-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HoDFoUEaTubdg+BfvCLbJrOVwQWfKo6n6gghXRO5qEafG2kmk8GjqZMC0q2rcT5q HNHZS3x3T7VPB9poa4YEkA== 0000904080-99-000008.txt : 19990514 0000904080-99-000008.hdr.sgml : 19990514 ACCESSION NUMBER: 0000904080-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STONE ENERGY CORP CENTRAL INDEX KEY: 0000904080 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721235413 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12074 FILM NUMBER: 99620758 BUSINESS ADDRESS: STREET 1: 625 E KALISTE SALOOM RD CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 3182370410 MAIL ADDRESS: STREET 1: 625 E KALISTLE SALOOM RD CITY: LAFAYETTE STATE: LA ZIP: 70508 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1999 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 1-12074 STONE ENERGY CORPORATION (Exact name of registrant as specified in its charter) Delaware 72-1235413 (State or other jurisdiction (I.R.S. employer of incorporation or organization) identification no.) 625 E. Kaliste Saloom Road 70508 Lafayette, Louisiana (Zip code) (Address of principal executive offices) Registrant's telephone number, including area code: (318) 237-0410 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of May 13, 1999 there were 15,085,408 shares of the Registrant's Common Stock, par value $.01 per share, outstanding. TABLE OF CONTENTS Page PART I Item 1. Financial Statements: Condensed Consolidated Balance Sheet as of March 31, 1999 and December 31, 1998.......... 1 Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 1999 and 1998............................. 2 Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 1999 and 1998............................. 3 Notes to Condensed Consolidated Financial Statements................................ 4 Auditors' Review Report............................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................... 8 PART II Item 5. Other Information...................................... 11 Item 6. Exhibits and Reports on Form 8-K....................... 11 STONE ENERGY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (In thousands)
March 31, December 31, Assets 1999 1998 ------------------------ ---------------------- (Unaudited) Current assets: Cash and cash equivalents.................................... $12,987 $10,550 Marketable securities, at market............................. 17,009 16,853 Accounts receivable.......................................... 19,888 26,803 Other current assets......................................... 52 184 ------------------------ ---------------------- Total current assets....................................... 49,936 54,390 Oil and gas properties, net: Proved....................................................... 290,724 286,098 Unevaluated.................................................. 8,753 7,726 Building and land, net........................................... 3,810 3,559 Fixed assets, net................................................ 1,948 1,336 Other assets, net................................................ 3,363 3,460 Deferred tax asset............................................... 8,877 9,821 ------------------------ ---------------------- Total assets............................................... $367,411 $366,390 ======================== ====================== Liabilities and Stockholders' Equity Current liabilities - accounts payable and accrued liabilities.......................................... $39,897 $44,506 Long-term loans.................................................. 213,913 209,936 Other long-term liabilities...................................... 6,351 6,616 ------------------------ ---------------------- Total liabilities.......................................... 260,161 261,058 ------------------------ ---------------------- Common stock..................................................... 151 151 Additional paid in capital....................................... 119,380 119,208 Retained deficit................................................. (12,281) (14,027) ------------------------ ---------------------- Total stockholders' equity................................. 107,250 105,332 ------------------------ ---------------------- Total liabilities and stockholders' equity $367,411 $366,390 ======================== ======================
STONE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, ------------------------------------------------ 1999 1998 -------------------- --------------------- Revenues Oil and gas production....................................... $30,490 $28,357 Overhead reimbursements and management fees 161 146 Other income................................................. 271 292 -------------------- --------------------- Total revenues............................................. 30,922 28,795 -------------------- --------------------- Expenses Normal lease operating expenses.............................. 4,828 3,597 Major maintenance expenses................................... 100 455 Production taxes............................................. 515 532 Depreciation, depletion and amortization 17,688 15,217 Interest..................................................... 3,814 2,529 Salaries, general and administrative 1,077 1,072 Incentive compensation plan.................................. 210 275 -------------------- --------------------- Total expenses............................................. 28,232 23,677 -------------------- --------------------- Net income before income taxes................................... 