided by operating activities.
Net daily production during the third quarter of 2017 averaged approximately 19.2 thousand barrels of oil equivalent ("MBoe") per day, compared to net daily production of approximately 20.6 MBoe per day for the quarter ended June 30, 2017. Third quarter 2017 volumes included the effects of one week of planned downtown at the Pompano platform for the rig demobilization and reinstallation of living quarters. The production mix for the third quarter of 2017 was approximately 73% oil, 21% natural gas, and 6% natural gas liquids ("NGLs"). We expect production rates to range from 17.0 MBoe per day to 18.0 MBoe per day for the fourth quarter of 2017, which includes five full days of downtime from Hurricane Nate and a ten day planned shut-in of the Pompano platform to replace a compressor engine in November.
Prices realized during the third quarter of 2017 averaged $48.13 per barrel of oil, $2.46 per Mcf of natural gas, and $21.69 per barrel of NGLs. Average realized prices for the third quarter of 2016 were $45.50 per barrel of oil, $1.93 per Mcf of natural gas, and $9.72 per barrel of NGLs.
In July 2017, we received a federal royalty recovery totaling $14.1 million as part of a multi-year federal royalty refund claim. Approximately $9.6 million of the refund was recognized as other operational income and $4.5 million as a reduction of lease operating expenses during the quarter ended September 30, 2017. Included in SG&A expenses during the quarter ended September 30, 2017 is a $3.9 million success-based consulting fee incurred in connection with the federal royalty recovery, resulting in an overall net gain of $10.2 million.
Lease operating expenses ("LOE") during the third quarter of 2017 totaled approximately $11.8 million ($6.66 per Boe), and included approximately $6.7 million of planned major maintenance expense and the aforementioned $4.5 million reduction of LOE related to the federal royalty refund claim, compared to LOE of $16.6 million ($8.88 per Boe) for the quarter ended June 30, 2017. Adjusting for third quarter actuals, including the LOE reduction related to the federal royalty recovery, we now expect our full year 2017 LOE to range from $58 million to $60 million, which includes planned major maintenance projects scheduled for the fourth quarter of 2017.
Transportation, processing, and gathering ("TP&G") expenses during the third quarter of 2017 totaled approximately $1.1 million ($0.61 per Boe). We expect TP&G expenses to approximate $1.0 million in the fourth quarter of 2017.
Depreciation, depletion, and amortization ("DD&A") expense on oil and gas properties for the third quarter of 2017 totaled approximately $26.7 million ($15.10per Boe). We expect DD&A to range from $14 per Boe to $16 per Boe for the fourth quarter of 2017.
Salaries, general, and administrative ("SG&A") expenses for the third quarter of 2017 were $15.9 million ($8.98per Boe), compared to SG&A expenses of $18.5 million ($9.88 per Boe) for the quarter ended June 30, 2017. This included the previously mentioned charge of approximately $3.9 million of success-based consulting fees paid in connection with the federal royalty recovery, as well as approximately $4 million of advisory fees tied to the Board-requested strategic review. We expect SG&A cash costs, excluding fees associated with the strategic review, to approximate $10 million to $11 million for the fourth quarter of 2017, of which we expect to capitalize approximately 17% - 18%. We capitalized $2.6 million of SG&A expenses in the third quarter of 2017.
Incentive compensation expense for the third quarter of 2017 was approximately $4.6 million, representing the accrual of three-fourths of the estimated annual incentive following the Board's approval of the incentive and retention programs in July 2017.
Accretion expense for the third quarter of 2017 was approximately $8.1 million. We expect accretion expense to also approximate $8 million in the fourth quarter of 2017.
Other operational expenses for the third quarter of 2017 totaled approximately $0.7 million and included approximately $0.4 million of stacking charges for the platform rig at Pompano, while awaiting demobilization.
Net derivative expense for the third quarter of 2017 totaled approximately $6.7 million, comprised of $1.2 million of income from cash settlements and $7.9 million of non-cash expense resulting from changes in the fair value of derivative instruments.
Interest expense for the third quarter of 2017 was approximately $3.5 million, which primarily included interest associated with the Company's $225 million 7.50% Senior Second Lien Notes due 2022. Capitalized interest was $1.2 million in the third quarter of 2017. We expect interest expense to remain constant for the fourth quarter of 2017.
Capital Expenditures Update
Capital expenditures for the third quarter of 2017 were approximately $34 million, which included $7 million related to drilling the Rampart Deep well, before reimbursement of lease costs, $5 million associated with removal of the rig and reinstallation of the living quarters at the Pompano platform, and $20 million of plugging and abandonment expenditures. In addition, approximately $2.6 million of SG&A expense and $1.2 million of interest expense were capitalized during the quarter ended September 30, 2017. For the nine months ended September 30, 2017, capital expenditures totaled approximately $96 million, which included approximately $57 million of plugging and abandonment expenditures. Capitalized SG&A and interest expenses for the nine months ended September 30, 2017 totaled approximately $7.4 million and $5.2 million, respectively.
Our Board-approved capital expenditures budget for 2017 is $181 million and includes approximately $22 million for exploration opportunities, $69 million for development activities, and $90 million for the plugging and abandonment of idle wells and platforms, and excludes capitalized SG&A and interest expenses. We currently expect to spend less than the approved 2017 budget.
Liquidity Update
As of September 30, 2017, Stone's liquidity approximated $420.8 million, which included approximately $137.4 million of undrawn capacity under the Company's revolving credit facility plus approximately $245.7 million in cash on hand and approximately $37.7 million in cash being held in a restricted account to satisfy near-term plugging and abandonment activities. As of November 1, 2017, Stone had cash on hand of approximately $242 million, and $38 million in cash held in the restricted abandonment account.
As of September 30, 2017, Stone's outstanding debt totaled approximately $236 million, consisting of $225 million of 7.50% Senior Second Lien Notes due 2022 and approximately $11 million outstanding under a building loan. Further, the Company had no outstanding borrowings and outstanding letters of credit of approximately $12.6 million under its $150 million available borrowing base. The borrowing base redetermination from the bank group is expected in early November 2017.
As of September 30, 2017, we had a current income tax receivable of $27.7 million, which we expect to collect within the next twelve months.
We expect that cash flows from operating activities, cash on hand, and availability under our revolving credit facility will be adequate to meet the current 2017 operating and capital expenditures needs of the Company.
Strategic Review
As previously announced, following the successful completion of the Company's financial restructuring and emergence from Chapter 11 reorganization, Stone's Board of Directors (the "Board") retained Petrie Partners LLC to assist the Board in its determination of the Company's strategic direction, including assessing its various strategic alternatives. The Board's assessment with Petrie Partners is ongoing and there can be no assurance that this assessment will result in any transaction.
Fresh Start Accounting and Hedge Accounting Changes
Upon emergence from Chapter 11 reorganization, Stone adopted fresh start accounting effective February 28, 2017. Under the principles of fresh start accounting, a new reporting entity was created, and Stone's assets and liabilities were recorded at their fair values as of the fresh start reporting date. Also, effective January 1, 2017, we have elected to not designate our 2017, 2018, and 2019 commodity derivative contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result, Stone's financial statements dated on or after March 1, 2017 will not be comparable with financial statements issued prior to that date. References to "Predecessor" refer to Stone prior to the adoption of fresh start accounting while references to "Successor" refer to Stone subsequent to the adoption of fresh start accounting. Please review Stone's Quarterly Reports on Form 10-Q for the periods ended March 31, 2017 and September 30, 2017, respectively, for further details regarding fresh start accounting and the financial information presented at the end of this press release.
Operational Update
Mississippi Canyon 116 - Rampart Deep (Deep Water). As previously announced, the Rampart Deep well, operated by Deep Gulf Energy III, LLC, encountered approximately 107 net vertical feet of liquids-rich natural gas pay in three primary zones, as interpreted by Stone. In addition to the reserve potential of Rampart Deep, this well also provides critical information that reduces the exploration risk of Stone's Derbio prospect. Completion of the Rampart Deep well was deferred while the partners analyze the well data, and will be further evaluated in conjunction with future Derbio drilling results, which may impact sanctioning of the project. Working interest partners in the Rampart Deep well are Stone with 40%, Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. Results from the Rampart Deep well reduced the exploration risk of the Derbio prospect. Current drilling plans for Derbio target a first half of 2018 spud date. The well is estimated to take three months to drill, and, if successful, first production from the Rampart Deep/Derbio project is expected by late 2019 and could be a multi-well tie back to the Stone 100% owned Pompano platform. Working interest partners in the Derbio prospect are Stone with 40%, Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.
Mississippi Canyon 28 - Mt. Providence (Deep Water). The Mt. Providence prospect is located approximately five miles from the Pompano platform and targets the Miocene interval. We currently expect to spud the Mt. Providence development well in December 2017. The well is estimated to take two months to drill. If successful, the well will be tied back to the Pompano platform, with first production expected in the second quarter of 2018. Stone holds a 100% working interest in this prospect.
Hedge Position
The following table illustrates our derivative positions for 2017, 2018, and 2019 as of November 1, 2017:
Oil Hedging Contracts | |||||||
NYMEX | |||||||
Put Contracts |
Swap Contracts | ||||||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Daily Volume (Bbls/d) |
Swap Price ($ per Bbl) | ||||
Feb 2017 – Dec 2017 |
2,000 |
$50.00 |
Mar 2017 – Dec 2017 |
1,000 |
$53.90 | ||
Jul 2017 – Dec 2017 |
1,000 |
$41.10 |
Oct 2017 – Dec 2017 |
1,000 |
$52.10 | ||
Jan 2018 – Dec 2018 |
1,000 |
$54.00 |
Jan 2018 – Dec 2018 |
1,000 |
$52.50 | ||
Jan 2018 – Dec 2018 |
1,000 |
$45.00 |
Jan 2018 – Dec 2018 |
1,000 |
$51.98 | ||
Jan 2018 – Dec 2018 |
1,000 |
$53.67 | |||||
Jan 2019 – Dec 2019 |
1,000 |
$51.00 | |||||
Jan 2019 – Dec 2019 |
1,000 |
$51.57 |
Collar Contracts | |||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Call Price ($ per Bbl) | |
Mar 2017 – Dec 2017 |
1,000 |
$50.00 |
$56.45 |
Apr 2017 – Dec 2017 Jan 2018 – Dec 2018 |
1,000 1,000 |
$50.00 $45.00 |
$56.75 $55.35 |
Natural Gas Hedging Contracts | |||||||
NYMEX | |||||||
Swap Contracts |
|||||||
Daily Volume (MMBtu/d) |
Swap Price ($ per MMBtu) |
||||||
Jul 2017 – Dec 2017 |
11,000 |
$3.00 |
|||||
Collar Contracts | |||
Daily Volume (MMBtu/d) |
Put Price ($ per MMBtu) |
Call Price ($ per MMBtu) | |
Jan 2018 – Dec 2018 |
6,000 |
$2.75 |
$3.24 |
Other Information
Stone has planned a conference call for 9:00 a.m. Central Time on November 2, 2017 to discuss the operational and financial results for the third quarter of 2017. The call will be available through a live webcast link located in the Investor Center section of the Company's website at www.StoneEnergy.com. The call will also be accessible by dialing (844) 632-7353 and requesting the "Stone Energy Call" approximately ten minutes before the scheduled start time. If unable to participate in the original call, a webcast replay will be available three hours after the call through a link in the Investor Center section of the Company's website.
Non-GAAP Financial Measure
In this press release, we refer to a non-GAAP financial measure we call "discretionary cash flow." Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities. Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by (used in) operating activities or net income (loss), as defined by GAAP. See the "Reconciliation of Non-GAAP Financial Measure" schedules for reconciliations of discretionary cash flow to net cash provided by (used in) operating activities.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities or results that Stone plans, expects, believes, projects, estimates, or anticipates will, should, or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells, and future financial or operating results are forward-looking statements. All forward-looking numbers are approximate. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing, extent, and volatility of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Estimates for Stone's future production volumes are based on assumptions of capital expenditures levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation, and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes, and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance and uptime estimates, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties, and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses, or DD&A rates, if provided, will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
STONE ENERGY CORPORATION | ||||||||||||
SUMMARY STATISTICS | ||||||||||||
(Unaudited) | ||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||
Three Months |
Three Months |
Combined Nine |
Nine Months | |||||||||
(1)(2) |
||||||||||||
PRODUCTION QUANTITIES |
||||||||||||
Oil (MBbls) |
1,285 |
1,563 |
3,902 |
4,746 |
||||||||
Natural gas (MMcf) |
2,220 |
8,096 |
10,630 |
20,042 |
||||||||
Natural gas liquids (MBbls) |
114 |
686 |
701 |
1,294 |
||||||||
Oil, natural gas and NGLs (MBoe) |
1,769 |
3,598 |
6,375 |
9,380 |
||||||||
AVERAGE DAILY PRODUCTION |
||||||||||||
Oil (MBbls) |
14.0 |
17.0 |
14.3 |
17.3 |
||||||||
Natural gas (MMcf) |
24.1 |
88.0 |
38.9 |
73.1 |
||||||||
Natural gas liquids (MBbls) |
1.2 |
7.5 |
2.6 |
4.7 |
||||||||
Oil, natural gas and NGLs (MBoe) |
19.2 |
39.1 |
23.4 |
34.2 |
||||||||
REVENUE DATA (in thousands) (3) |
||||||||||||
Oil revenue |
$61,841 |
$71,116 |
$189,393 |
$204,102 |
||||||||
Natural gas revenue |
5,451 |
15,601 |
27,677 |
43,327 |
||||||||
Natural gas liquids revenue |
2,473 |
6,666 |
14,970 |
15,119 |
||||||||
Total oil, natural gas and NGLs revenue |
$69,765 |
$93,383 |
$232,040 |
$262,548 |
||||||||
AVERAGE REALIZED PRICES (3) |
||||||||||||
Oil (per Bbl) |
$48.13 |
$45.50 |
$48.54 |
$43.01 |
||||||||
Natural gas (per Mcf) |
2.46 |
1.93 |
2.60 |
2.16 |
||||||||
Natural gas liquids (per Bbl) |
21.69 |
9.72 |
21.36 |
11.68 |
||||||||
Oil, natural gas and NGLs (per Boe) |
39.44 |
25.95 |
36.40 |
27.99 |
||||||||
AVERAGE COSTS PER BOE |
||||||||||||
Lease operating expenses |
$6.66 |
$4.72 |
$6.58 |
$5.90 |
||||||||
Transp, processing and gathering expenses |
0.61 |
2.96 |
1.57 |
1.99 |
||||||||
Salaries, general and administrative expenses |
8.98 |
4.29 |
7.43 |
5.14 |
||||||||
DD&A expense on oil and gas properties |
15.10 |
16.08 |
17.45 |
17.42 |
||||||||
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the nine month period ended September 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The financial information in the Consolidated Statement of Operations and Reconciliations of Non-GAAP Financial Measures on the following pages provides the Successor's and the Predecessor's GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information about production, revenues, commodity prices and costs that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION | ||||||
CONSOLIDATED STATEMENT OF OPERATIONS | ||||||
(In thousands, except per share amounts) | ||||||
(Unaudited) | ||||||
Successor |
Predecessor | |||||
Three Months |
Three Months | |||||
Operating revenue: |
||||||
Oil production |
$61,841 |
$71,116 |
||||
Natural gas production |
5,451 |
15,601 |
||||
Natural gas liquids production |
2,473 |
6,666 |
||||
Other operational income |
9,760 |
1,044 |
||||
Total operating revenue |
79,525 |
94,427 |
||||
Operating expenses: (1) |
||||||
Lease operating expenses |
11,778 |
16,976 |
||||
Transportation, processing and gathering expenses |
1,076 |
10,633 |
||||
Production taxes |
188 |
835 |
||||
Depreciation, depletion and amortization |
27,553 |
58,918 |
||||
Write-down of oil and gas properties |
— |
36,484 |
||||
Accretion expense |
8,095 |
10,082 |
||||
Salaries, general and administrative expenses |
15,887 |
15,425 |
||||
Incentive compensation expense |
4,646 |
2,160 |
||||
Restructuring fees |
129 |
5,784 |
||||
Other operational expenses |
703 |
9,059 |
||||
Derivative expense, net |
6,685 |
199 |
||||
Total operating expenses |
76,740 |
166,555 |
||||
Gain (loss) on Appalachia Properties divestiture |
(132) |
— |
||||
Income (loss) from operations |
2,653 |
(72,128) |
||||
Other (income) expenses: |
||||||
Interest expense |
3,529 |
16,924 |
||||
Interest income |
(366) |
(58) |
||||
Other income |
(276) |
(272) |
||||
Other expense |
47 |
16 |
||||
Total other expense |
2,934 |
16,610 |
||||
Loss before income taxes |
(281) |
(88,738) |
||||
Provision (benefit) for income taxes: |
||||||
Current |
(1,578) |
(991) |
||||
Deferred |
— |
1,888 |
||||
Total income taxes |
(1,578) |
897 |
||||
Net income (loss) |
$1,297 |
($89,635) |
||||
Net income (loss) per share |
$0.06 |
($16.01) |
||||
Average shares outstanding - diluted |
19,997 |
5,600 |
(1) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION | ||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||
(In thousands, except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||
Combined |
Period from |
Period from |
Nine Months | |||||||||
(1)(2) |
(1) |
|||||||||||
Operating revenue: (3) |
||||||||||||
Oil production |
$189,393 |
$143,556 |
$45,837 |
$204,102 |
||||||||
Natural gas production |
27,677 |
14,201 |
13,476 |
43,327 |
||||||||
Natural gas liquids production |
14,970 |
6,264 |
8,706 |
15,119 |
||||||||
Other operational income |
10,839 |
9,936 |
903 |
1,737 |
||||||||
Derivative income, net |
— |
1,414 |
— |
— |
||||||||
Total operating revenue |
242,879 |
175,371 |
68,922 |
264,285 |
||||||||
Operating expenses: (3) |
||||||||||||
Lease operating expenses |
41,974 |
33,154 |
8,820 |
55,349 |
||||||||
Transportation, processing and gathering expenses |
9,978 |
3,045 |
6,933 |
18,657 |
||||||||
Production taxes |
1,128 |
446 |
682 |
1,894 |
||||||||
Depreciation, depletion and amortization |
113,982 |
76,553 |
37,429 |
166,707 |
||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
284,337 |
||||||||
Accretion expense |
25,145 |
19,698 |
5,447 |
30,147 |
||||||||
Salaries, general and administrative expenses |
47,347 |
37,718 |
9,629 |
48,193 |
||||||||
Incentive compensation expense |
6,654 |
4,646 |
2,008 |
11,809 |
||||||||
Restructuring fees |
739 |
739 |
— |
16,173 |
||||||||
Other operational expenses |
3,822 |
3,292 |
530 |
49,266 |
||||||||
Derivative expense, net |
364 |
— |
1,778 |
687 |
||||||||
Total operating expenses |
507,568 |
435,726 |
73,256 |
683,219 |
||||||||
Gain (loss) on Appalachia Properties divestiture |
213,348 |
(105) |
213,453 |
— |
||||||||
Income (loss) from operations |
(51,341) |
(260,460) |
209,119 |
(418,934) |
||||||||
Other (income) expenses: |
||||||||||||
Interest expense |
8,320 |
8,320 |
— |
49,764 |
||||||||
Interest income |
(620) |
(575) |
(45) |
(474) |
||||||||
Other income |
(1,034) |
(719) |
(315) |
(840) |
||||||||
Other expense |
14,197 |
861 |
13,336 |
27 |
||||||||
Reorganization items, net |
(437,744) |
— |
(437,744) |
— |
||||||||
Total other (income) expense |
(416,881) |
7,887 |
(424,768) |
48,477 |
||||||||
Income (loss) before income taxes |
365,540 |
(268,347) |
633,887 |
(467,411) |
||||||||
Provision (benefit) for income taxes: |
||||||||||||
Current |
— |
(3,570) |
3,570 |
(4,178) |
||||||||
Deferred |
— |
— |
— |
10,947 |
||||||||
Total income taxes |
— |
(3,570) |
3,570 |
6,769 |
||||||||
Net income (loss) |
$365,540 |
($264,777) |
$630,317 |
($474,180) |
||||||||
Net income (loss) per share |
($13.24) |
$110.99 |
($84.90) |
|||||||||
Average shares outstanding - diluted |
19,997 |
5,634 |
5,585 |
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the nine month period ended September 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION | ||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | ||||||
DISCRETIONARY CASH FLOW to NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||
(In thousands) | ||||||
(Unaudited) | ||||||
Successor |
Predecessor | |||||
Three Months |
Three Months | |||||
Net income (loss) as reported |
$1,297 |
($89,635) |
||||
Reconciling items: |
||||||
Depreciation, depletion and amortization |
27,553 |
58,918 |
||||
Write-down of oil and gas properties |
— |
36,484 |
||||
Deferred income tax provision |
— |
1,888 |
||||
Accretion expense |
8,095 |
10,082 |
||||
Loss on sale of oil and gas properties |
132 |
— |
||||
Non-cash stock compensation expense |
502 |
1,725 |
||||
Non-cash interest expense |
3 |
4,875 |
||||
Non-cash derivative expense (1) |
7,879 |
236 |
||||
Other non-cash expense |
56 |
— |
||||
Discretionary cash flow |
45,517 |
24,573 |
||||
Change in income taxes payable |
(1,578) |
24,771 |
||||
Settlement of asset retirement obligations |
(20,293) |
(4,400) |
||||
Other working capital changes |
18,844 |
(9,921) |
||||
Net cash provided by operating activities |
$42,490 |
$35,023 |
(1) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION | ||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | ||||||||||||
DISCRETIONARY CASH FLOW to NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||
Combined Nine |
Period from |
Period from |
Nine Months | |||||||||
(1)(2) |
(1) |
|||||||||||
Net income (loss) as reported |
$365,540 |
($264,777) |
$630,317 |
($474,180) |
||||||||
Reconciling items: |
||||||||||||
Depreciation, depletion and amortization |
113,982 |
76,553 |
37,429 |
166,707 |
||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
284,337 |
||||||||
Deferred income tax provision |
— |
— |
— |
10,947 |
||||||||
Accretion expense |
25,145 |
19,698 |
5,447 |
30,147 |
||||||||
(Gain) loss on sale of oil and gas properties |
(213,348) |
105 |
(213,453) |
— |
||||||||
Non-cash stock compensation expense |
3,538 |
893 |
2,645 |
6,407 |
||||||||
Non-cash interest expense |
3 |
3 |
— |
14,278 |
||||||||
Non-cash derivative expense (3) |
2,988 |
1,210 |
1,778 |
1,261 |
||||||||
Non-cash reorganization items |
(458,677) |
— |
(458,677) |
— |
||||||||
Other non-cash expense |
1,049 |
877 |
172 |
6,081 |
||||||||
Discretionary cash flow |
96,655 |
90,997 |
5,658 |
45,985 |
||||||||
Change in income taxes payable |
(1,586) |
(5,156) |
3,570 |
21,584 |
||||||||
Settlement of asset retirement obligations |
(56,770) |
(53,129) |
(3,641) |
(15,106) |
||||||||
Investment in derivative contracts |
(6,152) |
(2,416) |
(3,736) |
— |
||||||||
Other working capital changes |
32,366 |
40,101 |
(7,735) |
(19,570) |
||||||||
Net cash provided by (used in) operating activities |
$64,513 |
$70,397 |
($5,884) |
$32,893 |
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the nine month period ended September 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017, 2018 and 2019 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION | |||||||
CONSOLIDATED BALANCE SHEET | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Successor |
Predecessor | ||||||
September 30, |
December 31, | ||||||
2017 |
2016 | ||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$245,714 |
$190,581 |
|||||
Restricted cash |
37,684 |
— |
|||||
Accounts receivable |
35,670 |
48,464 |
|||||
Fair value of derivative contracts |
2,565 |
— |
|||||
Current income tax receivable |
27,672 |
26,086 |
|||||
Other current assets |
9,295 |
10,151 |
|||||
Total current assets |
358,600 |
275,282 |
|||||
Oil and gas properties, full cost method of accounting: |
|||||||
Proved |
714,515 |
9,616,236 |
|||||
Less: accumulated depreciation, depletion and amortization |
(330,921) |
(9,178,442) |
|||||
Net proved oil and gas properties |
383,594 |
437,794 |
|||||
Unevaluated |
102,283 |
373,720 |
|||||
Other property and equipment, net |
18,433 |
26,213 |
|||||
Fair value of derivative contracts |
1,040 |
— |
|||||
Other assets, net |
18,252 |
26,474 |
|||||
Total assets |
$882,202 |
$1,139,483 |
|||||
Liabilities and Stockholders' Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable to vendors |
$33,120 |
$19,981 |
|||||
Undistributed oil and gas proceeds |
5,439 |
15,073 |
|||||
Accrued interest |
10,244 |
809 |
|||||
Fair value of derivative contracts |
368 |
— |
|||||
Asset retirement obligations |
84,654 |
88,000 |
|||||
Current portion of long-term debt |
421 |
408 |
|||||
Other current liabilities |
28,503 |
18,602 |
|||||
Total current liabilities |
162,749 |
142,873 |
|||||
Bank credit facility |
— |
341,500 |
|||||
7.5% Senior Second Lien Notes due 2022 |
225,000 |
— |
|||||
4.2% Building Loan |
10,567 |
10,876 |
|||||
Asset retirement obligations |
182,956 |
154,019 |
|||||
Fair value of derivative contracts |
74 |
— |
|||||
Other long-term liabilities |
10,110 |
17,315 |
|||||
Total liabilities not subject to compromise |
591,456 |
666,583 |
|||||
Liabilities subject to compromise |
— |
1,110,182 |
|||||
Total liabilities |
591,456 |
1,776,765 |
|||||
Predecessor common stock |
— |
56 |
|||||
Predecessor treasury stock |
— |
(860) |
|||||
Predecessor additional paid-in capital |
— |
1,659,731 |
|||||
Successor common stock |
200 |
— |
|||||
Successor additional paid-in capital |
555,323 |
— |
|||||
Accumulated deficit |
(264,777) |
(2,296,209) |
|||||
Total stockholders' equity |
290,746 |
(637,282) |
|||||
Total liabilities and stockholders' equity |
$882,202 |
$1,139,483 |
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-announces-third-quarter-2017-results-300547716.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., Oct. 19, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced it plans to report third quarter 2017 earnings results on Wednesday, November 1, 2017, after the market close. The release will provide financial and operational results, and provide production and expense guidance. The company has also scheduled a conference call on Thursday, November 2, 2017 at 9:00 a.m. Central Time to provide additional commentary.
The call will be available through a live webcast link located in the Investor Center section of the company's website at www.StoneEnergy.com. The call will also be accessible by dialing (844) 632-7353 and requesting the "Stone Energy Call" approximately ten minutes before the scheduled start time. If unable to participate in the original call, a webcast replay will be available three hours after the call through a link in the Investor Center section of the company's website.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development, and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-schedules-third-quarter-2017-earnings-release-and-conference-call-300539766.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., Sept. 5, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced drilling results from the deep water Rampart Deep well at Mississippi Canyon Block 116. Stone generated the prospect and owns a 40% non-operated working interest in the well.
The Rampart Deep well (the MC 116 #1 well), operated by Deep Gulf Energy III, LLC, encountered approximately 130 net feet of liquids-rich natural gas pay in three primary zones, as interpreted by Stone. In addition to the reserve potential of Rampart Deep, this well also provides critical information that reduces the exploration risk of Stone's Derbio prospect, which is positioned up-dip from Rampart Deep and located one block to the northwest in Mississippi Canyon Block 72. The completion of the Rampart Deep well will be deferred while the partners analyze the well data, and will be further evaluated in conjunction with future Derbio drilling results. Drilling plans for Derbio will be reviewed with the Rampart Deep partners over the next ninety days. If Derbio is successful, first production from the Rampart Deep/Derbio project is expected by late 2019 and could be a multi-well tie back to the Stone 100% owned Pompano platform.
Interim Chief Executive Officer and President James M. Trimble stated, "The Rampart Deep well is encouraging to Stone as this discovery provides us with potential future reserves as well as important information that should reduce the risk of our other prospects in the area, particularly the Derbio prospect. The discovery at Rampart Deep, along with a success at Derbio, would allow us to further leverage our infrastructure position at our Pompano platform by generating additional production and cash flow with minimal incremental operating cost."
Working interest partners in the Rampart Deep well are Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%. Stone currently holds a 100% working interest in the Derbio prospect, but the Rampart Deep partners may elect into the Derbio well for a 60% total working interest, proportionate to their respective Rampart Deep working interests, with the remaining 40% owned by Stone.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with an additional office in New Orleans. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-announces-rampart-deep-drilling-success-300512993.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., Aug. 7, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced financial and operational results for the second quarter of 2017. Some items of note include:
Interim Chief Executive Officer and President James M. Trimble stated, "In the second quarter of 2017, we focused on getting back to business with our restructured balance sheet and corporate reorganization. The Rampart Deep well spud in early June and we are eagerly awaiting its drilling results. We have identified several other near term drilling prospects both in our portfolio and outside-generated ideas, and we are evaluating these projects with industry partners to be drilled over the next six to twelve months. Additionally, we continue to review a number of asset acquisition opportunities. With over $200 million in unrestricted cash on the balance sheet at quarter end and an undrawn bank facility, we have the flexibility to explore various strategic paths."
Financial Results
For the quarter ended June 30, 2017, Stone reported a net loss of $6.5 million on oil and gas revenue of $71.2 million. This includes charges of $8.7 million for workforce reduction and employee severance costs and $4.2 million of non-cash derivative income. Net cash provided by operating activities for the second quarter of 2017 totaled $17.3 million, while discretionary cash flow for the same period totaled $32.4 million. Please see "Non-GAAP Financial Measure" and the accompanying financial statements for a reconciliation of discretionary cash flow, a non-GAAP financial measure, to net cash provided by operating activities.
Net daily production during the second quarter of 2017 averaged 20.6 thousand barrels of oil equivalent ("MBoe") per day, compared to net daily production from the Gulf of Mexico Basin ("GOM") basin of approximately 19.6 MBoe per day for the three months ended March 31, 2017. The production mix for the second quarter of 2017 was approximately 69% oil, 23% natural gas and 8% natural gas liquids ("NGLs"). We expect production rates to range from 17.5 MBoe per day to 19.5 MBoe per day for the third quarter of 2017, which includes one week of planned downtime at the Pompano platform for a rig demobilization and reinstallation of living quarters, some natural decline and no projected weather downtime.
Prices realized during the second quarter of 2017 averaged $47.49 per barrel of oil, $2.56 per Mcf of natural gas and $20.36 per barrel of NGLs. Average realized prices for the second quarter of 2016 were $46.97 per barrel of oil, $2.46 per Mcf of natural gas and $15.24 per barrel of NGLs.
Lease operating expenses during the second quarter of 2017 totaled approximately $16.6 million ($8.88 per Boe), and included approximately $6.1 million of planned major maintenance expense, compared to lease operating expenses for the GOM basin of approximately $11.3 million for the three months ended March 31, 2017. We have lowered our guidance and now expect lease operating expenses for the full year of 2017 to range from $62 million to $68 million, which includes additional planned major maintenance projects scheduled for the third and fourth quarters of 2017.
Transportation, processing and gathering ("TP&G") expenses during the second quarter of 2017 totaled approximately $1.8 million ($0.97 per Boe). Due to the sale of our Appalachia properties, we expect TP&G expenses to approximate $1.0 million to $1.5 million per quarter for the remaining quarters of 2017.
Depreciation, depletion and amortization ("DD&A") expense on oil and gas properties for the second quarter of 2017 totaled approximately $32.2 million ($17.22 per Boe). We expect DD&A to range from $17 per Boe to $19 per Boe for each of the remaining quarters of 2017.
Salaries, general and administrative ("SG&A") expenses for the second quarter of 2017 were $18.5 million ($9.88 per Boe), compared to SG&A expenses of $13.0 million ($4.74 per Boe) for the three months ended March 31, 2017. The increase in second quarter 2017 SG&A expenses is primarily attributable to approximately $8.7 million of workforce reduction and employee severance costs. We expect these actions to result in SG&A cash costs of approximately $11 million to $12 million per quarter by the fourth quarter of 2017, before expected capitalization of approximately 16%. We capitalized $1.4 million of SG&A expenses in the second quarter of 2017.
Accretion expense for the second quarter of 2017 was approximately $8.7 million. As a result of the revaluation of our asset retirement obligations in accordance with the implementation of fresh start accounting, we expect accretion expense to approximate $9 million in future quarters of 2017.
Other operational expenses for the second quarter of 2017 totaled approximately $1.9 million and included approximately $1.7 million of stacking charges for the platform rig at Pompano, while awaiting demobilization. We expect an additional $0.5 million of related rig stacking expenses in the third quarter of 2017.
Interest expense for the second quarter of 2017 was approximately $3.6 million, which primarily included interest associated with the Company's $225 million of 7.50% Senior Second Lien Notes due 2022 that were issued on the February 28, 2017 effective date of Stone's plan of reorganization. Capitalized interest was $1.1 million in the second quarter of 2017.
Fresh Start Accounting and Hedge Accounting Changes
Upon emergence from Chapter 11 reorganization, Stone adopted fresh start accounting effective February 28, 2017. Under the principles of fresh start accounting, a new reporting entity was created, and Stone's assets and liabilities were recorded at their fair values as of the fresh start reporting date. Also, effective January 1, 2017, we have elected to not designate our 2017 and 2018 commodity derivative contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result, Stone's financial statements dated on or after March 1, 2017 will not be comparable with financial statements issued prior to that date. References to "Predecessor" refer to Stone prior to the adoption of fresh start accounting while references to "Successor" refer to Stone subsequent to the adoption of fresh start accounting. Please review Stone's Quarterly Reports on Form 10-Q for the periods ended March 31, 2017 and June 30, 2017, respectively, for further details regarding fresh start accounting and the financial information presented at the end of this press release.
Capital Expenditures Update
Capital expenditures for the second quarter of 2017 were approximately $25 million, which included $6 million associated with drilling and completing the Mt. Bona well at the Pompano platform, $4 million related to drilling the Rampart Deep well, before reimbursement of lease costs, and $15 million of plugging and abandonment expenditures, $6 million of which was attributable to plugging and abandonment operations on the Amethyst well. In addition, $1.4 million of SG&A expense and $1.1 million of interest were capitalized during the quarter ended June 30, 2017. For the six months ended June 30, 2017, capital expenditures totaled approximately $62 million, which included $36 million of plugging and abandonment expenditures. Capitalized SG&A and interest expenses for the six months ended June 30, 2017 totaled $4.8 million and $4.0 million, respectively.
Our current capital expenditures budget for 2017 of $181 million includes approximately $27 million for exploration opportunities, $54 million for development activities and $100 million for the plugging and abandonment of idle wells and platforms, and excludes capitalized SG&A and interest expenses.
Liquidity Update
As of June 30, 2017, Stone's liquidity approximated $394.1 million, which included approximately $137.5 million of undrawn capacity under the Company's revolving credit facility plus approximately $208.0 million in cash on hand and approximately $48.6 million in cash being held in a restricted account to satisfy near-term plugging and abandonment activities. As of August 7, 2017, Stone had cash on hand of approximately $223 million and $45 million in cash held in the restricted abandonment account.
As of June 30, 2017, Stone's outstanding debt totaled approximately $236.1 million, consisting of $225 million of 7.50% Senior Second Lien Notes due 2022 and approximately $11.1 million outstanding under a building loan. Further, the Company had no outstanding borrowings and outstanding letters of credit of approximately $12.5 million under its $200 million reserve-based revolving credit facility, with available borrowings thereunder of $150 million until November 1, 2017.
As of June 30, 2017, we had a current income tax receivable of $26.1 million, which we expect to collect within the next twelve months. Additionally, in July 2017, we received approximately $10 million (net) from the Office of Natural Resources Revenue as part of a multi-year federal royalty refund claim.
We expect that cash flows from operating activities, cash on hand and availability under our revolving credit facility will be adequate to meet the current 2017 operating and capital expenditures needs of the Company.
Strategic Review
As previously announced, following the successful completion of the Company's financial restructuring and emergence from Chapter 11 reorganization, Stone's Board of Directors (the "Board") retained Petrie Partners LLC to assist the Board in its determination of the Company's strategic direction, including assessing its various strategic alternatives. The Board's assessment with Petrie Partners is ongoing and there can be no assurance that this assessment will result in any transaction.
Operational Update
Pompano Platform Drilling Program (Deep Water). In January 2017, we reinitiated platform drilling operations on the Mt. Bona prospect. We completed the well at the end of April 2017, and it is currently producing approximately 850 Boe per day. Stone holds a 100% working interest in this well. We decided not to utilize the platform drilling rig to drill the Mt. Providence prospect and we released the rig in July 2017. We are evaluating the benefits of utilizing a floating drilling rig to drill the Mt. Providence prospect.
Mississippi Canyon 116 - Rampart Deep (Deep Water). Drilling operations, which initiated on June 3, 2017, are ongoing on the Rampart Deep prospect in Mississippi Canyon Block 116, with drilling results expected in August 2017. The Stone generated prospect is being drilled and operated by Deep Gulf Energy III, LLC, and is expected to be tied back to Stone's 100% owned Pompano platform, if successful. The prospect, which targets the Miocene interval, is located nine miles from the Pompano platform. After a sell down of a portion of its position, Stone holds a 40% working interest in the well and received leasehold and other reimbursable costs. Additional working interest owners are Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. Results from the currently drilling Rampart Deep prospect could provide additional information regarding the Derbio prospect. Stone currently holds a 100% working interest in the prospect, but our Rampart Deep partners may elect into the Derbio well for a 60% percent total working interest, proportionate to their respective Rampart Deep working interests, with the remaining 40% owned by Stone. If successful, a tie-back to the Pompano platform is likely. The well is estimated to take three months to drill.
Hedge Position
The following table illustrates our derivative positions for 2017 and 2018 as of August 7, 2017:
Oil Hedging Contracts | |||||||
NYMEX | |||||||
Put Contracts |
Swap Contracts | ||||||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Daily Volume (Bbls/d) |
Swap Price ($ per Bbl) | ||||
Feb 2017 – Dec 2017 |
2,000 |
$50.00 |
Mar 2017 – Dec 2017 |
1,000 |
$53.90 | ||
Jul 2017 – Dec 2017 |
1,000 |
$41.10 |
|||||
Jan 2018 – Dec 2018 |
1,000 |
$54.00 |
Jan 2018 – Dec 2018 |
1,000 |
$52.50 | ||
Jan 2018 – Dec 2018 |
1,000 |
$45.00 |
Collar Contracts | |||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Call Price ($ per Bbl) | |
Mar 2017 – Dec 2017 |
1,000 |
$50.00 |
$56.45 |
Apr 2017 – Dec 2017 |
1,000 |
$50.00 |
$56.75 |
Jan 2018 – Dec 2018 |
1,000 |
$45.00 |
$55.35 |
Natural Gas Hedging Contracts | |||
NYMEX | |||
Swap Contracts |
|||
Daily Volume (MMBtu/d) |
Swap Price ($ per MMBtu) |
||
Jul 2017 – Dec 2017 |
11,000 |
$3.00 |
|
Collar Contracts | |||
Daily Volume (MMBtu/d) |
Put Price ($ per MMBtu) |
Call Price ($ per MMBtu) | |
Jan 2018 – Dec 2018 |
6,000 |
$2.75 |
$3.24 |
Other Information
Stone has planned a conference call for 9:00 a.m. Central Time on August 8, 2017 to discuss the operational and financial results for the second quarter of 2017. The call will be available through a live webcast link located in the Investor Center section of the Company's website at www.StoneEnergy.com. The call will also be accessible by dialing (877) 228-3598 and requesting the "Stone Energy Call" approximately ten minutes before the scheduled start time. If unable to participate in the original call, a webcast replay will be available two hours after the call through a link in the Investor Center section of the Company's website.
