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Stone Energy Gains 8% on Production and Drilling Update - Analyst Blog

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Stone Energy CorporationSGY has released its drilling and production update. The company's share price rose nearly 8% post announcement.

The company reported that operations at the Cardona #6 development well, located in Mississippi Canyon block 29 in the deepwaters of Gulf of Mexico has been progressing ahead of schedule and below budget. The drilling through the targeted zones at the Cardona #6 has been concluded as well.

Like Cardona #5, which hit a net pay of 275 feet, the Cardona #6 development well encountered about 288 feet of net pay in two intervals. Examination of the logging and pressure data established the presence of oil in the pay zones.

The well has been successfully cased and covered across all productive zones. Further, the subsea tree has been set up and currently, closure operations have been initiated. The well will be secured against its existing Cardona subsea infrastructure, which flows into its Pompano platform. The gross production from Cardona #6 is estimated to attain the level of about 5,000 barrels of oil equivalent (Boe) per day (65% working interest) from the lower completion by late September. On the other hand, upper completion is anticipated to have the same production rate and will be accessed later by hydraulically shifting sleeves between the upper and lower completions.

On completion of the drilling and production at Cardona #6 well, the ENSCO 8503 deepwater drilling rig will freed up for about 60 days. During this period the rig will receive the assigned maintenance and will be equipped with mooring capabilities. Thereafter, the rig will be moved to Mississippi Canyon block 26 to complete work on the Amethyst discovery (100% working interest). Amethyst will also be tied back to the Pompano platform, similar to Cardona #6. First yield from the Amethyst is scheduled for early first quarter of 2016. Subsequent to the completion of the Amethyst, the rig is presently intended to drill the Cardona #7 development well and the Lamprey deep water exploration prospect.

Production for the second quarter is projected to be at or above the higher end of the earlier guidance range of 246-258 million cubic feet equivalent (Mmcfe) per day. The increase in projection is mainly due to lower scheduled third-party pipeline downtime in the GOM deepwater and flatter-than-expected production declines in Appalachia. Further upward adjustments in Appalachian production may be recognized in the second-quarter 2015 earnings results, following participation elections by Stone's operating partners.

Stone Energy currently holds a Zacks Rank #2 (Buy). Other favorably-priced stocks from the same space are Transmontaigne Partners L.P. TLP , EQT Midstream Partners L.P. EQM and LRR Energy, L.P. LRE . All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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