2,690 5,118 -------------------- --------------------- Provision for income taxes Current...................................................... - - Deferred..................................................... 944 1,820 -------------------- --------------------- 944 1,820 -------------------- --------------------- Net income....................................................... $1,746 $3,298 ==================== ===================== Earnings per common share (see Note 2): Basic earnings per share..................................... $0.12 $0.22 ==================== ===================== Diluted earnings per share................................... $0.11 $0.22 ==================== ===================== Average shares outstanding................................... 15,078 15,061 ==================== ===================== Average shares outstanding assuming dilution 15,281 15,319 ==================== =====================
STONE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) (Unaudited)
Three Months Ended March 31, ------------------------------------------------ 1999 1998 -------------------- --------------------- Cash flows from operating activities: Net income...................................................... $1,746 $3,298 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 17,688 15,217 Provision for deferred income taxes 944 1,820 -------------------- --------------------- 20,378 20,335 Increase in marketable securities (156) (12,917) Decrease in accounts receivable 6,915 509 Decrease in other current assets 110 106 Increase (decrease) in accrued liabilities (5,040) 3,814 Other................................................. (264) (18) -------------------- --------------------- Net cash provided by operating activities 21,943 11,829 -------------------- --------------------- Cash flows from investing activities: Investment in oil and gas properties........................... (22,592) (48,745) Building additions and renovations............................. (274) - (Increase) decrease in other assets ............................. (790) 1,095 -------------------- --------------------- Net cash used in investing activities (23,656) (47,650) -------------------- --------------------- Cash flows from financing activities: Proceeds from borrowings..................................... 4,000 35,000 Repayment of debt............................................ (22) (21) Deferred financing costs...................................... - (152) Exercise of stock options.................................... 172 228 -------------------- --------------------- Net cash provided by financing activities 4,150 35,055 -------------------- --------------------- Net increase (decrease) in cash and cash equivalents 2,437 (766) Cash and cash equivalents, beginning of period 10,550 10,304 -------------------- --------------------- Cash and cash equivalents, end of period $12,987 $9,538 ==================== ===================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amount capitalized) $6,026 $4,756 Income taxes.............................................. - -
STONE ENERGY CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - INTERIM FINANCIAL STATEMENTS The condensed consolidated financial statements of Stone Energy Corporation (the "Company") at March 31, 1999 and for the three-month period then ended are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. The results of operations for the three-month period ended March 31, 1999 are not necessarily indicative of future financial results. Certain prior year amounts have been reclassified to conform to current year presentation. Note 2 - EARNINGS PER SHARE Basic net income per share of common stock was calculated by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period. Diluted net income per share of common stock was calculated by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period plus the weighted-average number of dilutive stock options granted to outside directors and certain employees which totaled approximately 203,000 shares in the first quarter of 1999 and 258,000 shares in the first quarter of 1998. Options which were considered antidilutive because the exercise price of the options exceeded the average price for the applicable period totaled approximately 7,800 shares and 100 shares during the first quarters of 1999 and 1998, respectively. Note 3 - HEDGING ACTIVITIES In order to reduce its exposure to the possibility of declining oil and gas prices, from time to time the Company hedges with third parties certain of its crude oil and natural gas production in various swap agreement contracts. The crude oil contracts are tied to the price of NYMEX light sweet crude oil futures and are settled monthly based on the differences between contract prices and the average NYMEX prices for that month applied to the related contract volumes. Settlement for gas swap contracts is based on the average closing prices of either the last three days or last full month of trading on the NYMEX for each month of the swap. The Company's forward positions as of May 13, 1999, are summarized as follows:
Oil Gas -------------------------- --------------------------- Average Average MBbls Price Bbtu Price -------- ---------- ---------- ----------- Second quarter, 1999 300.7 $16.43 3,640 $2.195 Third quarter, 1999 340.4 16.34 4,600 2.211 Fourth quarter, 1999 - - 4,600 2.450 First quarter, 2000 - - 4,550 2.528