Non-GAAP Financial Measure
In this press release, we refer to a non-GAAP financial measure we call "discretionary cash flow." Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities. Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by (used in) operating activities or net income (loss), as defined by GAAP. Please see the "Reconciliation of Non-GAAP Financial Measure" schedules for reconciliations of discretionary cash flow to net cash provided by (used in) operating activities.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Estimates for Stone's future production volumes are based on assumptions of capital expenditures levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance and uptime estimates, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates, if provided, will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
STONE ENERGY CORPORATION SUMMARY STATISTICS (Unaudited) | ||||||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||||||
Three Months |
Three Months June 30, 2016 |
Combined Six |
Six Months June 30, 2016 | |||||||||||||
PRODUCTION QUANTITIES |
||||||||||||||||
Oil (MBbls) |
1,299 |
1,548 |
2,617 |
3,183 |
||||||||||||
Natural gas (MMcf) |
2,555 |
5,100 |
8,410 |
11,946 |
||||||||||||
Natural gas liquids (MBbls) |
148 |
244 |
587 |
608 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
1,873 |
2,642 |
4,606 |
5,782 |
||||||||||||
AVERAGE DAILY PRODUCTION |
||||||||||||||||
Oil (MBbls) |
14.3 |
17.0 |
14.5 |
17.5 |
||||||||||||
Natural gas (MMcf) |
28.1 |
56.0 |
46.5 |
65.6 |
||||||||||||
Natural gas liquids (MBbls) |
1.6 |
2.7 |
3.2 |
3.3 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
20.6 |
29.0 |
25.4 |
31.8 |
||||||||||||
REVENUE DATA (in thousands)(3) |
||||||||||||||||
Oil revenue |
$61,688 |
$72,711 |
$127,552 |
$132,986 |
||||||||||||
Natural gas revenue |
6,540 |
12,553 |
22,226 |
27,726 |
||||||||||||
Natural gas liquids revenue |
3,014 |
3,718 |
12,497 |
8,453 |
||||||||||||
Total oil, natural gas and NGLs revenue |
$71,242 |
$88,982 |
$162,275 |
$169,165 |
||||||||||||
AVERAGE REALIZED PRICES (3) |
||||||||||||||||
Oil (per Bbl) |
$47.49 |
$46.97 |
$48.74 |
$41.78 |
||||||||||||
Natural gas (per Mcf) |
2.56 |
2.46 |
2.64 |
2.32 |
||||||||||||
Natural gas liquids (per Bbl) |
20.36 |
15.24 |
21.29 |
13.90 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
38.04 |
33.68 |
35.23 |
29.26 |
||||||||||||
AVERAGE COSTS PER BOE |
||||||||||||||||
Lease operating expenses |
$8.88 |
$7.13 |
$6.56 |
$6.64 |
||||||||||||
Transp, processing and gathering expenses |
0.97 |
2.72 |
1.93 |
1.39 |
||||||||||||
Salaries, general and administrative expenses |
9.88 |
7.58 |
6.83 |
5.67 |
||||||||||||
DD&A expense on oil and gas properties |
17.22 |
17.08 |
18.35 |
18.26 |
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the six month period ended June 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The financial information in the Consolidated Statement of Operations and Reconciliations of Non-GAAP Financial Measures on the following pages provides the Successor's and the Predecessor's GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information about production, revenues, commodity prices and costs that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | ||||||||
Successor |
Predecessor | |||||||
Three Months |
Three Months | |||||||
Operating revenue:(1) |
||||||||
Oil production |
$61,688 |
$72,711 |
||||||
Natural gas production |
6,540 |
12,553 |
||||||
Natural gas liquids production |
3,014 |
3,718 |
||||||
Other operational income |
27 |
337 |
||||||
Derivative income, net |
5,453 |
— |
||||||
Total operating revenue |
76,722 |
89,319 |
||||||
Operating expenses: |
||||||||
Lease operating expenses |
16,636 |
18,826 |
||||||
Transportation, processing and gathering expenses |
1,825 |
7,183 |
||||||
Production taxes |
193 |
578 |
||||||
Depreciation, depletion and amortization |
33,153 |
46,231 |
||||||
Write-down of oil and gas properties |
— |
118,649 |
||||||
Accretion expense |
8,702 |
10,082 |
||||||
Salaries, general and administrative expenses |
18,509 |
20,014 |
||||||
Incentive compensation expense |
— |
4,670 |
||||||
Restructuring fees |
322 |
9,436 |
||||||
Other operational expenses |
1,928 |
27,680 |
||||||
Derivative expense, net |
— |
626 |
||||||
Total operating expenses |
81,268 |
263,975 |
||||||
Gain on Appalachia Properties divestiture |
27 |
— |
||||||
Loss from operations |
(4,519) |
(174,656) |
||||||
Other (income) expenses: |
||||||||
Interest expense |
3,601 |
17,599 |
||||||
Interest income |
(169) |
(302) |
||||||
Other income |
(312) |
(270) |
||||||
Other expense |
814 |
9 |
||||||
Total other expense |
3,934 |
17,036 |
||||||
Loss before income taxes |
(8,453) |
(191,692) |
||||||
Provision (benefit) for income taxes: |
||||||||
Current |
(1,992) |
(2,113) |
||||||
Deferred |
— |
6,182 |
||||||
Total income taxes |
(1,992) |
4,069 |
||||||
Net loss |
($6,461) |
($195,761) |
||||||
Net loss per share |
($0.32) |
($35.05) |
||||||
Average shares outstanding – diluted |
19,997 |
5,585 |
(1) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | ||||||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||||||
Combined Six |
Period from |
Period from |
Six Months | |||||||||||||
Operating revenue:(3) |
||||||||||||||||
Oil production |
$127,552 |
$81,715 |
$45,837 |
$132,986 |
||||||||||||
Natural gas production |
22,226 |
8,750 |
13,476 |
27,726 |
||||||||||||
Natural gas liquids production |
12,497 |
3,791 |
8,706 |
8,453 |
||||||||||||
Other operational income |
1,079 |
176 |
903 |
693 |
||||||||||||
Derivative income, net |
8,099 |
8,099 |
— |
— |
||||||||||||
Total operating revenue |
171,453 |
102,531 |
68,922 |
169,858 |
||||||||||||
Operating expenses: |
||||||||||||||||
Lease operating expenses |
30,196 |
21,376 |
8,820 |
38,373 |
||||||||||||
Transportation, processing and gathering expenses |
8,902 |
1,969 |
6,933 |
8,024 |
||||||||||||
Production taxes |
940 |
258 |
682 |
1,059 |
||||||||||||
Depreciation, depletion and amortization |
86,429 |
49,000 |
37,429 |
107,789 |
||||||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
247,853 |
||||||||||||
Accretion expense |
17,050 |
11,603 |
5,447 |
20,065 |
||||||||||||
Salaries, general and administrative expenses |
31,460 |
21,831 |
9,629 |
32,768 |
||||||||||||
Incentive compensation expense |
2,008 |
— |
2,008 |
9,649 |
||||||||||||
Restructuring fees |
610 |
610 |
— |
10,389 |
||||||||||||
Other operational expenses |
3,119 |
2,589 |
530 |
40,207 |
||||||||||||
Derivative expense, net |
1,778 |
— |
1,778 |
488 |
||||||||||||
Total operating expenses |
438,927 |
365,671 |
73,256 |
516,664 |
||||||||||||
Gain on Appalachia Properties divestiture |
213,480 |
27 |
213,453 |
— |
||||||||||||
Income (loss) from operations |
(53,994) |
(263,113) |
209,119 |
(346,806) |
||||||||||||
Other (income) expenses: |
||||||||||||||||
Interest expense |
4,791 |
4,791 |
— |
32,840 |
||||||||||||
Interest income |
(254) |
(209) |
(45) |
(416) |
||||||||||||
Other income |
(758) |
(443) |
(315) |
(568) |
||||||||||||
Other expense |
14,150 |
814 |
13,336 |
11 |
||||||||||||
Reorganization items, net |
(437,744) |
— |
(437,744) |
— |
||||||||||||
Total other (income) expense |
(419,815) |
4,953 |
(424,768) |
31,867 |
||||||||||||
Income (loss) before income taxes |
365,821 |
(268,066) |
633,887 |
(378,673) |
||||||||||||
Provision (benefit) for income taxes: |
||||||||||||||||
Current |
1,578 |
(1,992) |
3,570 |
(3,187) |
||||||||||||
Deferred |
— |
— |
— |
9,059 |
||||||||||||
Total income taxes |
1,578 |
(1,992) |
3,570 |
5,872 |
||||||||||||
Net income (loss) |
$364,243 |
($266,074) |
$630,317 |
($384,545) |
||||||||||||
Net income (loss) per share |
($13.31) |
$110.99 |
($68.94) |
|||||||||||||
Average shares outstanding – diluted |
19,997 |
5,634 |
5,578 |
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the six month period ended June 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE DISCRETIONARY CASH FLOW to NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (In thousands) (Unaudited) | ||||||||
Successor |
Predecessor | |||||||
Three Months |
Three Months | |||||||
Net loss as reported |
($6,461) |
($195,761) |
||||||
Reconciling items: |
||||||||
Depreciation, depletion and amortization |
33,153 |
46,231 |
||||||
Write-down of oil and gas properties |
— |
118,649 |
||||||
Deferred income tax provision |
— |
6,182 |
||||||
Accretion expense |
8,702 |
10,082 |
||||||
Gain on sale of oil and gas properties |
(27) |
— |
||||||
Non-cash stock compensation expense |
374 |
2,370 |
||||||
Non-cash interest expense |
— |
4,768 |
||||||
Non-cash derivative (income) expense(1) |
(4,185) |
833 |
||||||
Other non-cash expense |
821 |
— |
||||||
Discretionary cash flow |
32,377 |
(6,646) |
||||||
Change in income taxes payable |
(3,578) |
(2,113) |
||||||
Settlement of asset retirement obligations |
(15,236) |
(6,039) |
||||||
Investment in derivative contracts |
(276) |
— |
||||||
Other working capital changes |
3,974 |
(16,771) |
||||||
Net cash provided by (used in) operating activities |
$17,261 |
($31,569) |
||||||
(1) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE DISCRETIONARY CASH FLOW to NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (In thousands) (Unaudited) | ||||||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||||||
Combined Six |
Period from |
Period from |
Six Months | |||||||||||||
Net income (loss) as reported |
$364,243 |
($266,074) |
$630,317 |
($384,545) |
||||||||||||
Reconciling items: |
||||||||||||||||
Depreciation, depletion and amortization |
86,429 |
49,000 |
37,429 |
107,789 |
||||||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
247,853 |
||||||||||||
Deferred income tax provision |
— |
— |
— |
9,059 |
||||||||||||
Accretion expense |
17,050 |
11,603 |
5,447 |
20,065 |
||||||||||||
Gain on sale of oil and gas properties |
(213,480) |
(27) |
(213,453) |
— |
||||||||||||
Non-cash stock compensation expense |
3,036 |
391 |
2,645 |
4,682 |
||||||||||||
Non-cash interest expense |
— |
— |
— |
9,403 |
||||||||||||
Non-cash derivative (income) expense(3) |
(4,891) |
(6,669) |
1,778 |
1,025 |
||||||||||||
Non-cash reorganization items |
(458,677) |
— |
(458,677) |
— |
||||||||||||
Other non-cash expense |
993 |
821 |
172 |
6,081 |
||||||||||||
Discretionary cash flow |
51,138 |
45,480 |
5,658 |
21,412 |
||||||||||||
Change in income taxes payable |
(8)) |
(3,578) |
3,570 |
(3,187) |
||||||||||||
Settlement of asset retirement obligations |
(36,477) |
(32,836) |
(3,641) |
(10,706) |
||||||||||||
Investment in derivative contracts |
(6,152) |
(2,416) |
(3,736) |
— |
||||||||||||
Other working capital changes |
13,522 |
21,257 |
(7,735) |
(9,649) |
||||||||||||
Net cash provided by (used in) operating activities |
$22,023 |
$27,907 |
($5,884) |
($2,130) |
||||||||||||
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the six month period ended June 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited) | |||||||||
Successor |
Predecessor | ||||||||
June 30, |
December 31, | ||||||||
2017 |
2016 | ||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$207,979 |
$190,581 |
|||||||
Restricted cash |
48,641 |
— |
|||||||
Accounts receivable |
34,328 |
48,464 |
|||||||
Fair value of derivative contracts |
7,965 |
— |
|||||||
Current income tax receivable |
26,095 |
26,086 |
|||||||
Other current assets |
8,627 |
10,151 |
|||||||
Total current assets |
333,635 |
275,282 |
|||||||
Oil and gas properties, full cost method of accounting: |
|||||||||
Proved |
702,751 |
9,616,236 |
|||||||
Less: accumulated depreciation, depletion and amortization |
(304,202) |
(9,178,442) |
|||||||
Net proved oil and gas properties |
398,549 |
437,794 |
|||||||
Unevaluated |
96,011 |
373,720 |
|||||||
Other property and equipment, net |
19,191 |
26,213 |
|||||||
Fair value of derivative contracts |
3,382 |
— |
|||||||
Other assets, net |
17,951 |
26,474 |
|||||||
Total assets |
$868,719 |
$1,139,483 |
|||||||
Liabilities and Stockholders' Equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable to vendors |
$19,317 |
$19,981 |
|||||||
Undistributed oil and gas proceeds |
968 |
15,073 |
|||||||
Accrued interest |
6,226 |
809 |
|||||||
Fair value of derivative contracts |
305 |
— |
|||||||
Asset retirement obligations |
85,000 |
88,000 |
|||||||
Current portion of long-term debt |
416 |
408 |
|||||||
Other current liabilities |
26,369 |
18,602 |
|||||||
Total current liabilities |
138,601 |
142,873 |
|||||||
Bank credit facility |
— |
341,500 |
|||||||
7.5% Senior Second Lien Notes due 2022 |
225,000 |
— |
|||||||
4.2% Building Loan |
10,711 |
10,876 |
|||||||
Asset retirement obligations |
194,808 |
154,019 |
|||||||
Other long-term liabilities |
10,652 |
17,315 |
|||||||
Total liabilities not subject to compromise |
579,772 |
666,583 |
|||||||
Liabilities subject to compromise |
— |
1,110,182 |
|||||||
Total liabilities |
579,772 |
1,776,765 |
|||||||
Predecessor common stock |
— |
56 |
|||||||
Predecessor treasury stock |
— |
(860) |
|||||||
Predecessor additional paid-in capital |
— |
1,659,731 |
|||||||
Successor common stock |
200 |
— |
|||||||
Successor additional paid-in capital |
554,821 |
— |
|||||||
Accumulated deficit |
(266,074) |
(2,296,209) |
|||||||
Total stockholders' equity |
288,947 |
(637,282) |
|||||||
Total liabilities and stockholders' equity |
$868,719 |
$1,139,483 |
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-announces-second-quarter-2017-results-300500548.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., July 24, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE:SGY) today announced it plans to report second quarter 2017 earnings results on Monday, August 7, 2017, after the market close. The release will provide financial and operational results, and provide production and expense guidance. The company has also scheduled a conference call on Tuesday, August 8, 2017 at 9:00 a.m. Central Time to provide additional commentary.
The call will be available through a live webcast link located in the Investor Center section of the company's website at www.StoneEnergy.com. The call will also be accessible by dialing (877) 228-3598 and requesting the "Stone Energy Call" approximately ten minutes before the scheduled start time. If unable to participate in the original call, a webcast replay will be available two hours after the call through a link in the Investor Center section of the company's website.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
View original content with multimedia:http://www.prnewswire.com/news-releases/stone-energy-corporation-schedules-second-quarter-2017-earnings-release-and-conference-call-300492774.html
SOURCE Stone Energy Corporation
LAFAYETTE, La., June 9, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that drilling operations on its Rampart Deep Prospect in Mississippi Canyon Block 116 were initiated on June 3, 2017. The Stone generated prospect will be drilled and operated by Deep Gulf Energy III, LLC, and is expected to be tied back to Stone's 100% owned Pompano platform, if successful. The prospect, which targets the Miocene interval, is located nine miles from the Pompano platform and is estimated to take two months to drill. After a sell down of a portion of its position, Stone holds a 40% working interest in the well and received leasehold and other reimbursable costs. Additional working interest owners are Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.
Recently, Stone implemented additional workforce reductions in order to better align its employee base with current business needs. We expect this action to result in an approximate 25% decrease in our salaries, general and administrative cash costs for the second half of 2017, translating into an expected quarterly cash SG&A outlay, before capitalization, of approximately $11 million to $12 million per quarter, excluding non-recurring and non-cash items. We project an overall SG&A reduction of approximately 50% from 2016.
Interim Chief Executive Officer and President James M. Trimble stated, "The Rampart Deep well is an important step in Stone's forward plans. A successful test of the Rampart Deep Prospect could lead to a multi-well development program, with a tie back to our Pompano platform further leveraging this facility. Partnering with Deep Gulf Energy and Ridgewood on this well reflects our renewed focus on efficient use of capital, and the reductions in SG&A reflect our continued commitment to manage our costs to better position Stone to be competitive in the current commodity price environment."
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., May 8, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced financial and operational results for the three months ended March 31, 2017. Some items of note include:
Financial Results
For the three months ended March 31, 2017, Stone reported net income of $370.7 million on oil and gas revenue of $91.0 million. The adjusted net loss for the same period, which excludes a net gain related to reorganization-related items of $637.9 million and impairment charges of $256.4 million, was $8.4 million. Net cash provided by operating activities for the three months ended March 31, 2017 totaled $4.8 million, while discretionary cash flow for the same period totaled $18.8 million. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of adjusted net loss, a non-GAAP financial measure, to net income, and discretionary cash flow, a non-GAAP financial measure, to net cash provided by operating activities.
Net daily production during the three months ended March 31, 2017 averaged 30.4 thousand barrels of oil equivalent ("MBoe") per day, which included approximately 19.6 MBoe per day from the Gulf of Mexico ("GOM") basin. The GOM basin production mix for this period was approximately 71% oil, 23% natural gas and 6% natural gas liquids ("NGLs"). We expect production rates from the GOM basin to range from 19 MBoe per day to 21 MBoe per day for the second quarter of 2017.
Prices realized during the three months ended March 31, 2017 averaged $49.97 per barrel of oil, $2.68 per Mcf of natural gas and $21.60 per barrel of NGLs. Average realized prices for the first quarter of 2016 were $36.87 per barrel of oil, $2.22 per Mcf of natural gas and $13.01 per barrel of NGLs.
Lease operating expenses during the three months ended March 31, 2017 totaled $13.6 million ($4.96 per Boe) including lease operating expenses for the GOM basin of approximately $11.3 million. We expect lease operating expenses for the full year of 2017 to range from $66 million to $72 million, which includes additional planned major maintenance projects scheduled for the second and third quarters of 2017.
Transportation, processing and gathering ("TP&G") expenses during the three months ended March 31, 2017 totaled $7.1 million ($2.59 per Boe), which includes TP&G expenses for the GOM basin of approximately $0.3 million. Due to the sale of our Appalachia properties, we expect TP&G expenses to remain under $1 million per quarter for the remaining quarters of 2017.
Depreciation, depletion and amortization ("DD&A") expense on oil and gas properties for the three months ended March 31, 2017 totaled $52.3 million ($19.13 per Boe). We expect DD&A for the GOM basin to range from $18 per Boe to $19 per Boe for each of the remaining quarters of 2017.
The March 31, 2017 write-down of oil and gas properties of $256.4 million was primarily due to differences between the trailing twelve-month average pricing assumption required by the Securities and Exchange Commission when calculating the ceiling test under the full cost method of accounting and the forward prices used in fresh start accounting to estimate the fair value of our oil and gas properties as of the fresh start reporting date of February 28, 2017.
Salaries, general and administrative ("SG&A") expenses (exclusive of incentive compensation) for the three months ended March 31, 2017 were $13.0 million ($4.74 per Boe). We expect cash SG&A expenses before capitalization for subsequent quarters in 2017 to range from $12 million to $14 million excluding non-recurring items, non-cash items and incentive compensation.
Accretion expense for the three months ended March 31, 2017 was $8.3 million. As a result of the revaluation of our asset retirement obligations in accordance with the implementation of fresh start accounting, we expect accretion expense to approximate $9 million in future quarters of 2017.
Interest expense for the three months ended March 31, 2017 was $1.2 million, which primarily included interest associated with the Company's $225 million of 7.50% Senior Second Lien Notes due 2022 that were issued on the February 28, 2017 effective date of Stone's plan of reorganization.
Other expense for the three months ended March 31, 2017 of $13.3 million was primarily attributable to the previously announced break-up fee paid to TH Exploration III, LLC, an affiliate of Tug Hill, Inc., upon the close of the sale of the Appalachia properties to EQT Corporation, through its wholly owned subsidiary EQT Production Company ("EQT").
Reorganization items for the three months ended March 31, 2017 generated income of $437.7 million, resulting from fresh start accounting valuations adjustments of $235.8 million and a $230.1 million gain on the settlement of liabilities subject to compromise, which were partially offset by reorganization professional fees and other expenses. Since the Company emerged from chapter 11 reorganization on February 28, 2017, we do not expect to incur additional reorganization expenses.
Fresh Start Accounting and Hedge Accounting Changes
Upon emergence from chapter 11 reorganization, Stone adopted fresh start accounting effective February 28, 2017. Under the principles of fresh start accounting, a new reporting entity was created, and Stone's assets and liabilities were recorded at their fair values as of the fresh start reporting date. Also, effective January 1, 2017, we have elected to not designate our 2017 and 2018 commodity derivative contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result, Stone's financial statements dated on or after March 1, 2017 will not be comparable with financial statements issued prior to that date. References to "Predecessor" refer to Stone prior to the adoption of fresh start accounting while references to "Successor" refer to Stone subsequent to the adoption of fresh start accounting. Please review Stone's Quarterly Report on Form 10-Q for the period ended March 31, 2017 for further details regarding fresh start accounting and the financial information presented at the end of this press release.
Capital Expenditures Update
Capital expenditures for the three months ended March 31, 2017 were approximately $37.3 million, which included approximately $13 million associated with drilling and completing the Mt. Bona well at the Pompano platform and approximately $21 million of plugging and abandonment expenditures, approximately $19 million of which were attributable to temporary plugging and abandonment operations on the Amethyst well. In addition, $3.3 million of SG&A expenses and $2.9 million of interest were capitalized during the three months ended March 31, 2017.
Our initial capital expenditures budget for 2017 of $181 million includes approximately $27 million for exploration opportunities, $54 million for development activities and $100 million for the plugging and abandonment of idle wells and platforms, and excludes capitalized SG&A and interest expenses. Stone is evaluating various acquisition opportunities, which, if successful, would be additive to the current capital expenditures budget.
Liquidity Update
As of March 31, 2017, Stone's liquidity approximated $391.8 million, which included $137.5 million of undrawn capacity under the Company's revolving credit facility plus approximately $180.2 million in cash and cash equivalents and approximately $74.1 million in cash being held in a restricted account to satisfy near-term plugging and abandonment activities. As of May 8, 2017, Stone had cash on hand of approximately $175.6 million, and $72.3 million in cash held in the restricted abandonment account.
As of March 31, 2017, Stone's outstanding debt totaled approximately $235.8 million, consisting of $225 million of 7.50% Senior Second Lien Notes due 2022 and approximately $10.8 million outstanding under a building loan. Further, the Company had no outstanding borrowings and outstanding letters of credit of approximately $12.5 million under its $200 million reserve-based revolving credit facility, with available borrowings thereunder of $150 million until November 1, 2017.
We expect that cash flows from operating activities, cash on hand and availability under our revolving credit facility will be adequate to meet the current 2017 operating and capital expenditures needs of the Company.
Sale of Appalachia Properties
As previously announced, on February 27, 2017, Stone completed the disposition of producing properties and acreage, including approximately 86,000 net acres, in the Appalachian regions of Pennsylvania and West Virginia (collectively, the "Properties") to EQT, for a purchase price of $527 million, subject to customary purchase price adjustments and an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments. The sale of the Properties was consummated in accordance with the terms of a purchase and sale agreement, dated February 9, 2017, by and between the Company and EQT.
At December 31, 2016, the estimated proved reserves associated with the Properties represented approximately 34% of the Predecessor Company's total estimated proved oil and natural gas reserves on a volume equivalent basis.
Strategic Review
As previously announced, following the successful completion of the Company's financial restructuring and emergence from Chapter 11 reorganization, Stone's Board of Directors (the "Board") retained Petrie Partners LLC to assist the Board in its determination of the Company's strategic direction, including assessing its various strategic alternatives. The Board intends to explore all potential avenues to increase stockholder value, which may include the acquisition of additional assets, accessing external capital, a business combination, or another strategic transaction. No decision has been made with regard to any alternatives, and there can be no assurance that this assessment will result in any transaction.
Operational Update
Pompano Platform Drilling Program (Deep Water). In January 2017, we reinitiated platform drilling operations on the Mt. Bona prospect. We completed the well at the end of April 2017, and it is currently producing approximately 950 Boe per day. Stone holds a 100% working interest in this well. We have decided to postpone the drilling of the Providence prospect utilizing the platform drilling rig, and will release the platform drilling rig as of mid-summer 2017.
Mississippi Canyon 26 – No. 1 Amethyst Well (Deep Water). As previously reported, on November 30, 2016, we performed a routine shut in of the Amethyst well to record pressures and determined that pressure communication existed between the production tubing and production casing strings, resulting from a suspected tubing leak. In late April 2017, we completed temporary abandonment operations and are evaluating the well for potential sidetrack operations, assuming we can secure an appropriate partner.
Mississippi Canyon 117 - Rampart Deep and Rampart Shallow (Deep Water). The Rampart exploration prospects (Deep and Shallow) target the Miocene interval and are expected to be tied back to the Pompano platform, if successful. Stone currently holds a 100% working interest in the prospect, but has been in discussions with deep water operators to reduce its working interest to 50% or less. The prospects are located nine miles from Stone's Pompano platform, and each well is estimated to take three months to drill.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. If successful, a tie-back to the Pompano platform is likely. Stone currently holds a 100% working interest in the prospect, but has been in discussions with other deep water operators to reduce its working interest to 50% or less. The well is estimated to take three months to drill.
Hedge Position
The following table illustrates our derivative positions for 2017 and 2018 as of May 8, 2017:
Oil Hedging Contracts | |||||||
NYMEX | |||||||
Put Contracts |
Swap Contracts | ||||||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Daily Volume (Bbls/d) |
Swap Price ($ per Bbl) | ||||
Feb 2017 – Dec 2017 |
2,000 |
$50.00 |
Mar 2017 – Dec 2017 |
1,000 |
$53.90 | ||
Jan 2018 – Dec 2018 |
1,000 |
$54.00 |
Jan 2018 – Dec 2018 |
1,000 |
$52.50 | ||
Jan 2018 – Dec 2018 |
1,000 |
$45.00 |
Collar Contracts | |||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Call Price ($ per Bbl) | |
Mar 2017 – Dec 2017 |
1,000 |
$50.00 |
$56.45 |
Apr 2017 – Dec 2017 |
1,000 |
$50.00 |
$56.75 |
Other Information
Stone Energy will not be hosting a conference call to discuss the operational and financial results for the three months ended March 31, 2017.
Non-GAAP Financial Measures
In this press release, we refer to non-GAAP financial measures we call "discretionary cash flow" and "adjusted net loss." Management believes adjusted net loss is useful to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities. Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by (used in) operating activities or net income (loss), as defined by GAAP. Please see the "Reconciliation of Non-GAAP Financial Measure" schedules for a reconciliation of adjusted net loss to net income (loss) and a reconciliation of discretionary cash flow to net cash provided by (used in) operating activities.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico basin; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein, except as required by law.
Estimates for Stone's future production volumes are based on assumptions of capital expenditures levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance and uptime estimates, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates, if provided, will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
STONE ENERGY CORPORATION SUMMARY STATISTICS (Unaudited)
| ||||||||
Three Months Ended March 31, | ||||||||
2017 (1) (2) |
2016 | |||||||
PRODUCTION QUANTITIES |
||||||||
Oil (MBbls) |
1,318 |
1,635 |
||||||
Natural gas (MMcf) |
5,855 |
6,846 |
||||||
Natural gas liquids (MBbls) |
439 |
364 |
||||||
Oil, natural gas and NGLs (MBoe) |
2,733 |
3,140 |
||||||
AVERAGE DAILY PRODUCTION |
||||||||
Oil (MBbls) |
14.6 |
18.2 |
||||||
Natural gas (MMcf) |
65.1 |
76.1 |
||||||
Natural gas liquids (MBbls) |
4.9 |
4.0 |
||||||
Oil, natural gas and NGLs (MBoe) |
30.4 |
34.9 |
||||||
REVENUE DATA (in thousands)(3) |
||||||||
Oil revenue |
$65,864 |
$60,275 |
||||||
Natural gas revenue |
15,686 |
15,173 |
||||||
Natural gas liquids revenue |
9,483 |
4,735 |
||||||
Total oil, natural gas and NGLs revenue |
$91,033 |
$80,183 |
||||||
AVERAGE REALIZED PRICES (3) |
||||||||
Oil (per Bbl) |
$49.97 |
$36.87 |
||||||
Natural gas (per Mcf) |
2.68 |
2.22 |
||||||
Natural gas liquids (per Bbl) |
21.60 |
13.01 |
||||||
Oil, natural gas and NGLs (per Boe) |
33.31 |
25.54 |
||||||
AVERAGE COSTS |
||||||||
Lease operating expenses (per Boe) |
$4.96 |
$6.23 |
||||||
Salaries, general and administrative expenses (per Boe) |
4.74 |
4.06 |
||||||
DD&A expense on oil and gas properties (per Boe) |
19.13 |
19.25 |
||||||
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three month period ended March 31, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The financial information in the Consolidated Statement of Operations and Reconciliations of Non-GAAP Financial Measures on the following pages provides the Successor's and the Predecessor's GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information about production, revenues, commodity prices and costs that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
| ||||||||||||||||||||||
Successor |
Predecessor |
Predecessor |
||||||||||||||||||||
Combined |
Period from |
Period from |
Three Months |
|||||||||||||||||||
Operating revenue:(3) |
||||||||||||||||||||||
Oil production |
$65,864 |
$20,027 |
$45,837 |
$60,275 |
||||||||||||||||||
Natural gas production |
15,686 |
2,210 |
13,476 |
15,173 |
||||||||||||||||||
Natural gas liquids production |
9,483 |
777 |
8,706 |
4,735 |
||||||||||||||||||
Other operational income |
1,052 |
149 |
903 |
356 |
||||||||||||||||||
Derivative income, net |
2,646 |
2,646 |
— |
138 |
||||||||||||||||||
Total operating revenue |
94,731 |
25,809 |
68,922 |
80,677 |
||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||
Lease operating expenses |
13,560 |
4,740 |
8,820 |
19,547 |
||||||||||||||||||
Transportation, processing and gathering expenses |
7,077 |
144 |
6,933 |
841 |
||||||||||||||||||
Production taxes |
747 |
65 |
682 |
481 |
||||||||||||||||||
Depreciation, depletion and amortization |
53,276 |
15,847 |
37,429 |
61,558 |
||||||||||||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
129,204 |
||||||||||||||||||
Accretion expense |
8,348 |
2,901 |
5,447 |
9,983 |
||||||||||||||||||
Salaries, general and administrative expenses |
12,951 |
3,322 |
9,629 |
12,754 |
||||||||||||||||||
Incentive compensation expense |
2,008 |
— |
2,008 |
4,979 |
||||||||||||||||||
Restructuring fees |
288 |
288 |
— |
953 |
||||||||||||||||||
Other operational expenses |
1,191 |
661 |
530 |
12,527 |
||||||||||||||||||
Derivative expense, net |
1,778 |
— |
1,778 |
— |
||||||||||||||||||
Total operating expenses |
357,659 |
284,403 |
73,256 |
252,827 |
||||||||||||||||||
Gain on Appalachia Properties divestiture |
213,453 |
— |
213,453 |
— |
||||||||||||||||||
Income (loss) from operations |
(49,475) |
(258,594) |
209,119 |
(172,150) |
||||||||||||||||||
Other (income) expenses: |
||||||||||||||||||||||
Interest expense |
1,190 |
1,190 |
— |
15,241 |
||||||||||||||||||
Interest income |
(85) |
(40) |
(45) |
(114) |
||||||||||||||||||
Other income |
(446) |
(131) |
(315) |
(298) |
||||||||||||||||||
Other expense |
13,336 |
— |
13,336 |
2 |
||||||||||||||||||
Reorganization items, net |
(437,744) |
— |
(437,744) |
— |
||||||||||||||||||
Total other (income) expense |
(423,749) |
1,019 |
(424,768) |
14,831 |
||||||||||||||||||
Income (loss) before income taxes |
374,274 |
(259,613) |
633,887 |
(186,981) |
||||||||||||||||||
Provision (benefit) for income taxes: |
||||||||||||||||||||||
Current |
3,570 |
— |
3,570 |
(1,074) |
||||||||||||||||||
Deferred |
— |
— |
— |
2,877 |
||||||||||||||||||
Total income taxes |
3,570 |
— |
3,570 |
1,803 |
||||||||||||||||||
Net income (loss) |
$370,704 |
($259,613) |
$630,317 |
($188,784) |
||||||||||||||||||
Net income (loss) per share |
($12.98) |
$110.99 |
($33.89) |
|||||||||||||||||||
Average shares outstanding - diluted |
19,997 |
5,634 |
5,571 |
|||||||||||||||||||
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three month period ended March 31, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE DISCRETIONARY CASH FLOW to NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (In thousands) (Unaudited)
| ||||||||||||||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||||||||||||||
Combined Three |
Period from |
Period from |
Three Months | |||||||||||||||||||||
Net income (loss) as reported |
$370,704 |
($259,613) |
$630,317 |
($188,784) |
||||||||||||||||||||
Reconciling items: |
||||||||||||||||||||||||
Depreciation, depletion and amortization |
53,276 |
15,847 |
37,429 |
61,558 |
||||||||||||||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
129,204 |
||||||||||||||||||||
Deferred income tax provision |
— |
— |
— |
2,877 |
||||||||||||||||||||
Accretion expense |
8,348 |
2,901 |
5,447 |
9,983 |
||||||||||||||||||||
Gain on sale of oil and gas properties |
(213,453) |
— |
(213,453) |
— |
||||||||||||||||||||
Non-cash stock compensation expense |
2,662 |
17 |
2,645 |
2,312 |
||||||||||||||||||||
Non-cash interest expense |
— |
— |
— |
4,635 |
||||||||||||||||||||
Non-cash derivative (income) expense (3) |
(706) |
(2,484) |
1,778 |
192 |
||||||||||||||||||||
Non-cash reorganization items |
(458,677) |
— |
(458,677) |
— |
||||||||||||||||||||
Other non-cash expense |
172 |
— |
172 |
6,081 |
||||||||||||||||||||
Discretionary cash flow |
18,761 |
13,103 |
5,658 |
28,058 |
||||||||||||||||||||
Change in income taxes payable |
3,570 |
— |
3,570 |
(1,074) |
||||||||||||||||||||
Settlement of asset retirement obligations |
(21,241) |
(17,600) |
(3,641) |
(4,667) |
||||||||||||||||||||
Investment in derivative contracts |
(5,876) |
(2,140) |
(3,736) |
— |
||||||||||||||||||||
Other working capital changes |
9,548 |
17,283 |
(7,735) |
7,122 |
||||||||||||||||||||
Net cash provided by (used in) operating activities |
$4,762 |
$10,646 |
($5,884) |
$29,439 |
||||||||||||||||||||
(1) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(2) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three month period ended March 31, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
(3) |
Through December 31, 2016, we designated our commodity derivatives as cash flow hedges for accounting purposes upon entering into the contracts. Accordingly, they were recorded as either an asset or liability measured at fair value and subsequent changes in the derivative's fair value were recognized in stockholders' equity through other comprehensive income (loss), net of related taxes, to the extent the hedge was considered effective. Monthly settlements of effective hedges were reflected in revenue from oil and natural gas production. With respect to our 2017 and 2018 commodity derivative contracts, we have elected to not designate these contracts as cash flow hedges for accounting purposes. Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense. As a result of these mark-to-market adjustments, we will likely experience volatility in earnings from time to time due to commodity price volatility. Further, this change in accounting method effects the comparability of 2017 revenues, average realized prices and derivative income/expense to 2016 revenues, average realized prices and derivative income/expense, respectively. |
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE ADJUSTED NET LOSS to NET INCOME (LOSS) (In thousands) (Unaudited)
| ||||||||||||||||||
Successor |
Predecessor |
Predecessor | ||||||||||||||||
Combined Three |
Period from |
Period from |
Three Months | |||||||||||||||
Net income (loss) as reported |
$370,704 |
($259,613) |
$630,317 |
($188,784) |
||||||||||||||
Reconciling items: |
||||||||||||||||||
Reorganization-related items (1) |
(637,861) |
— |
(637,861) |
— |
||||||||||||||
Tax effect |
240,953 |
— |
240,953 |
— |
||||||||||||||
Write-down of oil and gas properties |
256,435 |
256,435 |
— |
129,204 |
||||||||||||||
Tax effect |
(90,393) |
(90,393) |
— |
(45,544) |
||||||||||||||
Valuation allowance on deferred tax assets |
(148,260) |
91,543 |
(239,803) |
61,067 |
||||||||||||||
Total reconciling items |
(379,126) |
257,585 |
(636,711) |
144,727 |
||||||||||||||
Adjusted net loss |
($8,422) |
($2,028) |
($6,394) |
($44,057) |
||||||||||||||
Net income (loss) per share as reported |
($12.98) |
$110.99 |
($33.89) |
|||||||||||||||
Per share effect of impairment charges and reorganization-related items
|
$12.88 |
($112.12) |
$25.98 |
|||||||||||||||
Net loss per share before impairment charges and reorganization-related items |
($0.10) |
($1.13) |
($7.91) |
|||||||||||||||
(1)Reorganization-related items: |
||||||||||||||||||
Reorganization items |
($437,744) |
— |
($437,744) |
— |
||||||||||||||
Break-up fee and expense reimbursements to Tug Hill (Other expense) |
13,336 |
— |
13,336 |
— |
||||||||||||||
Gain on Appalachia Properties divestiture |
(213,453) |
— |
(213,453) |
— |
||||||||||||||
($637,861) |
— |
($637,861) |
— |
(2) |
Results include operational and financial results from the Appalachia basin through the close of the sale of Appalachia properties on February 27, 2017. |
(3) |
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three month period ended March 31, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor will not be comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh start accounting, combining the results of the Predecessor and Successor provides meaningful information that assists a reader in understanding the Company's financial results for the applicable period. |
STONE ENERGY CORPORATION CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited)
| |||||||||
Successor |
Predecessor | ||||||||
March 31, |
December 31, | ||||||||
2017 |
2016 | ||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$180,239 |
$190,581 |
|||||||
Restricted cash |
74,068 |
— |
|||||||
Accounts receivable |
35,380 |
48,464 |
|||||||
Fair value of derivative contracts |
3,398 |
— |
|||||||
Current income tax receivable |
22,516 |
26,086 |
|||||||
Other current assets |
11,150 |
10,151 |
|||||||
Total current assets |
326,751 |
275,282 |
|||||||
Oil and gas properties, full cost method of accounting: |
|||||||||
Proved |
677,977 |
9,616,236 |
|||||||
Less: accumulated depreciation, depletion and amortization |
(271,960) |
(9,178,442) |
|||||||
Net proved oil and gas properties |
406,017 |
437,794 |
|||||||
Unevaluated |
97,617 |
373,720 |
|||||||
Other property and equipment, net |
20,741 |
26,213 |
|||||||
Fair value of derivative contracts |
3,185 |
— |
|||||||
Other assets, net |
16,993 |
26,474 |
|||||||
Total assets |
$871,304 |
$1,139,483 |
|||||||
Liabilities and Stockholders' Equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable to vendors |
$26,033 |
$19,981 |
|||||||
Undistributed oil and gas proceeds |
1,428 |
15,073 |
|||||||
Accrued interest |
1,649 |
809 |
|||||||
Asset retirement obligations |
85,498 |
88,000 |
|||||||
Current portion of long-term debt |
412 |
408 |
|||||||
Other current liabilities |
17,500 |
18,602 |
|||||||
Total current liabilities |
132,520 |
142,873 |
|||||||
Bank credit facility |
— |
341,500 |
|||||||
7.5% Senior Second Lien Notes due 2022 |
225,000 |
— |
|||||||
4.2% Building Loan |
10,813 |
10,876 |
|||||||
Asset retirement obligations |
189,870 |
154,019 |
|||||||
Other long-term liabilities |
17,557 |
17,315 |
|||||||
Total liabilities not subject to compromise |
575,760 |
666,583 |
|||||||
Liabilities subject to compromise |
— |
1,110,182 |
|||||||
Total liabilities |
575,760 |
1,776,765 |
|||||||
Predecessor common stock |
— |
56 |
|||||||
Predecessor treasury stock |
— |
(860) |
|||||||
Predecessor additional paid-in capital |
— |
1,659,731 |
|||||||
Successor common stock |
200 |
— |
|||||||
Successor additional paid-in capital |
554,957 |
— |
|||||||
Accumulated deficit |
(259,613) |
(2,296,209) |
|||||||
Total stockholders' equity |
295,544 |
(637,282) |
|||||||
Total liabilities and stockholders' equity |
$871,304 |
$1,139,483 |
SOURCE Stone Energy Corporation
LAFAYETTE, La., April 28, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone Energy" or the "Company") today announced that David H. Welch, Chief Executive Officer and President of Stone Energy, informed the Stone Energy Board of Directors of his intention to retire following more than 13 years of service to the Company. Mr. Welch also indicated his intention to step down from his position as a director of the Company.
James M. Trimble, currently an independent director of the Company, has been elected interim Chief Executive Officer and President by the Board of Directors, effective April 28, 2017. The Board also appointed Keith Seilhan, formerly the Company's Senior Vice President – Gulf of Mexico, to the new post of Chief Operating Officer, effective immediately.
