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Stone Energy Corporation Announces First Quarter 2013 Results

        Stone Energy Corporation Announces First Quarter 2013 Results

PR Newswire

LAFAYETTE, La., May 6, 2013

LAFAYETTE, La., May 6, 2013 /PRNewswire/ -- Stone Energy Corporation (NYSE:
SGY) today announced financial and operational results for the first quarter
of 2013. Some of the highlights include:

  oTwo deep water drilling rig contracts were secured for the Stone operated
    projects in the proximity of its Pompano platform. The Diamond Ocean
    Victory is scheduled to drill the Amethyst exploration prospect starting
    in September 2013 and an ENSCO 8500 series rig is anticipated to commence
    drilling the Cardona and Cardona South development wells starting in the
    first quarter of 2014.
  oProduction volumes slightly exceeded the upper end of first quarter
    guidance. In Appalachia, volumes have been substantially restored from
    the third party pipeline interruptions which affected production from
    January through April 2013.
  oStone Energy Corporation was awarded the prestigious Safety in Seas Award
    from the National Ocean Industries Association. Stone Energy was
    recognized for innovative safety leadership in pioneering a new
    decommissioning method which resulted in a four-fold increase in the
    volume of work with zero OSHA recordable incidents.

Chairman, President and Chief Executive Officer David Welch stated, "We have
taken a significant step in our deep water efforts by securing the Diamond
Ocean Victory rig and the ENSCO 8500 series rig. The rigs will be used to
drill the Amethyst exploration prospect and the Cardona and Cardona South
development wells. If successful, these wells will be produced through the
Stone-operated Pompano deep water platform, with Cardona and Cardona South
production projected for late 2014 and Amethyst production projected for
2015. In addition to our Stone-operated deep water program, we plan to
accelerate our participation in non-operated deep water wells with 5-7
exploration prospects being drilled in 2013 and 2014. In our liquids rich
Deep Gas area, initial production from the third well at La Cantera is
projected by June 2013 and is expected to increase gross field volumes to over
100 MMcfe per day (over 25 MMcfe per day net). In Appalachia, third party
pipeline repairs around our Mary field have been made, allowing Marcellus net
volumes to reach over 60 MMcfe per day again. Our conventional shelf drilling
program for 2013 will start in May with several low risk development wells
scheduled in the second and third quarters. Finally, with over $250 million
in cash, an undrawn $400 million credit facility and cash flow from
operations, we are well positioned to fund our 2013 capital program."

Financial Results

For the first quarter of 2013, Stone reported net income of $40.8 million, or
$0.82 per share, on oil and gas revenue of $232.9 million, compared to net
income of $51.0 million, or $1.04 per share, on oil and gas revenue of $244.1
million in the first quarter of 2012. Discretionary cash flow totaled $159.1
million during the first quarter of 2013, as compared to $175.1 million during
the first quarter of 2012. Please see "Non-GAAP Financial Measures" and the
accompanying financial statements for a reconciliation of discretionary cash
flow, a non-GAAP financial measure, to net cash flow provided by operating
activities. 

Daily production during the first quarter of 2013 averaged 40.1 thousand
barrels of oil equivalent (MBoe) per day (241 million cubic feet of gas
equivalent (MMcfe) per day), compared with daily production of 45.0 MBoe (270
MMcfe) per day in the fourth quarter of 2012, and daily production of 41.0
MBoe (246 MMcfe) per day in the first quarter of 2012. First quarter of 2013
production was negatively impacted by third party pipeline interruptions in
Appalachia. First quarter of 2013 production mix was 46% oil, 6% natural gas
liquids (NGL), and 48% natural gas.

Prices realized during the first quarter of 2013 averaged $109.41 per barrel
of oil, $42.49 per barrel of NGLs and $3.17 per Mcf of natural gas. Average
realized prices for the first quarter of 2012 were $111.49 per barrel of oil,
$67.26 per barrel of NGLs and $2.41 per Mcf of natural gas. Effective hedging
transactions increased the average realized price of natural gas by $0.38 per
Mcf and increased the average realized price of oil by $2.72 per barrel in the
first quarter of 2013. Effective hedging transactions increased the average
realized price of natural gas by $0.48 per Mcf and decreased the average
realized price of oil by $3.13 per barrel in the first quarter of 2012.