During the first quarter of 1999, the Company had 38% of its natural gas production hedged at $2.535 per MMBTU. As a result, the Company realized a net hedging gain of $2.4 million, which was recorded in the accompanying condensed consolidated statement of operations as an increase of revenues from oil and gas production. Note 4 - LONG-TERM LOANS In May 1999, the Company's bank group increased the borrowing base under the Company's bank credit facility from $120.0 million to $127.5 million. The borrowing base limitation is based on a borrowing base amount established by the banks for the Company's oil and gas properties. Interest under the revolver is payable quarterly and at March 31, 1999, the weighted-average interest rate of the facility was 6.3% per annum, the total outstanding principal balance was $111.0 million and letters of credit totaling $7.5 million had been issued pursuant to the facility. Note 5 - NEW ACCOUNTING STANDARDS In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 130 establishes standards for the reporting and display of comprehensive income in the financial statements. Comprehensive income is the total of net income and all other non-owner changes in equity. For the quarter ended March 31, 1999 and the year ended December 31, 1998, the Company's only component of comprehensive income was net income. SFAS No. 131 requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. Because the Company operates in a single industry within a single geographic location, the Company does not have separately identifiable segments as defined under SFAS No. 131. SFAS Nos. 130 and 131 became effective and were adopted by the Company during 1998 with no effect on the Company's financial statements, financial position or results of operations. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Statement establishes accounting and reporting standards that require every derivative instrument (including certain derivative instruments embedded in other contracts) to be recorded in the balance sheet as either an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company expects to adopt SFAS No. 133 during the first quarter of 2000. Because of the nature of the Company's only derivative instrument, the Company does not expect that the adoption of SFAS No. 133 will have a material impact on the Company's results of operations. However, the adoption may create volatility in equity through changes in other comprehensive income. AUDITORS' REVIEW REPORT TO THE STOCKHOLDERS OF STONE ENERGY CORPORATION: We have reviewed the accompanying condensed consolidated balance sheet of Stone Energy Corporation (a Delaware corporation) as of March 31, 1999, and the related condensed consolidated statements of operations and cash flows for the three-month periods ended March 31, 1999 and 1998. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Stone Energy Corporation as of December 31, 1998 (not presented herein), and, in our report dated March 2, 1999, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1998, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. ARTHUR ANDERSEN LLP New Orleans, Louisiana May 3, 1999 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Stone Energy Corporation is an independent oil and gas company engaged in the development, exploration, acquisition and operation of oil and gas properties onshore and offshore in the Gulf Coast Basin. The Company and its predecessors have been active in the Gulf Coast Basin since 1973, which gives the Company extensive geophysical, technical and operational expertise in this area. The Company's business strategy is to increase production, cash flow and reserves through the acquisition and development of mature properties located in the Gulf Coast Basin. RESULTS OF OPERATIONS The following table sets forth certain operating information with respect to the oil and gas operations of the Company for the three-month periods ended March 31, 1999 and 1998. Three Months Ended March 31, ------------------------------------- 1999 1998 ------------- --------------- Production: Oil (MBbls)............. 830 638 Gas (MMcf).............. 9,918 7,310 Oil and gas (MMcfe)..... 14,898 11,138 Sales data (in thousands) (a): Total oil sales......... $9,804 $10,285 Total gas sales......... 20,686 18,072 Average sales prices (a): Oil (per Bbl)............ $11.81 $16.12 Gas (per Mcf)............ 2.09 2.47 Per Mcfe................. 2.05 2.55 Average costs (per Mcfe): Normal lease operating expenses (b)........... $0.32 $0.32 Salaries, general and administrative..... 0.07 0.10 Depreciation, depletion and amortization....... 1.17 1.35 (a) Net of the effects of hedging (b) Excludes major maintenance expenses For the first quarter of 1999, the Company reported net income totaling $1.7 million or $0.11 per share, as compared to net income reported for the first quarter of 1998 of $3.3 million, or $0.22 per share. Production volumes of oil and gas during the first quarter of 1999, compared to the 1998 quarter, rose 30% and 36%, respectively, totaling approximately 830,000 barrels of oil and 9.9 billion cubic feet of gas. On a thousand cubic feet of gas equivalent (Mcfe) basis, production rates for the first quarter of 1999 were 34% higher than the comparative 1998 period. The increase in production volumes from first quarter 1998 levels was primarily attributable to the commencement of production from the E Platform at the South Pelto Block 23 Field in November 1998 and production increases at the Vermilion Block 255 and Clovelly Fields. First quarter 1999 oil and gas revenues increased to $30.5 million, as compared to first quarter 1998 oil and gas revenues of $28.4 million. Prices during the