Neal P. Goldman, Chairman of the Board of Directors said, "We thank Dave for his years of dedication to Stone Energy. He led the Company with integrity and prioritized safety and environmental protection in all of Stone's operations."
Mr. Goldman continued, "We are thrilled that Jim has agreed to lead our senior management team. The Board is confident that Jim is the right leader to guide the company into a new period of shareholder value creation. He is a proven and highly-respected oil and gas executive with decades of industry experience."
"I am very excited to join the management team at Stone Energy," said Mr. Trimble. "I firmly believe that with the Company's excellent asset base, strong balance sheet, and seasoned executive team, Stone Energy can be a growing player in the offshore sector. I am honored by the confidence placed in me by the Board at this exciting time in the history of Stone Energy."
Mr. Trimble brings more than 35 years of energy industry experience to this position. Mr. Trimble was President and Chief Executive Officer of PDC Energy from 2011 – 2015, a period of exceptional growth and value creation for PDC shareholders. Earlier, he founded and/or led several private oil and gas companies focused primarily on drilling in Texas, Louisiana and Oklahoma. Mr. Trimble served as the Senior Vice President of Exploration and Production for Cabot Oil and Gas for 17 years. He graduated from Mississippi State University with a degree in petroleum engineering.
Mr. Seilhan was named Senior Vice President-Gulf of Mexico in January 2015 and Vice President-Deep Water in February 2013. He previously served as Deep Water Projects Manager beginning in July 2012. Prior to joining Stone Energy, Mr. Seilhan filled various senior leadership and operations roles for Amoco and BP over his 21-year career with those organizations.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., April 11, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that its Board of Directors has retained Petrie Partners LLC to assist the Board in its determination of the Company's strategic direction, including assessing its various strategic alternatives. The Board's decision to retain Petrie follows the successful completion of the Company's financial restructuring and emergence from Chapter 11 reorganization. "We are committed to increasing stockholder value," said Neal Goldman, Chairman of the Board of the Company, "and, as a newly appointed board of directors, we believe that engaging a financial advisor to help us assess the Company and its strategic alternatives will best enable us to establish an appropriate course." The Board intends to explore all potential avenues to increase stockholder value, which may include the acquisition of additional assets, accessing external capital, a business combination, or another strategic transaction. No decision has been made with regard to any alternatives, and there can be no assurance that this assessment will result in any transaction.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical fact, that address activities or results that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing, extent and volatility of changes in commodity prices for oil and gas, operating risks, liquidity risks, our ability to access capital markets, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin.
Contact:
Kenneth H. Beer
Chief Financial Officer
337-521-2210
SOURCE Stone Energy Corporation
LAFAYETTE, La., March 27, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that Kenneth H. Beer, Executive Vice President and Chief Financial Officer will be attending the Scotia Howard Weil 45th Annual Energy Conference at the Roosevelt Hotel in New Orleans, LA on Monday, March 27, 2017. The presentation material will be available in the "Events and Presentations" section of the Company's website, www.StoneEnergy.com within 24 hours of the presentation.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans and Houston. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
SOURCE Stone Energy Corporation
LAFAYETTE, La., March 9, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced that the Company received approval to list its warrants with the CUSIP number 861642 114 (the "Warrants") on the NYSE MKT under the ticker symbol "SGYWS", with trading expected to commence on March 10, 2017.
As previously disclosed, the Warrants were issued to holders of Stone's pre-emergence common stock upon the Company's emergence from chapter 11 reorganization in accordance with the Company's Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016, that was confirmed on February 15, 2017 by the United States Court for the Southern District of Texas. The Warrants have an exercise price of $42.04 per share, as the same may be adjusted pursuant to the terms of the Warrants, and a term of four years, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 28, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced that it successfully completed the conditions precedent to emerging from chapter 11 reorganization, and, accordingly, the Company's Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016 (the "Plan"), that was confirmed on February 15, 2017 by the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, became effective on February 28, 2017 (the "Effective Date"). Terms used but not defined herein have the meanings ascribed to them in the Plan, which was filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on February 15, 2017.
Equity Ownership Summary
As previously disclosed, under the Plan, pre-petition holders of the Company's unsecured notes are receiving 19.0 million New Common Shares, representing 95% of the New Common Shares. The pre-petition stockholders are receiving 1.0 million New Common Shares, or an equivalent of an approximate 1-for-5.674558 reverse stock split (or 0.176263 New Common Shares for each 1 share of Existing Shares), representing 5% of the New Common Shares. Additionally, the pre-petition stockholders are receiving Warrants to purchase 3,529,412 New Common Shares, or approximately 3.529412 Warrants for each 1 New Common Share. This equates to 0.622009 Warrants for each 1 Existing Share (each based on 5,674,558 Existing Shares issued and outstanding and subject to rounding). The Warrants have an exercise price of $42.04 per share, as the same may be adjusted pursuant to the terms of the Warrants, and a term of four years, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company.
Each of the foregoing common equity percentages in the reorganized Company is subject to dilution from the exercise of the Warrants described above and a management incentive plan ("MIP"). Shares authorized under the MIP include 2,614,379 shares, of which the Company issued no shares on the Effective Date. The authorized shares may be issued under the plan in the future at the discretion of the Company's board of directors.
The New Common Shares are scheduled to begin trading on the New York Stock Exchange under the ticker symbol "SGY" at the open of trading hours on March 1, 2017. The Warrants will not be listed on an exchange at this time, but the Company currently expects to list the Warrants on an exchange by the end of March 2017.
Liquidity Update
Upon emergence from bankruptcy, the Company eliminated approximately $1.2 billion in principal amount of outstanding debt, resulting in remaining debt outstanding of approximately $236.3 million, consisting of $225.0 million of 7.50% senior second lien notes due 2022, and approximately $11.3 million outstanding under a building loan. Further, the Company had (i) no outstanding borrowings and outstanding letters of credit of approximately $12.5 million under its $200 million reserve-based revolving credit facility (the "A&R Credit Facility"), with borrowing base availability thereunder of $150 million until November 1, 2017, (ii) approximately $150 million of cash on hand, and (iii) $75 million of cash held in a restricted account to satisfy near-term plugging and abandonment liabilities, pursuant to the terms of the A&R Credit Facility.
Board of Directors
Pursuant to the Plan, as of the Effective Date, the terms of the Company's previous board of directors expired and a new board of directors was appointed. The new board of directors consists of seven members including Neal P. Goldman, John "Brad" Juneau, David Rainey, Charles M. Sledge, James M. Trimble, David N. Weinstein and David H. Welch.
Additional Information
For additional information regarding the Company's emergence from bankruptcy, including biographical information on the Company's new board of directors, please see the Company's Current Report on Form 8-K filed today.
Stone and its wholly-owned subsidiaries filed their voluntary chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas in Houston on December 14, 2016. Information about the bankruptcy cases can be found at http://dm.epiq11.com/StoneEnergy or by calling +1-888-243-5081 (toll-free in North America) or +1-503-520-4474 (outside of North America).
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas; operating risks; liquidity risks, including risks relating to our bank credit facility and our outstanding notes; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 27, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced the close of the sale of its Appalachia properties.
On February 27, 2017, Stone completed its previously announced disposition of approximately 86,000 net acres in the Appalachian regions of Pennsylvania and West Virginia (collectively, the "Properties") to EQT Corporation, through its wholly owned subsidiary EQT Production Company ("EQT"), for a purchase price of $527 million in cash, subject to customary purchase price adjustments and an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments. The sale of the Properties was consummated in accordance with the terms of a purchase and sale agreement, dated February 9, 2017, by and between the Company and EQT (the "EQT PSA"). Under the EQT PSA, the sale of the Properties has an effective date of June 1, 2016. The Company will use a portion of the cash consideration received from the sale of the Properties to fund its cash payment obligations under its Second Amended Joint Prepackaged Plan of Reorganization, dated December 28, 2016 (the "Plan"), that was confirmed on February 15, 2017 by the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. The Company currently expects the Plan to become effective on February 28, 2017, at which point the Company and its debtor affiliates will emerge from bankruptcy; however, there can be no assurance that the effectiveness of the Plan will occur on such date, or at all.
Upon the close of the sale of the Properties to EQT, the purchase and sale agreement (the "Tug Hill PSA") with TH Exploration III, LLC, an affiliate of Tug Hill, Inc. ("Tug Hill"), terminated, and Stone used a portion of the cash consideration received to pay Tug Hill a break-up fee of $10.8 million.
Additional Information
Stone and its wholly-owned subsidiaries filed their voluntary chapter 11 petitions and the Plan in the U.S. Bankruptcy Court for the Southern District of Texas in Houston on December 14, 2016. Information about the bankruptcy cases can be found at http://dm.epiq11.com/StoneEnergy or by calling +1-888-243-5081 (toll-free in North America) or +1 503-520-4474 (outside of North America).
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects of bankruptcy proceedings and emergence from bankruptcy on the market price of the Company's common stock and on the Company's ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico; and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico basin.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 24, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced that the Company received approval to list its new common stock with the new CUSIP number 861642 403 (the "New Common Shares") on the New York Stock Exchange (the "NYSE") under the same NYSE ticker symbol "SGY" as the existing shares of the Company's issued common stock (the "Existing Shares"), in connection with its anticipated emergence from chapter 11 reorganization in accordance with the Company's Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016 (the "Plan") that was confirmed on February 15, 2017 by the United States Court for the Southern District of Texas, Houston Division.
The Company currently expects the Plan to become effective on February 28, 2017, at which point the Company and its debtor affiliates will emerge from bankruptcy (the "Effective Date"); however, there can be no assurance that the effectiveness of the Plan will occur on such date, or at all. The stockholders of record at the close of business on the Effective Date will be entitled to receive New Common Shares as well as warrants with the CUSIP number 861642 114 (the "Warrants") in accordance with the Plan. All Existing Shares (with the CUSIP number 861642 304) will be cancelled after the close of business on the Effective Date, and the New Common Shares and Warrants will be issued at such time.
Assuming emergence on the Effective Date of February 28, 2017, trading in the New Common Shares is expected to commence on March 1, 2017, under the ticker symbol "SGY," which is the same trading symbol used for the Company's common stock previously listed on the NYSE. The Warrants will not be listed on an exchange at this time, but the Company currently expects to list the Warrants on an exchange by the end of March 2017.
Because the Company will retain the ticker symbol "SGY" after the Effective Date of the Plan, holders of Existing Shares, and brokers, dealers and agents effecting trades in Existing Shares, and persons who expect to receive New Common Shares or effect trades in New Common Shares, should take note of the anticipated cancellation of the Existing Shares and issuance of New Common Shares, and the two different CUSIP numbers signifying the Existing Shares and the New Common Shares, in trading or taking any other actions in respect of shares of the Company that trade under the "SGY" ticker.
Pro Forma Equity Ownership Summary
As previously disclosed, under the Plan, assuming emergence on the Effective Date of February 28, 2017, pre-petition holders of the Company's unsecured notes will receive 19.0 million New Common Shares, representing 95% of the New Common Shares. The pre-petition stockholders will receive 1.0 million New Common Shares, or an equivalent of an approximate 1-for-5.674558 reverse stock split (or 0.176263 New Common Shares for each 1 share of Existing Shares), representing 5% of the New Common Shares. Additionally, the pre-petition stockholders will receive Warrants to purchase 3,529,412 New Common Shares, or approximately 3.529412 Warrants for each 1 New Common Share. This would equate to 0.622009 Warrants for each 1 Existing Share (each based on 5,674,558 Existing Shares issued and outstanding and subject to rounding). The Warrants have an exercise price of $42.04 per share, as the same may be adjusted pursuant to the terms of the Warrants, and a term of four years, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company.
Each of the foregoing common equity percentages in the reorganized Company is subject to dilution from the exercise of the Warrants described above and a management incentive plan ("MIP"). Shares authorized under the MIP include 2,614,379 shares, of which the Company expects to issue no shares on the Effective Date. The authorized awards may be awarded in the future at the discretion of the Company's board of directors.
The occurrence of the Effective Date is subject to conditions set forth in the Plan, and the Company can make no assurances as to whether the Effective Date will occur on February 28, 2017, or at all.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility; the ability to consummate the sale of the Appalachia Properties as contemplated by the purchase and sale agreement; the ability to consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects of bankruptcy proceedings and emergence from bankruptcy on the market price of the Company's common stock and on the Company's ability to access the capital markets, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 23, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced financial and operational results for the fourth quarter of 2016. Some items of note from the fourth quarter of 2016 and early 2017 include:
Financial Results
Stone reported a fourth quarter of 2016 net loss of $116.4 million, or $20.76 per share, on oil and gas revenue of $112.2 million, compared to a net loss of $318.7 million, or $57.63 per share, on oil and gas revenue of $106.2 million in the fourth quarter of 2015. The adjusted net loss for the fourth quarter of 2016, which excludes impairment charges of $73.1 million, was $27.3 million, or $4.88 per share. For full year 2016, Stone reported a net loss of $590.6 million, or $105.63 per share, on oil and gas revenue of $374.7 million, compared to a net loss of $1.1 billion, or $197.45 per share, on oil and gas revenue of $532.3 million for full year 2015. The adjusted net loss for full year 2016, which excludes impairment charges of $357.4 million, was $154.5 million, or $27.63 per share. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of adjusted net income or loss, a non-GAAP financial measure, to net loss.
Net cash provided by operating activities totaled $45.7 million for the fourth quarter of 2016, while discretionary cash flow totaled $37.1 million during the fourth quarter of 2016, as compared to $48.5 million and $114.6 million, respectively, during the fourth quarter of 2015. Net cash provided by operating activities totaled $78.6 million for full year 2016, while discretionary cash flow totaled $83.1 million for full year 2016, as compared to $247.5 million and $351.9 million, respectively, during full year 2015. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of discretionary cash flow, a non-GAAP financial measure, to net cash provided by operating activities.
Net daily production during the fourth quarter of 2016 averaged 43.7 thousand barrels of oil equivalent ("MBoe") per day (262 million cubic feet of gas equivalent ("MMcfe") per day), which included approximately 22.3 MBoe (133.8 MMcfe) per day from the Gulf of Mexico (GOM) and 21.4 MBoe (128.2 MMcfe) per day from Appalachia, compared to net daily production of 39.1 MBoe (234.7 MMcfe) per day in the third quarter of 2016 and net daily production of 24.1 MBoe (144.6 Mcfe) per day in the fourth quarter of 2015. The fourth quarter 2016 production mix was approximately 39% oil, 39% natural gas and 22% natural gas liquids ("NGLs"). Net daily production volumes for full year 2016 averaged 36.6 MBoe (219.6 MMcfe) per day, compared to net daily production of 39.6 MBoe (237.8 MMcfe) per day in 2015. The decrease in full year production volumes for 2016 was primarily attributable to the shut-in of production at our Mary field from September 2015 until late June 2016. The production mix for full year 2016 was 47% oil, 37% natural gas and 16% NGLs, while the production mix for full year 2015 was 41% oil, 42% natural gas and 17% NGLs. Excluding Appalachia production, volumes for the Gulf of Mexico basin in January and February 2017 averaged approximately 18 - 20 MBoe per day (108 - 120 MMcfe per day).
Prices realized during the fourth quarter of 2016 averaged $49.39 per barrel of oil, $15.49 per barrel of NGLs and $2.26 per Mcf of natural gas. Average realized prices for the fourth quarter of 2015 were $69.68 per barrel of oil, $18.51 per barrel of NGLs and $2.48 per Mcf of natural gas. Effective hedging transactions increased the average realized price of oil by $2.62 per barrel and increased the average realized price of natural gas by $0.21 per Mcf in the fourth quarter of 2016. Effective hedging transactions increased the average realized price of oil by $29.33 per barrel and increased the average realized price of natural gas by $0.91 per Mcf in the fourth quarter of 2015. Realized prices for the year ended December 31, 2016 averaged $44.59 per barrel of oil, $13.23 per barrel of NGLs and $2.19 per MCF of natural gas, compared to $69.52 per barrel of oil, $13.46 per barrel of NGLs and $2.29 per Mcf of natural gas realized during the year ended December 31, 2015. Effective hedging transactions increased the average realized price of oil by $3.77 per barrel and $22.64 per barrel for the years ended December 31, 2016 and 2015, respectively. Effective hedging transactions increased the average realized price of natural gas by $0.39 in both 2016 and 2015.
Lease operating expenses during the fourth quarter of 2016 totaled $24.3 million ($6.05 per Boe or $1.01 per Mcfe), compared to $20.9 million ($9.42 per Boe or $1.57 per Mcfe) in the fourth quarter of 2015. The quarter over quarter increase is primarily due to well intervention operations on the deep water Amethyst well. Lease operating expenses for the years ended December 31, 2016 and 2015 totaled $79.7 million and $100.1 million, respectively. On a unit of production basis, lease operating expenses were $5.94 per Boe or $0.99 per Mcfe and $6.92 per Boe or $1.15 per Mcfe for the years ended December 31, 2016 and 2015, respectively. The decrease in full year 2016 lease operating expenses is primarily attributable to service cost reductions, the implementation of cost-savings measures, operating efficiencies and the shut-in of production at our Mary field from September 2015 until late June 2016.
Other operational expenses during the fourth quarter of 2016 totaled $6.2 million, compared to $0.7 million in the fourth quarter of 2015. The increase is primarily due to payments related to contract termination charges and stacking charges associated with the platform rig at Pompano. Other operational expenses for the year ended December 31, 2016 totaled $55.5 million, and included $6.1 million relating to a non-cash, cumulative foreign currency loss, $29.9 million in contract termination charges and $17.7 million in rig subsidy and stacking charges, compared to $2.4 million for full year 2015. We expect other operational expenses to decline significantly in the first quarter of 2017 due to the termination of the rig, vessel and other contracts and the return to service of the Pompano platform rig in January 2017.
Transportation, processing and gathering (TP&G) expenses during the fourth quarter of 2016 totaled $9.1 million ($2.27 per Boe or $0.38 per Mcfe), compared to $3.0 million ($1.35 per Boe or $0.23 per Mcfe) during the fourth quarter of 2015. This increase is due primarily to the restoration of production at our Mary field that was shut-in from September 2015 until late June 2016. TP&G expenses for the year ended December 31, 2016 totaled $27.8 million ($2.07 per Boe or $0.35 per Mcfe), which included a $7.9 million Office of Natural Resources Revenue credit, compared to TP&G expenses for 2015 of $58.8 million ($4.07 per Boe or $0.68 Mcfe). The decrease in TP&G expenses during the year ended December 31, 2016 was primarily attributable to the shut-in of production at our Mary field from September 2015 until late June 2016 and the beneficial terms of the interim gas gathering and processing agreement in Appalachia that was executed at the end of the second quarter of 2016. For the year ended December 31, 2016, TP&G expenses attributable to the Appalachia Properties were $28.1 million.
Depreciation, depletion and amortization ("DD&A") expense on oil and gas properties for the fourth quarter of 2016 totaled $53.4 million ($13.02 per Boe or $2.17 per Mcfe), compared to $55.4 million ($24.47 per Boe or $4.08 per Mcfe) in the fourth quarter of 2015. DD&A expense on oil and gas properties for the year ended December 31, 2016 totaled $220.1 million ($16.10 per Boe or $2.68 per Mcfe), compared to DD&A expense of $281.7 million ($19.15 per Boe or $3.19 per Mcfe) for the year ended December 31, 2015. The quarterly and annual decreases are primarily attributable to the ceiling test write-downs of oil and gas properties.
Salaries, general and administrative ("SG&A") expenses (exclusive of incentive compensation) for the fourth quarter of 2016 were $10.7 million ($2.67 per Boe or $0.45 per Mcfe), compared to $16.4 million ($7.40 per Boe or $1.23 per Mcfe) in the fourth quarter of 2015. SG&A expenses (exclusive of incentive compensation) totaled $58.9 million ($4.40 per Boe or $0.73 per Mcfe) and $69.4 million ($4.80 per Boe or $0.80 per Mcfe) for the years ended December 31, 2016 and 2015, respectively. The quarterly and annual decreases in SG&A were primarily attributable to staff and other cost reductions. SG&A expenses for 2015 included $2.1 million of termination charges associated with the early termination of an office lease.
Incentive compensation expense for the fourth quarter of 2016 was $1.7 million, compared to ($1.4) million in the fourth quarter of 2015. For the years ended December 31, 2016 and 2015, incentive compensation expense totaled $13.5 million and $2.2 million, respectively. The 2016 incentive compensation cash bonuses are calculated based on the achievement of certain strategic objectives for each quarter of 2016. Portions of the 2016 incentive cash bonuses replace amounts previously awarded to employees as stock-based compensation, which is reflected in SG&A, resulting in higher incentive compensation expense in 2016 compared to 2015.
Accretion expense for the fourth quarter of 2016 was $10.1 million, compared to $6.7 million in the fourth quarter of 2015. Accretion expense totaled $40.2 million and $26.0 million for the years ended December 31, 2016 and 2015, respectively. The quarterly and annual increases were due to a higher applicable discount rate used to calculate the present value of the asset retirement obligations compared to prior years. Stone expects accretion expense to decrease upon implementation of fresh start accounting, which will be implemented upon emergence from bankruptcy proceedings.
Interest expense for the fourth quarter of 2016 was $14.7 million, compared to $12.2 million in the fourth quarter of 2015. Interest expense totaled $64.5 million and $43.9 million for the years ended December 31, 2016 and 2015, respectively. The quarterly and annual increases in interest expense were primarily due to an increase in borrowed funds, combined with a lower capitalized portion. Stone expects interest expense to significantly decrease in 2017, upon emergence from bankruptcy proceedings.
Restructuring expenses for the fourth quarter of 2016 were $13.4 million, and for full year 2016 were $29.6 million. These fees, incurred prior to the filing of the Bankruptcy Petitions on December 14, 2016, related to expenses supporting a restructuring effort, including legal and financial advisory costs for Stone, our bank group and our noteholders. Stone does not expect to incur further restructuring expenses since all legal and advisory fees incurred post-bankruptcy filing will be classified as "Reorganization Items."
Reorganization items for the fourth quarter and full year 2016 were $10.9 million, which represented an $8.3 million non-cash charge to write-off all deferred financing costs and associated unamortized discounts and premiums associated with our 2017 Convertible Notes and 2022 Notes and $2.6 million of expenses supporting a restructuring effort including legal and financial advisory costs for Stone, our bank group and our noteholders incurred post-bankruptcy filing. The quarterly amount of reorganization items is difficult to forecast as they will be highly dependent on the level of legal and financial advisory activity.
Reserves
Our estimated proved reserves as of December 31, 2016 were 53 MMBoe (million barrels of oil equivalent) or 321 Bcfe (billion cubic feet of natural gas equivalent), compared to 57 MMBoe (342 Bcfe) at year-end 2015. The decrease in estimated proved reserves is primarily attributable to 2016 production, which was partially offset by upward revisions of previous estimates resulting from positive gas pricing changes that extended the economic limits of the reservoirs by 15 MMBoe (92 Bcfe) primarily in Appalachia, slightly offset by negative well performance of 6 MMBoe (35 Bcfe). Through the upward revisions of previous estimates, Stone replaced approximately 73% of 2016 production. Substantially all of Stone's proved reserves in Appalachia were reclassified to contingent resources at December 31, 2015. The Appalachia Properties accounted for approximately 34% of our estimated proved oil, natural gas and NGLs reserves at December 31, 2016 compared to 1% at December 31, 2015. There were no estimated proved reserve quantities booked at December 31, 2016 for the Amethyst well. As of December 31, 2015, Amethyst represented approximately 23% and 25% of our estimated proved reserves quantities and standardized measure of discounted future net cash flows, respectively.
The year-end 2016 estimated proved reserves were 44% oil, 20% NGLs and 36% natural gas on an equivalent basis. The changes from year-end 2015 estimated proved reserves to year-end 2016 estimated proved reserves included production of approximately 13 MMBoe (80 Bcfe), positive price revisions of 15 MMBoe (92 Bcfe) and negative well performance of 6 MMBoe (35 Bcfe).
The standardized measure of discounted future net cash flows from our estimated proved reserves at December 31, 2016, using a 10% discount rate and 12-month average prices (after differentials) of $40.15 per barrel of oil, $9.46 per barrel of NGLs and $1.71 per Mcf of natural gas, was approximately $226 million. Estimated future income taxes had no effect on the standardized measure as of December 31, 2016. If current pricing was used to determine the estimated proved reserves or the standardized measure at December 31, 2016, the reserve volumes and values would be increased.
The year-end 2016 estimated proved reserves included proved developed (PD) reserves of 43 MMBoe or 256 Bcfe (43% oil, 22% NGLs, 35% natural gas) and proved undeveloped (PUD) reserves of 11 MMBoe or 65 Bcfe (46% oil, 13% NGLs, 41% natural gas). In addition, there were 35 MMBoe or 213 Bcfe of estimated probable reserves and 32 MMBoe or 191 Bcfe of estimated possible reserves at year-end 2016.
All of Stone's estimated proved, probable and possible reserves were independently engineered by Netherland Sewell & Associates.
Capital Expenditures Update
Capital expenditures for the fourth quarter of 2016 were approximately $22.0 million, which included $5.4 million of plugging and abandonment expenditures. Fourth quarter 2016 capital expenditures included increasing our working interest in a number of units in the Mary field in Appalachia to 100% and recompletion operations on our Mississippi Canyon 109 No. A-22 well. During the fourth quarter of 2016, we incurred charges of approximately $4.8 million for contract termination charges and stacking charges associated with the platform rig at Pompano, all of which were charged to other operational expenses and excluded from capital expenditures. Further, $4.1 million of SG&A expenses and $5.4 million of interest were capitalized during the fourth quarter of 2016, and were excluded from the capital expenditures budget. For the year ended December 31, 2016, capital expenditures totaled $161.1 million, which included $15.4 million of seismic expenditures and $18.9 million of plugging and abandonment expenditures. The rig stacking and subsidy charges and contract termination charges for the year ended December 31, 2016 totaled $47.6 million and were included in other operational expenses. For the year ended December 31, 2015, capital expenditures totaled $464.5 million, which included $72.4 million of plugging and abandonment expenditures. Capitalized SG&A expenses were $27.1 million and capitalized interest totaled $41.3 million for full year 2015.
Although our capital expenditures budget for 2017 has not yet been approved by the board of directors and is dependent on the outcome of our Chapter 11 proceedings and the related reorganization of the Company, the financial projections prepared in connection with our restructuring efforts included estimated preliminary capital expenditures of approximately $200 million for 2017. The projected capital expenditures budget of $200 million includes approximately $86 million of plugging and abandonment costs.
Liquidity Update
As previously reported, on June 14, 2016, we entered into an amendment (the "June Amendment") with our bank group, which amended the credit agreement to (i) increase the borrowing base to $360.0 million from $300.0 million, (ii) provide for no redetermination of the borrowing base by the lenders until January 15, 2017, other than an automatic reduction upon the sale of certain of the company's properties, (iii) permit second lien indebtedness, (iv) revise the maximum Consolidated Funded Leverage ratio to be 5.25x for the fiscal quarter ending June 30, 2016, 6.50x for the fiscal quarter ending September 30, 2016, 9.50x for the fiscal quarter ending December 31, 2016 and 3.75x thereafter, (v) require minimum liquidity of at least $125.0 million until January 15, 2017, (vi) impose limitations on capital expenditures to $60.0 million from June 2016 through December 2016 (excluding up to $25 million for completion expenditures in Appalachia), (vii) grant the lenders a perfected security interest in all deposit accounts and (viii) provide for anti-hoarding cash provisions for amounts in excess of $50.0 million to apply after December 10, 2016. Upon execution of the June Amendment, we repaid $56.8 million of borrowings, resulting in the elimination of our borrowing base deficiency and bringing our total borrowings and letters of credit outstanding under the credit facility in conformity with the $360.0 million borrowing base.
We have $300 million of 1¾% Senior Convertible Notes (the "2017 Convertible Notes") that we need to restructure or repay by March 1, 2017. Additionally, we had an interest payment obligation under our 7½% Senior Notes due 2022 (the "2022 Notes") of approximately $29.2 million, due on November 15, 2016. The indenture governing the 2022 Notes provides a 30-day grace period that extended the latest date for making this cash interest payment to December 15, 2016 before an event of default occurred under the indenture. Although we had sufficient liquidity to make the interest payment by the due date, we elected to not make this interest payment and utilized the 30-day grace period provided by the indenture before entering into the Chapter 11 proceedings. Subject to certain exceptions under the Bankruptcy Code, the Chapter 11 filings automatically stayed most judicial or administrative actions against the Debtors or their property to recover, collect or secure a pre-petition claim. This prohibits, for example, our lenders or noteholders from pursuing claims for defaults under our debt agreements.
As of September 30, 2016, we were in compliance with all covenants under the bank credit facility and the indentures governing our notes, however, we anticipated that the minimum liquidity requirement and other restrictions under the June Amendment would prevent us from being able to meet our interest payment obligation on the 2022 Notes in the fourth quarter of 2016, as well as the subsequent maturity of our 2017 Convertible Notes on March 1, 2017. As a result of these conditions, continued decreases in commodity prices and the significant level of our indebtedness, we continued to work with our financial and legal advisors throughout 2016 to structure a plan of reorganization to improve our financial position and liquidity and allow for growth and long-term success. See Chapter 11 Proceedings below.
As of December 31, 2016, the current portion of long-term debt of $0.4 million represented principal payments due within one year on our building loan. On December 31, 2016 and February 23, 2017, we had $341.5 million of outstanding borrowings and $12.5 million of outstanding letters of credit, leaving $6.0 million of availability under the bank credit facility.
The face value of the 2017 Convertible Notes of $300 million and the 2022 Notes of $775 million have been reclassified as liabilities subject to compromise in the consolidated financial statements at December 31, 2016. Additionally, a non-cash charge to write-off all deferred financing costs and associated unamortized discounts and premiums of approximately $8.3 million is included in reorganization items in the consolidated statement of operations for the year ended December 31, 2016.
The Debtors filed the Bankruptcy Petitions on December 14, 2016, and on February 15, 2017, the Bankruptcy Court entered an order confirming the Plan. We expect the Plan to become effective on February 28, 2017, at which point the Debtors will emerge from bankruptcy. Upon emergence from bankruptcy, we expect that we will eliminate approximately $1.2 billion in principal amount of outstanding debt, resulting in remaining debt outstanding of approximately $236 million, consisting of the $225 million of Second Lien Notes and $11 million outstanding under the Building Loan; however, there is no assurance that the effectiveness of the Plan will occur on February 28, 2017, or at all.
As of December 31, 2016 and February 23, 2017, Stone had cash on hand of approximately $190.6 million and $208.0 million, respectively.
Upon emergence, we expect that cash flows from operating activities, cash on hand and availability under our bank credit facility will be adequate to meet the 2017 operating and capital expenditures needs of the post-reorganized Company, however, there are no assurances that we will emerge from bankruptcy on February 28, 2017 as expected.
Chapter 11 Proceedings
On December 14, 2016, the Company and its subsidiaries Stone Energy Offshore, L.L.C. and Stone Energy Holding, L.L.C. (together with the Company, the "Debtors") filed voluntary petitions for reorganization (the "Bankruptcy Petitions") in the United States Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court") seeking relief under the provisions of Chapter 11 of Title 11 ("Chapter 11") of the United States Bankruptcy Code (the "Bankruptcy Code"). On February 15, 2017, the Bankruptcy Court entered an order confirming the Company's Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016 (the "Plan"). During the bankruptcy proceedings, the Debtors are operating as "debtors-in-possession" in accordance with applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted all first day motions filed by the Debtors, allowing the Company to operate its business in the ordinary course throughout the bankruptcy process. The first day motions included, among other things, a cash collateral motion, a motion maintaining the Company's existing cash management system and motions making various vendor payments, wage payments and tax payments in the ordinary course of business.
Subject to certain exceptions under the Bankruptcy Code, the Chapter 11 filings automatically stayed most judicial or administrative actions against the Debtors or their property to recover, collect or secure a pre-petition claim. This prohibits, for example, our lenders or noteholders from pursuing claims for defaults under our debt agreements.
Restructuring Support Agreement
Prior to filing the Bankruptcy Petitions, as previously announced, on October 20, 2016, the Debtors entered into a restructuring support agreement (the "Original RSA") with certain holders of the 2017 Convertible Notes and the 2022 Notes (collectively, the "Notes" and the holders thereof, the "Noteholders"), to support a restructuring on the terms of a pre-packaged plan of reorganization. On November 17, 2016, the Debtors commenced a solicitation to seek acceptance by a majority of those voting in each voting class of claims of the Company's creditors under the Plan, including (a) the lenders (the "Banks") under the Fourth Amended and Restated Credit Agreement, dated as of June 24, 2014, as amended, modified, or otherwise supplemented from time to time (the "Credit Facility") among Stone as borrower, Bank of America, N.A. as administrative agent and issuing bank, and the financial institutions named therein, and (b) the Noteholders. The solicitation period ended on December 16, 2016 and (i) of the 94.24% of Noteholders in aggregate outstanding principal amount that voted, 99.95% voted in favor of the Plan and .05% voted to reject the Plan, and (ii) 100% of the Banks voted to accept the Plan.
On December 14, 2016, the Debtors, the Noteholders holding approximately 79.7% of the aggregate principal amount of Notes and the Banks holding 100% of the aggregate principal amount owing under the Credit Facility entered into an Amended and Restated Restructuring Support Agreement (the "A&R RSA") that amended, superseded and restated in its entirety the Original RSA. In connection with entry into the A&R RSA and the commencement of the bankruptcy cases, the Debtors amended the plan of reorganization then in effect. Additionally, on December 16, 2016, an ad hoc group of certain of the Company's stockholders (the "Stockholder Ad Hoc Group") filed a motion (the "Equity Committee Motion") to appoint an official committee of equity security holders in connection with the Debtors' Chapter 11 proceedings. On December 21, 2016, the Company reached a settlement agreement with the Stockholder Ad Hoc Group (the "Settlement") and on December 28, 2016, the plan of reorganization was amended.
Upon emergence from bankruptcy by the Debtors, and pursuant to the terms of the Plan, as amended to be consistent with the terms of the A&R RSA and the term sheet annexed to the A&R RSA (the "Term Sheet") and as amended pursuant to the Settlement, the Noteholders will receive their pro rata share of (i) $100 million of cash, (ii) 95% of the common stock in reorganized Stone and (iii) $225 million of new 7.5% second lien notes due 2022 (the "Second Lien Notes"). Existing common stockholders of Stone will receive their pro rata share of (i) 5% of the common stock in reorganized Stone, and (ii) warrants for ownership of up to 15% of reorganized Stone's common equity exercisable upon the Company reaching certain benchmarks pursuant to the terms of the proposed new warrants and which may be exercised any time prior to the fourth anniversary of the Plan's effective date, unless terminated earlier by their terms upon the consummation of certain business combinations or sale transactions involving the Company. Banks signatory to the A&R RSA will receive their respective pro rata share of commitments and obligations under an amended credit agreement (the "Amended Credit Facility"), as well as their respective share of the Company's unrestricted cash, as of the effective date of the Plan, in excess of $25 million, net of certain fees, payments, escrows or distributions pursuant to the Plan and the PSA, defined below.
All claims of creditors with unsecured claims other than claims by the Noteholders, including vendors, shall be unaltered and will be paid in full in the ordinary course of business to the extent such claims are undisputed.
Each of the foregoing common equity percentages in reorganized Stone is subject to dilution from the exercise of the new warrants described above and a management incentive plan. Assuming implementation of the Plan, Stone expects that it will eliminate approximately $1.2 billion in principal amount of outstanding debt.
The A&R RSA contains certain covenants on the part of the Company and the Noteholders and Banks who are signatories to the A&R RSA, including that such Noteholders and Banks will support the sale of Stone's producing properties and acreage, including approximately 86,000 net acres, in the Appalachia regions of Pennsylvania and West Virginia (the "Appalachia Properties"), and otherwise facilitate the restructuring transaction, in each case subject to certain terms and conditions in the A&R RSA. The consummation of the Plan is subject to customary conditions and other requirements, as well as the sale by Stone of the Appalachia Properties for a cash purchase price of at least $350 million and approval of the Bankruptcy Court.
On February 15, 2017, the Bankruptcy Court entered the Order Confirming the Plan (the "Confirmation Order"). We currently expect to the Plan to become effective on February 28, 2017, at which point the Debtors will emerge from bankruptcy; however, there can be no assurance that the effectiveness of the Plan will occur on such date, or at all.
Purchase and Sale Agreement
As previously announced, on October 20, 2016, Stone entered into a purchase and sale agreement with TH Exploration III, LLC, an affiliate of Tug Hill, Inc., (the "Tug Hill PSA") for the sale of the Appalachia Properties for $360 million in cash, subject to customary purchase price adjustments. Pursuant to Bankruptcy Court orders dated January 11, 2017 and January 31, 2017, two additional bidders were allowed to participate in competitive bidding on the Appalachia Properties. On January 18, 2017, the Bankruptcy Court approved the Bidding Procedures in connection with the sale of the Appalachia Properties. In accordance with the Bidding Procedures, Stone conducted an auction for the sale of the Appalachia Properties on February 8, 2017 and upon conclusion, selected the final bid submitted by EQT Production Company ("EQT"), with a final purchase price of $527 million in cash, subject to customary purchase price adjustments and approval by the Bankruptcy Court, with an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments, as the prevailing bid.
On February 9, 2017, the Company entered into a purchase and sale agreement with EQT (the "EQT PSA"), reflecting the terms of the prevailing bid. Under the EQT PSA, the sale of the Appalachia Properties has an effective date of June 1, 2016. The EQT PSA contains customary representations, warranties and covenants. The EQT PSA may be terminated, subject to certain exceptions, (i) upon mutual written consent, (ii) if the closing has not occurred by March 1, 2017, (iii) for certain material breaches of representations and warranties or covenants that remain uncured, and (iv) upon the occurrence of certain other events specified in the EQT PSA.
At the close of the sale of the Appalachia Properties, the Tug Hill PSA will terminate, and the Company will use a portion of the cash consideration received to pay Tug Hill a break-up fee of $10.8 million. On February 10, 2017, the Bankruptcy Court entered a sale order approving the sale of the Appalachia Properties to EQT. We expect to close the sale of the Appalachia Properties by February 28, 2017, subject to customary closing conditions. At December 31, 2016, the estimated proved reserves associated with these assets represented approximately 34% of our total estimated proved oil and natural gas reserves.
Bank Credit Facility
On December 14, 2016, the Debtors and the Banks holding 100% of the aggregate principal amount owing under the Credit Facility entered into the A&R RSA, pursuant to which the Banks will receive their respective pro rata share of commitments and obligations under the Amended Credit Facility on the terms set forth in Exhibit 1(a) to the Term Sheet, as well as their respective share of the Company's unrestricted cash, as of the effective date of the Plan, in excess of $25 million, net of certain fees, payments, escrows or distributions pursuant to the Plan and the PSA. The terms of the Amended Credit Facility under the Plan are substantially consistent with the pre-petition facility, except, the borrowing base will be reduced to $200 million subject to a $150 million borrowing cap until the first redetermination of the borrowing base scheduled for November 1, 2017, and subject to decrease under certain circumstances. Additionally, the Consolidated Funded Leverage financial covenant will be adjusted to levels ranging from 2.50 to 1 to 3.00 to 1 for 2017 and ranging from 2.50 to 1 to 3.50 to 1 thereafter. The interest cost for loans at the LIBOR rate will be increased to a range of 3.00% to 4.00%. The Amended Credit Facility will be a four-year facility. There can be no assurance that we will emerge from bankruptcy on February 28, 2017 as expected.
For additional details regarding (i) the A&R RSA, please see Stone's Current Report on Form 8-K filed on December 14, 2016, (ii) the Plan, please see Stone's Current Report on Form 8-K filed on December 28, 2016, and (iii) the EQT PSA, please see Stone's Current Report on Form 8-K filed on February 10, 2017.
Supplemental Bonding Update
As previously reported, on March 21, 2016, the Bureau of Ocean Energy Management ("BOEM") notified Stone that we no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM's guidance to lessees at that time. In late March 2016, we proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which provides for posting incremental financial assurances in favor of BOEM. On May 13, 2016, we received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that we will continue to work with BOEM to finalize the implementation of our long-term tailored plan. A global update of the GOM decommissioning estimates was made on August 29, 2016, and BOEM requested that we resubmit our tailored plan to reflect the updated decommissioning estimates. Additionally, on July 14, 2016, BOEM issued a Notice to Lessees ("NTL"), with an effective date of September 12, 2016, that augments requirements for the posting of additional financial assurances by offshore lessees. The NTL discontinues the policy of supplemental bonding waivers and allows for the ability to self-insure up to 10% of a company's tangible net worth where a company could demonstrate a certain level of financial strength. BOEM tentatively expects to approve or deny tailored plans submitted by lessees on or around September 11, 2017, although extensions may be granted to companies actively working with BOEM to finalize tailored plans. We received a Self-Insurance letter from BOEM dated September 30, 2016 stating that we are not eligible to self-insure any of our additional security obligations. We received a Proposal letter from BOEM dated October 20, 2016 indicating that additional security may be required, and we are continuing to work with BOEM to adjust our previously submitted tailored plan for variances between our decommissioning estimates and that of the Bureau of Safety and Environmental Enforcement ("BSEE"). In the first quarter of 2017, BOEM announced that it will extend the implementation timeline for the new NTL by an additional six months. The revised proposed plan may require approximately $7 million to $10 million of incremental financial assurance or bonding for sole liability properties and potentially an additional $30 million to $60 million of incremental financial assurance or bonding for non-sole liability properties by the end of 2017 or in 2018, dependent on adjustments following ongoing discussions with BSEE and any modifications to the NTL. Under the revised plan, additional financial assurance would be required for subsequent years. There is no assurance this tailored plan will be approved by BOEM. Additionally, it is uncertain at this time what impact the new Trump administration may have on the current financial regulatory framework.
