0000904080-17-000009.txt : 20170303 0000904080-17-000009.hdr.sgml : 20170303 20170303165126 ACCESSION NUMBER: 0000904080-17-000009 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20170303 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170303 DATE AS OF CHANGE: 20170303 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12074 FILM NUMBER: 17664768 BUSINESS ADDRESS: STREET 1: 625 E KALISTE SALOOM RD CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 3372370410 MAIL ADDRESS: STREET 1: 625 E KALISTLE SALOOM RD CITY: LAFAYETTE STATE: LA ZIP: 70508 8-K/A 1 f8ka030317appalachiaprofor.htm FORM 8-K/A Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K/A
(Amendment No. 1)

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


February 27, 2017
Date of report (Date of earliest event reported)

STONE ENERGY CORPORATION
(Exact Name of Registrant as Specified in Charter)

 
Delaware
 
1-12074
 
72-1235413
 
 
(State or Other Jurisdiction of Incorporation)
 
(Commission File
Number)
 
(IRS Employer
Identification No.)
 

625 E. Kaliste Saloom Road
Lafayette, Louisiana

70508
(Address of Principal Executive Offices)
(Zip Code)
 
 
 
 
Registrant’s telephone number, including area code:  (337) 237-0410


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))




This Amendment No. 1 on Form 8-K/A amends the Current Report on Form 8-K that Stone Energy Corporation filed with the Securities and Exchange Commission on February 27, 2017, concerning the completion of the disposition of approximately 86,000 net acres in the Appalachian regions of Pennsylvania and West Virginia to EQT Corporation, through its wholly owned subsidiary EQT Production Company, to include the pro forma financial information required by Article 11 of Regulation S-X.

Item 9.01.    Financial Statements and Exhibits.

(b) Pro Forma Financial Information

Unaudited pro forma consolidated financial statements of Stone Energy Corporation as of December 31, 2016 and for the twelve months ended December 31, 2016 are attached as Exhibit 99.1 hereto.

(d) Exhibits
99.1
Unaudited pro forma consolidated financial statements of Stone Energy Corporation as of December 31, 2016 and for the twelve months ended December 31, 2016





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Stone Energy Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


STONE ENERGY CORPORATION


Date: March 3, 2017
 
By:
/s/ Lisa S. Jaubert
 
 
 
 
Lisa S. Jaubert
Senior Vice President, General Counsel and Secretary
 




EXHIBIT INDEX

Exhibit Number
Description
 
 
99.1
Unaudited pro forma consolidated financial statements of Stone Energy Corporation as of December 31, 2016 and for the twelve months ended December 31, 2016


 EX-99.1 2 f8ka030317ex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1



STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS


On February 27, 2017, Stone Energy Corporation (“Stone”) completed the sale of approximately 86,000 net acres in the Appalachian regions of Pennsylvania and West Virginia (collectively, the “Properties”) to EQT Corporation, through its wholly owned subsidiary EQT Production Company. Additional details of the sale are described in the notes to these financial statements.

The accompanying unaudited pro forma consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016 (the “Pro Forma Statements”), which have been prepared by Stone’s management, have been derived from the historical audited consolidated financial statements of Stone included in the Annual Report on Form 10-K for the year ended December 31, 2016.

The unaudited pro forma consolidated balance sheet was prepared assuming the sale of the Properties, including purchase price adjustments to date, occurred on December 31, 2016. The unaudited pro forma consolidated statement of operations was prepared assuming the sale of the Properties, including purchase price adjustments to date, occurred on January 1, 2016.

The Pro Forma Statements are presented for illustrative purposes only and do not indicate the results of operations or financial position of Stone had the transaction been in effect on the dates or for the periods indicated, or the results of operations or financial position of Stone for any future periods. The Pro Forma Statements should be read in conjunction with Stone’s Annual Report on Form 10-K for the year ended December 31, 2016.