first quarter of 1999 averaged $11.81 per barrel of oil and $2.09 per Mcf of gas, as compared to averages of $16.12 per barrel and $2.47 per Mcf received in the 1998 period. Stated on a Mcfe basis, prices received during the quarter ended March 31, 1999 were 20% lower than the prices received during the comparable 1998 period. Both total and unit revenue amounts include the effects of hedging transactions. Normal operating costs during the first quarter of 1999 increased to $4.8 million, as compared to $3.6 million during the 1998 period due to an increase in the number of producing wells and higher production rates. However, on a unit of production basis, first quarter 1999 operating costs were consistent with the 1998 quarter as costs totaled $0.32 per Mcfe during both quarterly periods. General and administrative expenses totaled $1.1 million during the first quarter of 1999 and the first quarter of 1998. On a unit basis, these costs declined 30% during the 1999 quarter to $0.07 per Mcfe, as compared to $0.10 per Mcfe during the 1998 period. Depreciation, depletion and amortization ("DD&A") expense on the Company's oil and gas properties increased to $17.4 million for the first three months of 1999, compared to $15.0 million for the 1998 period because of higher production rates and lower oil and gas prices. However, unit DD&A expense for 1999's first quarter declined to $1.17 per Mcfe versus $1.35 per Mcfe for the comparable 1998 period. As a result of the increase in the Company's outstanding borrowings under its bank credit facility, interest expense during the first quarter of 1999 increased to $3.8 million, as compared to $2.5 million during the three month 1998 period. LIQUIDITY AND CAPITAL RESOURCES WORKING CAPITAL AND CASH FLOW. During late-1998, due in part to the oil and gas price environment at the time, the Company adjusted its 1999 capital expenditures budget to enable the Company to finance its 1999 drilling and development plans with cash flow from operations and available borrowings under its bank credit facility. Based upon the Company's outlook for 1999 oil and gas prices and production rates, the Company believes that its cash flow from operations, combined with the available borrowings under its bank credit facility, will be sufficient to fund its current 1999 capital expenditures budget. Working capital at March 31, 1999 totaled $10.0 million. Net cash flow from operations before working capital changes for the first quarter of 1999 was $20.4 million, compared to $20.3 million reported for the same period of 1998. Capital expenditures during the first quarter of 1999 totaled $23.0 million and primarily consisted of exploration and development expenditures at the Vermilion Block 255, Eugene Island Block 243 and Clovelly Fields. First quarter 1999 capital expenditures included $1.4 million of capitalized general and administrative costs. These investments were financed by a combination of cash flow from operations and borrowings under the Company's bank revolver. LONG-TERM FINANCING. In May 1999, the Company and its bank group increased the borrowing base under the Company's bank credit facility from $120.0 million to $127.5 million. The borrowing base limitation is based on a borrowing base amount established by the banks for the Company's oil and gas properties. Interest under the Revolver is payable quarterly and, at March 31, 1999, the weighted average interest rate of the facility was 6.3% per annum, the total outstanding principal balance was $111.0 million and letters of credit totaling $7.5 million had been issued pursuant to the facility. The Company has a capital expenditures budget of approximately $61 million for the last three quarters of 1999 for oil and gas properties it now owns. Significant investments are planned at the Eugene Island 243, Vermilion Block 255, Vermilion Block 131 and Lake Hermitage Fields. The planned activities include projects which seek to increase cash flow from proved reserves and provide additions to the Company's reserve base. It is anticipated that these investments will be funded from a combination of available working capital, cash flow from operations and borrowings under the bank credit facility. The Company believes that the level of its 1999 capital expenditures budget provides flexibility for the Company to participate in opportunities on new properties. The Company is currently evaluating a significant number of potential acquisitions, although no future acquisitions can be assured. One or a combination of certain of these possible transactions could fully utilize the sources of capital currently available to the Company. If these opportunities materialize, the Company intends to explore a variety of options to finance these new projects. In attempting to maximize stockholder value, the Company will continue to contrast and compare the cost of debt financing with the potential dilution of equity offerings. The Company's goal is to maintain a relatively low level of debt because of the volatility of oil and gas prices. Although the Company has no current plans to access the public markets for purposes of entering into an underwritten financing, it would consider such funding sources if the amount of capital needed for its acquisition and development activities increased significantly or if total debt reached an unacceptable level. Availability of these sources of capital and the Company's ability to access new opportunities will depend upon a number of factors, some of which are beyond the control of the Company. YEAR 