Operational Update
Pompano Platform Drilling Program (Deep Water). In early June 2016, we temporarily stacked the platform rig in place to preserve liquidity. In January 2017, we reinitiated drilling operations on the Mt. Bona prospect, the first of a three well development program to be drilled from the Pompano platform. Each development well is expected to provide additional production volumes ranging from 500 to over 1,500 Boe per day per well after hook-up. Stone holds a 100% working interest in these wells.
Pompano Platform Production Update (Deep Water). On June 28, 2016, a third-party gas processing plant in Pascagoula, Mississippi experienced an explosion that shut down the facility and impacted Pompano gas volumes. In late December 2016, the gas processing plant returned to normal operations, with no further curtailments anticipated.
Mississippi Canyon 26 – No. 1 Amethyst Well (Deep Water). As previously reported, production from our Amethyst well was shut in during late April 2016 to allow for a technical evaluation. During the first week of November, we initiated acid stimulation work and intermittently flowed the well at a rate of 10-15 MMcf per day, while we continued to observe and evaluate the well's performance. On November 30, 2016, we performed a routine shut in of the well to record pressures and determined that pressure communication existed between the production tubing and production casing strings, resulting from a suspected tubing leak. We expect to begin temporary abandonment operations on the well late in the first quarter of 2017, and we plan to evaluate the well for potential sidetrack operations in the second half of 2017.
Mississippi Canyon 109 – No. A-22 Well Recompletion (Deep Water). On September 27, 2016, we initiated recompletion operations on the Mississippi Canyon 109 No. A-22 ST1 well to target the "H" sand in the Pliocene interval. Following the successful completion of this operation in November 2016, the well has produced at a rate of approximately 430 Boe per day. Stone holds a 100% working interest in this well, which ties back to our Amberjack platform.
Mississippi Canyon 117 - Rampart Deep and Rampart Shallow (Deep Water). The Rampart exploration prospects (Deep and Shallow) target the Miocene interval and are expected to be tied back to the Pompano platform, if successful. Stone currently holds a 100% working interest in the prospect, but has been in discussions with another deep water operator to reduce its working interest to 50% or less. The prospects are located nine miles from Stone's Pompano platform, and each well is estimated to take three months to drill.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. If successful, a tie-back to the Pompano platform is likely. Stone currently holds a 100% working interest in the prospect, but has been in discussions with another deep water operator to reduce its working interest to 50% or less. The well is estimated to take three months to drill.
Alaminos Canyon 943 - Lamprey (Deep Water). We were unable to secure a partner on this project, and we have elected to not further progress this prospect.
Appalachia Basin. As reported on June 29, 2016, Stone entered into an interim gas gathering and processing agreement to produce the Mary field in Appalachia. The initial term of the interim agreement was through August 31, 2016, and it continued on a month to month basis thereafter. We expect the interim agreement to continue through the sale of the Appalachia Properties, which we expect to close before February 28, 2017. During the fourth quarter of 2016, production from the Mary field averaged over 109 MMcfe per day, with total Appalachia volumes averaging 128 MMcfe per day.
Hedge Position
The following table illustrates our derivative positions for 2017 and 2018 as of February 23, 2017:
Oil Hedging Contracts | |||||||
NYMEX | |||||||
Put Contracts |
Swap Contracts | ||||||
Daily Volume (Bbls/d) |
Put Price ($ per Bbl) |
Daily Volume (Bbls/d) |
Swap Price ($ per Bbl) | ||||
Feb, 2017 – Dec, 2017 |
2,000 |
$50.00 |
Mar, 2017 – Dec, 2017 |
1,000 |
$53.90 | ||
Jan, 2018 – Dec, 2018 |
1,000 |
54.00 |
Jan, 2018 – Dec, 2018 |
1,000 |
52.50 |
New York Stock Exchange Notifications
On April 29, 2016, we were notified by the New York Stock Exchange ("NYSE") that we were not in compliance with the NYSE's continued listing requirements, as the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE. On May 17, 2016, we were notified by the NYSE that our average global market capitalization had been less than $50 million over a consecutive 30 trading-day period at the same time that our stockholders' equity was less than $50 million, which is non-compliant with the NYSE's rules.
At the close of business on June 10, 2016, we effected a 1-for-10 reverse stock split in order to increase the market price per share of our common stock in order to regain compliance with the NYSE's minimum share price requirement. We were notified on July 1, 2016 that we cured the minimum share price deficiency and that we were no longer considered non-compliant with the $1.00 per share average closing price requirement, although we remain non-compliant with the $50 million market capitalization and stockholders' equity requirements.
On June 30, 2016, we submitted our 18-month business plan for curing the average market capitalization and stockholders' equity deficiencies to the NYSE. The NYSE accepted the plan on August 4, 2016 and will continue to review the Company on a quarterly basis for compliance with the plan. On September 20, 2016, we submitted a second quarter 2016 update to our plan to mitigate listing deficiencies, and the update was accepted by the NYSE on September 22, 2016. On December 22, 2016, we submitted our third quarter 2016 update, and the update was accepted by the NYSE on January 5, 2017. We expect to submit our fourth quarter 2016 update to the NYSE by mid-March 2017.
Upon acceptance of the plan by the NYSE, and after two consecutive quarters of sustained market capitalization above $50 million, we would no longer be non-compliant with the market capitalization and stockholders' equity requirements. During the 18-month cure period, our shares of common stock will continue to be listed and traded on the NYSE, unless we experience other circumstances that subject us to delisting, including abnormally low market capitalization. If we fail to meet the material aspects of the plan or any of the quarterly milestones, the NYSE will review the circumstances and variance, and determine whether such variance warrants commencement of suspension and delisting procedures. Upon filing, or announcement of intention to file, for relief under chapter 11 of the Bankruptcy Code, a company below a listing standard is subject to immediate suspension and delisting. However, if we are profitable or have positive cash flow, or if we are demonstrably in sound financial health despite the bankruptcy proceedings, the NYSE may evaluate our plan in light of the filing without immediately suspending and delisting our common stock. To date, and throughout the chapter 11 filing period, we have continued to trade on the NYSE.
Other Information
Stone Energy will not be hosting a conference call to discuss the fourth quarter and full year 2016 operational and financial results.
Non-GAAP Financial Measures
In this press release, we refer to non-GAAP financial measures we call "discretionary cash flow" and "adjusted net loss." Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities. Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income, as defined by GAAP. Management believes adjusted net loss is useful to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Please see the "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of discretionary cash flow to net cash provided by operating activities and a reconciliation of adjusted net loss to net loss.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility; the ability to consummate the sale of the Appalachia Properties as contemplated by the EQT PSA; the ability to consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects of our bankruptcy proceedings and emergence from bankruptcy on the market price of the Company's common stock and on the Company's ability to access the capital markets, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Estimates for Stone's future production volumes are based on assumptions of capital expenditures levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
STONE ENERGY CORPORATION | ||||||||||||||||
SUMMARY STATISTICS | ||||||||||||||||
(In thousands, except per share/unit amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Twelve Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
FINANCIAL RESULTS |
||||||||||||||||
Net loss |
($116,406) |
($318,656) |
($590,5868) |
($1,090,915) |
||||||||||||
Net loss per share |
($20.76) |
($57.63) |
($105.63) |
($197.45) |
||||||||||||
PRODUCTION QUANTITIES |
||||||||||||||||
Oil (MBbls) |
1,562 |
1,326 |
6,308 |
5,991 |
||||||||||||
Natural gas (MMcf) |
9,399 |
4,391 |
29,441 |
36,457 |
||||||||||||
Natural gas liquids (MBbls) |
889 |
159 |
2,183 |
2,401 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
4,018 |
2,217 |
13,398 |
14,468 |
||||||||||||
Oil, natural gas and NGLs (MMcfe) |
24,105 |
13,301 |
80,387 |
86,809 |
||||||||||||
AVERAGE DAILY PRODUCTION |
||||||||||||||||
Oil (MBbls) |
17.0 |
14.4 |
17.2 |
16.4 |
||||||||||||
Natural gas (MMcf) |
102.2 |
47.7 |
80.4 |
99.9 |
||||||||||||
Natural gas liquids (MBbls) |
9.7 |
1.7 |
6.0 |
6.6 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
43.7 |
24.1 |
36.6 |
39.6 |
||||||||||||
Oil, natural gas and NGLs (MMcfe) |
262.0 |
144.6 |
219.6 |
237.8 |
||||||||||||
REVENUE DATA |
||||||||||||||||
Oil revenue |
$77,144 |
$92,392 |
$281,246 |
$416,497 |
||||||||||||
Natural gas revenue |
21,274 |
10,898 |
64,601 |
83,509 |
||||||||||||
Natural gas liquids revenue |
13,769 |
2,943 |
28,888 |
32,322 |
||||||||||||
Total oil, natural gas and NGLs revenue |
$112,187 |
$106,233 |
$374,735 |
$532,328 |
||||||||||||
AVERAGE PRICES |
||||||||||||||||
Prior to the cash settlement of effective hedging transactions: |
||||||||||||||||
Oil (per Bbl) |
$46.77 |
$40.35 |
$40.82 |
$46.88 |
||||||||||||
Natural gas (per Mcf) |
2.05 |
1.57 |
1.80 |
1.90 |
||||||||||||
Natural gas liquids (per Bbl) |
15.49 |
18.51 |
13.23 |
13.46 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
26.41 |
28.56 |
25.32 |
26.43 |
||||||||||||
Oil, natural gas and NGLs (per Mcfe) |
4.40 |
4.76 |
4.22 |
4.40 |
||||||||||||
Including the cash settlement of effective hedging transactions: |
||||||||||||||||
Oil (per Bbl) |
$49.39 |
$69.68 |
$44.59 |
$69.52 |
||||||||||||
Natural gas (per Mcf) |
2.26 |
2.48 |
2.19 |
2.29 |
||||||||||||
Natural gas liquids (per Bbl) |
15.49 |
18.51 |
13.23 |
13.46 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
27.92 |
47.92 |
27.97 |
36.79 |
||||||||||||
Oil, natural gas and NGLs (per Mcfe) |
4.65 |
7.99 |
4.66 |
6.13 |
||||||||||||
AVERAGE COSTS |
||||||||||||||||
Lease operating expenses (per Boe) |
$6.05 |
$9.42 |
$5.94 |
$6.92 |
||||||||||||
Lease operating expenses (per Mcfe) |
1.01 |
1.57 |
0.99 |
1.15 |
||||||||||||
Transp, processing & gathering exp (per Boe) |
2.27 |
1.35 |
2.07 |
4.07 |
||||||||||||
Transp, processing & gathering exp (per Mcfe) |
0.38 |
0.23 |
0.35 |
0.68 |
||||||||||||
Salaries, general and administrative expenses (per Boe) |
2.67 |
7.40 |
4.40 |
4.80 |
||||||||||||
Salaries, general and administrative expenses (per Mcfe) |
0.45 |
1.23 |
0.73 |
0.80 |
||||||||||||
DD&A expense on oil and gas properties (per Boe) |
13.02 |
24.47 |
16.10 |
19.15 |
||||||||||||
DD&A expense on oil and gas properties (per Mcfe) |
2.17 |
4.08 |
2.68 |
3.19 |
||||||||||||
AVERAGE SHARES OUTSTANDING - Diluted |
5,607 |
5,529 |
5,591 |
5,525 |
STONE ENERGY CORPORATION | |||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||
(In thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Twelve Months Ended | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Operating revenue: |
|||||||||||||||
Oil production |
$77,144 |
$92,392 |
$281,246 |
$416,497 |
|||||||||||
Natural gas production |
21,274 |
10,898 |
64,601 |
83,509 |
|||||||||||
Natural gas liquids production |
13,769 |
2,943 |
28,888 |
32,322 |
|||||||||||
Other operational income |
920 |
1,185 |
2,657 |
4,369 |
|||||||||||
Derivative income, net |
— |
3,081 |
— |
7,952 |
|||||||||||
Total operating revenue |
113,107 |
110,499 |
377,392 |
544,649 |
|||||||||||
Operating expenses: |
|||||||||||||||
Lease operating expenses |
24,301 |
20,889 |
79,650 |
100,139 |
|||||||||||
Transportation, processing and gathering expenses |
9,103 |
2,996 |
27,760 |
58,847 |
|||||||||||
Production taxes |
1,254 |
483 |
3,148 |
6,877 |
|||||||||||
Depreciation, depletion and amortization |
53,372 |
55,379 |
220,079 |
281,688 |
|||||||||||
Write-down of oil and gas properties |
73,094 |
351,062 |
357,431 |
1,362,447 |
|||||||||||
Accretion expense |
10,082 |
6,673 |
40,229 |
25,988 |
|||||||||||
Salaries, general and administrative expenses |
10,735 |
16,407 |
58,928 |
69,384 |
|||||||||||
Incentive compensation expense |
1,666 |
(1,379) |
13,475 |
2,242 |
|||||||||||
Restructuring fees |
13,424 |
— |
29,597 |
— |
|||||||||||
Other operational expenses |
6,187 |
748 |
55,453 |
2,360 |
|||||||||||
Derivative expense, net |
123 |
— |
810 |
— |
|||||||||||
Total operating expenses |
203,341 |
453,258 |
886,560 |
1,909,972 |
|||||||||||
Loss from operations |
(90,234) |
(342,759) |
(509,168) |
(1,365,323) |
|||||||||||
Other (income) expenses: |
|||||||||||||||
Interest expense |
14,694 |
12,219 |
64,458 |
43,928 |
|||||||||||
Interest income |
(76) |
(345) |
(550) |
(580) |
|||||||||||
Other income |
(599) |
(616) |
(1,439) |
(1,783) |
|||||||||||
Other expense |
569 |
286 |
596 |
434 |
|||||||||||
Reorganization items |
10,947 |
— |
10,947 |
— |
|||||||||||
Total other expenses |
25,535 |
11,544 |
74,012 |
41,999 |
|||||||||||
Loss before income taxes |
(115,769) |
(354,303) |
(583,180) |
(1,407,322) |
|||||||||||
Provision (benefit) for income taxes: |
|||||||||||||||
Current |
(1,496) |
(44,096) |
(5,674) |
(44,096) |
|||||||||||
Deferred |
2,133 |
8,449 |
13,080 |
(272,311) |
|||||||||||
Total income taxes |
637 |
(35,647) |
7,406 |
(316,407) |
|||||||||||
Net loss |
($116,406) |
($318,656) |
($590,586) |
($1,090,915) |
STONE ENERGY CORPORATION | |||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | |||||||||||||||||
DISCRETIONARY CASH FLOW to NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES | |||||||||||||||||
(In thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended |
Twelve Months Ended | ||||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||||
Net loss as reported |
($116,406) |
($318,656) |
($590,586) |
($1,090,915) |
|||||||||||||
Reconciling items: |
|||||||||||||||||
Depreciation, depletion and amortization |
53,372 |
55,379 |
220,079 |
281,688 |
|||||||||||||
Write-down of oil and gas properties |
73,094 |
351,062 |
357,431 |
1,362,447 |
|||||||||||||
Deferred income tax provision (benefit) |
2,133 |
8,449 |
13,080 |
(272,311) |
|||||||||||||
Accretion expense |
10,082 |
6,673 |
40,229 |
25,988 |
|||||||||||||
Non-cash stock compensation expense |
2,036 |
3,161 |
8,443 |
12,324 |
|||||||||||||
Excess tax benefits |
— |
(1,586) |
— |
(1,586) |
|||||||||||||
Non-cash interest expense |
4,126 |
4,578 |
18,404 |
17,788 |
|||||||||||||
Non-cash derivative expense |
210 |
5,586 |
1,471 |
16,440 |
|||||||||||||
Non-cash reorganization items |
8,332 |
— |
8,332 |
— |
|||||||||||||
Other non-cash expense |
167 |
— |
6,248 |
— |
|||||||||||||
Discretionary cash flow |
37,146 |
114,646 |
83,131 |
351,863 |
|||||||||||||
Change in income taxes payable |
(1,496) |
(44,588) |
20,088 |
(37,377) |
|||||||||||||
Settlement of asset retirement obligations |
(5,408) |
(12,556) |
(20,514) |
(72,382) |
|||||||||||||
Other working capital changes |
15,453 |
(9,008) |
(4,117) |
5,370 |
|||||||||||||
Net cash provided by operating activities |
$45,695 |
$48,494 |
$78,588 |
$247,474 |
|||||||||||||
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE ADJUSTED NET INCOME (LOSS) to NET LOSS (In thousands) (Unaudited) |
||||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||||
Net loss as reported |
($116,406) |
($318,656) |
($590,586) |
($1,090,915) |
||||||||||||||
Reconciling items: |
||||||||||||||||||
Write-down of oil and gas properties |
73,094 |
351,062 |
357,431 |
1,362,447 |
||||||||||||||
Tax effect |
(25,766) |
(116,164) |
(125,994) |
(480,263) |
||||||||||||||
Valuation allowance on deferred tax assets |
41,741 |
85,827 |
204,689 |
180,121 |
||||||||||||||
Total reconciling items |
89,069 |
320,725 |
436,126 |
1,062,305 |
||||||||||||||
Adjusted net income (loss) |
($27,337) |
$2,069 |
($154,460) |
($28,610) |
||||||||||||||
Net loss per share as reported |
($20.76) |
($57.63) |
($105.63) |
($197.45) |
||||||||||||||
Per share effect of impairment charges |
$15.88 |
$57.99 |
$78.00 |
$192.27 |
||||||||||||||
Net income (loss) per share before impairment charges |
($4.88) |
$0.36 |
($27.63) |
($5.18) |
STONE ENERGY CORPORATION CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited)
| ||||||||||||||||||||||||||||||||||||
December 31, |
December 31, | |||||||||||||||||||||||||||||||||||
2016 |
2015 | |||||||||||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$190,581 |
$10,759 | ||||||||||||||||||||||||||||||||||
Accounts receivable |
48,464 |
48,031 | ||||||||||||||||||||||||||||||||||
Fair value of derivative contracts |
— |
38,576 | ||||||||||||||||||||||||||||||||||
Current income tax receivable |
26,086 |
46,174 | ||||||||||||||||||||||||||||||||||
Other current assets |
10,151 |
6,881 | ||||||||||||||||||||||||||||||||||
Total current assets |
275,282 |
150,421 | ||||||||||||||||||||||||||||||||||
Oil and gas properties, full cost method of accounting: |
||||||||||||||||||||||||||||||||||||
Proved |
9,616,236 |
9,375,898 | ||||||||||||||||||||||||||||||||||
Less: accumulated depreciation, depletion and amortization |
(9,178,442) |
(8,603,955) | ||||||||||||||||||||||||||||||||||
Net proved oil and gas properties |
437,794 |
771,943 | ||||||||||||||||||||||||||||||||||
Unevaluated |
373,720 |
440,043 | ||||||||||||||||||||||||||||||||||
Other property and equipment, net |
26,213 |
29,289 | ||||||||||||||||||||||||||||||||||
Other assets, net |
26,474 |
18,473 | ||||||||||||||||||||||||||||||||||
Total assets |
$1,139,483 |
$1,410,169 | ||||||||||||||||||||||||||||||||||
Liabilities and Stockholders' Equity |
||||||||||||||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||||||||||||||
Accounts payable to vendors |
$19,981 |
$82,207 | ||||||||||||||||||||||||||||||||||
Undistributed oil and gas proceeds |
15,073 |
5,992 | ||||||||||||||||||||||||||||||||||
Accrued interest |
809 |
9,022 | ||||||||||||||||||||||||||||||||||
Asset retirement obligations |
88,000 |
21,291 | ||||||||||||||||||||||||||||||||||
Current portion of long-term debt |
408 |
— | ||||||||||||||||||||||||||||||||||
Other current liabilities |
18,602 |
40,712 | ||||||||||||||||||||||||||||||||||
Total current liabilities |
142,873 |
159,224 | ||||||||||||||||||||||||||||||||||
Bank credit facility |
341,500 |
— | ||||||||||||||||||||||||||||||||||
7½% Senior Notes due 2022 |
— |
770,009 | ||||||||||||||||||||||||||||||||||
1¾% Convertible Notes due 2017 |
— |
279,244 | ||||||||||||||||||||||||||||||||||
4.2% Building Loan |
10,876 |
11,702 | ||||||||||||||||||||||||||||||||||
Asset retirement obligations |
154,019 |
204,575 | ||||||||||||||||||||||||||||||||||
Other long-term liabilities |
17,315 |
25,204 | ||||||||||||||||||||||||||||||||||
Total liabilities not subject to compromise |
666,583 |
1,449,958 | ||||||||||||||||||||||||||||||||||
Liabilities subject to compromise |
1,110,182 |
— | ||||||||||||||||||||||||||||||||||
Total liabilities |
1,776,765 |
1,449,958 | ||||||||||||||||||||||||||||||||||
Common stock |
56 |
55 | ||||||||||||||||||||||||||||||||||
Treasury stock |
(860) |
(860) | ||||||||||||||||||||||||||||||||||
Additional paid-in capital |
1,659,731 |
1,648,687 | ||||||||||||||||||||||||||||||||||
Accumulated deficit |
(2,296,209) |
(1,705,623) | ||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income |
— |
17,952 | ||||||||||||||||||||||||||||||||||
Total stockholders' equity |
(637,282) |
(39,789) | ||||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity |
$1,139,483 |
$1,410,169 |
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 15, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced that the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court") issued an order confirming Stone's Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016 (as amended, modified or supplemented from time to time, the "Plan").
As previously disclosed on December 14, 2016, Stone and its subsidiaries, Stone Energy Holding, L.L.C. and Stone Energy Offshore, L.L.C. (collectively, the "Debtors"), filed voluntary petitions (the cases commenced thereby, the "Chapter 11 Cases") seeking relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the Bankruptcy Court under the caption In re Stone Energy Corporation, et al. On December 28, 2016, the Debtors filed with the Bankruptcy Court the proposed Second Amended Joint Prepackaged Plan of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016, as described below.
On February 15, 2017, the Bankruptcy Court entered an order, Docket No. 528 (the "Confirmation Order"), confirming the Plan, as modified by the Confirmation Order.
The Debtors expect that the effective date of the Plan (as defined in the Plan, the "Effective Date") will occur as soon as all conditions precedent to the Plan have been satisfied and on a date selected in consultation with the Required Consenting Noteholders and Required Consenting Banks. Although the Debtors are targeting occurrence of the Effective Date on February 28, 2017, the Debtors can make no assurances as to when, or ultimately if, the Plan will become effective. It is also possible that technical amendments could be made to the Plan.
The following is a summary of the material terms of the Plan. This summary highlights only certain substantive provisions of the Plan and is not intended to be a complete description of the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. This summary is qualified in its entirety by reference to the full text of the Plan and the Confirmation Order, which are attached as Exhibits 2.1 and 99.1, respectively, to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") today.
The Plan of Reorganization and Treatment of Claims and Interests
The Plan contemplates the following treatment of claims against and interests in the Debtors:
Unless otherwise specified, the treatment set forth in the Plan and Confirmation Order will be in full satisfaction of all claims against and interests in the Debtors, which will be discharged on the Effective Date. All of the Company's existing common stock will be extinguished by the Plan.
Additional Information
Additional information regarding the post-emergence Company may be found in the Company's Current Report on Form 8-K filed with the SEC today.
The Debtors filed their voluntary chapter 11 petitions and the Plan in the U.S. Bankruptcy Court for the Southern District of Texas in Houston. Information about the bankruptcy cases, including the Confirmation Order, can be found at http://dm.epiq11.com/StoneEnergy or by calling +1-888-243-5081 (toll-free in North America) or +1‑503-520-4474 (outside of North America).
Stone is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon the Company's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that the Company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions during the bankruptcy process, which may interfere with the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of a plan of reorganization; effects on the market price of the Company's common stock and on the Company's ability to access the capital markets; and other risk factors and known trends and uncertainties as described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in the forward-looking statements. The Company assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 8, 2017 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced the results of the auction for the sale of all of its approximately 86,000 net acres in the Appalachia regions of Pennsylvania and West Virginia (collectively, the "Properties"), including approximately 53,000 core net Marcellus acres and drilling rights on approximately 44,000 net acres in the Utica, to EQT Corporation, through its wholly-owned subsidiary EQT Production Company ("EQT"), for a sales price of $527 million, subject to the purchase price adjustments described below and approval by the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court").
As previously disclosed, on October 20, 2016, the Company entered into a purchase and sale agreement (as amended on December 9, 2016, the "PSA") with TH Exploration III, LLC, an affiliate of Tug Hill, Inc. ("Tug Hill"). Pursuant to the terms of the PSA, Stone agreed to sell the Properties to Tug Hill for $360 million in cash, subject to customary purchase price adjustments. Stone entered into the PSA in conjunction with previously announced comprehensive balance sheet restructuring efforts that include the execution of a restructuring support agreement, as amended, (the "A&R RSA"), to support a restructuring on the terms of a pre-packaged plan of reorganization as described therein (the "Plan").
On December 14, 2016, Stone and its domestic subsidiaries (the "Debtors") filed voluntary petitions under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the Bankruptcy Court. Pursuant to Bankruptcy Court orders dated January 11, 2017 and January 31, 2017, two additional bidders were allowed to participate in competitive bidding on the Properties, with the Tug Hill PSA bid serving as the stalking horse bid. On January 18, 2017, the Bankruptcy Court approved certain bidding procedures (the "Bidding Procedures") in connection with the sale of the Properties. In accordance with the Bidding Procedures, on February 8, 2017, Stone conducted an auction for the sale of the Properties and upon conclusion selected the final bid submitted by EQT, with a final purchase price of $527 million, subject to customary purchase price adjustments, with an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments (the "Purchase Price"), as the prevailing bid (the "Prevailing Purchaser"). A portion of the Purchase Price will be used to pay the break-up fee and expense reimbursement in the PSA. Further, in accordance with the Bidding Procedures, American Petroleum Partners Operating, LLC, who submitted a bid including a final purchase price of $526 million and otherwise on the same terms as the bid of the Prevailing Purchaser, was selected as the back-up bidder (the "Back-up Bidder"). The terms of the prevailing bid will be filed as an exhibit to a Current Report on Form 8-K that the Company expects to file in connection with the Sale Hearing, discussed below.
The hearing to consider approval of the sale of the Properties to the Prevailing Purchaser will be held on February 10, 2017 at 9:00 a.m. CST (the "Sale Hearing") in the Bankruptcy Court. The Company expects to close the sale of the Properties by February 28, 2017, subject to customary closing conditions and approval by the Bankruptcy Court.
Chairman, President and Chief Executive Officer David H. Welch stated, "With the successful conclusion of the auction, we are now poised to move forward with our pre-packaged Plan, with Stone, its noteholders and the bank group all in agreement on a plan of action. This should allow Stone to emerge as a much stronger, healthier company with significant debt reduction, a solid balance sheet, and a focused portfolio of deep water producing assets and near-term drilling opportunities.
I would like to acknowledge the enormous efforts of the Stone employees, our Board of Directors, and, in particular, the exemplary service of our board member David Lawrence, who agreed to serve as the Special Liaison of the Independent Directors during the months prior to filing. Dr. Lawrence is widely recognized for his industry leadership and extensive global experience across the energy business. His contributions have been invaluable."
Lead Director, Richard Pattarozzi, echoed Welch's comments and went on to say, "The Board would like to express its thanks to David Lawrence for having taken on this task in a challenging environment and is grateful for his consistent delivery of excellent guidance and sage advice throughout this process."
Latham & Watkins LLP is acting as lead counsel to the Debtors in connection with the sale of the Properties and the bankruptcy proceedings. Porter Hedges LLP is acting as the Debtors' bankruptcy co-counsel. Tudor, Pickering, Holt & Co. is acting as the Debtors' investment banker in connection with the sale of the Properties. Lazard is acting as the Debtors' investment banker in connection with the bankruptcy proceedings. Alvarez & Marsal North America, LLC is acting as the Debtors' restructuring advisors. Andrews Kurth Kenyon LLP is acting as counsel to the independent directors of the board. Kirkland & Ellis LLP is acting as legal counsel to EQT in connection with the acquisition of the Properties.
Additional Information
The Debtors filed their voluntary chapter 11 petitions and the Plan in the U.S. Bankruptcy Court for the Southern District of Texas in Houston. Information about the bankruptcy cases, including the prospective order approving the sale of the Properties and the Debtors' entry into the new purchase and sale agreement related to the prevailing bid which will be filed with the Bankruptcy Court prior to or following the Sale Hearing, can be found at http://dm.epiq11.com/StoneEnergy or by calling +1-888-243-5081 (toll-free in North America) or +1‑503-520-4474 (outside of North America).
Stone is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to consummate the sale of the Properties as contemplated by the PSA; the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects on the market price of the Company's common stock and on the Company's ability to access the capital markets; and the risk factors and known trends and uncertainties as described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in the forward-looking statements.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Dec. 22, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company") today announced resolution of a motion to appoint an equity committee, updated the status of the restructuring plan solicitation and announced the bankruptcy court's approval of Stone's First Day Motions.
Resolution of Equity Committee Motion
On December 16, 2016, an ad hoc group of certain of Stone's stockholders (the "Stockholder Ad Hoc Group") filed a motion (the "Equity Committee Motion") to appoint an official committee of equity security holders in connection with the Company's previously announced Chapter 11 proceedings. On December 20, 2016, the Company entered into new confidentiality agreements with an ad hoc group (the "Noteholder Ad Hoc Group") of certain holders of the Company's (i) 1 3/4% Senior Convertible Notes due 2017 (the "Convertible Notes"), and (ii) 7 1/2% Senior Notes due 2022 (the "2022 Notes", and together with the Convertible Notes, the "Notes", and the holders thereof the "Noteholders"). The Company engaged in discussions with, among others, the Stockholder Ad Hoc Group to reach a resolution of the Equity Committee Motion. On December 21, 2016, the Company reached a settlement agreement with the Stockholder Ad Hoc Group (the "Settlement"), which is also supported by the Noteholder Ad Hoc Group.
The Settlement provides, among other things, that (a) the Company will amend (the "Amendment") its First Amended Joint Prepackaged Plan of Reorganization (the "Existing Plan") to provide that Stone's existing stockholders will receive their pro rata share of (i) 5% of reorganized Stone's common stock compared to 4% as contemplated by the Existing Plan, and (ii) warrants for ownership of 15% of reorganized Stone's common equity exercisable upon the Company reaching certain benchmarks pursuant to the terms of the proposed new warrants compared to 10% as contemplated by the Existing Plan, (b) Stone will reimburse up to $1.0 million of the Stockholder Ad Hoc Group's reasonable and documented out-of-pocket fees and expenses, (c) no member of the Stockholder Ad Hoc Group, nor any professional representing such group, will object or otherwise contest the Existing Plan, as amended by the Amendment, (d) if a Stone stockholder opts-out of or otherwise interferes with the consummation of the Existing Plan, as amended by the Amendment, they will not receive their pro rata share of the common stock or warrants set forth in clause (a), (e) if an official committee of equity security holders is appointed by the U.S. Bankruptcy Court for the Southern District of Texas (the "Court"), then Stone's existing stockholders will instead receive their pro rata share of (i) 4% of reorganized Stone's common stock, and (ii) warrants for ownership of 10% of reorganized Stone's common equity and (f) the releases and exculpation provisions will include the Stockholder Ad Hoc Group and its professionals. The Company expects to file the Amendment with the Court by the end of the year and expects to file a Current Report on Form 8-K at that time, attaching the Amendment as an exhibit thereto. The Existing Plan, as amended by the Amendment, remains subject to approval by the Court. The Court has previously determined that it would consider the confirmation of the Existing Plan, as amended by the Amendment, on February 14, 2017.
At a hearing on December 21, 2016, the Court entered an order resolving the Equity Committee Motion (the "Order"). The foregoing description of the Settlement, which is set forth in the Order, is qualified by reference to the full text of the Order, a copy of which is attached to Stone's Current Report on Form 8-K filed today.
Restructuring Plan Solicitation
As previously announced, Stone commenced a solicitation of the Noteholders and the lenders (the "Banks") under the Company's Fourth Amended and Restated Credit Agreement for acceptance of a restructuring on the terms of a pre-packaged plan of reorganization. Such solicitation period ended on December 16, 2016 and (i) of the 94.24% of Noteholders in aggregate outstanding principal amount that voted, 99.95% voted in favor of such plan and .05% voted to reject such plan, and (ii) 100% of the Banks voted to accept such plan.
Stone will commence solicitation of Stone's stockholders for acceptance of the Existing Plan, as amended by the Amendment, on or before December 30, 2016, and the voting deadline for stockholders will be February 10, 2017. Stone will also provide its Noteholders with notice of the Amendment and will permit those Noteholders, if any, who want to change their vote on the Existing Plan the ability to do so, provided that they do so no later than February 1, 2017.
First Day Motions Granted
All of Stone's First Day Motions filed in the Company's previously announced Chapter 11 proceedings were granted by the Court, including a cash collateral motion, a motion maintaining the current treasury system and motions making various vendor payments, wage payments and tax payments in the ordinary course of business. Stone is scheduled for another court appearance on January 10, 2017, and the Court has scheduled the confirmation hearing for February 14, 2017.
Additional Information
The information contained in this Press Release is for informational purposes only and does not constitute an offer to buy, nor a solicitation of an offer to sell, any securities of the Company, nor does it constitute a solicitation of consent from any persons with respect to the transactions contemplated hereby and thereby. While the Company expects the restructuring will take place in accordance with the Existing Plan, as amended by the Amendment, there can be no assurance that the Company will be successful in completing a restructuring.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon the Company's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that the Company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Existing Plan, as amended by the Amendment; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions during the bankruptcy process, which may interfere with the ability to confirm and consummate a plan of reorganization; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of a plan of reorganization; effects on the market price of the Company's common stock and on the Company's ability to access the capital markets; and the risk factors and known trends and uncertainties as described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in the forward-looking statements. The Company assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Dec. 14, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone" or the "Company"), and its domestic subsidiaries (together with the Company, the "Debtors"), today announced that they had filed voluntary petitions under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court") to pursue a pre-packaged plan of reorganization (as amended, the "Plan") in accordance with its previously announced comprehensive balance sheet restructuring efforts.
As previously disclosed, on November 17, 2016, the Debtors commenced a solicitation to seek acceptance by a majority of those voting in each voting class of claims of the Company's creditors under the Plan, including (a) the lenders (the "Banks") under the Fourth Amended and Restated Credit Agreement, dated as of June 24, 2014, as amended, modified, or otherwise supplemented from time to time (the "Credit Agreement") among Stone as borrower, Bank of America, N.A. as administrative agent and issuing bank, and the financial institutions named therein, and (b) the holders of the Company's 1 3⁄4% Senior Convertible Notes due 2017 (the "Convertible Notes") and the Company's 7 1⁄2% Senior Notes due 2022 (the "2022 Notes" and, together with the Convertible Notes, the "Notes" and the holders thereof, the "Noteholders"). Stone expects the solicitation period to end on December 16, 2016. Copies of the Plan, then in effect, and the disclosure statement related to the solicitation were furnished as Exhibit 99.1 to Stone's Current Report on Form 8-K filed on November 18, 2016.
As previously announced, on October 20, 2016, the Debtors and Noteholders holding approximately 85.4% of the aggregate principal amount of Notes executed a restructuring support agreement (the "Original RSA"). On December 14, 2016, the Debtors, the Noteholders holding approximately 79.7% of the aggregate principal amount of Notes and the Banks holding 100% of the aggregate principal amount owing under the Credit Agreement entered into an Amended and Restated Restructuring Support Agreement (the "A&R RSA") that amends, supersedes and restates in its entirety the Original RSA. In connection with entry into the A&R RSA and the commencement of the bankruptcy cases, the Debtors amended the Plan.
Pursuant to the terms of the Plan as revised to be consistent with the terms of the A&R RSA and the term sheet annexed to the A&R RSA (the "Term Sheet"), Noteholders, Banks and other interest holders will receive treatment under the Plan, summarized as follows:
Each of the foregoing common equity percentages in reorganized Stone is subject to dilution from the exercise of the new warrants described above and a management incentive plan.
The A&R RSA contains certain covenants on the part of the Debtors and the Noteholders and Banks who are signatories to the A&R RSA, including that such Noteholders and Banks will vote in favor of the Plan, support the sale of approximately 86,000 net acres in the Appalachia regions of Pennsylvania and West Virginia (the "Properties") to an affiliate of Tug Hill, Inc., pursuant to the terms of that certain Purchase and Sale Agreement, dated October 20, 2016, as amended on December 9, 2016 (the "PSA"), and otherwise facilitate the restructuring transaction, in each case subject to certain terms and conditions in the A&R RSA. The consummation of the Plan will be subject to customary conditions and other requirements, as well as the sale by Stone of the Properties for a cash purchase price of at least $350 million and approval of the Bankruptcy Court. The A&R RSA also provides for termination by each party, or by any party, upon the occurrence of certain events, including without limitation, termination by the Noteholders or the Banks upon the failure of the Company to achieve certain milestones set forth in Schedule 1 to the A&R RSA.
The foregoing descriptions of the A&R RSA and the Plan are qualified by reference to the full text of such documents, copies of which are attached as Exhibits 10.1 and 99.1, respectively, to Stone's Current Report on Form 8-K filed today.
Assuming implementation of the Plan, Stone expects to eliminate approximately $1.2 billion in principal amount of outstanding debt.
No trustee has been appointed, and Stone and its subsidiaries will continue to operate as "debtors in possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. To assure ordinary course operations, Stone is seeking approval from the Bankruptcy Court for a variety of "first day" motions, including authority to maintain bank accounts and other customary relief.
Subject to the approval of the Bankruptcy Court, the Plan is expected to be consummated in approximately 90 days. Stone believes it has adequate liquidity to maintain its operations in the ordinary course and does not intend to seek any debtor-in-possession financing during the pendency of the bankruptcy cases. Stone plans, subject to approval by the Bankruptcy Court, to continue to pay vendors, royalty owners and other parties in the ordinary course throughout the bankruptcy process.
Stone has been in contact with the New York Stock Exchange (the "NYSE") and anticipates the continued listing of its common stock on the NYSE throughout the bankruptcy process so long as the Company continues to meet the minimum continued listing standards set forth by the NYSE.
The information contained in this press release is for informational purposes only and does not constitute an offer to buy, nor a solicitation of an offer to sell, any securities of the Company, nor does it constitute a solicitation of consent from any persons with respect to the transactions contemplated hereby and thereby. While Stone expects the restructuring will take place in accordance with the Plan, there can be no assurance that Stone will be successful in completing a restructuring.
Concurrent with filing the bankruptcy petitions, David Lawrence's role as Special Liaison of the Independent Directors to work together with the management of Stone to help with assessing restructuring alternatives came to an end. Mr. Lawrence will continue in his role as an independent director throughout the reorganization process.
The Debtors filed their voluntary chapter 11 petitions and the Plan in the U.S. Bankruptcy Court for the Southern District of Texas in Houston. Information about the bankruptcy cases can be found at http://dm.epiq11.com/StoneEnergy or by calling +1-888-243-5081 (toll-free in North America) or +1-503-520-4474 (outside of North America).
Stone is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to consummate the sale of the Properties as contemplated by the PSA; the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects on the market price of the Company's common stock and on the Company's ability to access the capital markets; and the risk factors and known trends and uncertainties as described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in the forward-looking statements.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
SOURCE Stone Energy Corporation
LAFAYETTE, La., Dec. 9, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone") and certain of its subsidiaries (collectively, the "Company"), today announced extensions to a restructuring support agreement, a purchase and sale agreement and a credit agreement.
Fourth Amendment to Restructuring Support Agreement
On October 20, 2016, Stone and certain of its subsidiaries entered into a restructuring support agreement, as amended on November 4, 2016, November 9, 2016, and November 15, 2016 (the "RSA"), with certain (i) holders of the Company's 1 ¾% Senior Convertible Notes due 2017 (the "Convertible Notes") and (ii) holders of the Company's 7 ½% Senior Notes due 2022 (together with the Convertible Notes, the "Notes" and the holders thereof, the "Noteholders"), to support a restructuring on the terms of a pre-packaged plan of reorganization as described therein (the "Plan"). On December 9, 2016, the Company and the Noteholders entered into a fourth amendment to the RSA (the "Fourth RSA Amendment") pursuant to which the requirement to commence the chapter 11 cases will be extended from December 9, 2016 to December 13, 2016.