    


STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2016
(In thousands of dollars)


Assets
Historical
 
Pro Forma Adjustments
 
Pro Forma
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
190,581

 
$
515,384

(a)
$
705,965

Accounts receivable
48,464

 
 
 
48,464

Current income tax receivable
26,086

 
 
 
26,086

Other current assets
10,151

 
 
 
10,151

Total current assets   
275,282

 
515,384

 
790,666

Oil and gas properties, full cost method of accounting:
 
 
 
 
 
    Proved, net
437,794

 
(178,153
)
(b)
259,641

    Unevaluated
373,720

 
(125,915
)
(b)
247,805

Other property and equipment, net
26,213

 
 
 
26,213

Other assets, net
26,474

 
 
 
26,474

Total assets    
$
1,139,483

 
$
211,316

 
$
1,350,799

 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable to vendors
$
19,981

 
 
 
$
19,981

Undistributed oil and gas proceeds
15,073

 
 
 
15,073

Accrued interest
809

 
 
 
809

Asset retirement obligations
88,000

 
 
 
88,000

Current portion of long-term debt
408

 
 
 
408

Other current liabilities
18,602

 
 
 
18,602

Total current liabilities   
142,873

 
—

 
142,873

Long-term debt
352,376

 
 
 
352,376

Asset retirement obligations
154,019

 
(8,410
)
(c)
145,609

Other long-term liabilities
17,315

 
 
 
17,315

Total liabilities not subject to compromise   
666,583

 
(8,410
)
 
658,173

Liabilities subject to compromise
1,110,182

 
 
 
1,110,182

Total liabilities   
1,776,765

 
(8,410
)
 
1,768,355

 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
Common stock
56

 
 
 
56

Treasury stock
(860
)
 
 
 
(860
)
Additional paid-in capital
1,659,731

 
 
 
1,659,731

Accumulated deficit
(2,296,209
)
 
219,726

(d)
(2,076,483
)
Total stockholders’ equity   
(637,282
)
 
219,726

 
(417,556
)
Total liabilities and stockholders’ equity   
$
1,139,483

 
$
211,316

 
$
1,350,799

 
 
 
 
 
 
See accompanying notes to the unaudited pro forma consolidated financial statements.








    



STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
(In thousands, except per share amounts)
 
Historical
 
Pro Forma Adjustments
 
Pro Forma
Operating revenue: 
 
 
 
 
 
Oil production
$
281,246

 
$
(9,268
)
(a)
$
271,978

Natural gas production
64,601

 
(25,276
)
(a)
39,325

Natural gas liquids production
28,888

 
(22,142
)
(a)
6,746

Other operational income
2,657

 
(1,593
)
(a)
1,064

Total operating revenue   
377,392

 
(58,279
)
 
319,113

Operating expenses:
 
 
 
 
 
Lease operating expenses
79,650

 
(11,644
)
(a)
68,006

Transportation, processing and gathering expenses
27,760

 
(28,089
)
(a)
(329
)
Production taxes
3,148

 
(2,387
)
(a)
761

Depreciation, depletion and amortization
220,079

 
(53,841
)
(c)
166,238

Write-down of oil and gas properties
357,431

 
(325,835
)
(c)
31,596

Accretion expense
40,229

 
(232
)
(b)
39,997

Salaries, general and administrative expenses
58,928

 
 
 
58,928

Incentive compensation expense
13,475

 
 
 
13,475

Restructuring fees
29,597

 
 
 
29,597

Other operational expenses
55,453

 
 
 
55,453

Derivative expense, net
810

 
 
 
810

Total operating expenses   
886,560

 
(422,028
)
 
464,532

Loss from operations   
(509,168
)
 
363,749

 
(145,419
)
Other (income) expenses:
 
 
 
 
 
Interest expense
64,458

 
 
 
64,458

Interest income
(550
)
 
 
 
(550
)
Other income
(1,439
)
 
 
 
(1,439
)
Other expense
596

 
 
 
596

Reorganization items
10,947

 
 