2000 COMPLIANCE. The Year 2000 ("Y2K") issue is the result of computerized systems being written to store and process the year portion of dates from and after January 1, 2000 without critical systems failure. During 1998, the Company's executive management and Board of Directors implemented a program to identify, evaluate and address the Company's Y2K risks to ensure that its Information Technology ("IT") Systems and Non-IT Systems will be Y2K compliant. The Company, with the assistance of outside consultants, completed the evaluation of its IT Systems for Y2K compliance and began replacing or modifying non-compliant systems during the first quarter of 1999. The Company expects to have all non-compliant IT Systems replaced or modified to Y2K compliant systems by the end of the second quarter of 1999. Regarding the Company's Non-IT Systems, which primarily consist of systems with embedded technology, the Company has completed its preliminary assessment of all date-sensitive components. Based upon this assessment, the Company has determined that there will be minimal modification required to become Y2K compliant. The Company expects to have replaced or modified all non-compliant Non-IT Systems by the end of the second quarter of 1999. Costs incurred as of March 31, 1999, and estimated remaining costs related to Y2K compliance total approximately $15,000. In addition to the expensed Y2K compliance costs, the Company capitalized a total of $0.8 million of costs related to computer hardware and software upgrades during the fourth quarter of 1998 and the first quarter of 1999. The upgrades were necessary due to the growth in the Company's number of employees and level of operations over the past 24 months. All upgrades were Y2K compliant.The Company does not separately track internal payroll costs incurred for employees involved in the Y2K compliance effort. Based on preliminary risk assessments, the Company believes the most likely Y2K related failure would be a temporary disruption in certain materials and services provided by third parties, which would not be expected to have a material adverse effect on the Company's financial condition or results of operations. As part of its assessment of the Y2K risk associated with third parties' systems, the Company has contacted its material suppliers and customers to determine their level of Y2K compliance. The Company expects to complete its assessment by the end of the second quarter of 1999. While the Company believes that the probability of the occurance of a disruption is low, the Company will develop specific contingency plans to address certain risk areas, as needed. There can be no assurance that the Company will not be materially adversely affected by Y2K problems or related costs. FORWARD-LOOKING STATEMENTS. Certain of the statements in this Form 10-Q are "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts included in this Form 10-Q, regarding budgeted capital expenditures, increases in oil and gas production, the Company's financial position, the assessment of the Company's Year 2000 compliance, business strategy and other plans and objectives for future operations, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in commodity prices for oil and gas, operating risks and other factors as disclosed under "Risk Factors" and elsewhere in the Company's 1998 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results and plans for 1999 and beyond could differ materially from those expressed in forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by such factors. PART II ITEM 5. OTHER INFORMATION The following is a summary of certain of the Company's recent activities: On May 4, 1999, the Company announced that during April 1999, its estimated net average daily production rates were approximately 107 million cubic feet of gas and 8,700 barrels of oil, and that it realized sales prices which averaged approximately $2.07 per Mcf of gas and $15.91 per barrel of oil. The prices include the effects of hedging contracts. In addition, the Company reported that it has a 1999 capital expenditures budget of $84.1 million for properties it owns and that through April 1999, it had completed seven drilling operations resulting in six successful wells and one dry hole with two wells in progress. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 10.1- Amendment and Restatement No. 2 of the Third Amended and Restated Credit Agreement between the Registrant, the financial institutions named therein and NationsBank, N.A., as Agent, dated as of May 3, 1999. (b) Exhibit 27.1- Financial Data Schedule (c) There were no reports on Form 8-K filed for the three months ended March 31, 1999. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. STONE ENERGY CORPORATION Date: May 13, 1999 By: /s/ Michael L. Finch ----------------------- Michael L. Finch Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer) EX-10 2 AMENDMENT AND RESTATEMENT NO. 2 Exhibit 10.1 AMENDMENT AND RESTATEMENT NO. 2 This Amendment and Restatement No. 2 dated as of May 3, 1999 ("Agreement") is among Stone Energy Corporation, a Delaware corporation ("Borrower"), the banks party to the Credit Agreement described below ("Banks"), and NationsBank, N.A., successor by merger to NationsBank of Texas, N.A., as Agent for the Banks ("Agent"). INTRODUCTION A. The Borrower, the Agent, and the Banks are parties to the Third Amended and Restated Credit Agreement dated as of July 30, 1997, as amended pursuant to that certain Amendment and Restatement No. 1 dated as of March 31, 1998 (the "Credit