First Amendment to Purchase and Sale Agreement
On October 20, 2016, the Company entered into a purchase and sale agreement (the "PSA") with TH Exploration III, LLC, an affiliate of Tug Hill, Inc. ("Tug Hill"). Pursuant to the terms of the PSA, Stone agreed to sell approximately 86,000 net acres in the Appalachia regions of Pennsylvania and West Virginia (the "Properties") to Tug Hill for $360 million in cash, subject to customary purchase price adjustments. On December 9, 2016, Tug Hill and Stone entered into a first amendment to the PSA (the "First PSA Amendment") pursuant to which the requirement to commence the chapter 11 cases will be extended from December 9, 2016 to December 14, 2016.
Fourth Amendment to Credit Agreement
On December 9, 2016, Stone entered into Amendment No. 4 (the "Fourth Credit Agreement Amendment") to the Fourth Amended and Restated Credit Agreement dated as of June 24, 2014 (as amended, the "Credit Agreement") among Stone, certain of Stone's subsidiaries, as guarantors, and the financial institutions party thereto. The Fourth Credit Agreement Amendment amends the Credit Agreement to modify the anti-hoarding cash provisions therein, which become effective as of December 10, 2016.
Additional Information
The foregoing descriptions of the Fourth RSA Amendment, the First PSA Amendment and the Fourth Credit Agreement Amendment are qualified by reference to the full text of such amendments, copies of which are included as exhibits to Stone's Current Report on Form 8-K filed today.
The information contained in this Press Release is for informational purposes only and does not constitute an offer to buy, nor a solicitation of an offer to sell, any securities of the Company, nor does it constitute a solicitation of consent from any persons with respect to the transactions contemplated hereby. While Stone expects the restructuring will take place in accordance with the Plan, there can be no assurance that the Company will be successful in completing a restructuring. Securityholders are urged to read the disclosure materials, including the disclosure statement, if and when they become available because they will contain important information regarding the restructuring. A copy of the disclosure statement was attached as Exhibit 99.1 to Stone's Current Report on Form 8-K dated November 17, 2016.
Stone is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to consummate the sale of the Properties as contemplated by the PSA; the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects on the market price of the Company's common stock and on the Company's ability to access the capital markets; and the risk factors and known trends and uncertainties as described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in the forward-looking statements.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
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SOURCE Stone Energy Corporation
LAFAYETTE, La., Dec. 5, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) ("Stone") today announced an operational update on its Amethyst well.
As previously reported, production from Stone's Amethyst well (the "Well") was shut in during late April 2016 to allow for a technical evaluation. During the first week of November, we initiated acid stimulation work and intermittently flowed the Well during the month of November at a rate of 10 – 15 million cubic feet of gas per day, while observing and evaluating the Well's performance. On November 30, 2016, we performed a routine shut in of the Well to record pressures and determined that pressure communication exists between the production tubing and production casing strings, resulting from a suspected tubing leak.
We are currently diagnosing the pressure information in an attempt to determine the most likely failure points and expect to have a better understanding within one to two weeks. We have communicated our findings to date with the Bureau of Safety and Environmental Enforcement ("BSEE") and will be working with BSEE in determining our next steps. We will evaluate our options to restore production from the Well, and all potential impacts on our estimated proved oil and gas reserves, which we anticipate will continue for at least several months. The estimated proved reserves associated with the Amethyst well at year-end 2015 were approximately 79 billion cubic feet of gas equivalent. We can provide no assurance that we will be able to restore the Well's production to previous levels, or at all. We also cannot ensure that a replacement or sidetrack well would be economic, or that we would have sufficient liquidity if significant capital is needed to restore the Well's production.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility; the ability to confirm and consummate our previously announced intention to pursue a chapter 11 bankruptcy filing under a pre-packaged plan of reorganization (the "Plan"); risks attendant to the bankruptcy process, including the effects thereof on Stone's business and on the interests of various constituents, the length of time that we might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization in accordance with the terms of the Plan; potential adverse effects on our liquidity or results of operations; increased costs to execute the reorganization in accordance with the terms of the Plan; effects on the market price of Stone's common stock and on our ability to access the capital markets; political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia; and the risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the Securities and Exchange Commission. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of Stone's most recent Annual Report on Form 10-K and Part II, Item 1A of Stone's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in the forward-looking statements.
Stone is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
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SOURCE Stone Energy Corporation
LAFAYETTE, La., Nov. 7, 2016 Stone Energy Corporation (NYSE: SGY) today announced financial and operational results for the third quarter of 2016. Some items of note include:
Financial Results
Stone reported a third quarter of 2016 net loss of $89.6 million, or $16.01 per share, on oil and gas revenue of $93.4 million, compared to a net loss of $292.0 million, or $52.82 per share, on oil and gas revenue of $128.4 million in the third quarter of 2015. The adjusted net loss for the third quarter of 2016, which excludes impairment charges of $36.5 million, was $41.5 million, or $7.40 per share. Net cash provided by operating activities totaled $35.0 million for the third quarter of 2016, while discretionary cash flow totaled $24.6 million during the third quarter of 2016, as compared to $53.3 million and $66.9 million, respectively, during the third quarter of 2015. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of adjusted net loss, a non-GAAP financial measure, to net loss, and discretionary cash flow, a non-GAAP financial measure, to net cash provided by operating activities.
Net daily production during the third quarter of 2016 averaged 39.1 thousand barrels of oil equivalent (MBoe) per day (235 million cubic feet of gas equivalent (MMcfe) per day), compared to net daily production of 29.0 MBoe (174 MMcfe) per day in the second quarter of 2016 and net daily production of 39.8 MBoe (239 Mcfe) per day in the third quarter of 2015. The third quarter 2016 production mix was approximately 43% oil, 38% natural gas and 19% natural gas liquids (NGLs), and included approximately 20 MBoe (123 MMcfe) per day from the Gulf of Mexico (GOM) and 19 MBoe (112 MMcfe) per day from Appalachia.
Production guidance for the fourth quarter of 2016 is estimated at 41 - 43 MBoe per day (246 - 258 MMcfe per day). This guidance assumes the Mary field is online throughout the fourth quarter of 2016 under the interim midstream agreement, with Appalachia averaging approximately 120 MMcfe – 140 MMcfe per day. Our full year production guidance has been adjusted to account for these factors as well. Our updated production guidance for fiscal year 2016 is 35 - 37 MBoe (210 - 222 MMcfe) per day.
Prices realized during the third quarter of 2016 averaged $45.50 per barrel of oil, $9.72 per barrel of NGLs and $1.93 per Mcf of natural gas. Average realized prices for the third quarter of 2015 were $69.59 per barrel of oil, $7.82 per barrel of NGLs and $2.09 per Mcf of natural gas. Effective hedging transactions increased the average realized price of natural gas by $0.30 per Mcf and increased the average realized price of oil by $3.40 per barrel in the third quarter of 2016. Effective hedging transactions increased the average realized price of natural gas by $0.44 per Mcf and increased the average realized price of oil by $24.08 per barrel in the third quarter of 2015.
Lease operating expenses during the third quarter of 2016 totaled $17.0 million ($4.72 per Boe or $0.79 per Mcfe), compared to $24.2 million ($6.62 per Boe or $1.10 per Mcfe) in the third quarter of 2015. The decrease in third quarter 2016 lease operating expenses is primarily attributable to service cost reductions, the implementation of cost-savings measures and operating efficiencies. Lease operating expenses are expected to increase in the fourth quarter of 2016 due to a scheduled well intervention operation on the deep water Amethyst well.
Other operational expenses during the third quarter of 2016 totaled $9.1 million, compared to $0.4 million in the third quarter of 2015. The increase is primarily due to charges related to the terminations of an offshore vessel contract and our Appalachian drilling rig contract, and rig subsidy and stacking charges associated with a deep water rig, the Appalachian rig and the platform rig at Pompano. Other operational expenses for the nine months ended September 30, 2016 totaled $49.3 million, and included $6.0 million relating to a non-cash, cumulative foreign currency loss, $27.5 million in contract termination charges and $15.3 million in rig subsidy charges. We expect other operational expenses to decline significantly in the fourth quarter of 2016 due to the termination of the rig and vessel contracts.
Transportation, processing and gathering (TP&G) expenses during the third quarter of 2016 totaled $10.6 million ($2.96 per Boe or $0.49 per Mcfe), compared to $18.2 million ($4.97 per Boe or $0.83 per Mcfe) during the third quarter of 2015. This decrease is due primarily to the beneficial terms of the interim gas gathering and processing agreement in Appalachia that was executed at the end of the second quarter of 2016. Since production rates in Appalachia continue to improve, we also expect TP&G expenses to increase in the fourth quarter of 2016. TP&G guidance for 2016 has been updated accordingly.
Depreciation, depletion and amortization (DD&A) on oil and gas properties for the third quarter of 2016 totaled $58.9 million ($16.08 per Boe or $2.68 per Mcfe), compared to $61.9 million ($16.60 per Boe or $2.77 per Mcfe), in the third quarter of 2015. The decrease is primarily attributable to the ceiling test write-downs of oil and gas properties.
Salaries, general and administrative (SG&A) expenses (exclusive of incentive compensation) for the third quarter of 2016 were $15.4 million ($4.29 per Boe or $0.71 per Mcfe), compared to $19.6 million ($5.34 per Boe or $0.89 per Mcfe), in the third quarter of 2015. The decrease in SG&A was primarily attributable to staff and other cost reductions and termination charges associated with the early termination of an office lease.
Incentive compensation expense for the third quarter of 2016 was $2.2 million, compared to $0.8 million in the third quarter of 2015. The 2016 incentive compensation cash bonuses are calculated based on the achievement of certain strategic objectives for each quarter of 2016. Portions of the 2016 incentive cash bonuses replace amounts previously awarded to employees as stock-based compensation, which is reflected in SG&A, resulting in higher incentive compensation expense in the third quarter of 2016 compared to the third quarter of 2015.
Accretion expense for the third quarter of 2016 was $10.1 million, compared to $6.5 million in the third quarter of 2015. The increase was due to a higher applicable discount rate used to calculate the present value of the asset retirement obligations compared to prior years. Stone expects accretion expense to remain relatively flat for the remainder of 2016.
Interest expense for the third quarter of 2016 was $16.9 million, compared to $10.9 million in the third quarter of 2015. The increase in interest expense was primarily due to an increase in borrowed funds, combined with a lower capitalized portion. Stone expects interest expense to remain relatively flat for the remainder of 2016.
Restructuring expenses for the third quarter of 2016 were $5.8 million. These fees related to expenses supporting a restructuring effort including legal and financial advisory costs for Stone, our bank group and our noteholders. The quarterly amount of restructuring fees is difficult to forecast as they will be highly dependent on the level of legal and financial advisory activity.
Capital Expenditures Update
Capital expenditures for the third quarter of 2016 were approximately $25.8 million, which included $7.7 million of previously committed seismic expenditures and $4.4 million of plugging and abandonment expenditures. Third quarter 2016 capital expenditures included drilling two horizontal wells in Appalachia. During the third quarter of 2016, we incurred charges of approximately $9.1 million for rig stacking or subsidy expenses, the termination of our drilling rig contract with an Appalachian rig contractor and the termination of an offshore vessel contract, all of which were charged to other operational expenses and excluded from capital expenditures. Further, $4.8 million of SG&A expenses and $6.9 million of interest were capitalized during the third quarter of 2016, and were excluded from the capital expenditure budget. Third quarter 2015 capital expenditures were approximately $124.6 million, which included $23.9 million of plugging and abandonment expenditures, and excluded $6.0 million of SG&A expenses and $10.3 million of interest that were capitalized. For the nine months ended September 30, 2016, capital expenditures totaled $139.2 million, which included $15.4 million of seismic expenditures and $13.5 million of plugging and abandonment expenditures. The rig stacking, subsidy and termination charges for the nine months ended September 30, 2016 totaled $42.8 million and were included in other operational expenses.
In early 2016, Stone's Board of Directors authorized an initial 2016 capital expenditure budget of $200 million, which did not include rig subsidies or rig stacking expenses that were projected to be approximately $40 million to $50 million. The budget was primarily focused on the Pompano platform rig development program and drilling one deep water development well and one or two deep water exploration wells.
However, to further reduce capital expenditures for 2016, we elected to temporarily stack the Pompano platform drilling rig in place. We currently expect to resume drilling operations in early 2017. In addition, as previously announced, we reached an agreement to terminate our deep water rig contract, offshore vessel contract, and Appalachian rig contract.
This updated rig schedule and other cost reduction efforts have decreased our projected annual capital expenditures, which are now expected to approximate $160 million to $170 million for 2016. The budget excludes acquisitions, capitalized SG&A and interest. As noted above, the rig stacking, subsidy and termination charges were accounted for in other operational expenses (not capital expenditures) and are expected to be approximately $46 million for 2016.
Supplemental Bonding Update
As previously reported, on March 21, 2016, the Bureau of Ocean Energy Management ("BOEM") notified Stone that we no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM's guidance to lessees at that time. In late March 2016, we proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which provides for posting incremental financial assurances in favor of BOEM. On May 13, 2016, we received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that we will continue to work with BOEM to finalize the implementation of our long-term tailored plan. We have submitted our tailored plan to BOEM and are awaiting its review and approval.
Additionally, on July 14, 2016, BOEM issued a Notice to Lessees ("NTL") that augments requirements for the posting of additional financial assurances by offshore lessees. The NTL, effective September 12, 2016, does away with the agency's past practice of waiving supplemental bonding obligations where a company could demonstrate a certain level of financial strength. Instead, BOEM will allow companies to "self-insure," but only up to 10% of a company's "tangible net worth." BOEM tentatively expects to approve or deny tailored plans submitted by lessees on or around September 11, 2017, although extensions may be granted to companies actively working with BOEM to finalize tailored plans. We received a "Self-Insurance" letter from BOEM dated September 30, 2016 stating that we are not eligible to self-insure any of our additional security obligations. We received a "Proposal" letter from BOEM dated October 20, 2016 indicating that additional security will be required, and we intend to work with BOEM to adjust our previously submitted tailored plan for the provision of new financial assurances required to be posted as a result of the new NTL. Our revised proposed plan would require approximately $35 million to $40 million of incremental financial assurance or bonding for 2016 through 2017, a portion of which may require cash collateral. Under the revised plan, additional financial assurance would be required for subsequent years. There is no assurance this tailored plan will be approved by BOEM.
Liquidity Update
As previously reported, on June 14, 2016, we entered into an amendment with our bank group, which amended the credit agreement to (i) increase the borrowing base to $360.0 million from $300.0 million, (ii) provide for no redetermination of the borrowing base by the lenders until January 15, 2017, other than an automatic reduction upon the sale of certain of the company's properties, (iii) permit second lien indebtedness to refinance the existing 1¾% Senior Convertible Notes due in March 2017 (the "2017 Convertible Notes") and 7½% Senior Notes due in 2022 ("the 2022 Notes"), (iv) revise the maximum Consolidated Funded Leverage ratio to be 5.25x for the fiscal quarter ending June 30, 2016, 6.50x for the fiscal quarter ending September 30, 2016, 9.50x for the fiscal quarter ending December 31, 2016 and 3.75x thereafter, (v) require minimum liquidity of at least $125.0 million until January 15, 2017, (vi) impose limitations on capital expenditures to $60.0 million from June 2016 through December 2016 (excluding up to $25 million for completion expenditures in Appalachia), (vii) grant the lenders a perfected security interest in all deposit accounts and (viii) provide for anti-hoarding cash provisions for amounts in excess of $50.0 million to apply after December 10, 2016. Upon execution of the amendment, we repaid $56.8 million of borrowings, resulting in the elimination of our borrowing base deficiency and bringing our total borrowings and letters of credit outstanding under the credit facility in conformity with the $360.0 million borrowing base. We were in compliance with all covenants under the amended bank credit facility as of September 30, 2016, however, the minimum liquidity requirement and other restrictions under the credit facility may prevent us from being able to meet our interest payment obligation on the 2022 Notes in the fourth quarter of 2016 as well as the subsequent maturity of our 2017 Convertible Notes. Additionally, we anticipate that we could exceed the Consolidated Funded Leverage financial covenant of 3.75x at the end of the first quarter of 2017 unless a material portion of our debt is repaid, reduced or exchanged into equity.
We have an interest payment obligation under our 2022 Notes of approximately $29.2 million, due on November 15, 2016. The indenture governing the 2022 Notes provides a 30-day grace period that extends the latest date for making this cash interest payment to December 15, 2016 before an event of default occurs under the indenture, which would give the trustee or the holders of at least 25% in principal amount of the 2022 Notes the option to accelerate payment of the principal plus accrued and unpaid interest on the 2022 Notes.
As of September 30, 2016, the current portion of long-term debt of $292.8 million consisted of $292.4 million of 2017 Convertible Notes and $0.4 million of principal payments due within one year on our building loan. On September 30 and November 7, 2016, we had $341.5 million of outstanding borrowings and $12.5 million of outstanding letters of credit, leaving $6.0 million of availability under the bank credit facility.
As of September 30, 2016 and November 7, 2016, Stone had cash on hand of approximately $182.4 million and $181.5 million, respectively.
Restructuring Update
Restructuring Support Agreement
As previously announced, on October 20, 2016, we entered into a restructuring support agreement (the "RSA") with noteholders holding approximately 85.4% of the aggregate principal amount of the 2017 Convertible Notes and the 2022 Notes (together the "Notes" and the holders thereof, the "Noteholders"), to support a restructuring on the terms of a pre-packaged plan of reorganization (the "Plan"). The RSA contemplates that Stone will file for voluntary relief under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in a United States Bankruptcy Court (the "Bankruptcy Court") on or before December 9, 2016 to implement the Plan in accordance with the term sheet annexed to the RSA. Pursuant to the terms of the RSA, the Noteholders will receive (i) 95% of the common stock in reorganized Stone, (ii) $225 million of new 7.5% second lien notes due 2022 and (iii) $150 million of the net cash proceeds from the sale of Stone's approximately 86,000 net acres in the Appalachia regions of Pennsylvania and West Virginia (the "Properties") plus 85% of the net cash proceeds from the sale of the Properties in excess of $350 million, if any. Existing common stockholders of Stone will receive their pro rata share of 5% of the common stock in reorganized Stone and warrants for up to 15% of the post-petition equity, exercisable upon the company reaching certain benchmarks pursuant to the terms of the proposed new warrants. Further, all claims of creditors with unsecured claims other than claims by the Noteholders, including vendors, shall be unaltered and will be paid in full in the ordinary course of business to the extent such claims are undisputed.
The RSA contains certain covenants on the part of Stone and the Noteholders who are signatories to the RSA, including that such Noteholders will vote in favor of the Plan, support the sale of the Properties, and otherwise facilitate the restructuring transaction, in each case subject to certain terms and conditions in the RSA. Consummation of the Plan will be subject to customary conditions and other requirements, as well as the sale by Stone of the Properties for a cash purchase price of at least $350 million and approval of the Bankruptcy Court. The RSA also provides for termination by each party, or by either party, upon the occurrence of certain events, including without limitation, termination by the Noteholders upon Stone's failure to achieve certain milestones set forth in Schedule 1 to the RSA, as amended by the RSA Amendment, discussed below.
On November 4, 2016, we entered into an amendment to the RSA (the "RSA Amendment") with the Noteholders pursuant to which (i) Stone will be obligated to, at any time upon the written request of the Noteholders or their counsel, provide in writing to counsel to the Noteholders the good faith estimate of Stone – together with documentation requested by the Noteholders or their counsel – of any cure amounts or other payment obligations of Stone arising or resulting from the assumption of executory contracts or unexpired leases on both a "per contract" basis and in the aggregate, (ii) the Noteholders will have the option to terminate the RSA at any time that the Noteholders determine, in their sole discretion, that the total amount of all such payments exceeds an amount acceptable to the Noteholders, (iii) the Noteholders will have the unilateral right to extend the automatic termination of the RSA if the restructuring transactions contemplated by the RSA are not consummated by the one-hundredth (100th) calendar day after the Company files for chapter 11 bankruptcy, and (iv) solicitation will commence by November 10, 2016.
Assuming implementation of the Plan, Stone expects that it will eliminate approximately $850 million in principal of outstanding debt and reduce its annual interest payment burden by approximately $46 million.
Although Stone intends to pursue the restructuring in accordance with the terms set forth in the RSA and the RSA Amendment, there can be no assurance that we will be successful in completing a restructuring or any other similar transaction on the terms set forth in the RSA and the RSA Amendment, on different terms or at all.
Purchase and Sale Agreement
As previously announced, on October 20, 2016, Stone entered into a purchase and sale agreement (the "PSA") with TH Exploration III, LLC, an affiliate of Tug Hill, Inc., for the sale of the Properties for $360 million in cash, subject to customary purchase price adjustments (the "Purchase Price").
The sale has an effective date of June 1, 2016. From October 20, 2016 through December 19, 2016 (the "Diligence Period"), the intended purchaser will conduct customary due diligence to assess the aggregate dollar value of any title and environmental defects associated with the Properties. The parties expect to close the sale by February 25, 2017, subject to customary closing conditions and approval by the Bankruptcy Court.
The PSA may be terminated, upon the occurrence of certain events, subject to certain exceptions, including without limitation (i) if the closing has not occurred by March 1, 2017, (ii) if, on or prior to the end of the Diligence Period, title and environmental defect amounts (after application of customary thresholds and deductibles), casualty losses and the value of any assets excluded from the Properties due to the exercise of preferential purchase rights or consents equal or exceed $10 million in the aggregate, and (iii) if Stone fails to file for bankruptcy on or before December 9, 2016.
Bank Credit Facility
We have also been engaged in discussions and have exchanged proposals with the lenders under our bank credit facility with respect to the treatment of the bank credit facility in a chapter 11 proceeding and a related amendment to the bank credit facility; however, no agreement has been reached. While we expect to continue discussions and related negotiations with the lenders under our bank credit facility, there can be no assurance that an agreement will be reached.
For additional details regarding the RSA and the PSA, and the RSA Amendment, please see Stone's Current Reports on Form 8-K filed on October 21, 2016 and November 4, 2016, respectively.
Operational Update
Pompano Platform Production Update (Deep Water). On June 28, 2016, the gas processing plant in Pascagoula, Mississippi experienced an explosion that shut down the facility, which is currently expected to return to operation late in the fourth quarter of 2016. Although Stone has no direct interest in the plant, it processed approximately 20-25 MMcf per day (gross) of gas produced from the Pompano platform. On July 21, 2016, we negotiated an agreement to flow gas to an alternate market, which allowed us to produce oil and gas from the Pompano platform with no additional pipeline curtailments. Our arrangement does not guarantee available capacity, so gas re-injection remains a fallback option if needed.
Mississippi Canyon 26 – No. 1 Amethyst Well (Deep Water). As previously reported, production from our Amethyst well was shut in during late April 2016 to allow for a technical evaluation. During the first week of November, we initiated acid stimulation work and are intermittently flowing the well while we continue to observe and evaluate the well's performance. We have identified potential factors which may explain the reason for the April 2016 pressure decline and ultimate production shut in. If the well continues to perform, we expect to flow and evaluate the well for an extended period of time at a 10-15 MMcf per day rate, although the gas export pipeline capacity may be temporarily restricted due to the Pascagoula gas plant outage.
Mississippi Canyon 109 – No. A-22 Well Recompletion (Deep Water). On September 27, 2016, we initiated recompletion operations on the Mississippi Canyon 109 No. A-22 ST1 well to target the "H" sand in the Pliocene interval. We expect the well to resume production in mid-November with initial volumes estimated to range from 300 to 350 Boe per day. Stone holds a 100% working interest in this well, which ties back to our Amberjack platform.
Pompano Platform Drilling Program (Deep Water). In early June 2016, we temporarily stacked the platform rig in place to preserve liquidity. We currently expect to resume platform drilling operations in early 2017. There are up to three additional development wells to be drilled from the Pompano platform. Each additional development well is expected to provide production volumes ranging from 500 to over 1,500 Boe per day per well after hook-up. Stone holds a 100% working interest in these wells.
Mississippi Canyon 117 - Rampart Deep and Rampart Shallow (Deep Water). The Rampart exploration prospects (Deep and Shallow) target the Miocene interval and are expected to be tied back to the Pompano platform, if successful. Stone currently holds a 100% working interest in the prospect and expects to reduce its working interest before drilling would commence. The prospects are located nine miles from Stone's Pompano platform, and each well is estimated to take three months to drill.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. If successful, a tie-back to the Pompano platform is likely. Stone currently holds a 100% working interest in the prospect, although a reduction to its working interest is expected before drilling would commence. The well is estimated to take three months to drill.
Alaminos Canyon 943 - Lamprey (Deep Water). We have engaged in discussions with potential partners regarding the 100% owned Lamprey prospect, and we have not secured a partner on this project to date. A significant reduction to Stone's working interest would be required before progressing this project.
Appalachia Basin. As reported on June 29, 2016, Stone entered into an interim gas gathering and processing agreement to produce the Mary field in Appalachia. The initial term of the interim agreement was through August 31, 2016, and it continues on a month to month basis thereafter, unless terminated by either party. During the third quarter of 2016, production from the Mary field averaged over 90 MMcfe per day, with total Appalachia volumes averaging 112 MMcfe per day. Most wells in Appalachia have returned to production and we expect daily production rates from Appalachia to average 120 MMcfe to 140 MMcfe per day in the fourth quarter.
During the third quarter of 2016, we negotiated the termination of the contract for the Appalachia drilling rig. Due to capital constraints, we expect to limit Appalachian activities for the remainder of 2016 to maintaining production and core leasehold interests and to other maintenance operations.
Fourth Quarter of 2016 Guidance
Selected guidance for the fourth quarter and full year 2016 is shown in the table below (updated guidance numbers are italicized and bolded). The guidance for the fourth quarter of 2016 production includes previously mentioned operational updates, including the assumption that the Mary field in Appalachia remains online through year end under the terms of the interim agreement. The guidance is also subject to all the cautionary statements and limitations described below and under the caption "Forward Looking Statements."
Fourth Quarter |
Full Year | ||
Production - MBoe per day (MMcfe per day) |
41 - 43 (246 - 258) |
35 - 37 (210 - 222) | |
Lease operating expenses (in millions) (excluding transportation/processing expenses) |
- |
$80 - $90
| |
Transportation, processing and gathering (in millions) |
- |
$31 - $34 | |
Salaries, General & Administrative expenses (in millions) |
- |
$58 - $62 | |
(excluding incentive compensation and non-recurring professional fess)
|
|||
Depreciation, Depletion & Amortization (per MBoe) |
- |
$15.00 - $18.00 | |
(per Mcfe) |
$2.50 - $3.00 | ||
Corporate Tax Rate (%) |
- |
0% - 5% | |
Capital Expenditure Budget (in millions) |
- |
$160 - $170 |
Hedge Position
The following table illustrates our derivative positions for 2016 as of November 7, 2016:
Fixed-Price Swaps | |||||||
NYMEX | |||||||
Natural Gas |
Oil | ||||||
Daily Volume (MMBtus/d) |
Swap Price |
Daily Volume (Bbls/d) |
Swap Price | ||||
2016 |
10,000 |
$4.110 |
1,000 |
$90.00 | |||
2016 |
10,000 |
4.120 |
1,000 |
52.78 | |||
2016 |
1,000 |
49.75 | |||||
2016 |
1,000* |
45.00 - 54.75 | |||||
*collar |
New York Stock Exchange Notifications
On April 29, 2016, we were notified by the New York Stock Exchange ("NYSE") that we were not in compliance with the NYSE's continued listing requirements, as the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE. On May 17, 2016, we were notified by the NYSE that our average global market capitalization had been less than $50 million over a consecutive 30 trading-day period at the same time that our stockholders' equity was less than $50 million, which is non-compliant with the NYSE's rules.
At the close of business on June 10, 2016, we effected a 1-for-10 reverse stock split in order to increase the market price per share of our common stock in order to regain compliance with the NYSE's minimum share price requirement. Stone's shares of common stock continue to trade on the NYSE under the symbol "SGY" but trade under the new CUSIP number 861642304. We were notified on July 1, 2016 that we cured the minimum share price deficiency and that we were no longer considered non-compliant with the $1.00 per share average closing price requirement, although we remain non-compliant with the $50 million market capitalization and stockholders' equity requirements.
On June 30, 2016, we submitted our 18-month business plan for curing the average market capitalization and stockholders' equity deficiencies to the NYSE. The NYSE accepted the plan on August 4, 2016 and will continue to review the company on a quarterly basis for compliance with the plan. Upon acceptance of the plan by the NYSE, and after two consecutive quarters of sustained market capitalization above $50 million, we would no longer be non-compliant with the market capitalization and stockholders' equity requirements. During the 18-month cure period, our shares of common stock will continue to be listed and traded on the NYSE, unless we experience other circumstances that subject us to delisting, including abnormally low market capitalization. If we fail to meet the material aspects of the plan or any of the quarterly milestones, the NYSE will review the circumstances and variance, and determine whether such variance warrants commencement of suspension and delisting procedures. Upon a delisting from the NYSE, we would commence trading on the OTC Pink. On September 20, 2016, we submitted a second quarter 2016 update to our plan to mitigate listing deficiencies, and the update was accepted by the NYSE on September 22, 2016. Upon filing, or announcement of intention to file, for relief under chapter 11 of the Bankruptcy Code, a company below a listing standard is subject to immediate suspension and delisting. However, if we are profitable or have positive cash flow, or if we are demonstrably in sound financial health despite the bankruptcy proceedings, the NYSE may evaluate our plan in light of the filing or announcement of intent to file without immediately suspending and delisting our common stock.
Other Information
Stone Energy will not be hosting a conference call to discuss the third quarter of 2016 operational and financial results.
Non-GAAP Financial Measures
In this press release, we refer to non-GAAP financial measures we call "discretionary cash flow" and "adjusted net loss." Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities. Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income, as defined by GAAP. Management believes adjusted net loss is useful to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Please see the "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of discretionary cash flow to net cash provided by operating activities and a reconciliation of adjusted net loss to net loss.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility; the ability to consummate the sale of the Properties as contemplated by the PSA; the ability to confirm and consummate a plan of reorganization in accordance with the terms of the RSA; risks attendant to the bankruptcy process, including the effects thereof on the company's business and on the interests of various constituents, the length of time that the company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization; potential adverse effects on the company's liquidity or results of operations; increased costs to execute the reorganization; effects on the market price of the company's common stock and on the company's ability to access the capital markets, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the company's most recent Annual Report on Form 10-K and Part II, Item 1A of the company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements. Stone assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
STONE ENERGY CORPORATION | ||||||||||||||||
SUMMARY STATISTICS | ||||||||||||||||
(In thousands, except per share/unit amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
FINANCIAL RESULTS |
||||||||||||||||
Net loss |
($89,635) |
($291,965) |
($474,180) |
($772,259) |
||||||||||||
Net loss per share |
($16.01) |
($52.82) |
($84.90) |
($139.83) |
||||||||||||
PRODUCTION QUANTITIES |
||||||||||||||||
Oil (MBbls) |
1,563 |
1,509 |
4,746 |
4,665 |
||||||||||||
Natural gas (MMcf) |
8,096 |
8,328 |
20,042 |
32,066 |
||||||||||||
Natural gas liquids (MBbls) |
686 |
765 |
1,294 |
2,242 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
3,598 |
3,662 |
9,380 |
12,252 |
||||||||||||
Oil, natural gas and NGLs (MMcfe) |
21,590 |
21,972 |
56,282 |
73,508 |
||||||||||||
AVERAGE DAILY PRODUCTION |
||||||||||||||||
Oil (MBbls) |
17.0 |
16.4 |
17.3 |
17.1 |
||||||||||||
Natural gas (MMcf) |
88.0 |
90.5 |
73.1 |
117.5 |
||||||||||||
Natural gas liquids (MBbls) |
7.5 |
8.3 |
4.7 |
8.2 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
39.1 |
39.8 |
34.2 |
44.9 |
||||||||||||
Oil, natural gas and NGLs (MMcfe) |
234.7 |
238.8 |
205.4 |
269.3 |
||||||||||||
REVENUE DATA |
||||||||||||||||
Oil revenue |
$71,116 |
$105,013 |
$204,102 |
$324,105 |
||||||||||||
Natural gas revenue |
15,601 |
17,367 |
43,327 |
72,611 |
||||||||||||
Natural gas liquids revenue |
6,666 |
5,980 |
15,119 |
29,379 |
||||||||||||
Total oil, natural gas and NGLs revenue |
$93,383 |
$128,360 |
$262,548 |
$426,095 |
||||||||||||
AVERAGE PRICES |
||||||||||||||||
Prior to the cash settlement of effective hedging transactions: |
||||||||||||||||
Oil (per Bbl) |
$42.10 |
$45.51 |
$38.86 |
$48.74 |
||||||||||||
Natural gas (per Mcf) |
1.63 |
1.65 |
1.68 |
1.94 |
||||||||||||
Natural gas liquids (per Bbl) |
9.72 |
7.82 |
11.68 |
13.10 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
23.82 |
24.15 |
24.86 |
26.04 |
||||||||||||
Oil, natural gas and NGLs (per Mcfe) |
3.97 |
4.02 |
4.14 |
4.34 |
||||||||||||
Including the cash settlement of effective hedging transactions: |
||||||||||||||||
Oil (per Bbl) |
$45.50 |
$69.59 |
$43.01 |
$69.48 |
||||||||||||
Natural gas (per Mcf) |
1.93 |
2.09 |
2.16 |
2.26 |
||||||||||||
Natural gas liquids (per Bbl) |
9.72 |
7.82 |
11.68 |
13.10 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
25.95 |
35.05 |
27.99 |
34.78 |
||||||||||||
Oil, natural gas and NGLs (per Mcfe) |
4.33 |
5.84 |
4.66 |
5.80 |
||||||||||||
AVERAGE COSTS |
||||||||||||||||
Lease operating expenses (per Boe) |
$4.72 |
$6.62 |
$5.90 |
$6.47 |
||||||||||||
Lease operating expenses (per Mcfe) |
0.79 |
1.10 |
0.98 |
1.08 |
||||||||||||
Transp, processing and gathering exp (per Boe) |
2.96 |
4.97 |
1.99 |
4.56 |
||||||||||||
Transp, processing and gathering exp (per Mcfe) |
0.49 |
0.83 |
0.33 |
0.76 |
||||||||||||
Salaries, general and administrative expenses (per Boe) |
4.29 |
5.34 |
5.14 |
4.32 |
||||||||||||
Salaries, general and administrative expenses (per Mcfe) |
0.71 |
0.89 |
0.86 |
0.72 |
||||||||||||
DD&A expense on oil and gas properties (per Boe) |
16.08 |
16.60 |
17.42 |
18.19 |
||||||||||||
DD&A expense on oil and gas properties (per Mcfe) |
2.68 |
2.77 |
2.90 |
3.03 |
||||||||||||
AVERAGE SHARES OUTSTANDING - Diluted |
5,560 |
5,528 |
5,585 |
5,523 |
STONE ENERGY CORPORATION | |||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||
(In thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Operating revenue: |
|||||||||||||||
Oil production |
$71,116 |
$105,013 |
$204,102 |
$324,105 |
|||||||||||
Natural gas production |
15,601 |
17,367 |
43,327 |
72,611 |
|||||||||||
Natural gas liquids production |
6,666 |
5,980 |
15,119 |
29,379 |
|||||||||||
Other operational income |
1,044 |
1,392 |
1,737 |
3,184 |
|||||||||||
Derivative income, net |
— |
2,444 |
— |
4,871 |
|||||||||||
Total operating revenue |
94,427 |
132,196 |
264,285 |
434,150 |
|||||||||||
Operating expenses: |
|||||||||||||||
Lease operating expenses |
16,976 |
24,244 |
55,349 |
79,250 |
|||||||||||
Transportation, processing and gathering expenses |
10,633 |
18,208 |
18,657 |
55,851 |
|||||||||||
Production taxes |
835 |
2,052 |
1,894 |
6,394 |
|||||||||||
Depreciation, depletion and amortization |
58,918 |
61,936 |
166,707 |
226,309 |
|||||||||||
Write-down of oil and gas properties |
36,484 |
295,679 |
284,337 |
1,011,385 |
|||||||||||
Accretion expense |
10,082 |
6,498 |
30,147 |
19,315 |
|||||||||||
Salaries, general and administrative expenses |
15,425 |
19,552 |
48,193 |
52,977 |
|||||||||||
Incentive compensation expense |
2,160 |
794 |
11,809 |
3,621 |
|||||||||||
Restructuring fees |
5,784 |
— |
16,173 |
— |
|||||||||||
Other operational expenses |
9,059 |
442 |
49,266 |
1,612 |
|||||||||||
Derivative expense, net |
199 |
— |
687 |
— |
|||||||||||
Total operating expenses |
166,555 |
429,405 |
683,219 |
1,456,714 |
|||||||||||
Loss from operations |
(72,128) |
(297,209) |
(418,934) |
(1,022,564) |
|||||||||||
Other (income) expenses: |
|||||||||||||||
Interest expense |
16,924 |
10,872 |
49,764 |
31,709 |
|||||||||||
Interest income |
(58) |
(47) |
(474) |
(235) |
|||||||||||
Other income |
(272) |
(411) |
(840) |
(1,167) |
|||||||||||
Other expense |
16 |
148 |
27 |
148 |
|||||||||||
Total other expenses |
16,610 |
10,562 |
48,477 |
30,455 |
|||||||||||
Loss before income taxes |
(88,738) |
(307,771) |
(467,411) |
(1,053,019) |
|||||||||||
Provision (benefit) for income taxes: |
|||||||||||||||
Current |
(991) |
— |
(4,178) |
— |
|||||||||||
Deferred |
1,888 |
(15,806) |
10,947 |
(280,760) |
|||||||||||
Total income taxes |
897 |
(15,806) |
6,769 |
(280,760) |
|||||||||||
Net loss |
($89,635) |
($291,965) |
($474,180) |
($772,259) |
STONE ENERGY CORPORATION | ||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | ||||||||||||||||
DISCRETIONARY CASH FLOW to NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
Net loss as reported |
($89,635) |
($291,965) |
($474,180) |
($772,259) |
||||||||||||
Reconciling items: |
||||||||||||||||
Depreciation, depletion and amortization |
58,918 |
61,936 |
166,707 |
226,309 |
||||||||||||
Write-down of oil and gas properties |
36,484 |
295,679 |
284,337 |
1,011,385 |
||||||||||||
Deferred income tax provision (benefit) |
1,888 |
(15,806) |
10,947 |
(280,760) |
||||||||||||
Accretion expense |
10,082 |
6,498 |
30,147 |
19,315 |
||||||||||||
Non-cash stock compensation expense |
1,725 |
3,135 |
6,407 |
9,163 |
||||||||||||
Non-cash interest expense |
4,875 |
4,473 |
14,278 |
13,210 |
||||||||||||
Non-cash derivative expense |
236 |
2,923 |
1,261 |
10,854 |
||||||||||||
Other non-cash expense |
— |
— |
6,081 |
— |
||||||||||||
Discretionary cash flow |
24,573 |
66,873 |
45,985 |
237,217 |
||||||||||||
Change in income taxes payable |
24,771 |
5 |
21,584 |
7,211 |
||||||||||||
Settlement of asset retirement obligations |
(4,400) |
(23,903) |
(15,106) |
(59,826) |
||||||||||||
Other working capital changes |
(9,921) |
10,340 |
(19,570) |
14,378 |
||||||||||||
Net cash provided by operating activities |
$35,023 |
$53,315 |
$32,893 |
$198,980 |
||||||||||||
STONE ENERGY CORPORATION | ||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | ||||||||||||||||
ADJUSTED NET LOSS to NET LOSS | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
Net loss as reported |
($89,635) |
($291,965) |
($474,180) |
($772,259) |
||||||||||||
Reconciling items: |
||||||||||||||||
Write-down of oil and gas properties |
36,484 |
295,679 |
284,337 |
1,011,385 |
||||||||||||
Tax effect |
(12,861) |
(106,444) |
(100,229) |
(364,099) |
||||||||||||
Valuation allowance on deferred tax assets |
24,551 |
94,294 |
162,948 |
94,294 |
||||||||||||
Total reconciling items |
48,174 |
283,529 |
347,056 |
741,580 |
||||||||||||
Adjusted net loss |
($41,461) |
($8,436) |
($127,124) |
($30,679) |
||||||||||||
Net loss per share as reported |
($16.01) |
($52.82) |
($84.90) |
($139.83) |
||||||||||||
Per share effect of impairment charges |
$8.61 |
$51.29 |
$62.14 |
$134.28 |
||||||||||||
Net loss per share before impairment charges |
($7.40) |
($1.53) |
($22.76) |
($5.55) |
STONE ENERGY CORPORATION | ||||||||
CONSOLIDATED BALANCE SHEET | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
September 30, |
December 31, | |||||||
2016 |
2015 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$182,399 |
$10,759 |
||||||
Accounts receivable |
44,063 |
48,031 |
||||||
Fair value of derivative contracts |
6,261 |
38,576 |
||||||
Current income tax receivable |
19,863 |
46,174 |
||||||
Other current assets |
11,176 |
6,881 |
||||||
Total current assets |
263,762 |
150,421 |
||||||
Oil and gas properties, full cost method of accounting: |
||||||||
Proved |
9,564,561 |
9,375,898 |
||||||
Less: accumulated depreciation, depletion and amortization |
(9,054,069) |
(8,603,955) |
||||||
Net proved oil and gas properties |
510,492 |
771,943 |
||||||
Unevaluated |
404,226 |
440,043 |
||||||
Other property and equipment, net |
27,227 |
29,289 |
||||||
Other assets, net |
29,800 |
18,473 |
||||||
Total assets |
$1,235,507 |
$1,410,169 |
||||||
Liabilities and Stockholders' Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable to vendors |
$29,259 |
$82,207 |
||||||
Undistributed oil and gas proceeds |
7,439 |
5,992 |
||||||
Accrued interest |
22,917 |
9,022 |
||||||
Asset retirement obligations |
60,223 |
21,291 |
||||||
Current portion of long-term debt |
292,795 |
— |
||||||
Other current liabilities |
10,903 |
40,712 |
||||||
Total current liabilities |
423,536 |
159,224 |
||||||
Bank credit facility |
341,500 |
— |
||||||
7½% Senior Notes due 2022 |
770,427 |
770,009 |
||||||
1¾% Senior Convertible Notes due 2017 |
— |
279,244 |
||||||
4.2% Building Loan |
11,018 |
11,702 |
||||||
Asset retirement obligations |
182,816 |
204,575 |
||||||
Other long-term liabilities |
25,871 |
25,204 |
||||||
Total liabilities |
1,755,168 |
1,449,958 |
||||||
Common stock |
56 |
55 |
||||||
Treasury stock |
(860) |
(860) |
||||||
Additional paid-in capital |
1,657,028 |
1,648,687 |
||||||
Accumulated deficit |
(2,179,803) |
(1,705,623) |
||||||
Accumulated other comprehensive income |
3,918 |
17,952 |
||||||
Total stockholders' equity |
(519,661) |
(39,789) |
||||||
Total liabilities and stockholders' equity |
$1,235,507 |
$1,410,169 |
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SOURCE Stone Energy Corporation
LAFAYETTE, La., Oct. 20, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced entry into a comprehensive restructuring support agreement and a purchase and sale agreement for its properties in the Appalachia basin.