Lease operating expenses during the first quarter of 2013 totaled $53.0
million ($14.70 per Boe or $2.45 per Mcfe), compared to $44.5 million ($11.93
per Boe or $1.99 per Mcfe), in the first quarter of 2012.

Depreciation, depletion and amortization (DD&A) on oil and gas properties for
the first quarter of 2013 totaled $74.5 million ($20.65 per Boe or $3.44 per
Mcfe), compared to $83.8 million ($22.48 per Boe or $3.75 per Mcfe), in the
first quarter of 2012.

Salaries, general and administrative (SG&A) expenses for the first quarter of
2013 were $14.0 million ($3.87 per Boe or $0.64 per Mcfe), compared to $13.7
million ($3.68 per Boe or $0.61 per Mcfe), in the first quarter of 2012.

Capital expenditures before capitalized SG&A and interest during the first
quarter of 2013 were approximately $114.2 million, which includes $14.9
million of plugging and abandonment expenditures. Additionally, $6.6 million
of SG&A expenses and $10.0 million of interest were capitalized during the
first quarter of 2013.

As of March 31, 2013, and May 6, 2013 we had no outstanding borrowings under
our bank credit facility. In addition, Stone had letters of credit totaling
$21.0 million, resulting in $379.0 million available for borrowing based on a
borrowing base of $400 million. The borrowing base was reaffirmed at $400
million on April 30, 2013.

Operational Update

Mississippi Canyon 26 - Amethyst (Deep Water). Stone has contracted the
Diamond Ocean Victory deep water drilling rig for Stone's Amethyst oil
exploration prospect at Mississippi Canyon 26. The deep water Amethyst
exploration well is currently scheduled to spud late in the third quarter of
2013. Stone is the operator of the well and currently holds a 100% working
interest, although expects to reduce its working interest in the prospect.
The well is estimated to take four months to drill.

Pompano Area – Cardona and Cardona South Prospects (Deep Water). Stone has
contracted an ENSCO 8500 series dynamically positioned deep water drilling rig
for Stone's Cardona oil development program at Mississippi Canyon 29.
Drilling on the Cardona well is expected to commence in the first quarter of
2014 followed by the drilling of the Cardona South well. Stone plans to tie
back both wells to the 100% owned Pompano platform with production projected
for late 2014. Stone holds a 65% working interest in the Cardona wells and
will be the operator. Each well is estimated to take three to four months to
drill.

Mississippi Canyon 983 - San Marcos (Deep Water). The deep water San Marcos
exploration well is currently scheduled to spud late in the third quarter of
2013. Stone currently holds a 25% working interest in the prospect, which is
operated by Apache. The well is estimated to take four months to drill.

Mississippi Canyon 555 – Guadalupe (Deep Water). The deep water Guadalupe
exploration well is currently scheduled to spud in late 2013 or early 2014.
Stone currently holds a 40% working interest in the prospect, which is
operated by Apache. The well is estimated to take four months to drill.

Mississippi Canyon 816 – Taggert (Deep Water). The deep water Taggert
exploration well is currently planned to spud in the second half of 2013.
Stone currently holds a 23% working interest in the prospect, which is
operated by LLOG. The well is estimated to take two months to drill.

Walker Ridge 719 – Phinisi (Deep Water). The deep water Phinisi exploration
well is now projected to spud either in the fourth quarter of 2013 or the
first half of 2014. Stone currently holds a 20% working interest in the
prospect, which is operated by ENI. The well is estimated to take four months
to drill.

La Cantera (Deep Gas). The third well in the La Cantera field, the Broussard
#1 ST #1, has been successfully drilled to 18,000 feet and is currently in
completion operations with first production expected by June 2013. Combined
with the first two wells, gross production from this field is projected at
over 100 MMcfe per day (over 25 MMcfe per day net) when the third well
commences production. Stone holds a 34.6% non-operated working interest in
the field.

