Independent energy firm, Stone Energy CorporationSGY has reported its updated production and operational data.
Per the report, Stone Energy has shut-in one of its Appalachian basin fields - Mary, mainly due to the low commodity price environment. Other factors attributable for the shut-in include negative differentials in the region as well as transportation, processing and gathering fees that decreased operating margins to an unacceptable level.
The Mary field shut-in has reduced production by about 100-110 million cubic feet equivalent (Mmcfe) per day. The company now has to depend mainly on production from other Appalachian basin fields - Heather and Buddy - that yield about 25 Mmcfe per day.
The production for the first two months of third-quarter 2015 has been better than expected. However, production for the quarter is now expected to be below the earlier projected range of 39-41 thousand barrels of oil equivalent (Mboe) per day, or 234-246 Mmcfe per day. As a result, the company has revised its production guidance to 37.5-38.5 Mboe per day, or 225-231 Mmcfe per day.
If the Mary field continues to be shut-in for long, the company would have to readjust its annual guidance of 42-44 Mboe per day, or 252-264 Mmcfe per day, to account for the lower volumes. The curtailed volumes, however, will not have a significant impact on the company's cash flow in the third quarter given the low margins in Appalachia. Notably, Gulf of Mexico volumes have higher margins as the downtime in the region was minimal so far in the third quarter.
Per the update, scheduled maintenance has been completed on the ENSCO 8503 deepwater drilling rig and it has now been equipped with mooring capabilities. The company anticipates rig operations to be restarted before Oct 1, 2015. Thereafter, the rig will be transferred to Mississippi Canyon block 26 to complete work on the Amethyst discovery (100% working interest).
The company also reported that Amethyst will be tied back to the Pompano platform. The development is projected to yield by early first-quarter 2016. Per current estimations, after work on Amethyst has been completed, the rig will be used to drill the Cardona #7 development well. Following that, the rig will be put to work at the Lamprey and Derbio deep water exploration prospects.
Eni SpA E operated Vernaccia exploration well is likely to be drilled by early Oct 2015. Following a partial sale down of its position recently, Stone now holds about 4% working interest in the drilling cost of the well, which targets the Miocene interval in a four-way structure. Stone will also have about 22% working interest ownership in the Vernaccia exploration well. The drilling of the well is projected to take three months.