Restructuring Support Agreement
As previously disclosed, Stone Energy Corporation ("Stone") has been involved in discussions with certain of its stakeholders in respect of a possible restructuring of the indebtedness and capitalization of Stone and certain of its subsidiaries (collectively, the "Company"). On October 20, 2016, the Company entered into a restructuring support agreement (the "RSA") with certain (i) holders of the Company's 1¾% Senior Convertible Notes due 2017 (the "Convertible Notes") and (ii) holders of the Company's 7½% Senior Notes due 2022 (together with the Convertible Notes, the "Notes" and the holders thereof, the "Noteholders"), to support a restructuring on the terms of a pre-packaged plan of reorganization as described therein (the "Plan"). The RSA contemplates that the Company will file for voluntary relief under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in a United States Bankruptcy Court (the "Bankruptcy Court") on or before December 9, 2016 to implement the Plan in accordance with the term sheet annexed to the RSA (the "Term Sheet"). The following description of the RSA and annexed Term Sheet is qualified by reference to the full text of such agreement, a copy of which is included as Exhibit 10.1 to the Current Report on Form 8-K filed today.
"The execution of the RSA is the culmination of months of hard work to right-size our balance sheet in response to a sustained period of low oil and natural gas commodity prices," said David Welch, Chairman, President and Chief Executive Officer. "The agreement with our Noteholders will provide value to all of our stakeholders, improves our liquidity and better positions us to be profitable during a historically difficult time in our industry. Importantly, this agreement will allow all stakeholders to share in potential valuation growth if commodity prices improve."
The RSA will become effective upon (i) execution by the Company and Noteholders holding, in the aggregate, at least 66-2/3% of the outstanding aggregate principal amount of the Notes, and (ii) Stone having entered into a PSA for the sale of Properties, defined below, for a cash purchase price of at least $350 million. Both conditions have been satisfied, with Noteholders holding approximately 85.4% of the aggregate principal amount of the Notes executing the RSA and Stone signing the PSA, as indicated below. Pursuant to the terms of the RSA and the Term Sheet, Noteholders and other interest holders will receive treatment under the Plan summarized as follows:
Each of the foregoing common equity percentages in reorganized Stone is subject to dilution from the exercise of the new warrants described above and a management incentive plan.
The Company has been engaged in discussions and has exchanged proposals with the lenders under its revolving credit facility with respect to the treatment of the revolving credit facility in a chapter 11 proceeding and a related amendment to the revolving credit facility; however, no agreement has been reached. While the Company expects to continue discussions and related negotiations with its lenders, there can be no assurance that an agreement will be reached.
The RSA contains certain covenants on the part of the Company and the Noteholders who are signatories to the RSA, including that such Noteholders will vote in favor of the Plan, support the sale of the Properties and otherwise facilitate the restructuring transaction, in each case subject to certain terms and conditions in the RSA. The consummation of the Plan will be subject to customary conditions and other requirements, as well as the sale by Stone of the Properties for a cash purchase price of at least $350 million and approval of the Bankruptcy Court. The RSA also provides for termination by each party, or by either party, upon the occurrence of certain events, including without limitation, termination by the Noteholders upon the failure of the Company to achieve certain milestones set forth in Schedule 1 to the RSA.
Assuming implementation of the Plan, Stone expects that it will have eliminated approximately $850 million in principal of outstanding debt and reduced its annual interest payment burden by approximately $46 million.
Although the Company intends to pursue the restructuring in accordance with the terms set forth in the RSA, there can be no assurance that the Company will be successful in completing a restructuring or any other similar transaction on the terms set forth in the RSA, on different terms or at all.
The information contained in the RSA, including the Term Sheet, and this press release are for informational purposes only and do not constitute an offer to buy, nor a solicitation of an offer to sell, any securities of the Company, nor do they constitute a solicitation of consent from any persons with respect to the transactions contemplated hereby and thereby. While we expect the restructuring will take place in accordance with the Plan, there can be no assurance that the Company will be successful in completing a restructuring. Securityholders are urged to read the disclosure materials, including the disclosure statement, if and when they become available because they will contain important information regarding the restructuring.
Purchase and Sale Agreement
On October 20, 2016 (the "Execution Date"), Stone entered into a purchase and sale agreement (the "PSA") with TH Exploration III, LLC, an affiliate of Tug Hill, Inc. ("Tug Hill"). Pursuant to the terms of the PSA, Stone agreed to sell the Properties to Tug Hill (the "Disposition") for $360 million in cash, subject to customary purchase price adjustments (the "Purchase Price"). The following description of the PSA is qualified by reference to the text of such agreement, a copy of which is included as Exhibit 10.2 to the Current Report on Form 8-K filed today.
"The sale of the Appalachia properties, an important component of the restructuring support agreement, will further streamline our operations and allow us to advance our efforts to grow value in the Gulf of Mexico, which is central to our long-term business plan," said David Welch.
The Disposition has an effective date of June 1, 2016. In connection with the execution of the PSA, Tug Hill deposited $5.0 million in escrow, which amount may be supplemented by an additional $31 million at a later date on certain conditions being met. Upon a closing, the deposit will be credited against the Purchase Price. From the Execution Date through December 19, 2016 (the "Diligence Period"), Tug Hill intends to conduct customary due diligence to assess the aggregate dollar value of any title and environmental defects associated with the Properties. The parties expect to close the Disposition by February 27, 2017, subject to customary closing conditions and approval by the Bankruptcy Court.
The PSA contains customary representations, warranties and covenants. From and after the closing of the Disposition, Stone and Tug Hill, respectively, have agreed to indemnify each other and their respective affiliates against certain losses resulting from any breach of their representations, warranties or covenants contained in the PSA, subject to certain customary limitations and survival periods. Additionally, from and after closing of the Disposition, Stone has agreed to indemnify Tug Hill for certain identified retained liabilities related to the Properties, subject to certain survival periods, and Tug Hill has agreed to indemnify Stone for certain assumed obligations related to the Properties.
The PSA may be terminated, subject to certain exceptions, (i) upon mutual written consent, (ii) if the closing has not occurred by March 1, 2017, (iii) for certain material breaches of representations and warranties or covenants that remain uncured, (iv) if, on or prior to the end of the Diligence Period, title and environmental defect amounts (after application of customary thresholds and deductibles), casualty losses and the value of any assets excluded from the Properties due to the exercise of preferential purchase rights or consents equal or exceed $10 million in the aggregate, (v) if Stone fails to file for bankruptcy on or before December 9, 2016, (vi) if the Bankruptcy Court does not enter an order approving Stone's assumption of the PSA and certain other matters within 30 days of Stone filing for bankruptcy, (vii) if the Bankruptcy Court does not enter a sale order for the Disposition by February 10, 2017, and (viii) upon the occurrence of certain other events specified in the PSA.
Additional Information
Additional details of the restructuring and the asset sale can be found in the RSA and PSA, respectively, as filed with the Securities Exchange Commission on a Current Report on Form 8-K today.
Stone is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins.
Forward-Looking Statements
Certain statements in this press release are forward-looking and are based upon the Company's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that the Company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the ability to consummate the sale of the Properties as contemplated by the PSA; the ability to confirm and consummate a plan of reorganization in accordance with the terms of the RSA; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization; potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization; effects on the market price of the Company's common stock and on the Company's ability to access the capital markets; and the risk factors and known trends and uncertainties as described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. For a more detailed discussion of risk factors, please see Part I, Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2016 and June 30, 2016, respectively. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in the forward-looking statements. The Company assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Contact:
Jennifer E. Mercer
Epiq Strategic Communications for Stone Energy
310-712-6215
jmercer@epiqsystems.com
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SOURCE Stone Energy Corporation
LAFAYETTE, La., Aug. 2, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced financial and operational results for the second quarter of 2016. Some items of note include:
Chairman, President and Chief Executive Officer David Welch stated, "During the second quarter of 2016, we were able to negotiate and execute important agreements with three business partners. The amendment to the bank credit facility in June provided us with financial flexibility by increasing the borrowing base from $300 million to $360 million and relaxing certain financial covenants. We were also able to terminate the ENSCO 8503 deep water rig contract that included a $341,000 operating day rate, which was not scheduled to expire until the third quarter of next year. Finally, we were able to negotiate an interim midstream agreement with Williams that allowed us to resume production operations at our Mary field in Appalachia. Production volumes in Appalachia averaged over 95 MMcfe per day in July, and we expect daily volumes to reach over 125 MMcfe per day during the third quarter of 2016. In the Gulf of Mexico, our deep water volumes were relatively flat in the second quarter, yet we reduced our lease operating expenses. Though the explosion at the third-party Pascagoula gas processing plant caused a temporary suspension of our Pompano production operations in late June, we were able to quickly restore most of our production volumes within days through the utilization of a gas injection well, which was part of our contingency plan. In late July, we negotiated an agreement to flow gas to an alternate market and are again producing from the Pompano platform at previous rates. Finally, we continue to work with our advisors, who are assisting us in reviewing various financial, transactional and strategic restructuring alternatives."
Financial Results
Stone reported a second quarter of 2016 net loss of $195.8 million, or $35.05 per share, on oil and gas revenue of $89.0 million, compared to a net loss of $152.9 million, or $27.68 per share, on oil and gas revenue of $149.5 million in the second quarter of 2015. The adjusted net loss, which excludes impairment charges of $118.6 million, was $41.6 million, or $7.45 per share. Net cash (used in) provided by operating activities totaled ($31.6) million for the second quarter of 2016, while discretionary cash flow totaled ($6.6) million during the second quarter of 2016, as compared to $62.1 and $84.9 million, respectively, during the second quarter of 2015. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of adjusted net loss, a non-GAAP financial measure, to net loss, and discretionary cash flow, a non-GAAP financial measure, to net cash (used in) provided by operating activities.
Net daily production during the second quarter of 2016 averaged 29.0 thousand barrels of oil equivalent (MBoe) per day (174 million cubic feet of gas equivalent (MMcfe) per day), compared to net daily production of 34.5 MBoe (207 MMcfe) per day in the first quarter of 2016 and net daily production of 48.6 MBoe (291 MMcfe) per day in the second quarter of 2015. The second quarter 2016 production mix was approximately 59% oil, 32% natural gas and 9% natural gas liquids (NGLs), and included approximately 23 MBoe (138 MMcfe) per day from the Gulf of Mexico (GOM) and 6 MBoe (36 MMcfe) per day from Appalachia. Appalachian volumes for the second quarter of 2016 included 21 MMcfe per day from the Heather and Buddy fields, 11 MMcfe per day of intermittent production from the Mary field and 4 MMcfe per day attributed to final adjustments of our working interests in two Mary units.
Production guidance for the third quarter of 2016 is estimated at 35 - 37 MBoe per day (210 - 222 MMcfe per day). The guidance anticipates a production decline in the GOM primarily due to reduced volumes from the Pompano platform caused by potential gas curtailment that could also restrict oil flow, a deferral of projected volumes from Amethyst into the fourth quarter for the same reason, projected hurricane downtime and natural declines. This guidance also assumes the Mary field is online throughout the third quarter of 2016 under the interim midstream agreement, with Appalachia averaging approximately 110 MMcfe – 120 MMcfe per day. Our full year production guidance has been adjusted to account for these factors as well. Our updated production guidance for 2016 is 33 - 35 MBoe (198 - 210 MMcfe) per day.
Prices realized during the second quarter of 2016 averaged $46.97 per barrel of oil, $15.24 per barrel of NGLs and $2.46 per Mcf of natural gas. Average realized prices for the second quarter of 2015 were $72.74 per barrel of oil, $13.90 per barrel of NGLs and $2.14 per Mcf of natural gas. Effective hedging transactions increased the average realized price of natural gas by $0.74 per Mcf and increased the average realized price of oil by $3.31 per barrel in the second quarter of 2016. Effective hedging transactions increased the average realized price of natural gas by $0.32 per Mcf and increased the average realized price of oil by $17.19 per barrel in the second quarter of 2015.
Lease operating expenses during the second quarter of 2016 totaled $18.8 million ($7.13 per Boe or $1.19 per Mcfe), compared to $27.4 million ($6.20 per Boe or $1.03 per Mcfe) in the second quarter of 2015. The decrease in second quarter 2016 lease operating expenses is primarily attributable to cost reduction efforts, operating efficiencies and the shut in of our Mary field from September 2015 until late June 2016. Lease operating expenses are expected to increase in the third quarter of 2016 due to the resumption of production operations at the Mary field and a scheduled well intervention operation on the deep water Amethyst well. However, lease operating expenses per unit of production are expected to decline due to the increased production projected in the third quarter of 2016.
Other operational expenses during the second quarter of 2016 totaled $27.7 million, compared to $1.5 million in the second quarter of 2015. The increase is primarily due to a $20.0 million charge related to the termination of our deep water drilling rig contract with Ensco and approximately $7.5 million of rig subsidy and stacking charges associated with the ENSCO 8503 deep water rig, the Appalachian rig and the platform rig at Pompano. Other operational expenses for the six months ended June 30, 2016 totaled $40.2 million, and included $6.0 million relating to a non-cash, cumulative foreign currency loss and another $6.1 million in rig subsidy charges. We expect other operational expenses to decline significantly in the third and fourth quarters of 2016 due to the termination of the Ensco rig contract in the second quarter of 2016.
Transportation, processing and gathering (TP&G) expenses during the second quarter of 2016 totaled $7.2 million ($2.72 per Boe or $0.45 per Mcfe), compared to $19.9 million ($4.51 per Boe or $0.75 per Mcfe) during the second quarter of 2015. The decrease was due to the Mary field being off production for most of the second quarter of 2016. Since production has been restored at the Mary field, we expect TP&G expenses for the remainder of the year to increase materially. TP&G expense guidance for 2016 has been updated to account for the resumption of Mary field production.
Depreciation, depletion and amortization (DD&A) on oil and gas properties for the second quarter of 2016 totaled $45.1 million ($17.08 per Boe or $2.85 per Mcfe), compared to $76.8 million ($17.35 per Boe or $2.89 per Mcfe), in the second quarter of 2015. The decrease is attributable to lower production volumes and previous ceiling test write-downs.
Salaries, general and administrative (SG&A) expenses (exclusive of incentive compensation) for the second quarter of 2016 were $20.0 million ($7.58 per Boe or $1.26 per Mcfe), compared to $16.4 million ($3.71 per Boe or $0.62 per Mcfe), in the second quarter of 2015. The increase in SG&A was primarily attributable to legal fees pertaining to Stone's pursuit of a claim for damages against a third party, partially offset by staff and other cost reductions.
Incentive compensation expense for the second quarter of 2016 was $4.7 million, compared to $1.3 million in the second quarter of 2015. The 2016 incentive compensation cash bonuses are calculated based on the achievement of certain strategic objectives for each quarter of 2016. Portions of the 2016 incentive cash bonuses replace amounts previously awarded to employees as stock-based compensation, which is reflected in SG&A, resulting in higher incentive compensation expense in the second quarter of 2016 compared to the second quarter of 2015.
Accretion expense for the second quarter of 2016 was $10.1 million, compared to $6.4 million in the second quarter of 2015. The increase was due to a higher applicable discount rate used to calculate the present value of the asset retirement obligations compared to prior years. Stone expects accretion expense to remain relatively flat at this level for each subsequent quarter in 2016.
Interest expense for the second quarter of 2016 was $17.6 million, compared to $10.5 million in the second quarter of 2015. The increase in interest expense was primarily due to an increase in borrowed funds, combined with a lower capitalized portion. Stone expects interest expense to remain relatively flat at this level for the remainder of 2016.
Restructuring expenses for the second quarter of 2016 were $9.4 million. These fees related to expenses supporting a restructuring effort including legal and financial advisory costs for Stone, our bank group and our noteholders. The quarterly amount of restructuring fees is difficult to forecast as they will be highly dependent on the level of legal and financial advisory activity.
Capital expenditures for the second quarter of 2016 were approximately $32.7 million, which included $6.0 million of plugging and abandonment expenditures. Second quarter 2016 capital expenditures included completion operations at the Silverthrone well (100% working interest), part of the Pompano platform drilling program, and setting of surface casing at the deep water Lamprey prospect. As previously noted, during the second quarter of 2016, we incurred approximately $7.5 million of rig stacking or subsidy expenses and a $20 million contract termination charge for the Ensco rig, all of which were charged to other operational expenses and excluded from capital expenditures. Further, $6.6 million of SG&A expenses and $6.9 million of interest were capitalized during the second quarter of 2016, and were excluded from the capital expenditure budget. Second quarter 2015 capital expenditures were approximately $91.1 million, which included $18.8 million of plugging and abandonment expenditures, and excluded $7.4 million of SG&A expenses and $10.8 million of interest that were capitalized. For the six months ended June 30, 2016, capital expenditures totaled $113.4 million, which included $9.1 million of plugging and abandonment expenditures. The rig stacking, subsidy and termination charges for the six months ended June 30, 2016 totaled $33.6 million and were included in other operational expenses.
In early 2016, Stone's Board of Directors authorized an initial 2016 capital expenditure budget of $200 million, which did not include rig subsidies or rig stacking expenses that were projected to be approximately $40 million to $50 million. The budget was primarily focused on the Pompano platform rig development program and the utilization of the ENSCO 8503 deep water rig for a development well and one or two exploration wells.
However, to further reduce capital expenditures for 2016, we elected to temporarily stack the Pompano platform drilling rig in place. We currently expect to resume drilling operations in early 2017. In addition, we reached an agreement with Ensco to terminate the ENSCO 8503 deep water rig contract for total consideration of $20 million and payment of a $5 million deposit to be used against future drilling activities initiated before March 31, 2017, subject to extension in certain circumstances.
This updated rig schedule and other cost reduction efforts have decreased our projected annual capital expenditures, which are now expected to approximate $160 million to $170 million for 2016. The budget excludes acquisitions, capitalized SG&A and interest, and any deep water exploration drilling in the third and fourth quarters. As noted above, the rig stacking, subsidy and termination charges were accounted for in other operational expenses (not capital expenditures) and are expected to be approximately $40 million to $50 million for 2016.
As previously reported, on March 21, 2016, the Bureau of Ocean Energy Management ("BOEM") notified Stone that we no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM's guidance to lessees at that time. In late March 2016, we proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which provides for posting incremental financial assurances in favor of BOEM. On May 13, 2016, we received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that we will continue to work with BOEM to finalize the implementation of our long-term tailored plan. We have submitted our tailored plan to BOEM and are awaiting its review and approval. Our proposed plan would require approximately $16 million of incremental financial assurance or bonding for 2016, a majority of which may require cash collateral. Under the submitted plan, additional financial assurance would be required for subsequent years. There is no assurance this tailored plan will be approved by BOEM. Additionally, on July 14, 2016, BOEM issued a Notice to Lessees ("NTL") that augments requirements for the posting of additional financial assurances by offshore lessees. We are reviewing the new NTL and its potential impact to Stone.
Liquidity Update
As previously reported, on April 13, 2016, Stone was notified that the borrowing base under its bank credit facility was redetermined and lowered from $500 million to $300 million, which resulted in a borrowing base deficiency of $175.3 million. We elected to pay the deficiency in six equal monthly installments of $29.2 million to eliminate the deficiency within six months, and we made two such payments in May and June of 2016.
On June 14, 2016, we entered into an amendment with our bank group, which amended the credit agreement to (i) increase the borrowing base to $360.0 million from $300.0 million, (ii) provide for no redetermination of the borrowing base by the lenders until January 15, 2017, other than an automatic reduction upon the sale of certain of the Company's properties, (iii) permit second lien indebtedness to refinance the existing convertible notes and senior unsecured notes, (iv) revise the maximum Consolidated Funded Leverage ratio to be 5.25x for the fiscal quarter ending June 30, 2016, 6.50x for the fiscal quarter ending September 30, 2016, 9.50x for the fiscal quarter ending December 31, 2016 and 3.75x thereafter, (v) require minimum liquidity of at least $125.0 million until January 15, 2017, (vi) impose limitations on capital expenditures to $60.0 million from June 2016 through December 2016 (excluding up to $25 million for completion expenditures in Appalachia), (vii) grant the lenders a perfected security interest in all deposit accounts and (viii) provide for anti-hoarding cash provisions for amounts in excess of $50.0 million to apply after December 10, 2016. Upon execution of the amendment, we repaid $56.8 million of borrowings, resulting in the elimination of our borrowing base deficiency and bringing our total borrowings and letters of credit outstanding under the credit facility in conformity with the $360.0 million borrowing base. We were in compliance with all covenants under the bank credit facility as of June 30, 2016, however, the minimum liquidity requirement and other restrictions under the credit facility may prevent us from being able to meet our interest payment obligation on the 7½% Senior Notes due in 2022 in the fourth quarter of 2016 as well as the subsequent maturity of our 1¾% Senior Convertible Notes due in March 2017. Additionally, we anticipate that we could exceed the Consolidated Funded Leverage financial covenant of 3.75x at the end of the first quarter of 2017 unless a material portion of our debt is repaid, reduced or exchanged into equity.
As of June 30, 2016, the current portion of long-term debt of $288.3 million consisted of $287.9 million of 2017 Convertible Notes and $0.4 million of principal payments due within one year on our building loan. As of June 30, 2016, our outstanding letters of credit totaled $18.3 million.
As of June 30, 2016 and August 2, 2016, Stone had cash on hand of approximately $169.2 million and $165.5 million, respectively.
On March 10, 2016, Stone announced that it retained Lazard as its financial advisor and Latham & Watkins LLP as its legal advisor to assist Stone in analyzing and considering financial, transactional and strategic alternatives. We are actively reviewing various financing, asset sales and debt restructuring alternatives to address the March 1, 2017 maturity of the 2017 Convertible Notes and are currently engaged in negotiations with financial advisors for certain holders of the 2017 Convertible Notes and 2022 Senior Unsecured Notes regarding restructuring of the notes. We cannot provide any assurances that we will be able to complete a private restructuring or asset sales on satisfactory terms to provide the liquidity to restructure or pay down our senior indebtedness. A restructuring of the notes may result in significant dilution for existing stockholders.
Operational Update
Pompano Platform Production Update (Deep Water). On June 28, 2016, the gas processing plant in Pascagoula, Mississippi experienced an explosion that shut down the facility and is not expected to be back in operation for months. Although Stone has no direct interest in the plant, it processed approximately 20-25 MMcf per day (gross) of gas produced from the Pompano platform. Subsequent to the explosion, Pompano gas was either shut in or re-injected, and the gas curtailment restricted oil flow from the Pompano platform to approximately 70% of previous production rates for most of July. Prior to this curtailment, second quarter 2016 net production from the Pompano platform averaged approximately 11 MBbls of oil per day and approximately 21 MMcfe of gas and NGLs per day. On July 21, 2016, we negotiated an agreement to flow gas to an alternate market and are currently producing oil and gas from the Pompano platform at volumes similar to second quarter production rates. Our arrangement does not guarantee available capacity, so gas re-injection remains a fallback option if needed. As previously reported, production from our Amethyst well was shut in during late April 2016 to allow for a technical evaluation. We anticipate conducting intervention activities at Amethyst late in the third quarter of 2016, assuming we can secure a reliable gas sales market for the Pompano facility.
Deep Water Drilling Contract (Gulf of Mexico). As reported on June 29, 2016, Stone and Ensco agreed to terminate Stone's contract with Ensco for total consideration of $20 million, approximately $5 million of which was a deposit previously provided to Ensco pursuant to the drilling services contract. Further, Stone agreed to provide Ensco the opportunity to perform certain drilling services commenced before December 31, 2019, and Stone paid Ensco a $5 million deposit to be used against future drilling activities initiated before March 31, 2017, subject to extension in certain circumstances. The ENSCO 8503 deep water rig contract included an operating day rate of $341,000 and was not scheduled to expire until August 2017.
Pompano Platform Drilling Program (Deep Water). Subsequent to bringing the Silverthrone well online in early June 2016, we temporarily stacked the platform rig in place to preserve liquidity. We currently expect to resume platform drilling operations in early 2017. There are up to three additional development wells to be drilled from the Pompano platform. Each additional development well is expected to provide production volumes ranging from 500 to over 1,500 Boe per day per well after hook-up. The Silverthrone well is flowing at under 200 Boe per day and is being evaluated for stimulation. Stone holds a 100% working interest in these wells.
Alaminos Canyon 943 - Lamprey (Deep Water). In mid-April of 2016, Stone set surface casing on the Lamprey prospect, which targets the Upper Wilcox interval. We estimate that the initial Lamprey well would take two to three months to drill and, if successful, Stone may drill a follow-up appraisal well. Discussions with potential partners regarding the 100% owned Lamprey prospect are ongoing, with a reduction to Stone's working interest expected before drilling the well.
Mississippi Canyon 117 - Rampart Deep and Rampart Shallow (Deep Water). The Rampart exploration prospects (Deep and Shallow) target the Miocene interval and are expected to be tied back to the Pompano platform, if successful. Stone currently holds a 100% working interest in the prospect and expects to reduce its working interest before drilling would commence. The prospects are located nine miles from Stone's Pompano platform, and each well is estimated to take three months to drill.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. If successful, a tie-back to the Pompano platform is likely. Stone currently holds a 100% working interest in the prospect, although a reduction to its working interest is expected before drilling would commence. The well is estimated to take three months to drill.
Appalachia Basin. As reported on June 29, 2016, Stone entered into an interim gas gathering and processing agreement with Williams at the Mary field in Appalachia. Production from the Mary field has been substantially shut in from September 2015 until late June 2016, except for intermittent production. The initial term of the interim agreement is through August 31, 2016, and it continues on a month to month basis thereafter, unless terminated by either party. Subsequent to executing the interim agreement, production from much of the Mary field resumed in late June and has averaged over 75 MMcfe per day in July, with total Appalachia volumes averaging 95 MMcfe per day in July. We expect daily production rates from Appalachia to reach over 125 MMcfe per day in the third quarter. Currently, 57 wells representing over 60 MMcfe per day in potential volume remain shut in due to downstream liquids-handling capacity constraints. We expect most of this production to come online later in the third quarter.
The contracted rig for Appalachia remains stacked. Due to capital constraints, we expect to limit Appalachian activities for the remainder of 2016 to maintaining production and core leasehold interests and to other maintenance operations.
Third Quarter of 2016 Guidance
Selected guidance for the third quarter and full year 2016 is shown in the table below (updated guidance numbers are italicized and bolded). The guidance for the third quarter of 2016 production includes previously mentioned operational updates, including the assumption that the Mary field in Appalachia remains online through year end under the terms of the interim agreement. The guidance is also subject to all the cautionary statements and limitations described below and under the caption "Forward Looking Statements."
Third Quarter |
Full Year | ||
Production - MBoe per day (MMcfe per day) |
35 - 37 (210 - 222) |
33 - 35 (198 - 210) | |
Lease operating expenses (in millions) (excluding transportation/processing expenses) |
- |
$85 - $95
| |
Transportation, processing and gathering (in millions) |
- |
$32 - $35 | |
Salaries, General & Administrative expenses (in millions) |
- |
$57 - $61 | |
(excluding incentive compensation and |
|||
Depreciation, Depletion & Amortization (per MBoe) |
- |
$15.00 - $18.00 | |
(per Mcfe) |
$2.50 - $3.00 | ||
Corporate Tax Rate (%) |
- |
0% - 5% | |
Capital Expenditure Budget (in millions) |
- |
$160 - $170 | |
(excludes farm out subsidies and rig stacking charges) |
Hedge Position
The following table illustrates our derivative positions for 2016 as of August 2, 2016:
Fixed-Price Swaps | |||||||
NYMEX | |||||||
Natural Gas |
Oil | ||||||
Daily Volume (MMBtus/d) |
Swap Price |
Daily Volume (Bbls/d) |
Swap Price | ||||
2016 |
10,000 |
$4.110 |
1,000 |
$90.00 | |||
2016 |
10,000 |
4.120 |
1,000 |
52.78 | |||
2016 |
1,000 |
49.75 | |||||
2016 |
1,000* |
45.00 - 54.75 | |||||
*collar |
New York Stock Exchange Notifications
On April 29, 2016, we were notified by the New York Stock Exchange ("NYSE") that we were not in compliance with the NYSE's continued listing requirements, as the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE. On May 17, 2016, we were notified by the NYSE that our average global market capitalization had been less than $50 million over a consecutive 30 trading-day period at the same time that our stockholders' equity was less than $50 million, which is non-compliant with the NYSE's rules.
At the close of business on June 10, 2016, we effected a 1-for-10 reverse stock split in order to increase the market price per share of our common stock in order to regain compliance with the NYSE's minimum share price requirement. Stone's shares of common stock continue to trade on the NYSE under the symbol "SGY" but trade under the new CUSIP number 861642304. We were notified on July 1, 2016 that we cured the minimum share price deficiency and that we were no longer considered non-compliant with the $1.00 per share average closing price requirement, although we remain non-compliant with the $50 million market capitalization and stockholders' equity requirements. On June 30, 2016, we submitted our 18-month business plan for curing the average market capitalization and stockholders' equity deficiencies to the NYSE. After submitting our business plan, the NYSE had 45 calendar days to review the plan to determine whether we have made a reasonable demonstration of our ability to come into conformity with the relevant standards within the 18-month period. The NYSE will either accept the plan, at which time we would be subject to ongoing monitoring for compliance with the plan, or not accept the plan, at which time we would be subject to suspension and delisting proceedings. If the NYSE accepts the plan, our shares of common stock would continue to be listed and traded on the NYSE during the 18-month cure period. As of August 2, 2016, our market capitalization has been above $50 million for 25 consecutive trading days.
Other Information
Stone Energy will not be hosting a conference call to discuss the second quarter of 2016 operational and financial results.
Non-GAAP Financial Measures
In this press release, we refer to non-GAAP financial measures we call "discretionary cash flow" and "adjusted net loss." Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income, as defined by GAAP. Management believes adjusted net loss is useful to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Please see the "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of discretionary cash flow to net cash (used in) provided by operating activities and a reconciliation of adjusted net loss to net loss.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, our ability to continue as a going concern and any potential bankruptcy proceeding, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
STONE ENERGY CORPORATION SUMMARY STATISTICS (In thousands, except per share/unit amounts) (Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
FINANCIAL RESULTS |
||||||||||||||||
Net loss |
($195,761) |
($152,906) |
($384,545) |
($480,294) |
||||||||||||
Net loss per share |
($35.05) |
($27.68) |
($68.94) |
($86.99) |
||||||||||||
PRODUCTION QUANTITIES |
||||||||||||||||
Oil (MBbls) |
1,548 |
1,534 |
3,183 |
3,156 |
||||||||||||
Natural gas (MMcf) |
5,100 |
12,581 |
11,946 |
23,738 |
||||||||||||
Natural gas liquids (MBbls) |
244 |
794 |
608 |
1,477 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
2,642 |
4,425 |
5,782 |
8,589 |
||||||||||||
Oil, natural gas and NGLs (MMcfe) |
15,852 |
26,549 |
34,692 |
51,536 |
||||||||||||
AVERAGE DAILY PRODUCTION |
||||||||||||||||
Oil (MBbls) |
17.0 |
16.9 |
17.5 |
17.4 |
||||||||||||
Natural gas (MMcf) |
56.0 |
138.3 |
65.6 |
131.1 |
||||||||||||
Natural gas liquids (MBbls) |
2.7 |
8.7 |
3.3 |
8.2 |
||||||||||||
Oil, natural gas and NGLs (MBoe) |
29.0 |
48.6 |
31.8 |
47.5 |
||||||||||||
Oil, natural gas and NGLs (MMcfe) |
174.2 |
291.7 |
190.6 |
284.7 |
||||||||||||
REVENUE DATA |
||||||||||||||||
Oil revenue |
$72,711 |
$111,585 |
$132,986 |
$219,092 |
||||||||||||
Natural gas revenue |
12,553 |
26,907 |
27,726 |
55,244 |
||||||||||||
Natural gas liquids revenue |
3,718 |
11,033 |
8,453 |
23,399 |
||||||||||||
Total oil, natural gas and NGLs revenue |
$88,982 |
$149,525 |
$169,165 |
$297,735 |
||||||||||||
AVERAGE PRICES |
||||||||||||||||
Prior to the cash settlement of effective hedging transactions: |
||||||||||||||||
Oil (per Bbl) |
$43.66 |
$55.55 |
$37.27 |
$50.28 |
||||||||||||
Natural gas (per Mcf) |
1.72 |
1.82 |
1.71 |
2.04 |
||||||||||||
Natural gas liquids (per Bbl) |
15.24 |
13.90 |
13.90 |
15.84 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
30.31 |
26.93 |
25.51 |
26.85 |
||||||||||||
Oil, natural gas and NGLs (per Mcfe) |
5.05 |
4.49 |
4.25 |
4.47 |
||||||||||||
Including the cash settlement of effective hedging transactions: |
||||||||||||||||
Oil (per Bbl) |
$46.97 |
$72.74 |
$41.78 |
$69.42 |
||||||||||||
Natural gas (per Mcf) |
2.46 |
2.14 |
2.32 |
2.33 |
||||||||||||
Natural gas liquids (per Bbl) |
15.24 |
13.90 |
13.90 |
15.84 |
||||||||||||
Oil, natural gas and NGLs (per Boe) |
33.68 |
33.79 |
29.26 |
34.66 |
||||||||||||
Oil, natural gas and NGLs (per Mcfe) |
5.61 |
5.63 |
4.88 |
5.78 |
||||||||||||
AVERAGE COSTS |
||||||||||||||||
Lease operating expenses (per Boe) |
$7.13 |
$6.20 |
$6.64 |
$6.40 |
||||||||||||
Lease operating expenses (per Mcfe) |
1.19 |
1.03 |
1.11 |
1.07 |
||||||||||||
Transp, processing and gathering exp (per Boe) |
2.72 |
4.51 |
1.39 |
4.38 |
||||||||||||
Transp, processing and gathering exp (per Mcfe) |
0.45 |
0.75 |
0.23 |
0.73 |
||||||||||||
Salaries, general and administrative expenses (per Boe) |
7.58 |
3.71 |
5.67 |
3.89 |
||||||||||||
Salaries, general and administrative expenses (per Mcfe) |
1.26 |
0.62 |
0.94 |
0.65 |
||||||||||||
DD&A expense on oil and gas properties (per Boe) |
17.08 |
17.35 |
18.26 |
18.87 |
||||||||||||
DD&A expense on oil and gas properties (per Mcfe) |
2.85 |
2.89 |
3.04 |
3.14 |
||||||||||||
AVERAGE SHARES OUTSTANDING - Diluted |
5,585 |
5,525 |
5,578 |
5,521 |
STONE ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands) (Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Operating revenue: |
|||||||||||||||
Oil production |
$72,711 |
$111,585 |
$132,986 |
$219,092 |
|||||||||||
Natural gas production |
12,553 |
26,907 |
27,726 |
55,244 |
|||||||||||
Natural gas liquids production |
3,718 |
11,033 |
8,453 |
23,399 |
|||||||||||
Other operational income |
337 |
— |
693 |
1,792 |
|||||||||||
Derivative income, net |
— |
— |
— |
2,427 |
|||||||||||
Total operating revenue |
89,319 |
149,525 |
169,858 |
301,954 |
|||||||||||
Operating expenses: |
|||||||||||||||
Lease operating expenses |
18,826 |
27,429 |
38,373 |
55,006 |
|||||||||||
Transportation, processing and gathering expenses |
7,183 |
19,940 |
8,024 |
37,643 |
|||||||||||
Production taxes |
578 |
1,827 |
1,059 |
4,342 |
|||||||||||
Depreciation, depletion and amortization |
46,231 |
77,951 |
107,789 |
164,373 |
|||||||||||
Write-down of oil and gas properties |
118,649 |
224,294 |
247,853 |
715,706 |
|||||||||||
Accretion expense |
10,082 |
6,408 |
20,065 |
12,817 |
|||||||||||
Salaries, general and administrative expenses |
20,014 |
16,418 |
32,768 |
33,425 |
|||||||||||
Incentive compensation expense |
4,670 |
1,264 |
9,649 |
2,827 |
|||||||||||
Restructuring fees |
9,436 |
— |
10,389 |
— |
|||||||||||
Other operational expenses |
27,680 |
1,454 |
40,207 |
1,170 |
|||||||||||
Derivative expense, net |
626 |
701 |
488 |
— |
|||||||||||
Total operating expenses |
263,975 |
377,686 |
516,664 |
1,027,309 |
|||||||||||
Loss from operations |
(174,656) |
(228,161) |
(346,806) |
(725,355) |
|||||||||||
Other (income) expenses: |
|||||||||||||||
Interest expense |
17,599 |
10,472 |
32,840 |
20,837 |
|||||||||||
Interest income |
(302) |
(66) |
(416) |
(188) |
|||||||||||
Other income |
(270) |
(613) |
(568) |
(756) |
|||||||||||
Other expense |
9 |
— |
11 |
— |
|||||||||||
Total other expenses |
17,036 |
9,793 |
31,867 |
19,893 |
|||||||||||
Loss before income taxes |
(191,692) |
(237,954) |
(378,673) |
(745,248) |
|||||||||||
Provision (benefit) for income taxes: |
|||||||||||||||
Current |
(2,113) |
— |
(3,187) |
— |
|||||||||||
Deferred |
6,182 |
(85,048) |
9,059 |
(264,954) |
|||||||||||
Total income taxes |
4,069 |
(85,048) |
5,872 |
(264,954) |
|||||||||||
Net loss |
($195,761) |
($152,906) |
($384,545) |
($480,294) |
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE DISCRETIONARY CASH FLOW to NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (In thousands) (Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
Net loss as reported |
($195,761) |
($152,906) |
($384,545) |
($480,294) |
||||||||||||
Reconciling items: |
||||||||||||||||
Depreciation, depletion and amortization |
46,231 |
77,951 |
107,789 |
164,373 |
||||||||||||
Write-down of oil and gas properties |
118,649 |
224,294 |
247,853 |
715,706 |
||||||||||||
Deferred income tax provision (benefit) |
6,182 |
(85,048) |
9,059 |
(264,954) |
||||||||||||
Accretion expense |
10,082 |
6,408 |
20,065 |
12,817 |
||||||||||||
Non-cash stock compensation expense |
2,370 |
3,388 |
4,682 |
6,028 |
||||||||||||
Non-cash interest expense |
4,768 |
4,419 |
9,403 |
8,737 |
||||||||||||
Non-cash derivative expense |
833 |
6,420 |
1,025 |
7,931 |
||||||||||||
Other non-cash expense |
— |
— |
6,081 |
— |
||||||||||||
Discretionary cash flow |
(6,646) |
84,926 |
21,412 |
170,344 |
||||||||||||
Change in income taxes payable |
(2,113) |
18 |
(3,187) |
7,206 |
||||||||||||
Settlement of asset retirement obligations |
(6,039) |
(18,778) |
(10,706) |
(35,923) |
||||||||||||
Other working capital changes |
(16,771) |
(4,023) |
(9,649) |
4,038 |
||||||||||||
Net cash (used in) provided by operating activities |
($31,569) |
$62,143 |
($2,130) |
$145,665 |
||||||||||||
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE ADJUSTED NET LOSS to NET LOSS (In thousands) (Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
Net loss as reported |
($195,761) |
($152,906) |
($384,545) |
($480,294) |
||||||||||||
Reconciling items: |
||||||||||||||||
Write-down of oil and gas properties |
118,649 |
224,294 |
247,853 |
715,706 |
||||||||||||
Tax effect |
(41,824) |
(80,746) |
(87,368) |
(257,654) |
||||||||||||
Valuation allowance on deferred tax assets |
77,330 |
— |
138,396 |
— |
||||||||||||
Total reconciling items |
154,155 |
143,548 |
298,881 |
458,052 |
||||||||||||
Adjusted net loss |
($41,606) |
($9,358) |
($85,664) |
($22,242) |
||||||||||||
Net loss per share as reported |
($35.05) |
($27.68) |
($68.94) |
($86.99) |
||||||||||||
Per share effect of impairment charges |
$27.60 |
$25.99 |
$53.58 |
$82.96 |
||||||||||||
Net loss per share before impairment charges |
($7.45) |
($1.69) |
($15.36) |
($4.03) |
STONE ENERGY CORPORATION CONSOLIDATED BALANCE SHEET (In thousands) (Unaudited) | ||||||||
June 30, |
December 31, | |||||||
2016 |
2015 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$169,194 |
$10,759 |
||||||
Accounts receivable |
38,276 |
48,031 |
||||||
Fair value of derivative contracts |
11,887 |
38,576 |
||||||
Current income tax receivable |
46,174 |
46,174 |
||||||
Other current assets |
12,080 |
6,881 |
||||||
Total current assets |
277,611 |
150,421 |
||||||
Oil and gas properties, full cost method of accounting: |
||||||||
Proved |
9,518,245 |
9,375,898 |
||||||
Less: accumulated depreciation, depletion and amortization |
(8,960,440) |
(8,603,955) |
||||||
Net proved oil and gas properties |
557,805 |
771,943 |
||||||
Unevaluated |
425,204 |
440,043 |
||||||
Other property and equipment, net |
27,968 |
29,289 |
||||||
Other assets, net |
28,183 |
18,473 |
||||||
Total assets |
$1,316,771 |
$1,410,169 |
||||||
Liabilities and Stockholders' Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable to vendors |
$28,914 |
$82,207 |
||||||
Undistributed oil and gas proceeds |
5,071 |
5,992 |
||||||
Accrued interest |
9,773 |
9,022 |
||||||
Fair value of derivative contracts |
37 |
— |
||||||
Asset retirement obligations |
33,695 |
21,291 |
||||||
Current portion of long-term debt |
288,336 |
— |
||||||
Other current liabilities |
34,793 |
40,712 |
||||||
Total current liabilities |
400,619 |
159,224 |
||||||
Bank credit facility |
341,500 |
— |
||||||
7½% Senior Notes due 2022 |
770,285 |
770,009 |
||||||
1¾% Senior Convertible Notes due 2017 |
— |
279,244 |
||||||
4.2% Building Loan |
11,116 |
11,702 |
||||||
Asset retirement obligations |
203,661 |
204,575 |
||||||
Other long-term liabilities |
18,446 |
25,204 |
||||||
Total liabilities |
1,745,627 |
1,449,958 |
||||||
Common stock |
56 |
55 |
||||||
Treasury stock |
(860) |
(860) |
||||||
Additional paid-in capital |
1,654,731 |
1,648,687 |
||||||
Accumulated deficit |
(2,090,168) |
(1,705,623) |
||||||
Accumulated other comprehensive income |
7,385 |
17,952 |
||||||
Total stockholders' equity |
(428,856) |
(39,789) |
||||||
Total liabilities and stockholders' equity |
$1,316,771 |
$1,410,169 |
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SOURCE Stone Energy Corporation
LAFAYETTE, La., June 29, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced the termination of an existing long term deep water rig commitment and the execution of a new interim Appalachian midstream contract.