Appalachian Basin (Marcellus Shale). Stone drilled 9 and completed 8
horizontal wells in the first quarter, and plans to drill and complete 28 to
32 horizontal wells in Appalachia in 2013. First quarter net volumes were
negatively impacted by approximately 20 MMcfe per day as a result of third
party pipeline failures and unscheduled gas processing plant outage. The
Williams pipeline has been repaired and production is being restored, although
there remain some pressure restrictions on volumes. Production is expected to
increase as 11 recently completed wells in the Heather field (50% working
interest) are brought on production. Appalachia is currently producing
approximately 60 to 70 MMcfe per day, net.

Conventional Shelf. The ENSCO 81 jack-up rig is expected to begin drilling on
a three to four well conventional shelf/deep gas drilling program in May
2013. Stone expects to drill the Hammerlock oil prospect located on South
Timbalier 100, followed by the Taildancer and Coracle oil prospects located on
Ship Shoal 113. The Parker 50B inland barge rig spudded the Stone-operated
Hyena prospect in the Clovelly field in South Louisiana on April 30, 2013.
Stone holds a 94% working interest in the Hammerlock prospect and a 100%
working interest in Taildancer, Coracle, and Clovelly prospects.

2013 Guidance

Guidance for the second quarter and full year 2013 is shown in the table below
(updated guidance numbers are italicized and bolded). The guidance is subject
to all the cautionary statements and limitations described below and under the
caption "Forward Looking Statements."

                                                              Second   Full
                                                              Quarter  Year
Production - MBoe per day                    38 – 40  40 – 43
 (MMcfe per day)                              (230 –   (240 –
                                                              240)     255)
Lease operating expenses (in millions)                                $205 -
                                                              -        $225
(excluding transportation/processing expenses)
Transportation, processing and gathering (in millions)                 $26 -
                                                                       $32
Salaries, General & Administrative expenses (in millions)     -        $55 -
                                                                       $60
(excluding incentive compensation)
                                                                       $19.50
Depreciation, Depletion & Amortization (per MBoe)             -        -
                                                                       $21.00
 (per            $3.25 -
Mcfe)                                                                  $3.50
Corporate Tax Rate (%)                                        -        35% -
                                                                       37%
Capital Expenditure Budget (in millions)                      -        $650
 (excluding acquisitions)

Hedge Position

The following table illustrates our derivative positions for 2013, 2014 and
2015 as of May 6, 2013:

     Fixed-Price Swaps
     NYMEX (except where noted)
     Natural Gas           Oil
     Daily                 Daily
                   Swap                    Swap
     Volume                Volume
                   Price                   Price
     (MMBtus/d)            (Bbls/d)
2013 10,000        $4.000   2,000**     $92.35
2013  10,000*     4.050   1,000           92.80
2013  20,000**  4.450    2,000***  94.05
2013 10,000        5.270   1,000           94.45
2013 10,000        5.320   1,000           94.60
2013                       1,000           97.15
2013                       1,000           101.53
2013                       1,000           103.00
2013                       1,000           103.15
2013                       1,000           104.25
2013                       1,000           104.47
2013                       1,000           104.50
2013                        1,000†        107.30
2014 10,000        4.000   1,000           90.06
2014 10,000        4.040   1,000           93.55
2014 10,000        4.105   1,000           94.00
2014 10,000        4.190   1,000           98.00
2014 10,000        4.250   1,000           98.30
2014 10,000        4.350   1,000           99.65
2014                        1,000†        103.30
2015 10,000        4.005   1,000           90.00
2015 10,000        4.220
2015 10,000        4.255
* April - December
** July - December
*** January - June
† Brent oil contract



Other Information

Stone Energy has planned a conference call for 10:00 a.m. Central Time on
Tuesday, May 7, 2013 to discuss the operational and financial results for the
first quarter of 2013. 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.

