Stone Energy Corporation Announces First Quarter 2014 Results

        Stone Energy Corporation Announces First Quarter 2014 Results

PR Newswire

LAFAYETTE, La., May 5, 2014

LAFAYETTE, La., May 5, 2014 /PRNewswire/ --Stone Energy Corporation (NYSE:
SGY) today announced financial and operational results for the first quarter
of 2014. Some of the highlights include:

  oNet income of $25.9 million or $0.52 per share
  oProduction volumes at the upper end of first quarter guidance
  oDevelopment drilling success at the Cardona South and Cardona wells in the
    Pompano field
  oDiscovery at the Amethyst deep water exploration prospect
  oDiscovery at the Tomcat deep gas prospect

Chairman, President and Chief Executive Officer David Welch stated, "We have
started the year with four successful discovery wells which provide us with
short and intermediate term production visibility. We expect Tomcat to
commence production this June, the Cardona and Cardona South volumes to
commence production by the first quarter of 2015 and Amethyst to come on line
in 2016. Separately, the Mica Deep exploration well has reached total depth
without encountering commercial hydrocarbons. However, importantly, we have a
multi-year inventory of deep water and deep gas prospects to provide us with
future exploration exposure. In Appalachia, we look forward to spudding our
first Utica shale exploration well later this June with testing expected later
in the year. Finally, volumes from our Marcellus shale wells are expected to
grow to over 100 MMcfe per day in the second half of the year. Overall, it has
been an excellent start to 2014."

Financial Results

For the first quarter of 2014, Stone reported net income of $25.9 million, or
$0.52 per share, on oil and gas revenue of $222.6 million, compared to net
income of $40.8 million, or $0.82 per share, on oil and gas revenue of $232.9
million in the first quarter of 2013. Discretionary cash flow totaled $138.0
million during the first quarter of 2014, as compared to $159.1 million during
the first quarter of 2013. 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.

Net daily production during the first quarter of 2014 averaged 44.8 thousand
barrels of oil equivalent (MBoe) per day (269 million cubic feet of gas
equivalent (MMcfe) per day), compared with daily production of 50.0 MBoe (298
MMcfe) per day in the fourth quarter of 2013, and daily production of 40.1
MBoe (241 MMcfe) per day in the first quarter of 2013. First quarter of 2014
production was negatively impacted by the sale of some onshore properties in
January 2014 and the fourth quarter 2013, weather-related logistical issues in
Appalachia and extended downtime at Main Pass 288. First quarter of 2014
production mix was 35% oil, 13% natural gas liquids (NGL) and 52% natural
gas.

Prices realized during the first quarter of 2014 averaged $97.52 per barrel of
oil, $54.84 per barrel of NGLs and $4.46 per Mcf of natural gas. Average
realized prices for the first quarter of 2013 were $112.13 per barrel of oil,
$42.49 per barrel of NGLs and $3.55 per Mcf of natural gas. Effective hedging
transactions decreased the average realized price of natural gas by $0.36 per
Mcf and decreased the average realized price of oil by $1.75 per barrel in the
first quarter of 2014. 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.

Lease operating expenses during the first quarter of 2014 totaled $46.9
million ($11.62 per Boe or $1.94 per Mcfe), compared to $53.0 million ($14.70
per Boe or $2.45 per Mcfe), in the first quarter of 2013.

Depreciation, depletion and amortization (DD&A) on oil and gas properties for
the first quarter of 2014 totaled $81.8 million ($20.27 per Boe or $3.38 per
Mcfe), compared to $74.5 million ($20.65 per Boe or $3.44 per Mcfe), in the
first quarter of 2013.

Salaries, general and administrative (SG&A) expenses for the first quarter of
2014 were $16.3 million ($4.05 per Boe or $0.67 per Mcfe), compared to $14.0
million ($3.87 per Boe or $0.64 per Mcfe), in the first quarter of 2013.