Stone and Ensco have agreed to terminate Stone's current contract with Ensco for total consideration of $20 million, approximately $5 million of which was a deposit previously provided to Ensco pursuant to the drilling services contract. Further, Stone agreed to provide Ensco the opportunity to perform certain drilling services commenced before December 31, 2019, and Stone paid Ensco a $5 million deposit to be used as a credit against future drilling activities initiated before March 31, 2017, subject to extension in certain circumstances. The ENSCO 8503 deep water rig contract was at a day rate of $341,000 and was scheduled to expire in August 2017.
Separately, Stone entered into an interim gas gathering and processing agreement with Williams at the Mary field in Appalachia. The mutually beneficial interim agreement provides near-term relief for Stone by permitting Stone to resume production at the Mary field, thereby providing greater volume to Williams. Volumes from the Mary field are now at approximately 45 MMcfe per day and are expected to climb to over 60 MMcfe per day in July and then over 100 MMcfe per day in August. These volumes are in addition to the approximately 20 MMcfe per day producing from the Heather and Buddy fields. The effects of this agreement on annual guidance, including production volumes and associated costs, are still being assessed. Updates to annual guidance will be provided in Stone's second quarter 2016 press release.
Chairman, President and CEO David Welch stated, "We are very pleased to reach agreement with both Ensco and Williams on these two important contracts. The termination of the Ensco contract eliminates a long term obligation, which provides Stone with additional financial flexibility. The interim contract with Williams allows us to resume profitable production and positive cash flow at our Mary field in West Virginia. We appreciate Ensco's and Williams' willingness to work with Stone during this difficult period of sustained low commodity prices."
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, our ability to continue as a going concern and any potential bankruptcy proceeding, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., June 13, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that at the close of business on June 10, 2016, it effected a 1-for-10 reverse stock split. Every 10 shares of Stone's issued and outstanding common stock were automatically converted into one share of common stock. Stone's common stock will begin trading on a split-adjusted basis when the market opens on June 13, 2016.
Pursuant to the reverse stock split, every 10 shares of Stone's issued and outstanding common stock (and such shares held in treasury) were automatically converted into one share of common stock. No fractional shares will be issued if, as a result of the reverse stock split, a stockholder would otherwise have been entitled to a fractional share. Instead, each stockholder is entitled to receive a cash payment equal to the fraction of which such holder would otherwise have been entitled multiplied by the closing price per share on June 10, 2016. Following the reverse stock split, the number of outstanding shares of Stone's common stock was reduced by a factor of ten. The number of authorized shares of common stock has also been proportionately decreased. The overall and per person share limitations in Stone's 2009 Amended and Restated Stock Incentive Plan, as amended from time to time, and outstanding awards thereunder were also proportionately adjusted to reflect the reverse stock split.
Stone's shares of common stock will continue to trade on the New York Stock Exchange ("NYSE") under the symbol "SGY" but will trade under the new CUSIP number 861642304. The reverse stock split was intended to increase the market price per share of Stone's common stock in order to comply with the NYSE continued listing standards relating to minimum price per share. The reverse stock split will not cure Stone's non-compliance with the NYSE average global market capitalization.
Computershare Trust Company, N.A., Stone's transfer agent, is acting as the exchange agent for the reverse stock split. Please contact Computershare Trust Company, N.A. for further information at (800) 962-4284.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, and our ability to continue as a going concern, any potential chapter 11 bankruptcy proceeding, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., June 1, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that the Board of Directors of Stone has approved a 1-for-10 reverse split of its issued and outstanding shares of common stock. The 1-for-10 reverse stock split will be effective upon the filing and effectiveness of a certificate of amendment to Stone's certificate of incorporation after the market closes on June 10, 2016, and Stone's common stock will begin trading on a split-adjusted basis when the market opens on June 13, 2016.
At Stone's 2016 Annual Meeting of Stockholders held on May 19, 2016, Stone's stockholders granted authority to the Board of Directors, in its discretion, to determine whether to proceed with the reverse stock split and, if the Board of Directors so determines, to select and file a certificate of amendment to Stone's certificate of incorporation to effect the reverse stock split at a ratio to be determined by the Board of Directors.
When the reverse stock split becomes effective, every 10 shares of Stone's issued and outstanding common stock (and such shares held in treasury) will automatically be converted into one share of common stock. No fractional shares will be issued if, as a result of the reverse stock split, a stockholder would otherwise become entitled to a fractional share. Instead, each stockholder will be entitled to receive a cash payment equal to the fraction of which such holder would otherwise be entitled multiplied by the closing price per share on June 10, 2016. The reverse stock split will not impact any stockholder's percentage ownership of Stone or voting power, except for minimal effects resulting from the treatment of fractional shares. Following the reverse stock split, the number of outstanding shares of Stone's common stock will be reduced by a factor of ten. The certificate of amendment to Stone's certificate of incorporation in connection with the reverse stock split will also proportionately decrease the number of authorized shares of common stock. The overall and per person share limitations in the Company's 2009 Amended and Restated Stock Incentive Plan, as amended from time to time, and outstanding awards thereunder will also be proportionately adjusted to reflect the reverse stock split.
Stone's shares of common stock will continue to trade on the New York Stock Exchange ("NYSE") under the symbol "SGY" but will trade under a new CUSIP. The reverse stock split is intended to increase the market price per share of Stone's common stock in order to comply with the NYSE continued listing standards relating to minimum price per share. The reverse stock split will not cure Stone's non-compliance with the NYSE average global market capitalization.
Computershare Trust Company, N.A., Stone's transfer agent, will act as the exchange agent for the reverse stock split. Please contact Computershare Trust Company, N.A. for further information at (800) 962-4284.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, and our ability to continue as a going concern, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., May 20, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced the receipt of formal notice of non-compliance with the New York Stock Exchange ("NYSE") market capitalization listing standard. On May 17, 2016, we were notified by the NYSE that our average global market capitalization has been less than $50 million over a consecutive 30 trading-day period at the same time that our stockholders' equity is less than $50 million, which is non-compliant with Section 802.01B of the NYSE Listed Company Manual. Under the NYSE's rules, we have 10 business days from receipt of the notification to submit a letter confirming that we will submit a plan that demonstrates our ability to regain compliance within 18 months. Thereafter, we will have 45 calendar days following our confirmation letter to the NYSE to submit such plan.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, and our ability to continue as a going concern, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., May 19, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced the rescission of notice letters received from the Bureau of Ocean Energy Management ("BOEM"). As previously disclosed, in March of 2016, Stone received notice letters from BOEM stating that BOEM had determined that Stone no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM's current guidance to lessees. The notice letters required that Stone provide significant supplemental bonding relating to our abandonment obligations.
Following receipt of the notice letters, Stone met with and proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which provides for posting some incremental financial assurances in favor of BOEM. Currently, Stone has an aggregate of approximately $230 million posted in surety bonds in favor of BOEM, third party bonds and letters of credit, all relating to our offshore abandonment obligations. On May 13, 2016, Stone received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that Stone will continue to make progress with BOEM in finalizing and implementing our long-term tailored plan.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, and our ability to continue as a going concern, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., May 4, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced financial and operational results for the first quarter of 2016. Some of the highlights include:
Chairman, President and Chief Executive Officer David Welch stated, "Late in the first quarter of 2016, we drew down on our credit facility to provide near term financial flexibility to continue to execute operationally as we explore various options to strengthen our balance sheet. During the first quarter, the Cardona #7 well came online at a gross initial production rate of approximately 5,000 Boe per day, which brought the Cardona four well total gross production rate to approximately 20,000 Boe per day. We brought the Amethyst well online in late December of 2015, and it averaged approximately 24 MMcfe per day for the quarter, although the well was shut-in in late April to address suspected blockage around the perforated section. Intervention actions are being reviewed, including an acid operation. We farmed out the ENSCO 8503 in early February through mid-April, which reduced our capital spending for the quarter. We are working towards an agreement on a second farm out arrangement that is expected to commence prior to May 15, and continue discussions with other potential farm out and farm in partners. Importantly, our deep water volumes have increased, yet we have managed to decrease our operating expenses and reduce our overhead costs. Finally, we continue to work with our advisors who are assisting us in reviewing various financial, transactional and strategic alternatives."
Financial Results
Stone had a first quarter of 2016 adjusted net loss of $44.1 million, or $0.79 per share, before impairment charges of $129.2 million. After impairment charges, the reported net loss was $188.8 million, or $3.39 per share, on oil and gas revenue of $80.2 million, compared to a net loss of $327.4 million, or $5.93 per share, on oil and gas revenue of $148.2 million in the first quarter of 2015. Discretionary cash flow totaled $28.1 million during the first quarter of 2016, as compared to $85.4 million during the first quarter of 2015. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of discretionary cash flow, a non-GAAP financial measure, to net cash flow provided by operating activities and adjusted net loss, a non-GAAP financial measure, to net loss.
Net daily production during the first quarter of 2016 averaged 34.5 thousand barrels of oil equivalent (MBoe) per day (207 million cubic feet of gas equivalent (MMcfe) per day), compared with net daily production of 46.3 MBoe (278 MMcfe) per day in the first quarter of 2015. First quarter of 2016 production mix was 52% oil, 12% natural gas liquids (NGLs) and 36% natural gas. Production guidance for the second quarter of 2016 is estimated at 28-30 Mboe per day, or 168-180 MMcfe per day. The expected production decline from the first quarter of 2016 is primarily due to reduced volumes from Amethyst and natural declines. This guidance assumes a continued shut in of the Mary field. Additionally, our full year production guidance has been reduced to account for the Amethyst volume reduction and the suspension of the remaining Pompano platform rig program due to capital constraints. Our updated production guidance for 2016 is 26 - 28 MBoe (156-168 MMcfe) per day.
Prices realized during the first quarter of 2016 averaged $36.87 per barrel of oil, $13.01 per barrel of NGLs and $2.22 per Mcf of natural gas. Average realized prices for the first quarter of 2015 were $66.28 per barrel of oil, $18.11 per barrel of NGLs and $2.54 per Mcf of natural gas. Effective hedging transactions increased the average realized price of natural gas by $0.52 per Mcf and increased the average realized price of oil by $5.65 per barrel in the first quarter of 2016. Effective hedging transactions increased the average realized price of natural gas by $0.25 per Mcf and increased the average realized price of oil by $20.97 per barrel in the first quarter of 2015.
Lease operating expenses during the first quarter of 2016 totaled $19.5 million ($6.23 per Boe or $1.04 per Mcfe), compared to $27.6 million ($6.62 per Boe or $1.10 per Mcfe) in the first quarter of 2015. The decrease in first quarter of 2016 lease operating expenses is primarily attributable to cost reduction efforts and lower major maintenance expense. Lease operating expenses are expected to increase in subsequent quarters due to maintenance operations to be performed throughout the remainder of the year that are typically scheduled during more favorable weather conditions.
Other operational expenses during the first quarter of 2016 totaled $12.5 million, compared to $0.1 million, in the first quarter of 2015. The increase is primarily due to two items. First, Stone recognized a one-time, non-cash charge of approximately $6.0 million related to foreign currency losses accumulated by its Canadian subsidiary, Stone Energy Canada ULC, which was substantially dissolved during the quarter. Second, there was approximately $6.1 million of rig subsidy and stacking charges associated with the ENSCO 8503 deep water rig farm out and the Saxon Appalachian rig. We expect other operational expenses to remain significantly higher in 2016 compared to 2015 due to these farm out subsidies and rig stacking charges.
Transportation, processing and gathering (TP&G) expenses during the first quarter of 2016 totaled $0.8 million ($0.27 per Boe or $0.04 per Mcfe), compared to $17.7 million ($4.25 per Boe or $0.71 per Mcfe) during the first quarter of 2015. In addition to the shut-in at the Mary field in Appalachia, the significant decrease was attributable to the recoupment of previously paid transportation costs allocable to the federal government's portion of certain of our deep water production, which amounted to approximately $4 million. Stone had incurred these costs on a monthly basis over several years but all were recognized in the first quarter of 2016. This reduction is considered a one-time occurrence as the Company expects it will recognize these cost reductions on a monthly basis going forward, and TP&G expense guidance has been updated as appropriate. Also, if production were to resume in our Mary field, TP&G expenses would be expected to increase materially.
Depreciation, depletion and amortization (DD&A) on oil and gas properties for the first quarter of 2016 totaled $60.4 million ($19.25 per Boe or $3.21 per Mcfe), compared to $85.2 million ($20.47 per Boe or $3.41 per Mcfe), in the first quarter of 2015. The decrease is attributable to ceiling test write-downs incurred in 2015.
Salaries, general and administrative (SG&A) expenses for the first quarter of 2016 were $13.7 million ($4.37 per Boe or $0.73 per Mcfe), compared to $17.0 million ($4.08 per Boe or $0.68 per Mcfe), in the first quarter of 2015. The decrease is due to staff and other cost reductions. The SG&A expenses in the first quarter of 2016 included approximately $1 million in professional fees associated with our restructuring efforts as well as a lower capitalized portion of SG&A. Although base SG&A is expected to be lower in 2016 compared to 2015, there will be a significant increase in professional fees associated with the financial and legal advisors hired to assist in analyzing and reviewing Stone's financial, transactional and strategic alternatives, particularly in the second quarter of 2016.
Accretion expense for the first quarter of 2016 was $10.0 million, compared to $6.4 million in the first quarter of 2015. The increase is due to a higher applicable discount rate used to calculate the present value of the asset retirement obligations compared to prior years. Stone expects accretion expense to remain relatively flat at this level for each subsequent quarter in 2016.
Interest expense for the first quarter of 2016 was $15.2 million, compared to $10.4 million in the first quarter of 2015. The increase in interest expense was due to a lower interest capitalization on our unevaluated properties as well as an increase in borrowed funds. Stone expects interest expense to be higher in the second quarter of 2016 with the bank credit facility significantly drawn.
Capital expenditures for the first quarter of 2016 were approximately $80.7 million, which includes $3.1 million of plugging and abandonment expenditures. This includes the drilling and completion operations at the Cardona #7 well (65% working interest) and the beginning of the Pompano platform drilling program, which included workover operations on the A-30 well and the drilling of the Silverthrone well, the first well of the program. Additionally, $5.8 million of SG&A expenses and $7.4 million of interest were capitalized during the first quarter of 2016. This compared to first quarter of 2015 capital expenditures of approximately $113.8 million, which included $17.1 million of plugging and abandonment expenditures. Additionally, $8.5 million of SG&A expenses and $10.8 million of interest were capitalized during the first quarter of 2015.
Stone's Board of Directors authorized an initial 2016 capital expenditure budget of $200 million, which did not include rig subsidies or rig stacking expenses, projected to be approximately $40-$50 million and is included as part of "Other operational expenses" in our statement of operations. The budget was primarily focused on the Pompano platform rig development program and the utilization of the ENSCO 8503 deep water rig for a development well and one or two exploration wells.
However, to further reduce capital expenditures for 2016, Stone has elected to suspend the Pompano drilling program after the completion of the Silverthrone well, which is expected to be completed in early May of 2016. The suspension of the Pompano program is expected to reduce the capital expenditure budget estimate by approximately $20 million to $30 million. Additionally, if Stone has not secured partners for the Lamprey, Derbio or Rampart exploration wells, operations of the ENSCO 8503 deep water drilling rig are expected to be suspended in the third quarter of 2016, following the completion of the second farm out.
This updated rig schedule and other cost reduction efforts have decreased Stone's projected annual capital expenditures, which are now expected to be less than the $200 million Board authorized budget. The budget includes minimal activity in the Appalachian basin, satisfying regulatory abandonment commitments and contractual seismic and leasehold commitments. The budget excludes acquisitions and capitalized SG&A and interest.
On March 21, 2016, we received notice letters from the Bureau of Ocean Energy Management ("BOEM") stating that BOEM had determined that we no longer qualified for a supplemental bonding waiver under the financial criteria specified in BOEM's current guidance to lessees. In late March 2016, we proposed a tailored plan to BOEM for financial assurances relating to our abandonment obligations, which remains subject to approval by BOEM. Our proposed tailored plan provides for posting some incremental financial assurances in favor of BOEM, and discussions on the approval and implementation of this plan are ongoing.
Liquidity Update
On March 10, 2016, Stone drew $385 million under its bank credit facility, which represented substantially all of the remaining undrawn amount that was available under its bank credit facility. After the March 10, 2016 withdrawal, the aggregate principal amount of borrowings under the bank credit facility was $477 million plus approximately $19.2 million of outstanding letters of credit.
On April 13, 2016, Stone was notified that the borrowing base under its bank credit facility was redetermined and lowered from $500 million to $300 million. As of April 13, 2016, Stone had outstanding borrowings of $457 million and letters of credit of $18.3 million under its bank credit facility, resulting in a borrowing base deficiency of $175.3 million. Stone had cash on hand of approximately $360 million as of April 13, 2016. The credit agreement provides that within 30 days after the agent delivers written notice to Stone of a borrowing base deficiency, Stone must elect to do one or more of the following: (a) repay the loan to eliminate the deficiency within 10 days, (b) add additional collateral to eliminate the deficiency within 30 days, or (c) pay the deficiency in six equal monthly installments to eliminate the deficiency within six months. We have not taken any action or made an election of actions to be taken to cure the borrowing base deficiency.
As of March 31, 2016, the current portion of long-term debt of $459.2 million consisted of $283.5 million of 2017 Convertible Notes, $175.3 million of outstanding borrowings under the bank credit facility (our borrowing base deficiency) and $0.4 million of principal payments due within one year on the Building Loan.
As of March 31, 2016 and May 4, 2016, Stone had cash on hand of approximately $367 million and $350 million, respectively.
Although we were in compliance with our bank credit facility financial covenants at the end of the first quarter of 2016, we project that we will be out of compliance at the end of the second quarter of 2016. We are in discussion with our banks regarding our borrowing base deficiency and the potential compliance issue.
On March 10, 2016, Stone announced it had retained Lazard as its financial advisor and Latham & Watkins LLP as its legal advisor to assist Stone in analyzing and considering financial, transactional and strategic alternatives. We are actively reviewing various financing, asset sales and debt restructuring alternatives to address the March 1, 2017 maturity of the 2017 Convertible Notes and are currently engaged in ongoing negotiations with financial advisors for the noteholders of the 2017 Convertible Notes and 2022 Notes regarding restructuring the notes. We have an interest payment obligation under our 2022 Notes totaling approximately $29 million, due on May 16, 2016. The indenture governing the 2022 Notes provides a 30-day grace period, extending the date for making the cash interest payment to June 14, 2016. Although we have sufficient liquidity to make the interest payment by the due date, we may utilize the 30-day grace period provided for by the indenture to allow additional time to assess our restructuring alternatives.
We continue to work with our financial and legal advisors to identify certain contractual obligations whereby an opportunity exists for potential relief.
In support of Stone's announcement of the retention of professionals to assist in analyzing and considering financial, transactional and strategic alternatives, the Independent Directors of Stone's Board of Directors named current board member David T. Lawrence as a Special Liaison of the Independent Directors to work together with the management of Stone to help with assessing strategic alternatives and restructuring alternatives.
Operational Update
Deep Water Drilling Contract (Gulf of Mexico). In mid-February of 2016, Stone reached an agreement with an experienced Gulf of Mexico deep water operator to farm out and utilize the ENSCO 8503 deep water rig for a period that ended in mid-April of 2016. The agreement carried some associated subsidy expenses and commenced after Stone had finished operations at the Cardona #7 well. Stone is also working towards an agreement on a second farm out for another 70 to 90 days with another experienced Gulf of Mexico operator that is expected to commence no later than May 15, 2016, following a brief utilization of the rig for preparation work ahead of drilling the Lamprey exploration prospect. Additionally, Stone is also reviewing other farm out opportunities as well as farm in opportunities whereby Stone would utilize the ENSCO 8503 rig as the operator with a relatively small working interest in the project.
Mississippi Canyon 29 – Cardona Field (Deep Water). The fourth and final well in the Cardona project, the Cardona #7, came online in late March of 2016, with initial gross production of approximately 5,000 Boe per day. Currently, gross production volumes from the Cardona field are approximately 20,000 Boe per day. Stone holds a 65% working interest in the field and is the operator.
Mississippi Canyon 26 - Amethyst (Deep Water). The Amethyst prospect came online in late December of 2015 and averaged approximately 24 MMcfe per day for the first quarter of 2016. Production from the well gradually declined during the month of April until the well was shut in late April to allow for a technical evaluation. After reviewing pressure and volume data, Stone suspects there is blockage in the perforated section of the well and is determining best intervention options, including performing an acid operation. This acid operation is projected to start in late June or early July. The well is a tie-back to Stone's Pompano platform, located less than five miles from the discovery, and Stone holds a 100% working interest.
Pompano Platform Drilling Program (Deep Water). Stone performed workover operations at the A-30 well in January of 2016, which has been completed and is producing approximately 250 Boe per day. Drilling commenced on the Silverthrone development prospect in February and was completed in April, with production expected to come online in May of 2016. Stone has completed one of two zones in the prospect, which is expected to come online at a gross production rate of approximately 700 to 1,000 Boe per day. After the operations for the Silverthrone well are complete, the platform rig is expected to be temporarily stacked in place to preserve liquidity while we review our financial, transactional and strategic alternatives. There are up to three additional development wells to be drilled from the Pompano platform. Each additional development well is expected to provide production volumes ranging from 1,000 to 2,000 Boe per day per well after hook-up. Stone holds a 100% working interest in these wells.
Alaminos Canyon 943 - Lamprey (Deep Water). In the fourth quarter of 2015, Petróleos Mexicanos ("Pemex") spud the Tiaras-1 exploration well, which is located approximately three miles southwest of Stone's Lamprey exploration prospect in Alaminos Canyon block 943 in the Gulf of Mexico. Operations at Tiaras-1 are complete and the rig has demobilized. In mid-April of 2016, Stone set surface casing on the Lamprey prospect, prior to the commencement of a second farm out of the ENSCO 8503 rig, which is expected in mid-May. It is estimated that the initial Lamprey well would take two to three months to drill and, if successful, Stone may drill a follow-up appraisal well. Discussions with potential partners regarding the 100% owned Lamprey prospect are ongoing, with a reduction to Stone's working interest expected before fully drilling the well.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. If successful, a tie-back to the Pompano platform is likely. Stone currently holds a 100% working interest in the prospect, although a reduction to its working interest is expected before drilling would commence. The well is estimated to take three months to drill.
Mississippi Canyon 117 - Rampart (Deep Water). The Rampart exploration well targets the Miocene interval and is expected to be a tie-back to the Pompano platform if successful. Stone currently holds a 100% working interest in the prospect and is expected to reduce its working interest before drilling would commence. The prospect is located nine miles from Stone's Pompano platform, and the well is estimated to take three months to drill.
Appalachia Basin (Production and Drilling Update). In Appalachia, prior to shutting in on September 1, 2015, production at the Mary field was averaging approximately 130 MMcfe per day. Production at Mary has remained shut in and production from the Heather and Buddy fields averaged approximately 23 MMcfe per day for the first quarter of 2016. The Mary field remains shut-in due to low prices of natural gas, natural gas liquids and high midstream costs. The contracted rig for Appalachia remains stacked. Activity for the remainder of 2016 is expected to be limited to maintaining core leasehold interests and other maintenance operations.
Second Quarter of 2016 Guidance
Guidance for the second quarter and full year 2016 is shown in the table below (updated guidance numbers are italicized and bolded). The guidance for the second quarter of 2016 production includes the expected continued shut-in of the Mary field in Appalachia and other previously mentioned operational updates. The guidance is also subject to all the cautionary statements and limitations described below and under the caption "Forward Looking Statements."
Second Quarter |
Full Year | ||
Production - MBoe per day (MMcfe per day) |
26 - 28 (156 - 168) |
26 - 28 (156 - 168) | |
Lease operating expenses (in millions) (excluding transportation/processing expenses) |
- |
$90 - 100
| |
Transportation, processing and gathering (in millions) |
$16 - $18 | ||
Salaries, General & Administrative expenses (in millions) |
- |
$52 - $56 | |
(excluding incentive compensation and non-recurring professional fess)
|
|||
Depreciation, Depletion & Amortization (per MBoe) |
- |
$16.50 - $19.50 | |
(per Mcfe) |
$2.75 - $3.25 | ||
Corporate Tax Rate (%) |
- |
0%-5% | |
Capital Expenditure Budget (in millions) |
- |
$200 |
(excludes farm out subsidies and rig stacking charges) |
Hedge Position
The following table illustrates our derivative positions for 2016 as of May 4, 2016:
Fixed-Price Swaps | |||||||
NYMEX | |||||||
Natural Gas |
Oil | ||||||
Daily Volume (MMBtus/d) |
Swap Price |
Daily Volume (Bbls/d) |
Swap Price | ||||
2016 |
10,000 |
$4.110 |
1,000 |
$90.00 | |||
2016 |
10,000 |
4.120 |
1,000 |
52.78 | |||
2016 |
1,000 |
49.75 | |||||
2016 |
1,000* |
45.00-54.75 | |||||
*costless collar |
New York Stock Exchange Notification
On April 29, 2016, we were notified by the New York Stock Exchange ("NYSE") that the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE under Rule 802.01C of the NYSE Listed Company Manual. Under the NYSE's rules, we have six months following receipt of the notification to regain compliance with the minimum share price requirement.
Other Information
Stone Energy will not be hosting a conference call to discuss the first quarter of 2016 operational and financial results. Stone Energy will hold its 2016 Annual Meeting of Stockholders on Thursday, May 19, 2016, at 10:00 a.m. Central time at the Windsor Court Hotel, 300 Gravier Street, New Orleans, Louisiana. The close of business on March 24, 2016 has been fixed as the record date for determination of stockholders entitled to receive notification of and to vote at the Annual Meeting.
Non-GAAP Financial Measures
In this press release, we refer to non-GAAP financial measures we call "discretionary cash flow" and "adjusted net loss." Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income, as defined by GAAP. Management believes adjusted net loss is useful to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Please see the "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of discretionary cash flow to cash flow provided by operating activities and a reconciliation of adjusted net income to net income.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, including risks relating to our bank credit facility, our outstanding notes and any restructuring thereof, and our ability to continue as a going concern, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates will be as estimated.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com
STONE ENERGY CORPORATION | ||||
SUMMARY STATISTICS | ||||
(In thousands, except per share/unit amounts) | ||||
(Unaudited) | ||||
Three Months Ended March 31, |
||||
2016 |
2015 |
|||
FINANCIAL RESULTS |
||||
Net loss |
($188,784) |
($327,388) |
||
Net loss per share |
($3.39) |
($5.93) |
||
PRODUCTION QUANTITIES |
||||
Oil (MBbls) |
1,635 |
1,622 |
||
Gas (MMcf) |
6,846 |
11,157 |
||
Natural gas liquids (MBbls) |
364 |
683 |
||
Oil, gas and NGLs (MBoe) |
3,140 |
4,165 |
||
Oil, gas and NGLs (MMcfe) |
18,840 |
24,987 |
||
AVERAGE DAILY PRODUCTION |
||||
Oil (MBbls) |
18.0 |
18.0 |
||
Gas (MMcf) |
75.2 |
124.0 |
||
Natural gas liquids (MBbls) |
4.0 |
7.6 |
||
Oil, gas and NGLs (MBoe) |
34.5 |
46.3 |
||
Oil, gas and NGLs (MMcfe) |
207.0 |
277.6 |
||
REVENUE DATA |
||||
Oil revenue |
$60,275 |
$107,507 |
||
Gas revenue |
15,173 |
28,337 |
||
Natural gas liquids revenue |
4,735 |
12,366 |
||
Total oil, gas and NGLs revenue |
$80,183 |
$148,210 |
||
AVERAGE PRICES |
||||
Prior to the cash settlement of effective hedging transactions: |
||||
Oil (per Bbl) |
$31.22 |
$45.31 |
||
Gas (per Mcf) |
1.70 |
2.29 |
||
Natural gas liquids (per Bbl) |
13.01 |
18.11 |
||
Oil, gas and NGLs (per Boe) |
21.47 |
26.76 |
||
Oil, gas and NGLs (per Mcfe) |
3.58 |
4.46 |
||
Including the cash settlement of effective hedging transactions: |
||||
Oil (per Bbl) |
$36.87 |
$66.28 |
||
Gas (per Mcf) |
2.22 |
2.54 |
||
Natural gas liquids (per Bbl) |
13.01 |
18.11 |
||
Oil, gas and NGLs (per Boe) |
25.54 |
35.58 |
||
Oil, gas and NGLs (per Mcfe) |
4.26 |
5.93 |
||
AVERAGE COSTS |
||||
Lease operating expenses (per Boe) |
$6.23 |
$6.62 |
||
Lease operating expenses (per Mcfe) |
1.04 |
1.10 |
||
Transp, processing and gathering exp (per Boe) |
0.27 |
4.25 |
||
Transp, processing and gathering exp (per Mcfe) |
0.04 |
0.71 |
||
Salaries, general and administrative expenses (per Boe) |
4.37 |
4.08 |
||
Salaries, general and administrative expenses (per Mcfe) |
0.73 |
0.68 |
||
DD&A expense on oil and gas properties (per Boe) |
19.25 |
20.47 |
||
DD&A expense on oil and gas properties (per Mcfe) |
3.21 |
3.41 |
||
AVERAGE SHARES OUTSTANDING – Diluted |
55,713 |
55,181 |
STONE ENERGY CORPORATION | ||||||
Three Months Ended March 31, |
||||||
2016 |
2015 |
|||||
Operating revenue: |
||||||
Oil production |
$60,275 |
$107,507 |
||||
Gas production |
15,173 |
28,337 |
||||
Natural gas liquids production |
4,735 |
12,366 |
||||
Other operational income |
356 |
2,160 |
||||
Derivative income, net |
138 |
3,128 |
||||
Total operating revenue |
80,677 |
153,498 |
||||
Operating expenses: |
||||||
Lease operating expenses |
19,547 |
27,577 |
||||
Transportation, processing and gathering |
841 |
17,703 |
||||
Production taxes |
481 |
2,515 |
||||
Depreciation, depletion and amortization |
61,558 |
86,422 |
||||
Write-down of oil and gas properties |
129,204 |
491,412 |
||||
Accretion expense |
9,983 |
6,409 |
||||
Salaries, general and administrative expenses |
13,707 |
17,007 |
||||
Incentive compensation expense |
4,979 |
1,563 |
||||
Other operational expenses |
12,527 |
84 |
||||
Total operating expenses |
252,827 |
650,692 |
||||
Loss from operations |
(172,150) |
(497,194) |
||||
Other (income) expenses: |
||||||
Interest expense |
15,241 |
10,365 |
||||
Interest income |
(114) |
(122) |
||||
Other income |
(298) |
(143) |
||||
Other expense |
2 |
- |
||||
Total other expenses |
14,831 |
10,100 |
||||
Loss before taxes |
(186,981) |
(507,294) |
||||
Provision (benefit) for income taxes: |
||||||
Current portion |
(1,074) |
- |
||||
Deferred portion |
2,877 |
(179,906) |
||||
Total income taxes |
1,803 |
(179,906) |
||||
Net loss |
($188,784) |
($327,388) |
STONE ENERGY CORPORATION | |||||
Three Months Ended |
|||||
2016 |
2015 |
||||
Net loss as reported |
($188,784) |
($327,388) |
|||
Reconciling items: |
|||||
Depreciation, depletion and amortization |
61,558 |
86,422 |
|||
Write-down of oil and gas properties |
129,204 |
491,412 |
|||
Deferred income tax provision (benefit) |
2,877 |
(179,906) |
|||
Accretion expense |
9,983 |
6,409 |
|||
Non-cash stock compensation expense |
2,312 |
2,640 |
|||
Non-cash interest expense |
4,635 |
4,318 |
|||
Non-cash derivative expense |
192 |
1,511 |
|||
Other non-cash expense |
6,081 |
- |
|||
Discretionary cash flow |
28,058 |
85,418 |
|||
Changes in income taxes payable |
(1,074) |
7,188 |
|||
Settlement of asset retirement obligations |
(4,667) |
(17,145) |
|||
Other working capital changes |
7,122 |
8,061 |
|||
Net cash provided by operating activities |
$29,439 |
$83,522 |
STONE ENERGY CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE ADJUSTED NET LOSS to NET LOSS (In thousands) (Unaudited) | |||
Three Months Ended March 31, | |||
2016 |
2015 | ||
Net loss as reported |
($188,784) |
($327,388) | |
Reconciling items: |
|||
Write-down of oil and gas properties |
129,204 |
$491,412 | |
Tax effect |
(45,544) |
(176,908) | |
Valuation allowance on deferred tax assets |
61,067 |
- | |
Total reconciling items |
144,727 |
314,504 | |
Adjusted net loss |
($44,057) |
($12,884) | |
Net loss per share as reported |
($3.39) |
($5.93) | |
Per share effect of impairment charges |
$2.60 |
$5.70 | |
Net loss per share before impairment charges |
($0.79) |
($0.23) |
STONE ENERGY CORPORATION | ||||
CONSOLIDATED BALANCE SHEET | ||||
(In thousands) | ||||
(Unaudited) | ||||
March 31, |
December 31, | |||
2016 |
2015 | |||
Assets |
||||
Current assets: |
||||
Cash and cash equivalents |
$367,134 |
$10,759 | ||
Accounts receivable |
42,185 |
48,031 | ||
Fair value of hedging contracts |
30,222 |
38,576 | ||
Current income tax receivable |
46,174 |
46,174 | ||
Inventory |
535 |
535 | ||
Other current assets |
6,531 |
6,346 | ||
Total current assets |
492,781 |
150,421 | ||
Oil and gas properties, full cost method of accounting: |
||||
Proved |
9,481,859 |
9,375,898 | ||
Less: accumulated depreciation, depletion and amortization |
(8,796,412) |
(8,603,955) | ||
Net proved oil and gas properties |
685,447 |
771,943 | ||
Unevaluated |
421,429 |
440,043 | ||
Other property and equipment, net |
28,667 |
29,289 | ||
Other assets, net |
18,257 |
18,473 | ||
Total assets |
$1,646,581 |
$1,410,169 | ||
Liabilities and Stockholders' Equity |
||||
Current liabilities: |
||||
Accounts payable to vendors |
$38,200 |
$82,207 | ||
Undistributed oil and gas proceeds |
3,875 |
5,992 | ||
Accrued interest |
22,901 |
9,022 | ||
Asset retirement obligations |
23,465 |
21,291 | ||
Current portion of long-term debt |
459,201 |
- | ||
Other current liabilities |
32,671 |
40,712 | ||
Total currentliabilities |
580,313 |
159,224 | ||
Bank credit facility |
281,731 |
- | ||
7½% Senior Notes due 2022 |
770,145 |
770,009 | ||
1¾% Senior Convertible Notes due 2017 |
- |
279,244 | ||
4.2% Building Loan |
11,214 |
11,702 | ||
Asset retirement obligations |
209,848 |
204,575 | ||
Other long-term liabilities |
18,329 |
25,204 | ||
Total liabilities |
1,871,580 |
1,449,958 | ||
Common stock |
558 |
553 | ||
Treasury stock |
(860) |
(860) | ||
Additional paid-in capital |
1,650,969 |
1,648,189 | ||
Accumulated deficit |
(1,894,407) |
(1,705,623) | ||
Accumulated other comprehensive income |
18,741 |
17,592 | ||
Total stockholders' equity |
(224,999) |
(39,789) | ||
Total liabilities and stockholders' equity |
$1,646,581 |
$1,410,169 |
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SOURCE Stone Energy Corporation
NEW YORK, April 27, 2016 /PRNewswire/ -- Quorum Health Corporation (NYSE:QHC) will replace Stone Energy Corp. (NYSE:SGY) in the S&P SmallCap 600 after the close of trading on Monday, May 2. S&P MidCap 400 constituent Community Health Systems (NYSE:CYH) is spinning off Quorum Health in a transaction expected to be completed on Friday, April 29. Post spin-off, Community Health Systems will remain in the S&P MidCap 400. Stone Energy is ranked near the bottom of the S&P SmallCap 600 and is no longer appropriate for that index.
Quorum Health owns and operates hospitals. Headquartered in Franklin, TN, the company will be added to the S&P SmallCap 600 GICS (Global Industry Classification Standard) Healthcare Facilities Sub-Industry index.