 
10,947

Total other expenses   
74,012

 
—

 
74,012

Loss before income taxes   
(583,180
)
 
363,749

 
(219,431
)
Provision (benefit) for income taxes: 
 
 
 
 
 
Current
(5,674
)
 
 
 
(5,674
)
Deferred
13,080

 
 
 
13,080

Total income taxes   
7,406

 
—

 
7,406

Net loss   
$
(590,586
)
 
$
363,749

 
$
(226,837
)
 
 
 
 
 
 
Basic loss per share   
$
(105.63
)
 
 
 
$
(40.57
)
Diluted loss per share   
$
(105.63
)
 
 
 
$
(40.57
)
 
 
 
 
 
 
Average shares outstanding
5,591

 
 
 
5,591

Average shares outstanding assuming dilution
5,591

 
 
 
5,591


See accompanying notes to the unaudited pro forma consolidated financial statements.



    


STONE ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

On February 27, 2017, Stone completed the sale of approximately 86,000 net acres in the Appalachian regions of Pennsylvania and West Virginia to EQT Corporation, through its wholly owned subsidiary EQT Production Company, referred to herein as the “Properties.” The net cash proceeds received from the sale totaled approximately $515.4 million, representing gross proceeds of $527.0 million adjusted by $4.5 million for preliminary purchase price adjustments for operations related to the Sold Properties after June 1, 2016, the effective date of the transaction. Estimated transaction costs associated with the sale are approximately $7.1 million.

The historical financial information has been derived from the historical audited consolidated financial statements of Stone included in the Annual Report on Form 10-K for the year ended December 31, 2016. The unaudited pro forma consolidated balance sheet was prepared as if the sale occurred as of December 31, 2016. The unaudited pro forma consolidated statement of operations was prepared as if the sale occurred as of January 1, 2016.

The pro forma adjustments are based on actual information and estimates made by management. These unaudited pro forma consolidated financial statements are provided for illustrative purposes only and do not purport to represent what Stone’s financial position or results of operations would have been if the sale of the Properties had occurred as presented, or to project Stone’s financial position or results of operations for any future periods. The pro forma adjustments related to the sale of the Properties are based on management’s best estimates as of the date of this Current Report on Form 8-K/A. Such pro forma adjustments are subject to change based on numerous factors, including the final purchase price adjustments and the final allocation of oil and gas properties to the Properties sold under the full cost method of accounting, and any such adjustments could be material.

Note 2 – Pro Forma Adjustments
 
The unaudited pro forma consolidated balance sheet at December 31, 2016 reflects the following adjustments:

(a)
Adjustment for net cash proceeds of approximately $515.4 million, which represents the gross sales price of $527.0 million, less purchase price adjustments of $4.5 million and estimated transaction costs of $7.1 million.

(b)
Adjustment to eliminate the net carrying value allocated to the Properties.

(c)
Adjustment to eliminate the asset retirement obligations associated with the Properties.

(d)
Adjustment to record the estimated gain on the sale of the Properties as follows:
 
 
(in thousands)

Gross proceeds
 

$527,000

Add: Transfer of asset retirement obligations
 
8,410

Less: Purchase price adjustments
 
(4,529
)
Transaction costs
 
(7,087
)
Carrying value of properties sold
 
(304,068
)
Gain on sale
 

$219,726


The unaudited pro forma consolidated statement of operations for the year ended December 31, 2016 reflects the following adjustments:

(a)
Adjustment to revenue and direct operating expenses associated with the Properties. The pro forma remaining net credit in transportation, processing and gathering expenses includes a $7.9 million recoupment of prior period expenses against Federal royalties.

(b)
Adjustment to eliminate accretion expense attributable to asset retirement obligations associated with the Properties.




    

(c)
Adjustment to depreciation, depletion and amortization expense and write-down of oil and gas properties to reflect the sale of the Properties.

The above pro forma adjustments have no effect on income taxes as a result of the valuation allowance recorded with respect to Stone's deferred tax assets.