In addition, as previously announced, Stone Energy will hold its 2013 Annual
Meeting of Stockholders on Thursday, May 23, 2013, at 10:00 a.m. Central Time
at the Windsor Court Hotel, 300 Gravier Street, New Orleans, Louisiana. The
Company proposes to elect ten directors, to ratify the appointment of Ernst &
Young LLP as the Company's independent public accounting firm for the fiscal
year ending December 31, 2013, to have a non-binding advisory vote on the
compensation of the named executive officers (say on pay), and to transact
such other business as may properly come before the meeting. The close of
business on March 25, 2013 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 a non-GAAP financial measure we call
"discretionary cash flow." 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. Please see the "Reconciliation of Non-GAAP
Financial Measure" for a reconciliation of discretionary cash flow to cash
flow provided by 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 the timing and extent 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 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. Our business strategy is to
leverage cash flow generated from existing assets to maintain relatively
stable GOM shelf production, profitably grow gas reserves and production in
price-advantaged basins such as Appalachia and the Gulf Coast Basin, and
profitably grow oil reserves and production in material impact areas such as
the deep water GOM and onshore oil. For additional information, contact
Kenneth H. Beer, Chief Financial Officer, at 337-521-2210 phone, 337-521-2072
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,
                                                           2013      2012
FINANCIAL RESULTS
 Net income                                         $40,758   $50,974
 Net income per share                               $0.82     $1.04
PRODUCTION QUANTITIES
 Oil (MBbls)                                        1,667     1,862
 Gas (MMcf)                                         10,358    9,994
 Natural gas liquids (MBbls)                        216       200
 Oil, gas and NGLs (MBoe)                           3,609     3,728
 Oil, gas and NGLs (MMcfe)                          21,656    22,366
AVERAGE DAILY PRODUCTION
 Oil (MBbls)                                        18.5      20.5
 Gas (MMcf)                                         115.1     109.8
 Natural gas liquids (MBbls)                        2.4       2.2
 Oil, gas and NGLs (MBoe)                           40.1      41.0
 Oil, gas and NGLs (MMcfe)                          240.6     245.8
REVENUE DATA
 Oil revenue                                        $186,925  $201,758
 Gas revenue                                        36,822    28,857
 Natural gas liquids revenue                        9,178     13,452
 Total oil, gas and NGL revenue                     $232,925  $244,067
AVERAGE PRICES
Prior to the cash settlement of effective hedging
transactions:
 Oil (per Bbl)                                      $109.41   $111.49
 Gas (per Mcf)                                      3.17      2.41
 Natural gas liquids (per Bbl)                      42.49     67.26
 Oil, gas and NGLs (per Boe)                        62.18     65.74
 Oil, gas and NGLs (per Mcfe)                       10.36     10.96
Including the cash settlement of effective hedging
transactions:
 Oil (per Bbl)                                      $112.13   $108.36
 Gas (per Mcf)                                      3.55      2.89
 Natural gas liquids (per Bbl)                      42.49     67.26
 Oil, gas and NGLs (per Boe)                        64.54     65.47
 Oil, gas and NGLs (per Mcfe)                       10.76     10.91
COST DATA
 Lease operating expenses                           $53,044   $44,480
 Salaries, general and administrative expenses      13,952    13,705
 DD&A expense on oil and gas properties             74,532    83,824
AVERAGE COSTS
 Lease operating expenses (per Boe)                 $14.70    $11.93
 Lease operating expenses (per Mcfe)                2.45      1.99
 Salaries, general and administrative expenses (per 3.87      3.68
Boe)
 Salaries, general and administrative expenses (per 0.64      0.61
Mcfe)
 DD&A expense on oil and gas properties (per Boe)   20.65     22.48
 DD&A expense on oil and gas properties (per Mcfe)  3.44      3.75
AVERAGE SHARES OUTSTANDING – Diluted                       48,657    48,299



STONE ENERGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
                                                       Three Months Ended