Following is a summary of the changes:
S&P SMALLCAP 600 INDEX – May 2, 2016 | |||
COMPANY |
GICS ECONOMIC SECTOR |
GICS SUB-INDUSTRY | |
ADDED |
Quorum Health |
Healthcare |
Healthcare Facilities |
DELETED |
Stone Energy |
Energy |
Oil & Gas Production |
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SOURCE S&P Dow Jones Indices
LAFAYETTE, La., April 19, 2016 /PRNewswire/ -- In support of Stone's recent announcement of the retention of professionals to assist in analyzing and considering financial, transactional and strategic alternatives, the Independent Directors of Stone's Board of Directors recently named current board member David T. Lawrence as a Special Liaison of the Independent Directors to work together with the management of Stone to help with assessing strategic alternatives and restructuring alternatives for Stone.
Andrews Kurth LLP has been hired as special counsel to the Independent Directors.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana, with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., April 14, 2016 /PRNewswire/ -- Stone Energy Corporation ("Stone") today announced an update on its first quarter operational activities and its borrowing base redetermination. First quarter results are expected to be reported in early May 2016.
Production for the first quarter of 2016 was approximately 34 MBoe (or 204 MMcfe) per day, above the first quarter production guidance of 32-33 MBoe per day provided by Stone in its earnings release for year-end 2015 results. Gross volumes from the Gulf of Mexico deep water benefited from approximately 17,400 Boe per day from the four-well Cardona field (65% working interest) and approximately 24 MMcfe per day from the new Amethyst well (100% w.i.) which commenced production in late December 2015. The fourth Cardona #7 well came on production on February 24, 2016 and is currently producing approximately 4,800 Boe per day gross (65% w.i.).
Production from the Mary field in Appalachia remained shut-in for the first quarter of 2016, while net production from other Appalachian fields averaged approximately 23 MMcfe per day.
Stone's Pompano platform drilling program has completed one workover project, and Stone expects to finish the first well (Silverthrone) in May 2016. After the Silverthrone well has been completed, the utilization of the platform rig will be evaluated due to 2016 capital constraints.
The ENSCO 8503 deep water drilling rig was farmed out to a third party deep water operator in early February, 2016 and Stone expects the farm out to run until mid-April 2016. An agreement with a different operator regarding another farm out is expected to be executed later this month with an early May commencement date, which should extend the farm out position another 70 to 90 days. In the period between the farm out contracts, Stone plans to move the ENSCO 8503 to its Alaminos Canyon 943 lease to start drilling the top section of its Lamprey prospect.
In late March 2016, representatives of Stone met with representatives of the Bureau of Ocean Energy Management ("BOEM") to propose Stone's tailored plan for financial assurances relating to abandonment obligations. Currently Stone has an aggregate of approximately $220 million posted in surety bonds in favor of BOEM, third party bonds and letters of credit, all relating to its offshore abandonment obligations. Stone's proposed tailored plan involves posting certain incremental surety bonds, and discussions on the implementation of this plan are continuing with BOEM.
On April 13, 2016, Stone was notified that the borrowing base under its bank credit agreement has been redetermined from $500 million to $300 million. Stone had outstanding borrowings of $457 million and letters of credit of $18.3 million under its credit agreement as of April 13, 2016, resulting in a borrowing base deficiency of $175.3 million. Stone had cash on hand of approximately $360 million as of April 13, 2016. The credit agreement provides that within 30 days after the agent delivers written notice to Stone of a borrowing base deficiency, Stone must elect to do one or more of the following: (a) repay the loan to eliminate the deficiency within 10 days, (b) add additional collateral to eliminate the deficiency within 30 days, or (c) pay the deficiency in six equal monthly installments to eliminate the deficiency within six months.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana, with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., March 10, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that it has borrowed $385 million under Stone's Bank Credit Facility, which represents substantially all of the remaining undrawn amount that was available under the Credit Facility. These funds are intended to be used for general corporate purposes. As of March 10, 2016, following the funding of this borrowing, the aggregate principal amount of borrowings under the Credit Facility was $477 million. This is in addition to approximately $19 million of outstanding letters of credit. The bank borrowings will initially bear an interest rate of approximately 5 percent. On March 10, 2016, the banks provided notice to Stone under the Credit Facility of a request for a borrowing base redetermination. Stone expects that the borrowing base will be reduced to an amount below the current borrowings.
Chairman, President and Chief Executive Officer David Welch stated, "We felt it important to increase our liquidity in the current low price commodity environment to ensure we have adequate financial flexibility. We will continue to explore various options to strengthen our balance sheet, including alternatives to address our debt position."
Stone has retained Lazard as its financial advisor and Latham & Watkins LLP as its legal advisor to assist the Company in analyzing and considering financial, transactional and strategic alternatives. Vinson & Elkins LLP will continue to provide ongoing corporate and finance representation.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana, with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
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SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 22, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced financial and operational results for the fourth quarter and year-end of 2015. Some of the highlights include:
Financial Results
Stone had fourth quarter 2015 adjusted net income of $2.1 million, or $0.04 per share, before pre-tax impairment charges of $351.1 million. Full year 2015 adjusted net loss was $28.6 million, or $0.52 per share, before pre-tax impairment charges of $1,362.4 million. After impairment charges, the net loss was $318.7 million for the fourth quarter of 2015, or $5.76 per share, and $1,090.9 million for the full year 2015, or $19.75 per share. The 2015 net loss compares with the 2014 net loss of $189.5 million, or $3.60 per share. The fourth quarter 2015 net loss compares with the fourth quarter 2014 net loss of $190.5 million, or $3.47 per share. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of adjusted net income or loss, a non-GAAP financial measure, to net loss.
Discretionary cash flow for the fourth quarter of 2015 totaled $114.6 million, compared to $90.1 million for the fourth quarter of 2014. Discretionary cash flow for 2015 totaled $351.9 million, compared to $437.8 million for 2014. Please see "Non-GAAP Financial Measures" and the accompanying financial statements for reconciliations of discretionary cash flow, a non-GAAP financial measure, to net cash flow provided by operating activities.
Net daily production volumes for the fourth quarter of 2015 averaged 24 MBoe (145 MMcfe) per day, compared with net daily production of 42 MBoe (255 MMcfe) per day in the fourth quarter of 2014. Net daily production volumes for 2015 averaged 40 thousand barrels of oil equivalent (MBoe) per day (238 million cubic feet of gas equivalent (MMcfe) per day), compared with net daily production of 43 MBoe (256 MMcfe) per day in 2014. The decrease in fourth quarter and full year 2015 volumes was primarily due to the shut-in of approximately 100 MMcfe per day at the Mary field. The production mix for 2015 was 41% oil, 17% natural gas liquids (NGLs) and 42% natural gas, while the production mix for 2014 was 36% oil, 14% NGLs and 50% natural gas.
Excluding potential production from the currently shut-in Mary field (approximately 100 MMcfe per day), average daily production for the first quarter of 2016 is expected to be 32-33 MBoe (192-198 MMcfe) per day. Excluding potential production from the Mary field, production guidance for the full year 2016 is 31-33 MBoe (186-198 MMcfe) with approximately 55% projected as oil, 9% projected as natural gas liquids and 36% projected as natural gas. Please see "2016 Guidance."
Realized prices during the fourth quarter of 2015 averaged $69.68 per Bbl of oil, $18.51 per Bbl of NGLs and $2.48 per Mcf of natural gas, compared to fourth quarter 2014 average realized prices of $83.30 per Bbl of oil, $32.28 per Bbl of NGLs and $2.89 per Mcf of natural gas. Price realizations in the fourth quarter of 2015 for oil, NGLs and natural gas benefited from the shut-in at the Mary field, since realized pricing in Appalachia has been lower than in the Gulf of Mexico. Realized prices during the year ended December 31, 2015 averaged $69.52 per barrel (Bbl) of oil, $13.46 per Bbl of NGLs and $2.29 per thousand cubic feet (Mcf) of natural gas, compared to $92.69 per Bbl of oil, $40.51 per Bbl of NGLs and $3.51 per Mcf of natural gas realized during the year ended December 31, 2014.
All unit pricing amounts include the cash settlement of effective hedging contracts. During the fourth quarter and full year 2015, effective hedging transactions increased the average price received for natural gas by $0.91 and $0.39 per Mcf, respectively. Realized oil prices during the fourth quarter and full year 2015 were increased due to hedging by $29.33 and $22.64 per Bbl, respectively. Hedging transactions increased the average price received for natural gas during the fourth quarter 2014 by $0.03 per Mcf, and decreased the full year 2014 average price received for natural gas by $0.16 per Mcf. Realized oil prices during the fourth quarter and full year 2014 were increased due to hedging by $13.37 and $1.42 per Bbl, respectively.
In addition, for the full year of 2015, Stone realized net derivative income of approximately $8.0 million primarily related to non-qualifying natural gas hedging contracts that were designated to Gulf Coast production. After asset sales in 2014, the contracts were no longer deemed as qualifying hedges.
For the three months ended December 31, 2015 and 2014, lease operating expenses were $20.9 million ($9.42 per Boe or $1.57 per Mcfe) and $36.6 million ($9.37 per Boe or $1.56 per Mcfe), respectively. Lease operating expenses incurred during 2015 totaled $100.1 million ($6.92 per Boe or $1.15 per Mcfe), compared to $176.5 million ($11.32 per Boe or $1.89 per Mcfe) during 2014. The year-over-year decrease in lease operating expenses in 2015 from 2014 was primarily due to increased efficiencies, cost reduction efforts and the divestiture of non-core conventional shelf assets in 2014.
For the three months ended December 31, 2015 and 2014, transportation, processing and gathering expenses were $3.0 million and $19.5 million, respectively. Transportation, processing and gathering expenses during 2015 totaled $58.8 million, compared to $65.0 million during 2014. The decreases were primarily attributable to the September 1, 2015 shut-in of the Mary field in Appalachia, which remained shut-in throughout the fourth quarter 2015.
Depreciation, depletion and amortization (DD&A) expense on oil and gas properties for the three months ended December 31, 2015 totaled $54.2 million ($24.47 per Boe or $4.08 per Mcfe), compared to $83.1 million ($21.28 per Boe or $3.55 per Mcfe) during the comparable period of 2014. DD&A expense on oil and gas properties totaled $277.1 million ($19.15 per Boe or $3.19 per Mcfe) during 2015, compared to $336.0 million ($21.56 per Boe or $3.59 per Mcfe) during 2014. The decrease in DD&A from 2014 was primarily due to the ceiling test write-downs of our oil and gas properties in 2015.
Salaries, general and administrative (SG&A) expenses (excluding incentive compensation expense) for the three months ended December 31, 2015 totaled $16.4 million ($7.40 per Boe or $1.23 per Mcfe), compared to $17.2 million ($4.41 per Boe or $0.73 per Mcfe) during the comparable quarter of 2014. SG&A expenses (excluding incentive compensation expense) totaled $69.4 million ($4.80 per Boe or $0.80 per Mcfe) during 2015, compared to $66.5 million ($4.26 per Boe or $0.71 per Mcfe) during 2014. The increase in SG&A expenses in 2015 was the result of expenses associated with headcount reductions and early termination of various contracts, including office rental agreements, which totaled $5.8 million for the year.
Capital expenditures on oil and gas properties for 2015 were $464.5 million, which included $72.4 million of abandonment expenditures. This compares to capital expenditures on oil and gas properties during 2014 of $884.0 million, which included $56.4 million of abandonment expenditures. Capitalized SG&A expenses were $27.1 million and capitalized interest totaled $41.3 million for 2015. In 2014, capitalized SG&A was $30.7 million and capitalized interest totaled $45.7 million.
2016 Capital Expenditure Budget
Stone's Board of Directors has authorized an initial 2016 capital expenditure budget of $200 million, subject to further Board review. The proposed expenditures are primarily focused on the Pompano platform rig development program and the utilization of the ENSCO 8503 deep water rig for a development well and one or two exploration wells. The budget includes minimal activity in the Appalachian basin, satisfying regulatory abandonment commitments and contractual seismic and leasehold commitments. The budget also assumes success in farming-out the ENSCO 8503 rig to another operator for 5-6 months and the reduction in our working interests on potential exploration wells to be drilled to an acceptable level or the stacking of the rig. The budget excludes acquisitions and capitalized SG&A and interest as well as potential subsidy expense associated with a rig farm-out and potential rig stacking expense. In addition to the $200 million in budgeted capital expenditures, the farm-out subsidy and rig stacking expenses would be charges to our statement of operations as "Other operational expenses" and are projected to be approximately $40-$50 million. The 2016 budget is allocated approximately 80% to 85% to the Gulf of Mexico basin, 3% to 5% in Appalachia, and 10% to 15% to abandonment expenditures.
In the Gulf of Mexico, the budget assumes three development wells to be drilled using a platform rig on the Pompano platform. Additionally, Stone expects to use the ENSCO 8503 rig to drill and complete the Cardona #7 development well in the first quarter of 2016, followed by one or two farm-outs of the rig and the drilling of the deep water Lamprey or Derbio prospects (assuming reductions to our working interests). The Appalachia capital budget includes maintaining core leasehold interests and other maintenance operations.
The capital budget and allocation of capital across the various areas is subject to change based on several factors, including commodity pricing, liquidity, permitting times, regulatory, non-operator decisions and the sales of working interests in certain assets. The capital budget is expected to be funded primarily through the bank credit facility and expected cash flow, as well as possible financings or asset sales.
Liquidity
At December 31, 2015, Stone had cash on hand of $10.8 million and $480.8 million available for borrowing under its bank credit facility, based on a borrowing base of $500 million and outstanding letters of credit outstanding of $19.2 million. As of February 22, 2016, we had cash on hand of approximately $23 million and approximately $50 million drawn on the bank credit facility. Including the $19.2 million of letters of credit outstanding, there is approximately $431 million available for borrowing as of February 22, 2016. The borrowing base was affirmed at $500 million in October 2015 and is scheduled to be redetermined by May 2016. We are expecting a borrowing base reduction for the May 2016 redetermination.
The level of our indebtedness of approximately $1.1 billion and the current commodity price environment have presented challenges as they relate to our ability to comply with the covenants in the agreements governing our indebtedness. As of December 31, 2015 and February 22, 2016, we were in compliance with all of our financial covenants under our bank credit facility and indentures governing our outstanding notes. However, given the lower commodity prices and reduced hedged position, we anticipate that we could exceed the Consolidated Funded Debt to Consolidated EBITDA financial ratio covenant of 3.75 to 1 set forth in our bank credit facility at the end of the first quarter of 2016, which would require us to seek a waiver or amendment from our bank lenders. We are currently in discussions with our banks regarding an amendment to our bank credit facility to address this potential covenant issue. If we are unable to reach an agreement with our banks or find acceptable alternative financing, it may lead to an event of default under our bank credit facility. If following an event of default, the banks were to accelerate repayment under the bank credit facility, it may result in an event of default and an acceleration under our other debt instruments. We do not expect to obtain an amendment from our banks before the filing of our 2015 Form 10-K.
We are actively reviewing various financings, asset sales and debt restructuring alternatives to provide additional and adequate longer term liquidity, and to address the March 1, 2017 maturity of our $300 million 2017 Convertible Notes.
Although we are currently exempt from supplemental bonding requirements on our offshore leases for abandonment obligations, we expect to lose this exemption in 2016, as suppressed commodity prices have negatively affected our net worth. If we cannot qualify for a waiver, we may need to obtain surety bonds or some other form of financial assurance, which could impact our liquidity.
We have an existing commitment for a deep water rig with ENSCO, which is projected to last until the fall of 2017. To lessen our financial exposure, we have executed a farm-out of the rig, starting in late February 2016, for a period of 60 to 90 days. We continue to pursue additional opportunities to farm-out the rig and anticipate that we may execute a second, separate farm-out agreement for another 90 to 120 days with another operator, which would immediately follow the currently scheduled farm-out. Including these projected farm-out arrangements, we expect to spend approximately $85 million on this contract in 2016 and approximately $50 million in 2017.
Reserves
Our estimated proved reserves as of December 31, 2015 were 57 MMBoe (million barrels of oil equivalent) or 342 Bcfe (billion cubic feet of natural gas equivalent), compared to 153 MMBoe (915 Bcfe) at year-end 2014. The decrease in estimated proved reserves is primarily attributable to the downward revision of 95 MMBoe (570 Bcfe) to contingent resources due to depressed commodity prices. Substantially all of Stone's proved reserves in Appalachia were reclassified to contingent resources during 2015. From drilling additions, extensions, well performance, and the acquisition of Appalachia working interests, Stone replaced approximately 104% of 2015 production.
The year-end 2015 estimated proved reserves were 53% oil, 11% natural gas liquids (NGLs) and 36% gas on an equivalent basis. The changes from year-end 2014 estimated proved reserves to year-end 2015 estimated proved reserves included production of approximately 14 MMBoe (85 Bcfe), divestitures of 1 MMBoe (6 Bcfe), drilling additions/extensions of 1 MMBoe (7 Bcfe), acquisition of working interest in Appalachia of 6 MMBoe (34 Bcfe), positive performance revisions of 8 MMBoe (47 Bcfe) and net downward price revisions of 95 MMBoe or 570 Bcfe.
The standardized measure of discounted future net cash flows from our estimated proved reserves at December 31, 2015, using a 10% discount rate and 12-month average prices (after differentials) of $51.16 per barrel of oil, $16.40 per barrel of NGLs and $2.19 per Mcf of gas, was approximately $604 million. Estimated future income taxes had no effect on the standardized measure as of December 31, 2015. If current pricing was used to determine the estimated proved reserves or the standardized measure at December 31, 2015, the reserve volumes and values would be reduced.
The year-end 2015 estimated proved reserves included proved developed (PD) reserves of 42 MMBoe or 249 Bcfe (52% oil, 12% NGLs, 36% gas) and proved undeveloped (PUD) reserves of 15 MMBoe or 93 Bcfe (55% oil, 11% NGLs, 34% gas). In addition, there were 23 MMBoe or 139 Bcfe of estimated probable reserves and 59 MMBoe or 356 Bcfe of estimated possible reserves at year-end 2015.
All of Stone's estimated proved, probable and possible reserves and contingent resources were independently engineered by Netherland Sewell & Associates.
Operational Update
Deep Water Drilling Contract (Gulf of Mexico). In February of 2016, Stone reached an agreement with an experienced Gulf of Mexico deep water operator to farm-out and utilize the ENSCO 8503 for a period of 60 to 90 days. The agreement will carry some associated subsidy expenses and will commence late in the first quarter of 2016, after Stone has finished operations at the Cardona #7 well. Stone continues to pursue additional opportunities to farm-out the rig and is currently engaged in discussions with multiple experienced operators for potential projects, including a separate farm-out agreement for another 90 to 120 days with another operator that would immediately follow the currently scheduled farm-out. Additionally, Stone is reviewing farm-in opportunities whereby Stone would utilize the ENSCO 8503 rig as the operator with a relatively small working interest in the project.
Mississippi Canyon 29 – Cardona Field (Deep Water). The first two Cardona wells (#4 and #5) produced at a combined gross rate of approximately 10,000 Boe per day for most of 2015. Production from the Cardona #6 development well commenced in the second half of 2015 at a rate of approximately 5,000 Boe per day. The fourth and final well in the Cardona project, the Cardona #7, has been drilled and completed and is expected to be online in late March of 2016, with initial gross production expected to reach approximately 4,000 – 5,000 Boe per day. Stone holds a 65% working interest in the field and is the operator.
Mississippi Canyon 26 - Amethyst (Deep Water). The Amethyst prospect came online in late December 2015 and gross production is currently approximately 35 MMcfe per day. The reservoir pressure and rate will continue to be evaluated over the next few months for possible volume adjustments. The well is a tie-back to Stone's Pompano platform, located less than five miles from the discovery and Stone holds a 100% working interest.
Pompano Platform Drilling Program (Deep Water). During the first week of November 2015, Stone mobilized and successfully installed an H&P platform drilling rig on its Pompano platform to begin a development drilling program, consisting of one workover project and two development wells. Stone may elect to drill up to two additional development wells based on capital availability. The workover of the A-30 well, which commenced in the first week of January 2016, has been completed and is producing approximately 250 Boe per day. Drilling has commenced on the Silverthrone development prospect and is expected to come online in late April or May of 2016. The well is expected to average daily gross production of approximately 1,400 Boe per day for the remainder of the year once online. Each additional development well is expected to provide a production increase ranging from 1,000 to 2,000 Boe per day per well, and would be brought on over the course of the program. Stone holds a 100% working interest in these wells.
Alaminos Canyon 943 - Lamprey (Deep Water). In the fourth quarter of 2015, Petróleos Mexicanos ("Pemex") spud the Tiaras-1 exploration well, which is located approximately three miles southwest of Stone's Lamprey exploration prospect in Alaminos Canyon block 943 in the Gulf of Mexico. The Tiaras-1 well was drilled to a total depth of approximately 15,850 feet by the end of December 2015, and the rig has remained on location since reaching total depth. Information on the results of the Tiaras-1 is expected to prove helpful in evaluating the Lamprey prospect. If a decision is made to move forward with the Lamprey prospect, it is estimated that the initial well would take two to three months to drill and, if successful, Stone may drill a follow-up appraisal well. Discussions with potential partners regarding the 100% owned Lamprey prospect are ongoing, with a reduction to Stone's working interest expected before drilling the well.
Mississippi Canyon 72 - Derbio (Deep Water). The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval. If successful, a tie-back to the Pompano platform is likely. Stone currently holds a 100% working interest in the prospect, which is currently projected to spud in late 2016, although a reduction to our working interest is expected before drilling commences. The well is estimated to take three months to drill.
Mississippi Canyon 117 - Rampart (Deep Water). The Rampart exploration well targets the Miocene interval and is expected to follow the Derbio exploration well. Stone currently holds 100% working interest in the prospect and is expected to reduce its working interest before drilling commences. The prospect is located nine miles from Stone's Pompano platform and a tie-back is likely. The well is estimated to take three months to drill.
Appalachia Basin (Production and Drilling Update). In Appalachia, production averaged approximately 130 Mmcfe per day before shutting in production at the Mary Field on September, 1, 2015. Production for fourth quarter of 2015 at the Mary Field remained shut-in, and production from the Heather and Buddy fields was approximately 21 MMcfe per day. The Mary field remains shut-in due to low prices of natural gas, natural gas liquids and high midstream costs. The contracted rig for Appalachia was available for delivery late in the fourth quarter of 2015, but remains stacked. Our 2016 activity is expected to be limited to maintaining core leasehold interests and other maintenance operations.
2016 Guidance
Guidance for the first quarter and full year 2016 is shown in the table below. Guidance ranges provided below assume the Mary field in Appalachia remains shut-in for the full calendar year of 2016. Any Mary field production in 2016 would be additive to the production guidance below and expense guidance would have to be adjusted. The guidance is subject to all the cautionary statements and limitations described below and under the caption "Forward Looking Statements."
First Quarter |
Full Year | ||
Production - MBoe per day |
32 - 33 |
31 - 33 | |
(MMcfe per day) |
(192 - 198) |
(186 - 198) | |
(excludes production from Mary field) |
|||
Lease operating expenses (in millions) |
- |
$90 - 100 | |
(excluding transportation/processing expenses) |
|||
Transportation, processing and gathering (in millions) |
- |
$18 - $20 | |
Salaries, General & Administrative expenses (in millions) |
- |
$52 - $56 | |
(excluding incentive compensation) |
|||
Depreciation, Depletion & Amortization (per Boe) |
- |
$16.50 - $19.50 | |
(per Mcfe) |
$2.75 - $3.25 | ||
Corporate Tax Rate (%) |
- |
0% | |
Capital Expenditure Budget (in millions) |
- |
$200 | |
(excluding acquisitions, and associated expenses from rig farm-outs or rig stacking) |
Hedge Position | |||||||
The following table illustrates our derivative positions as of February 22, 2016: | |||||||
Fixed-Price Swaps | |||||||
NYMEX | |||||||
Natural Gas |
Oil | ||||||
Daily Volume (MMBtus/d) |
Swap Price |
Daily Volume (Bbls/d) |
Swap Price | ||||
2016 |
10,000 |
4.110 |
1,000 |
90.00 | |||
2016 |
10,000 |
4.120 |
1,000 |
52.78 | |||
2016 |
1,000 |
49.75 | |||||
2016 |
1,000* |
45.00-54.75 | |||||
*costless collar |
Annual Meeting Information
Stone Energy will hold its 2016 Annual Meeting of Stockholders on Thursday, May 19, 2016, at 10:00 a.m. Central time at the Windsor Court Hotel, 300 Gravier Street, New Orleans, Louisiana. The close of business on March 24, 2016 has been fixed as the record date for determination of stockholders entitled to receive notification of and to vote at the Annual Meeting.
Other Information
Stone Energy has planned a conference call for 9:00 a.m. Central time on Tuesday, February 23, 2016 to discuss the operational and financial results for the fourth quarter and full year 2015. Anyone wishing to participate should visit our website at www.StoneEnergy.com for a live web cast or dial 1-877-228-3598 and request the "Stone Energy Call." If you are unable to participate in the original conference call, a replay will be available immediately following the completion of the call on Stone Energy's website. The replay will be available for one month.
Non-GAAP Financial Measures
In this press release, we refer to non-GAAP financial measures we call "discretionary cash flow" and "adjusted net income (loss)." Management believes discretionary cash flow is a financial indicator of our company's ability to internally fund capital expenditures and service debt. Management also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income or loss, as defined by GAAP. Management believes adjusted net income (loss) is useful to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the oil and gas exploration and production industry. Please see the "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of discretionary cash flow to cash flow provided by operating activities and a reconciliation of adjusted net income (loss) to net loss.
Guidance Disclosure
Guidance is subject to all the cautionary statements and limitations described below and under the caption "Forward Looking Statements." Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. Currently production at the Mary field in Appalachia is curtailed, which affects annual production and expense guidance. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes, commodity prices and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required.
Forward Looking Statements
Certain statements in this press release are forward-looking and are based upon Stone's current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include weather, the timing and extent of changes in commodity prices for oil and gas, operating risks, liquidity risks, access to capital including availability under our credit facility, political and regulatory developments and legislation, including developments and legislation relating to our operations in the Gulf of Mexico and Appalachia, and other risk factors and known trends and uncertainties as described in Stone's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Stone's actual results and plans could differ materially from those expressed in the forward-looking statements.
Estimates for Stone's future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation and marketing of oil and gas are subject to disruption due to transportation and processing availability, mechanical failure, human error, hurricanes and numerous other factors. Stone's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Delays experienced in well permitting could affect the timing of drilling and production. Lease operating expenses, which include major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Estimates of DD&A rates can vary according to reserve additions, capital expenditures, future development costs, and other factors. Therefore, we can give no assurance that our future production volumes, lease operating expenses or DD&A rates will be as estimated.
Reserves
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions of such terms. Stone discloses only estimated proved reserves in its filings with the SEC. Stone's estimated proved, probable and possible reserves as of December 31, 2015 contained in this press release were prepared by Netherland, Sewell & Associates, Inc., a nationally recognized engineering firm, and comply with definitions promulgated by the SEC. Additional information on Stone's estimated proved reserves will be contained in Stone's Annual Report on Form 10-K.
In this press release, Stone also uses the term "contingent resources" which are volumes of resources potentially recoverable, except the volumes are deemed uneconomic at current pricing. The SEC's guidelines strictly prohibit Stone from including contingent resources in filings with the SEC. These estimates, as well as estimates of probable and possible reserves, are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by Stone.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana, with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
STONE ENERGY CORPORATION | |||||||||||||
SUMMARY STATISTICS | |||||||||||||
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FINANCIAL RESULTS |
|||||||||||||
Net loss |
($318,656) |
($190,515) |
($1,090,915) |
($189,543) | |||||||||
Net loss per share |
($5.76) |
($3.47) |
($19.75) |
($3.60) | |||||||||
PRODUCTION QUANTITIES |
|||||||||||||
Oil (MBbls) |
1,326 |
1,340 |
5,991 |
5,568 | |||||||||
Gas (MMcf) |
4,391 |
11,531 |
36,457 |
47,426 | |||||||||
Natural gas liquids (MBbls) |
159 |
642 |
2,401 |
2,114 | |||||||||
Oil, gas and NGLs (MBoe) |
2,217 |
3,904 |
14,468 |
15,586 | |||||||||
Oil, gas and NGLs (MMcfe) |
13,301 |
23,423 |
86,809 |
93,518 | |||||||||
AVERAGE DAILY PRODUCTION |
|||||||||||||
Oil (MBbls) |
14 |
15 |
16 |
15 | |||||||||
Gas (MMcf) |
48 |
125 |
100 |
130 | |||||||||
Natural gas liquids (MBbls) |
2 |
7 |
7 |
6 | |||||||||
Oil, gas and NGLs (MBoe) |
24 |
42 |
40 |
43 | |||||||||
Oil, gas and NGLs (MMcfe) |
145 |
255 |
238 |
256 | |||||||||
REVENUE DATA |
|||||||||||||
Oil revenue |
$92,392 |
$111,627 |
$416,497 |
$516,104 | |||||||||
Gas revenue |
10,898 |
33,311 |
83,509 |
166,494 | |||||||||
Natural gas liquids revenue |
2,943 |
20,722 |
32,322 |
85,642 | |||||||||
Total oil, gas and NGLs revenue |
$106,233 |
$165,660 |
$532,328 |
$768,240 | |||||||||
AVERAGE PRICES |
|||||||||||||
Prior to the cash settlement of effective hedging transactions: |
|||||||||||||
Oil (per Bbl) |
$40.35 |
$69.93 |
$46.88 |
$91.27 | |||||||||
Gas (per Mcf) |
1.57 |
2.86 |
1.90 |
3.67 | |||||||||
Natural gas liquids (per Bbl) |
18.51 |
32.28 |
13.46 |
40.51 | |||||||||
Oil, gas and NGLs (per Boe) |
28.56 |
37.77 |
26.43 |
49.26 | |||||||||
Oil, gas and NGLs (per Mcfe) |
4.76 |
6.30 |
4.40 |
8.21 | |||||||||
Including the cash settlement of effective hedging transactions: |
|||||||||||||
Oil (per Bbl) |
$69.68 |
$83.30 |
$69.52 |
$92.69 | |||||||||
Gas (per Mcf) |
2.48 |
2.89 |
2.29 |
3.51 | |||||||||
Natural gas liquids (per Bbl) |
18.51 |
32.28 |
13.46 |
40.51 | |||||||||
Oil, gas and NGLs (per Boe) |
47.92 |
42.43 |
36.79 |
49.29 | |||||||||
Oil, gas and NGLs (per Mcfe) |
7.99 |
7.07 |
6.13 |
8.21 | |||||||||
AVERAGE COSTS |
|||||||||||||
Lease operating expenses (per Boe) |
$9.42 |
$9.37 |
$6.92 |
$11.32 | |||||||||
Lease operating expenses (per Mcfe) |
1.57 |
1.56 |
1.15 |
1.89 | |||||||||
Transp, processing and gathering exp (per Boe) |
1.35 |
5.00 |
4.07 |
4.17 | |||||||||
Transp, processing and gathering exp (per Mcfe) |
0.23 |
0.83 |
0.68 |
0.69 | |||||||||
Salaries, general and administrative expenses (per Boe) |
7.40 |
4.41 |
4.80 |
4.26 | |||||||||
Salaries, general and administrative expenses (per Mcfe) |
1.23 |
0.73 |
0.80 |
0.71 | |||||||||
DD&A expense on oil and gas properties (per Boe) |
24.47 |
21.28 |
19.15 |
21.56 | |||||||||
DD&A expense on oil and gas properties (per Mcfe) |
4.08 |
3.55 |
3.19 |
3.59 | |||||||||
AVERAGE SHARES OUTSTANDING – Diluted |
55,286 |
54,868 |
55,250 |
52,721 |
STONE ENERGY CORPORATION | ||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, | |||||||
2015 |
2014 |
2015 |
2014 | |||||
Operating revenue: |
||||||||
Oil production |
$92,392 |
$111,627 |
$416,497 |
$516,104 | ||||
Gas production |
10,898 |
33,311 |
83,509 |
166,494 | ||||
Natural gas liquids production |
2,943 |
20,722 |
32,322 |
85,642 | ||||
Other operational income |
1,185 |
2,436 |
4,369 |
7,951 | ||||
Derivative income, net |
3,081 |
16,684 |
7,952 |
19,351 | ||||
Total operating revenues |
110,499 |
184,780 |
544,649 |
795,542 | ||||
Operating expenses: |
||||||||
Lease operating expenses |
20,889 |
36,577 |
100,139 |
176,495 | ||||
Transportation, processing and gathering |
2,996 |
19,506 |
58,847 |
64,951 | ||||
Production taxes |
483 |
2,181 |
6,877 |
12,151 | ||||
Depreciation, depletion and amortization |
55,379 |
84,234 |
281,688 |
340,006 | ||||
Write-down of oil and gas properties |
351,062 |
304,062 |
1,362,447 |
351,192 | ||||
Accretion expense |
6,673 |
6,584 |
25,988 |
28,411 | ||||
Salaries, general and administrative expenses |
16,407 |
17,199 |
69,384 |
66,451 | ||||
Incentive compensation expense |
(1,379) |
232 |
2,242 |
10,361 | ||||
Other operational expenses |
748 |
352 |
2,360 |
862 | ||||
Total operating expenses |
453,258 |
470,927 |
1,909,972 |
1,050,880 | ||||
Income (loss) from operations |
(342,759) |
(286,147) |
(1,365,323) |
(255,338) | ||||
Other (income) expenses: |
||||||||
Interest expense |
12,219 |
10,262 |
43,928 |
38,855 | ||||
Interest income |
(345) |
(69) |
(580) |
(574) | ||||
Other income |
(616) |
(208) |
(1,783) |
(2,332) | ||||
Other expense |
286 |
- |
434 |
274 | ||||
Total other expenses |
11,544 |
9,985 |
41,999 |
36,223 | ||||
Loss before taxes |
(354,303) |
(296,132) |
(1,407,322) |
(291,561) | ||||
Provision (benefit) for income taxes: |
||||||||
Current portion |
(44,096) |
159 |
(44,096) |
159 | ||||
Deferred portion |
8,449 |
(105,776) |
(272,311) |
(102,177) | ||||
Total income taxes |
(35,647) |
(105,617) |
(316,407) |
(102,018) | ||||
Net loss |
($318,656) |
($190,515) |
($1,090,915) |
($189,543) | ||||
STONE ENERGY CORPORATION | ||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
DISCRETIONARY CASH FLOW to NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, | |||||||
2015 |
2014 |
2015 |
2014 | |||||
Net loss as reported |
($318,656) |
($190,515) |
($1,090,915) |
($189,543) | ||||
Reconciling items: |
||||||||
Depreciation, depletion and amortization |
55,379 |
84,234 |
281,688 |
340,006 | ||||
Deferred income tax provision (benefit) |
8,449 |
(105,776) |
(272,311) |
(102,177) | ||||
Accretion expense |
6,673 |
6,584 |
25,988 |
28,411 | ||||
Non-cash stock compensation expense |
3,161 |
2,916 |
12,324 |
11,325 | ||||
Excess tax benefits |
(1,586) |
- |
(1,586) |
- | ||||
Write-down of oil and gas properties |
351,062 |
304,062 |
1,362,447 |
351,192 | ||||
Non-cash interest expense |
4,578 |
4,268 |
17,788 |
16,661 | ||||
Non-cash derivative expense (income) |
5,586 |
(15,642) |
16,440 |
(18,028) | ||||
Discretionary cash flow |
114,646 |
90,131 |
351,863 |
437,847 | ||||
Change in current income taxes |
(44,588) |
164 |
(37,377) |
158 | ||||
Settlement of asset retirement obligations |
(12,556) |
(9,192) |
(72,382) |
(56,409) | ||||
Other working capital changes |
(9,008) |
(12,362) |
5,370 |
19,545 | ||||
Net cash provided by operating activities |
$48,494 |
$68,741 |
$247,474 |
$401,141 | ||||
STONE ENERGY CORPORATION | ||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||
ADJUSTED NET INCOME (LOSS) to NET LOSS | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 31, |
December 31, |
|||||||||
2015 |
2014 |
2015 |
2014 |
|||||||
Net loss as reported |
($318,656) |
($190,515) |
($1,090,915) |
($189,543) |
||||||
Reconciling items: |
||||||||||
Write-down of oil and gas properties |
351,062 |
304,062 |
1,362,447 |
351,192 |
||||||
Tax effect |
(116,164) |
(109,462) |
(480,263) |
(126,429) |
||||||
Valuation allowance on deferred tax assets |
85,827 |
- |
180,121 |
- |
||||||
Total Reconciling items |
320,725 |
194,600 |
1,062,305 |
224,763 |
||||||
Adjusted net income (loss) |
$2,069 |
$4,085 |
($28,610) |
$35,220 |
||||||
Net loss per share as reported |
($5.76) |
($3.47) |
($19.75) |
($3.60) |
||||||
Per share effect of reconciling items |
$5.80 |
$3.54 |
$19.23 |
$4.25 |
||||||
Net income (loss) per share before reconciling items |
0.04 |
$0.07 |
($0.52) |
$0.65 |
||||||
STONE ENERGY CORPORATION | ||||
CONSOLIDATED BALANCE SHEET | ||||
(In thousands) | ||||
(Unaudited) | ||||
December 31, |
December 31, | |||
2015 |
2014 | |||
Assets |
||||
Current assets: |
||||
Cash and cash equivalents |
$10,759 |
$74,488 | ||
Restricted cash |
- |
177,647 | ||
Accounts receivable |
48,031 |
120,359 | ||
Fair value of derivative contracts |
38,576 |
139,179 | ||
Current income tax receivable |
46,174 |
7,212 | ||
Inventory |
535 |
3,709 | ||
Other current assets |
6,346 |
8,118 | ||
Total current assets |
150,421 |
530,712 | ||
Oil and gas properties, full cost method of accounting: |
||||
Proved |
9,375,898 |
8,817,268 | ||
Less: accumulated depreciation, depletion and amortization |
(8,603,955) |
(6,970,631) | ||
Net proved oil and gas properties |
771,943 |
1,846,637 | ||
Unevaluated |
440,043 |
567,365 | ||
Other property and equipment, net |
29,289 |
32,340 | ||
Fair value of derivative contracts |
- |
14,333 | ||
Other assets, net |
18,473 |
18,470 | ||
Total assets |
1,410,169 |
$3,009,857 | ||
Liabilities and Stockholders' Equity |
||||
Current liabilities: |
||||
Accounts payable to vendors |
82,207 |
$132,629 | ||
Undistributed oil and gas proceeds |
5,992 |
23,232 | ||
Accrued interest |
9,022 |
9,022 | ||
Deferred taxes |
- |
20,119 | ||
Asset retirement obligations |
21,291 |
69,400 | ||
Other current liabilities |
40,712 |
49,505 | ||
Total currentliabilities |
159,224 |
303,907 | ||
7½% Senior Notes due 2022 |
770,009 |
769,490 | ||
1¾% Senior Convertible Notes due 2017 |
279,244 |
262,791 | ||
4.2% Building Loan |
11,702 |
- | ||
Deferred taxes |
- |
286,343 | ||
Asset retirement obligations |
204,575 |
247,009 | ||
Fair value of derivative contracts |
- |
- | ||
Other long-term liabilities |
25,204 |
38,714 | ||
Total liabilities |
1,449,958 |
1,908,254 | ||
Common stock |
553 |
549 | ||
Treasury stock |
(860) |
(860) | ||
Additional paid-in capital |
1,648,189 |
1,633,307 | ||
Accumulated deficit |
(1,705,623) |
(614,708) | ||
Accumulated other comprehensive income |
17,952 |
83,315 | ||
Total stockholders' equity |
(39,789) |
1,101,603 | ||
Total liabilities and stockholders' equity |
1,410,169 |
$3,009,857 |
Logo - http://photos.prnewswire.com/prnh/20130429/MM04099LOGO
SOURCE Stone Energy Corporation
LAFAYETTE, La., Feb. 19, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE:SGY) today announced it plans to report fourth quarter and year end 2015 earnings results on Monday, February 22, 2016, after the market close. The release will provide year end reserves results, financial and operational results, and provide production and expense guidance for the first quarter and full year 2016. The company has also scheduled a conference call on Tuesday, February 23, 2016 at 9:00 a.m. Central time to provide additional commentary.
The call will be available through a live webcast link on the company's website at www.StoneEnergy.com, located in the Investor Center section. The call will also be accessible by dialing (877) 228-3598 approximately ten minutes before the scheduled start time. If unable to participate in the original call a digital recording will be available two hours after the call by dialing (855) 859-2056, and a replay of the call will be available on the company's website beginning at 12:00 p.m. Central time.
Stone Energy is an independent oil and natural gas exploration and production company headquartered in Lafayette, Louisiana, with additional offices in New Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the acquisition, exploration, development and production of properties in the Gulf of Mexico and Appalachian basins. For additional information, contact Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-9880 fax or via e-mail at CFO@StoneEnergy.com.
Logo - http://photos.prnewswire.com/prnh/20130429/MM04099LOGO
SOURCE Stone Energy Corporation
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