8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

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

May 24, 2006
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:

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

Item 8.01. Other Items

     On May 24, 2006, Stone Energy Corporation (“Stone”) received an unsolicited proposal from Energy Partners, Ltd. (“EPL”) to acquire Stone for $52.00 per share, of which a portion would be paid in cash and the balance in shares of EPL common stock, conditioned on the satisfactory completion of due diligence, and the negotiation of a mutually acceptable definitive merger agreement. In accordance with its fiduciary duties, the Stone Board of Directors will consider such proposal. A copy of the EPL proposal is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

     Also on May, 26, 2006, Stone issued a press release, attached hereto as Exhibit 99.2 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

     (d) Exhibits:

99.1	Letter Proposal from Energy Partners, Ltd. dated May 24, 2006
99.2	Press release dated May 26, 2006, “Stone Energy Corporation Announces Receipt of Unsolicited Proposal from Energy Partners, Ltd. ”

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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: May 26, 2006	By:	/s/ J. Kent Pierret
		J. Kent Pierret
		Senior Vice President, Chief Accounting Officer and Treasurer

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EXHIBIT INDEX

Exhibit
Number	Description
99.1	Letter Proposal from Energy Partners, Ltd. dated May 24, 2006
99.2	Press release dated May 26, 2006, “Stone Energy Corporation Announces Receipt of Unsolicited Proposal from Energy Partners, Ltd.”

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EX-99.1

Exhibit 99.1

May 24, 2006

Board of Directors
Stone Energy Corporation
625 E. Kaliste Saloom Road
Lafayette, LA 70508

Attention: James H. Stone
Chairman of the Board

     Dear Jimmy:

     We are pleased to submit this offer to combine the businesses of our two companies, subject to the terms and conditions discussed below. Our offer clearly meets the standard for a Target Superior Proposal as contemplated by your merger agreement with Plains.

     We propose to acquire all the shares of Stone for a combination of cash and stock at a price of $52.00 per Stone share, subject to a limit on the number of EPL shares to be issued. Under the terms of our offer, each Stone share will be exchanged for $26.00 in cash and a variable number of shares of EPL common stock having a value of $26.00 based on the average closing price over the 20 trading days preceding the closing of the merger, provided that the number of EPL shares to be issued for each Stone share will range from a maximum of 1.287 to a minimum of 1.053, based on our assumption of 27.7 million fully diluted Stone shares. Based on our closing price today, that would equate to 1.21 EPL shares for each Stone share. We will provide the opportunity for each Stone shareholder to elect whether to receive the consideration in cash or common stock of EPL, subject to the limitation that the total value of the cash consideration payable for the shares will be approximately $720 million. We intend to structure the transaction so that receipt of our shares would be tax free to your shareholders who elect to receive shares.

     We call your attention to the following:

• Our offer ($52.00 per Stone share) represents a 26.21% premium over the current value of the Plains offer ($41.20 per Stone
share based on today’s closing price for Plains’ shares).

• Our offer represents aggregate additional consideration of approximately $300 million to Stone’s shareholders.

• Fully 50% of our offer is in cash, which combined with our variable exchange ratio (subject to a collar), will substantially protect the offer value from changes in EPL’s share price.

• Given the overlapping nature of a significant portion of our asset base, we believe there are material overhead and operating cost savings that will create additional value for Stone’s shareholders who continue as EPL shareholders.

     Our offer is not subject to any financing contingency. We have received a commitment letter from Bank of America, N.A. and affiliates
for the financing necessary to consummate the proposed transaction.

     We have carefully reviewed all information filed by Stone with the SEC, and believe that we can complete our due diligence review of your Company promptly. We are available to commence our due diligence review immediately, and we are confident that, assuming full cooperation, we can complete our review within 7 to 10 days. We are also prepared to give you and your representatives full access to our non-public information for purposes of your due diligence review of us.