                                                       March 31,
                                                       2013      2012
 Operating revenue:
  Oil production                                 $186,925  $201,758
  Gas production                                 36,822    28,857
  Natural gas liquids production                 9,178     13,452
  Other operational income                       807       890
  Total operating revenue            233,732   244,957
  Operating expenses:
  Lease operating expenses                       53,044    44,480
  Transportation, processing and gathering       5,397     3,657
  Other operational expense                      72        42
  Production taxes                               2,089     3,378
  Depreciation, depletion and amortization       75,435    84,575
  Accretion expense                              8,263     8,266
  Salaries, general and administrative expenses  13,952    13,705
  Incentive compensation expense                 1,431     1,442
  Derivative expenses, net                       1,221     485
  Total operating expenses           160,904   160,030
  Income from operations                            72,828    84,927
 Other (income) expenses:
  Interest expense                               9,635     5,731
  Interest income                                (117)     (31)
  Other income                                   (726)     (420)
 Total other expenses                8,792     5,280
  Income before taxes                               64,036    79,647
  Provision for income taxes:
  Current                                        (3,746)   1,234
  Deferred                                       27,024    27,439
 Total income taxes                  23,278    28,673
 Net income                                         $40,758   $50,974



STONE ENERGY CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(In thousands)
(Unaudited)
                                            Three Months Ended

                                            March 31,
                                            2013      2012
Net income as reported                      $40,758   $50,974
Reconciling items:
Depreciation, depletion and amortization    75,435    84,575
Deferred income tax provision               27,024    27,439
Accretion expense                           8,263     8,266
Stock compensation expense                  2,296     1,750
Non-cash interest expense                   4,041     1,573
Other                                       1,281     495
Discretionary cash flow                     159,098   175,072
Changes in income taxes payable             (9,402)   (2,647)
Settlement of asset retirement obligations  (14,880)  (2,980)
Other working capital changes               11,950    (50,513)
Net cash provided by operating activities   $146,766  $118,932



STONE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
                                                     March 31,    December 31,
                                                     2013         2012
Assets
Current assets:
 Cash and cash equivalents                   $261,353     $279,526
 Accounts receivable                         147,336      167,288
 Fair value of hedging contracts             18,712       39,655
 Current income tax receivable               19,533       10,027
 Deferred taxes                              23,354       15,514
 Inventory                                   4,027        4,207
 Other current assets                        3,587        3,626
Total current assets                   477,902      519,843
Oil and gas properties, full cost method of
accounting:
Proved                                              7,358,370    7,244,466
Less: accumulated depreciation, depletion and        (5,584,698)  (5,510,166)
amortization
Net proved oil and gas properties                    1,773,672    1,734,300
Unevaluated                                         471,457      447,795
Other property and equipment, net                    22,059       22,115
Fair value of hedging contracts                      6,792        9,199
Other assets, net                                    50,512       43,179
 Total assets                                $2,802,394   $2,776,431
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable to vendors                 $81,491      $94,361
 Undistributed oil and gas proceeds          28,904       23,414
 Accrued interest                            15,351       18,546
 Fair value of hedging contracts             5,376        149
 Asset retirement obligations                68,978       66,260
 Other current liabilities                   5,840        16,765
 Total current  liabilities            205,940      219,495
8⅝% Senior Notes due 2017                            375,000      375,000
7½% Senior Notes due 2022                            300,000      300,000
1¾% Senior Convertible Notes due 2017                242,267      239,126
Deferred taxes                                       336,108      310,830
Asset retirement obligations                         412,706      422,042
Fair value of hedging contracts                      2,997        1,530
Other long-term liabilities                          33,853       36,275
Total liabilities                            1,908,871    1,904,298
Common stock                                         487          484
Treasury stock                                       (860)        (860)
Additional paid-in capital                           1,385,445    1,386,475
Accumulated deficit                                  (502,041)    (542,799)
Accumulated other comprehensive income               10,492       28,833
 Total stockholders' equity                  893,523      872,133
 Total liabilities and stockholders' equity  $2,802,394   $2,776,431

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SOURCE Stone Energy Corporation

Website: http://www.stoneenergy.com