Capital expenditures before capitalized SG&A and interest during the first
quarter of 2014 were approximately $254.1 million, which includes $9.8 million
of plugging and abandonment expenditures. Additionally, $7.7 million of SG&A
expenses and $12.8 million of interest were capitalized during the first
quarter of 2014. In addition, in the first quarter of 2014, Stone received
$54.5 million in proceeds from the sale of some onshore properties. This is
compared to capital expenditures before capitalized SG&A and interest during
the first quarter of 2013 of 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, 2014 and May 5, 2014, we had no outstanding borrowings under
our bank credit facility. Stone had letters of credit totaling $21.4 million,
resulting in $378.6 million available for borrowing under our bank credit
facility based on a borrowing base of $400 million.

Operational Update

Mississippi Canyon 29 – Cardona South (Deep Water). The Cardona South well
(MC 29 #5 well) encountered over 275 feet of net oil pay in three separate
sections of the well. The Cardona South success extends the productive zone
of the Mississippi Canyon 29 TB-9 well to the adjacent fault block to the
south and sets up a potential second and third well in the fault block. Plans
are to flow the Cardona South well and the previously announced Cardona
discovery to the Stone owned and operated Pompano platform with first
production expected in early 2015. Stone holds a 65% working interest in the
project and is the operator.

Mississippi Canyon 29 – Cardona (Deep Water). The Cardona well (MC 29 #4
well) was estimated to have approximately 84 feet of net pay upon initial
discovery. After further evaluation of the discovery, the estimated pay zone
is now expected to be approximately 96 feet, although the deeper exploration
target was deemed non-commercial. The Cardona success extends the productive
zone in Stone's Mississippi Canyon 29 TB-9 well to the adjacent fault block to
the north. Plans are to flow the Cardona and the Cardona South wells to the
Stone owned and operated Pompano platform with first production expected in
early 2015. Stone holds a 65% working interest in the project and is the
operator.

Mississippi Canyon 211 - Mica Deep (Deep Water).The Mica Deep exploration
well has reached total depth without encountering commercial hydrocarbons.
Stone holds a 50% working interest in the prospect.

Mississippi Canyon 26 – Amethyst (Deep Water). The Amethyst exploration well
(100% working interest) encountered approximately 90 feet of net hydrocarbon
pay in one interval which suggests acommercial discovery. Analysis of
logging, coring and fluid data confirmed the existence of natural gas,
condensate and natural gas liquids in the pay zone (an estimated yield of
60-80 barrels of liquids per million cubic foot of natural gas). The interval
has been placed safely behind pipe for a future completion. A full
evaluation, including seismic and subsurface data integration, is needed
before hydrocarbon quantities can be estimated and a specific development plan
is sanctioned. A single or multi-well tie-back to Stone's 100 percent owned
and operated Pompano platform, located less than five miles from the
discovery, is a likely development option. 

Amberjack Development Drilling Program. Stone expects to secure a platform
rig for its Amberjack (Mississippi Canyon 109) drill program. It is
anticipated that the rig will become available in the fourth quarter of 2014.
The program is expected to consist of four to six development wells.

Pompano Development Drilling Program. Stone expects to secure a platform rig
for its Pompano (Viosca Knoll 989) drill program. It is anticipated that the
rig will become available by mid-2015. The program is expected to consist of
four to five development wells.

Walker Ridge89 -Goodfellow(Deep Water).TheGoodfellowexploration well
targets the Lower Tertiary and is projected to spud in late 2014. Stone
currently holds an approximate 13% working interest in the prospect, which is
operated by Eni. The well is estimated to take five months to drill.

Mississippi Canyon 118 -Harrier(Deep Water).TheHarrierexploration well
targets the Miocene interval and is projected to spud in late 2014 or early
2015. Stone currently holds an approximate 37% working interest in the
prospect, which is operated by ConocoPhillips. The well is estimated to take
four months to drill.

West Cameron 176 - Tomcat (Deep Gas).The Tomcat exploration well (100%
working interest) encountered approximately 30 feet of net hydrocarbon pay in
the Camerina interval. Based on well log analysis, combined with offset
Camerina production history, we believe that the zone may produce liquids rich
natural gas with approximately 40-60 barrels of condensate per Mcf of natural
gas as well as additional natural gas liquids volumes. The well is currently
being tied back to the nearby Stone operated East Cameron 64 production
platform with production estimated to commence in June 2014.

