Stone Energy Corp.
) has reported third-quarter 2012 earnings of 48 cents per share,
which missed the Zacks Consensus Estimate of 52 cents due to
lower price realization and higher operating expenses. The
quarterly earnings were also down 54.7% from the year-earlier
profit of $1.06 per share.
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Total operating revenue increased 6% year over year to $227.4
million in the quarter from $214.6 million and beat the Zacks
Consensus Estimate of $219.0 million.
During the quarter, production averaged 251 million cubic feet of
gas equivalent per day (MMcfe/d), up 17.8% from the year-earlier
level of 213 MMcfe/d. Of the total production, natural gas
accounted for nearly 46% while 45% was oil and the remaining 9%
natural gas liquids (NGL).
Overall realization on a per Mcfe basis amounted to $9.82 in the
reported quarter versus $10.70 per Mcfe in third quarter 2011.
Natural gas prices were down at $3.20 per Mcf from $4.48 per Mcf
in the year-ago quarter, while oil price stood at $104.15 per
barrel (up 0.6% on an annualized basis). Natural gas liquids
prices also decreased 42.6% from the year-ago quarter to $34.93
On the cost front, unit lease operating expenses increased to
$2.64 per Mcfe (versus $2.38 per Mcfe in the year-ago quarter).
Depreciation, depletion and amortization was $3.83 per Mcfe
(versus $3.26 per Mcfe), while salaries, general and
administrative (SG&A) expenses came in at 59 cents per Mcfe
(versus 37 cents per Mcfe).
At quarter end, the company had approximately $176.2 million in
cash and $811.0 million in long-term debt, with a
debt-to-capitalization ratio of 49.5% versus 49.3% in the
preceding quarter. Discretionary cash flow was down 10.8% year
over year to $142.8 million.
For the upcoming quarter, the company expects net daily
production of 255−270 MMcfe. For full-year 2012, the company
anticipates total volume in the range of 250-255 MMcfe per day,
up 17-19% from the 2011 level of 214 MMcfe/d.
The company has maintained its capital outlay projection for the
year at $625 million. Earlier, the amount was distributed across
Stone's foremost areas with approximately 34% for the Gulf of
Mexico (GoM) conventional shelf, 24% for Deep Water/Deep Gas
projects, 30% for the Marcellus Shale and 12% for Onshore Oil
projects and new ventures.
Lafayette, Louisiana-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 GoM.
Currently, Stone Energy is well placed in the industry with
widespread high yielding inventory. The company boasts an
extensive capital project inventory and is generating surplus
cash flow with no bank debt. Although Stone Energy aims to
apportion the capital across its portfolio, the focus will be on
the GoM shelf as well as the Marcellus region.
During the quarter, Stone Energy inked a joint venture deal with
) for exploration of four deepwater prospects in GoM. The company
also commissioned the deep gas La Cantera #2 delineation well and
completed 21 wells in Mary and Heather fields in the Marcellus
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.
Hence, we maintain our long-term Neutral recommendation for the
company, which carries a Zacks #3 Rank, equivalent to a
short-term Hold rating.