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Stone Energy: View for '16, Update on 4Q15 Production Outlook

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Stone Energy CorporationSGY provided the latest capital expenditure budget as well as drilling and production operations outlook for 2016. The company also updated fourth-quarter and full-year 2015 production guidance.

An initial 2016 capital expenditure budget of $200 million has been authorized by Stone's Board of Directors. Of the total, about 80-85% has been assigned to the Gulf of Mexico (GoM) basin, 3-5% to Appalachia and 10-15% for abandonment expenditures. Capex for 2016 is down 56.5-57.4% from $460-$470 million estimated for 2015.

Per the budget, three development wells are to be drilled in the GoM using a platform rig, which has been fitted onto the Pompano platform.

The ENSCO 8503 deep water drilling rig recently finished completion operations and a well test at the Amethyst well. The well is projected to start production by Jan 2016, with an expected initial production rate of about 40-60 million cubic feet of gas equivalent per day (Mmcfepd) after clean up.

Further, Stone expects to use the ENSCO 8503 rig to drill and complete the Cardona #7 development well in the first quarter of 2016. Thereafter, the company intends to pursue a potential farm out of the rig or the drilling of either the Lamprey prospect or the Derbio prospect.

Stone also installed and mobilized an H&P platform drilling rig on its Pompano platform to commence a development drilling program comprising one workover project and three to four development wells during the fourth quarter. Drilling operations at the deep water Vernaccia exploration prospect were concluded in Nov 2015.

The updated fourth-quarter production forecast, after accounting for unplanned third party pipeline downtime at Pompano and the Mary field curtailment, is estimated at 23-24 million barrels of oil equivalent per day (Mboepd) or 138-144 Mmcfepd. The full-year guidance is of about 39 Mboepd or 234 Mmcfepd.

Stone Energy carries a Zacks Rank #4 (Sell). Some better-ranked players from the energy sector are Energy Transfer Equity, L.P. ETE , ReneSola Ltd. SOL and Boardwalk Pipeline Partners, LP BWP . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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STONE ENERGY CP (SGY): Free Stock Analysis Report

RENESOLA LT-ADR (SOL): Free Stock Analysis Report

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BOARDWALK PIPLN (BWP): Free Stock Analysis Report

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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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