Cayenne (Deep Gas).The Cayenne exploration well, located in Iberia parish,
is expected to spud in late 2014 or the first half of 2015. Stone holds a
50% working interest in the project and is also the operator. The well is
estimated to take three months to drill.

Appalachian Basin-Marcellus Shale(Drilling Program Update). Stone drilled
nine Marcellus shale wells and began completions on 14 wells during the first
quarter of 2014. By year-end 2014, Stone expects to drill 28 to 32 wells and
to complete 30 to 34 wells in the Marcellus shale.

Appalachian Basin-Marcellus Shale(Production Update). During the first
quarter of 2014, Stone averaged approximately 87 MMcfe per day (62 MMcf per
day of gas and 4,200 barrels per day of liquids) from Stone's Marcellus shale
position. During the first quarter of 2014, two wells in the Heather field
were brought online. Stone expects to bring an additional four wells in the
Heather field online during the second quarter of 2014. Additionally, it is
projected that 18 new wells in the Mary field will be brought on production in
third quarter of 2014.

Appalachian Basin – Utica Shale Test. Stone expects to spud a Utica shale
test well late in the second quarter of 2014 on its existing acreage in the
Mary Field in West Virginia with the completion and testing expected later in
the year.

2014 Guidance

Guidance for the second quarter and full year 2014 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
                                                                   43.5 -   43 -
Production - MBoe per day                                          45.5     47

 (MMcfe per day)                                 (261 -   (258
                                                                   273)     - 282)
Lease operating expenses (in millions)                                     $195 -
                                                                   -        $210
(excluding transportation/processing expenses)
                                                                            
Transportation, processing and gathering (in millions)                      $56 -
                                                                            $68
Salaries, General & Administrative expenses (in millions)          -        $65 -
                                                                            $69
(excluding incentive compensation)


                                                                            $21.00
Depreciation, Depletion & Amortization (per MBoe)                  -        -
                                                                            $22.50
(per          $3.50
Mcfe)                                                                       -
                                                                            $3.75
Corporate Tax Rate (%)                                             -        36% -
                                                                            38%
Capital Expenditure Budget (in millions)                           -        $825
 (excluding acquisitions)



Hedge Position

The following table illustrates our derivative positions for 2014, 2015 and
2016 as of May 5, 2014:

     Fixed-Price Swaps
     NYMEX (except where noted)
     Natural Gas         Oil
     Daily              Daily     

     Volume      Swap    Volume    Swap

     (MMBtus/d)  Price   (Bbls/d)  Price
2014 10,000      $4.000  1,000     $90.06
2014 10,000      4.040   1,000**   90.25
2014 10,000      4.105   1,000     92.25
2014 10,000      4.190   1,000     93.55
2014 10,000*     4.250   1,000     94.00
2014 10,000      4.250   1,000     98.00
2014 10,000      4.350   1,000     98.30
2014                     2,000***  98.85
2014                     1,000     99.65
2014                     1,000†    103.30
2015 10,000      4.005   1,000     89.00
2015 10,000      4.120   1,000     90.00
2015 10,000      4.150   1,000     90.25
2015 10,000      4.165   1,000     90.40
2015 10,000      4.220
2015 10,000      4.255
2016 10,000      4.110
2016 10,000      4.120



*   February - December
**  October - December
*** January - June
†   Brent oil contract

Other Information

Stone Energy has planned a conference call for 9:00 a.m. Central Time on
Tuesday, May 6, 2014 to discuss the operational and financial results for the
first quarter of 2014. 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.

Separately, Stone Energy will host an analyst and investor day on Tuesday, May
20, 2014 for analysts and institutional investors at the Windsor Court Hotel
in New Orleans, LA. The Stone management team will provide an update and
information on Stone Energy's core development and exploration projects, will
discuss growth plans and opportunities, and will review financial results from
8:00 a.m. until 1:00 p.m. on May 20^th. The presentation will also be
available via a live webcast. If you are an equity analyst or institutional
investor and would like to attend the Stone Energy Investor Day please click
on the following link and fill out the registration form
http://www.stoneenergy.com/links/eventRegistration.aspx. For additional
information please contact Sheri Bienvenue – Executive Assistant at (337)
521-0237 or BienvenueSL@StoneEnergy.com.