Agreement"). B. The Borrower has requested that the Banks agree to amend the tangible net worth covenant under the Credit Agreement and to make certain other amendments to the Credit Agreement. THEREFORE, the Borrower, the Agent, and the Banks hereby agree as follows: Section 1. Definitions; References. Unless otherwise defined in this Agreement, terms used in this Agreement which are defined in the Credit Agreement shall have the meanings assigned to such terms in the Credit Agreement. Section 2. Amendments. (a) Subsection (a) of Section 2.02 is amended in its entirety to read as follows: (a) The Borrowing Base as of May 7, 1999 has been set by the Majority Banks and acknowledged by the Borrower as $127,500,000. (b) Section 6.14 of the Credit Agreement, Tangible Net Worth, is amended in its entirety to read as follows: -2- Section 6.14. Tangible Net Worth. The Borrower shall not permit the consolidated Tangible Net Worth of the Borrower to be less than the sum of (a) $95,000,000.00, plus (b) an amount equal to 50% of the cumulative consolidated quarterly Net Income of the Borrower from January 1, 1999, through the end of the Borrower's most recently ended fiscal quarter, but excluding consolidated Net Income for any fiscal quarter in which consolidated Net Income is not positive, plus (c) an amount equal to 100% of the net cash proceeds from any sale of stock or other equity interests in the Borrower since January 1, 1999. Section 3. Representations and Warranties. The Borrower represents and warrants to the Agent and the Banks that: (a) the representations and warranties set forth in the Credit Agreement and in the other Credit Documents are true and correct in all material respects as of the date of this Agreement; (b) (i) the execution, delivery and performance of this Agreement, the replacement promissory notes referred to below, and the reaffirmation of guaranties referred to below are within the corporate power and authority of the Borrower and its Subsidiaries, as applicable, and have been duly authorized by appropriate proceedings and (ii) each of this Agreement, the replacement promissory notes and the Guaranties constitutes a legal, valid, and binding obligation of the Borrower and its Subsidiaries, as applicable, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; and (c) as of the effectiveness of this Agreement, no Default or Event of Default has occurred and is continuing. Section 4. Effectiveness. This Agreement shall become effective as of the date of this Agreement, and the Credit Agreement shall be amended as provided in this Agreement upon the occurrence of the following conditions precedent: (a) the Borrower, the Agent, and the Banks shall have delivered duly and validly executed originals of this Agreement to the Agent; (b) the representations and warranties in this Agreement shall be true and correct in all material respects; (c) each of the Borrower and its Subsidiaries shall have delivered a certificate of its Secretary or Assistant Secretary certifying its certificate of incorporation, bylaws, resolutions and incumbency and in form and substance satisfactory to the Agent and the Banks; and (d) the Borrower shall have paid all amounts and expenses required to be paid in connection with this Agreement and the amendments evidenced hereby. Section 5. Effect on Loan Documents. (a) Except as amended herein, the Credit Agreement and the Credit Documents remain in full force and effect as originally executed. Nothing herein shall act as a waiver of any of the Agents' or Banks' rights under the Credit Documents, as amended, including the waiver of any Default or Event of Default, however denominated. (b) This Agreement is a Credit Document for the purposes of the provisions of the other Credit Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement may be a Default or Event of Default under other Credit Documents. Section 6. Choice of Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas. Section 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original. PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED IN THE LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE LOAN AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. EXECUTED as of the date first above written. BORROWER: STONE ENERGY CORPORATION By:/s/ D. Peter Canty -------------------- Name: D. Peter Canty Title: President By:/s/ Michael L. Finch -------------------- Name: Michael L. Finch Title: Executive Vice-President AGENT: NATIONSBANK, N.A. By:/s/ Mary Louise Allen ---------------------- Name: Mary Louise Allen Title: Vice-President -5- BANKS: NATIONSBANK, N.A. By:/s/ Mary Louise Allen --------------------- Name: Mary Louise Allen Title: Vice-President BANKBOSTON, N.A. By:/s/ George W. Passela ---------------------- Name: George W. Passela Title: Managing Director BANK ONE, LOUISIANA SUCCESSOR BY MERGER TO FIRST NATIONAL BANK OF COMMERCE By:/s/ Jo Linda Papadakis ----------------------- Name: Jo Linda Papadakis Title: Vice-President HIBERNIA NATIONAL BANK By:/s/ David R. Reid ------------------- Name: David R. Reid Title: Senior Vice-President EX-27.1 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet of Stone Energy Corporation as of March 31, 1999 and the related statement of operations for the three months ended March 31, 1999 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 12,987 17,009 19,888 0 0 49,936 10,992 1,871 367,411 39,897 100,000 0 0 151 107,099 367,411 30,490 30,922 0 23,131 1,287 0 3,814 2,690 944 1,746 0 0 0 1,746 0.12 0.11
-----END PRIVACY-ENHANCED MESSAGE-----