     Our board of directors has approved the submission of our offer. Any definitive transaction between EPL and Stone would, of course, be subject to final approval by our board and our shareholders. We are prepared to enter into a merger agreement reflecting the above terms and which would otherwise be substantially similar to the merger agreement that you entered into with Plains. We believe that the proposed transaction could close in the third quarter of 2006.

     This letter is not intended to, and does not, create or constitute any legally binding obligation, liability or commitment by us regarding the proposed transaction, and, other than the confidentiality agreement we will enter into with you, there will be no legally binding contract or agreement between us regarding the proposed transaction unless and until a definitive merger agreement is executed.

     We and our financial advisors, Evercore Group L.L.C. and Banc of America Securities LLC, and our legal advisors, Cahill Gordon & Reindel LLP, are prepared to move forward immediately with our offer. We believe that it presents a compelling opportunity for both our companies, and look forward to your prompt response.

Very truly yours,

/s/ Richard A. Bachmann

Richard A. Bachmann
Chairman of the Board and Chief Executive Officer

cc:  David H. Welch, President and Chief Executive Officer, Stone Energy Corporation

EX-99.2

Exhibit 99.2

STONE ENERGY CORPORATION

Announces Receipt of Unsolicited Proposal from Energy Partners, Ltd.

LAFAYETTE, L.A. May 26, 2006

     Stone Energy Corporation (NYSE:SGY) confirmed today that it received an unsolicited proposal from Energy Partners, Ltd. and said that its Board of Directors, in accordance with its duties, would consider such proposal. Stone also said that the definitive merger agreement between Stone and Plains Exploration and Production Company (NYSE:PXP) remains in effect.

Additional Information and Where to Find It

     As previously announced, on April 23, 2006, Stone entered into a definitive merger agreement providing for a merger of Stone with PXP in a stock-for-stock transaction. Under the terms of the agreement, Stone stockholders will receive 1.25 shares of PXP common stock for each Stone share they own. In connection with the PXP transaction, Stone and PXP have filed, and will file, materials relating to the transaction with the Securities and Exchange Commission (SEC), including one or more registration statement(s) that contain a prospectus and a joint proxy statement. Investors and security holders of Stone and PXP are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about Stone and PXP and the transaction. Investors and security holders may obtain these documents free of charge at the SEC’s website at www.sec.gov. In addition, the documents filed with the SEC by Stone may be obtained free of charge from Stone’s website at www.stoneenergy.com. The documents filed with the SEC by PXP may be obtained free of charge from PXP’s website at www.plainsxp.com. Investors and security holders are urged to read the joint proxy statement/prospectus and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed merger.

     Stone, PXP and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Stone and PXP in connection with the PXP merger. Information about the executive officers and directors of Stone and their direct or indirect interests, by security holdings or otherwise, in the merger will be set forth in the proxy statement/prospectus relating to the merger when it becomes available. Information about the executive officers and directors of PXP and their direct or indirect interests, by security holdings or otherwise, in the merger will be set forth in the proxy statement/prospectus relating to the merger when it becomes available.

About Stone Energy Corporation

     Stone is an independent oil and gas company headquartered in Lafayette, Louisiana, and is engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located in the conventional shelf of the Gulf of Mexico (GOM), deep shelf of the GOM, deep water of the GOM, Rocky Mountain basins and the Williston Basin. For additional information, please contact Kenneth H. Beer, Senior Vice President and Chief Financial Officer, at 337-521-2210-phone, 337-237-0426-fax or via e-mail at CFO@StoneEnergy.com.

Forward-Looking Statements

     Certain statements in this press release are forward-looking and are based upon Stone’s current belief as to the outcome and timing of future events. All statements, other than statements of historical facts, that address activities that Stone plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future, including future production of oil and gas, future capital expenditures and drilling of wells and future financial or operating results are forward-looking statements. 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 risk factors as described in Stone’s 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, Stone’s actual results and plans could differ materially from those expressed in the forward-looking statements.

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