Stone Energy Corp.
) posted second-quarter 2014 earnings of 8 cents per share, which
lagged the Zacks Consensus Estimate of 36 cents. The reported
figure also decreased from 78 cents per share earned in the
year-earlier quarter. The decline was due to both lower price
realization and production.
Total operating revenue fell 15.8% year over year to $207 million
in the quarter from approximately $245.9 million. The reported
figure was also short of the Zacks Consensus Estimate of $220
During the quarter, production averaged 264.3 million cubic feet of
gas equivalent per day (MMcfe/d), down 3% from the prior-year
quarter level of 272.4 MMcfe/d. Of the total production, natural
gas accounted for nearly 51%, oil constituted 37% and the remaining
12% was natural gas liquids (NGL).
Overall realization on a per Mcfe basis was $8.52 in the reported
quarter versus $9.82 per Mcfe in second-quarter 2013. Natural gas
price of $3.77 per Mcf was down from $4.07 per Mcf in the year-ago
quarter, while natural gas liquids price came in at $34.12 per
barrel (up 24% on an annualized basis). Oil price, however,
decreased 7.9% from the year-ago quarter to $96.15 per barrel.
On the cost front, unit lease operating expenses decreased to $2.06
per Mcfe (versus $2.04 per Mcfe in the year-ago quarter).
Depreciation, depletion and amortization was $3.82 per Mcfe (versus
$3.48 per Mcfe), while salaries, general and administrative
(SG&A) expenses came in at 69 cents per Mcfe (versus 61 cents
At the quarter-end, Stone Energy had approximately $333.9 million
in cash and $1,033.9 million in long-term debt, with a
debt-to-capitalization ratio of 50.9% versus 51.1% in the preceding
quarter. Discretionary cash flow fell 30.7% year over year to
For the third quarter of 2014, the company expects net daily
production of 222−234 MMcfe. For full-year 2014, it anticipates
total volume in the range of 246−264 MMcfe per day. Stone Energy
expects its capital outlay projection for full-year 2014 to be $825
Lafayette, LA-based Stone Energy is an independent oil and gas
exploration and production company engaged in the acquisition and
subsequent exploration, development, operation and production of
oil and gas properties, located primarily in the Gulf of Mexico
Currently, the company is well positioned in the industry, with
widespread high-yielding inventory. Notably, it boasts an extensive
capital project inventory. Moreover, Stone Energy is generating
surplus cash flow with no bank debt. Although the company aims to
apportion the capital across its portfolio, its focus will be on
the GoM shelf and Marcellus region.
However, as is the case with other independent exploration and
production companies, results for Stone Energy are directly exposed
to oil and gas prices, which are inherently volatile and subject to
complex market forces.
At present, Stone Energy has a Zacks Rank #3 (Hold). Investors
interested in the oil and gas sector could consider stocks like
Weatherford International plc (
), Sasol Ltd. (
) and Cameron International Corp. (
). All of these carry a Zacks Rank #1 (Strong Buy).
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