Stone Energywill hold its 2014 Annual Meeting of Stockholders onThursday,
May 22, 2014, at10:00 a.m. Central Timeat the Stone Energy New Orleans
office at1100 Poydras Street, Suite 1050,New Orleans, Louisiana. The
Company proposes to elect ten directors, to ratify the appointment ofErnst &
Young LLPas the Company's independent public accounting firm for the fiscal
year endingDecember 31, 2014, 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 onMarch 26, 2014has 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 Energyis an independent oil and natural gas exploration and production
company headquartered inLafayette, Louisianawith additional offices inNew
Orleans, Houston and Morgantown, West Virginia. Stone is engaged in the
acquisition, exploration, and development of properties in the Deep Water Gulf
of Mexico, Appalachia, and the onshore and offshore Gulf Coast.For additional
information, contactKenneth H. Beer, Chief Financial Officer, at 337-521-2210
phone, 337-521-9880 fax or via e-mail atCFO@StoneEnergy.com.

STONE ENERGY CORPORATION
SUMMARY STATISTICS
(In thousands, except per share/unit amounts)
(Unaudited)
                                                           Three Months Ended

                                                           March 31,
                                                           2014      2013
FINANCIAL RESULTS
 Net income                                         $25,943   $40,758
 Net income per share                               $0.52     $0.82
PRODUCTION QUANTITIES
 Oil (MBbls)                                        1,418     1,667
 Gas (MMcf)                                         12,641    10,358
 Natural gas liquids (MBbls)                        510       216
 Oil, gas and NGLs (MBoe)                           4,035     3,609
 Oil, gas and NGLs (MMcfe)                          24,209    21,656
AVERAGE DAILY PRODUCTION
 Oil (MBbls)                                        15.8      18.5
 Gas (MMcf)                                         140.5     115.1
 Natural gas liquids (MBbls)                        5.7       2.4
 Oil, gas and NGLs (MBoe)                           44.8      40.1
 Oil, gas and NGLs (MMcfe)                          269.0     240.6
REVENUE DATA
 Oil revenue                                        $138,289  $186,925
 Gas revenue                                        56,362    36,822
 Natural gas liquids revenue                        27,970    9,178
 Total oil, gas and NGL revenue                     $222,621  $232,925
AVERAGE PRICES
Prior to the cash settlement of effective hedging
transactions:
 Oil (per Bbl)                                      $99.27    $109.41
 Gas (per Mcf)                                      4.82      3.17
 Natural gas liquids (per Bbl)                      54.84     42.49
 Oil, gas and NGLs (per Boe)                        56.93     62.18
 Oil, gas and NGLs (per Mcfe)                       9.49      10.36
Including the cash settlement of effective hedging
transactions:
 Oil (per Bbl)                                      $97.52    $112.13
 Gas (per Mcf)                                      4.46      3.55
 Natural gas liquids (per Bbl)                      54.84     42.49
 Oil, gas and NGLs (per Boe)                        55.17     64.54
 Oil, gas and NGLs (per Mcfe)                       9.20      10.76
COST DATA
 Lease operating expenses                           $46,903   $53,044
 Salaries, general and administrative expenses      16,329    13,952
 DD&A expense on oil and gas properties             81,788    74,532
AVERAGE COSTS
 Lease operating expenses (per Boe)                 $11.62    $14.70
 Lease operating expenses (per Mcfe)                1.94      2.45
 Salaries, general and administrative expenses (per 4.05      3.87
Boe)
 Salaries, general and administrative expenses (per 0.67      0.64
Mcfe)
 DD&A expense on oil and gas properties (per Boe)   20.27     20.65
 DD&A expense on oil and gas properties (per Mcfe)  3.38      3.44
AVERAGE SHARES OUTSTANDING – Diluted                       49,062    48,657



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

                                                       March 31,
                                                       2014      2013
 Operating revenue:
  Oil production                                 $138,289  $186,925
  Gas production                                 56,362    36,822
  Natural gas liquids production                 27,970    9,178
  Other operational income                       1,209     807
  Total operating revenue            223,830   233,732
  Operating expenses:
  Lease operating expenses                       46,903    53,044
  Transportation, processing and gathering       14,626    5,397
  Other operational expense                      424       72
  Production taxes                               3,062     2,089
  Depreciation, depletion and amortization       82,646    75,435
  Accretion expense                              7,555     8,263
  Salaries, general and administrative expenses  16,329    13,952
  Incentive compensation expense                 3,134     1,431
  Derivative expenses, net                       599       1,221
  Total operating expenses           175,278   160,904
  Income from operations                            48,552    72,828
 Other (income) expenses:
  Interest expense                               8,357     9,635
  Interest income                                (143)     (117)
  Other income                                   (707)     (726)
 Total other expenses                7,507     8,792
  Income before taxes                               41,045    64,036
  Provision for income taxes:
  Current                                        -         (3,746)
  Deferred                                       15,102    27,024
 Total income taxes                  15,102    23,278
 Net income                                         $25,943   $40,758



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

                                            March 31,
                                            2014      2013
Net income as reported                      $25,943   $40,758
Reconciling items:
Depreciation, depletion and amortization    82,646    75,435
Deferred income tax provision               15,102    27,024
Accretion expense                           7,555     8,263
Stock compensation expense                  2,247     2,296
Non-cash interest expense                   4,070     4,041
Other                                       448       1,281
Discretionary cash flow                     138,011   159,098
Changes in income taxes payable             -         (9,402)
Settlement of asset retirement obligations  (9,842)   (14,880)
Other working capital changes               (12,697)  11,950
Net cash provided by operating activities   $115,472  $146,766



STONE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
                                                                                                              March 31,    December
                                                                                                                           31,
                                                                                                              2014         2013
Assets
Current assets:
 Cash and cash equivalents                                                                            $202,761     $331,224
 Accounts receivable                                                                                  190,573      171,971
 Fair value of hedging contracts                                                                      745          4,549
 Current income tax receivable                                                                        7,366        7,366
 Deferred taxes                                                                                       36,098       31,710
 Inventory                                                                                            4,651        3,723
 Other current assets                                                                                 1,774        1,874
Total current assets                                                                            443,968      552,417
Oil and gas properties, full cost method of accounting:
Proved                                                                                                        7,898,668    7,804,117
Less: accumulated depreciation, depletion and                                                                 (6,052,894)  (5,908,760)
amortization
Net proved oil and gas properties                                                                             1,845,774    1,895,357
Unevaluated                                                                                                   906,043      724,339
Other property and equipment, net                                                                             26,975       26,178
Fair value of hedging contracts                                                                               1,867        1,378
Other assets, net                                                                                             37,154       48,887
 Total assets                                                                                         $3,261,781   $3,248,556


Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable to vendors                                                                          $165,973     $195,677
 Undistributed oil and gas proceeds                                                                   55,676       37,029
 Accrued interest                                                                                     22,247       9,022
 Fair value of hedging contracts                                                                      15,277       7,753
 Asset retirement obligations                                                                         87,927       67,161
 Other current liabilities                                                                            28,467       54,520
 Total current  liabilities                                                                     375,567      371,162
7 1/2% Senior Notes due 2022                                                                                  775,000      775,000
1 3/4% Senior Convertible Notes due 2017                                                                      255,466      252,084
Deferred taxes                                                                                                406,477      390,693
Asset retirement obligations                                                                                  416,171      435,352
Fair value of hedging contracts                                                                               376          470
Other long-term liabilities                                                                                   46,772       53,509
Total liabilities                                                                                     2,275,829    2,278,270
Common stock                                                                                                  491          488
Treasury stock                                                                                                (860)        (860)
Additional paid-in capital                                                                                    1,394,694    1,397,885
Accumulated deficit                                                                                           (399,222)    (425,165)
Accumulated other comprehensive loss                                                                          (9,151)      (2,062)
 Total stockholders' equity                                                                           985,952      970,286
 Total liabilities and stockholders' equity                                                           $3,261,781   $3,248,556



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