-----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, SoSaorp58VntcTdqVJSeKsbqFsjrfNh8vJhNMcFKzLvaDH8j5zsBRWNIyHP2RGzX DzrcF+NJqcyGaOqRhi1JoA== 0000950129-97-004633.txt : 19971114 0000950129-97-004633.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950129-97-004633 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD 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: 97714092 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 STONE ENERGY CORPORATION - DATED 9/30/97 1 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 September 30, 1997 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 LAFAYETTE, LOUISIANA 70508 (Address of principal executive offices) (Zip code) 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 November 10, 1997, there were 15,040,408 shares of the Registrant's Common Stock, par value $.01 per share, outstanding. 2 TABLE OF CONTENTS PAGE PART I Item 1. Financial Statements: Condensed Consolidated Balance Sheet as of September 30, 1997 and December 31, 1996.............. 1 Condensed Consolidated Statement of Operations for the Three- and Nine-Month Periods Ended September 30, 1997 and 1996................................. 2 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 1997 and 1996....... 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................................ 12 -i- 3 STONE ENERGY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, ASSETS 1997 1996 ------------------ ----------------- (UNAUDITED) Current assets: Cash and cash equivalents............................... $5,088 $9,864 Marketable securities, at market........................ 26,340 10,331 Accounts receivable..................................... 13,913 12,936 Other current assets.................................... 327 94 ------------------ ----------------- Total current assets.................................. 45,668 33,225 Oil and gas properties, net: Proved.................................................. 258,452 167,562 Unevaluated............................................. 12,822 3,834 Building and land, net of accumulated depreciation.......... 3,559 3,390 Other assets, net........................................... 4,641 1,395 Total assets.......................................... $325,142 $209,406 ================== ================= LIABILITIES AND EQUITY Current liabilities - accounts payable and accrued liabilities..................................... $40,905 $26,542 Long-term loans............................................. 113,045 26,172 Deferred tax liability...................................... 16,826 12,112 Other long-term liabilities................................. 2,054 139 ------------------ ----------------- Total liabilities..................................... 172,830 64,965 ------------------ ----------------- Common stock................................................ 150 150 Additional paid in capital.................................. 118,789 118,606 Retained earnings........................................... 33,373 25,685 ------------------ ----------------- Total equity.......................................... 152,312 144,441 ------------------ ----------------- Total liabilities and equity.......................... $325,142 $209,406 ================== =================
-1- 4 STONE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1997 1996 1997 1996 ------------ ------------- ------------ ------------ REVENUES Oil and gas production..................... $15,603 $12,857 $44,608 $41,248 Overhead reimbursements and management fees..................... 119 196 374 561 Other income............................... 236 198 875 938 ------------ ------------- ------------ ------------ Total revenues...................... 15,958 13,251 45,857 42,747 ------------ ------------- ------------ ------------ EXPENSES Normal lease operating expenses............ 2,420 2,147 6,782 6,115 Major maintenance expenses................. 130 11 616 271 Production taxes........................... 355 892 1,854 2,403 Depreciation, depletion and amortization............................. 6,472 5,163 18,401 15,497 Interest................................... 1,448 959 2,551 2,496 Salaries, general and administrative....... 924 794 2,683 2,456 Incentive compensation plan................ 152 - 468 278 ------------ ------------- ------------ ------------ Total expenses...................... 11,901 9,966 33,355 29,516 ------------ ------------- ------------ ------------ Net income before income taxes............... 4,057 3,285 12,502 13,231 ------------ ------------- ------------ ------------ Provision for income taxes Current.................................... - 51 100 173 Deferred.................................. 1,562 1,213 4,714 4,920 ------------ ------------- ------------ ------------ 1,562 1,264 4,814 5,093 ------------ ------------- ------------ ------------ Net income $2,495 $2,021 $7,688 $8,138 ============ ============= ============ ============ Earnings per common share (see Note 2): Net income per share ..................... $0.16 $0.17 $0.49 $0.68 ============ ============= ============ ============ Net income per share assuming full dilution $0.16 $0.17 $0.49 $0.68 ============ ============= ============ ============ Average shares outstanding................ 15,359 11,959 15,327 11,923 ============ ============= ============ ============ Average shares outstanding assuming full dilution............................... 15,434 11,959 15,417 11,933 ============ ============= ============ ============
-2- 5 STONE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, -------------------------------------- 1997 1996 ----------------- ----------------- Cash flows from operating activities: Net income............................................... $7,688 $8,138 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization.......... 18,401 15,497 Provision for deferred income taxes............... 4,714 4,920 ----------------- ----------------- 30,803 28,555 (Increase) decrease in marketable securities.... (16,009) (9,892) (Increase) decrease in accounts receivable........ (977) (3,285) (Increase) decrease in other current assets....... (258) 376 Increase (decrease) in accounts payable and accrued liabilities......................... (1,685) 260 Deferred financing costs........................ (3,128) (653) Other............................................. 1,914 (21) ----------------- ----------------- Net cash provided by operating activities................... 10,660 15,340 ----------------- ----------------- Cash flows from investing activities: Investment in oil and gas properties..................... (102,647) (54,569) Sale of oil and gas properties ........................... 825 - Other asset additions.................................... (674) (354) ----------------- ----------------- Net cash used in investing activities....................... (102,496) (54,923) ----------------- ----------------- Cash flows from financing activities: Proceeds from borrowings................................. 59,000 44,000 Repayment of debt........................................ (72,123) (4,051) Issuance of 8-3/4% Senior Subordinated Notes (Note 4)..... 100,000 - Expenses for common stock offering ....................... (104) - Exercise of stock options................................. 287 34 ----------------- ----------------- Net cash provided by financing activities................... 87,060 39,983 ----------------- ----------------- Net increase (decrease) in cash............................. (4,776) 400 Cash balance beginning of period............................ 9,864 6,286 ----------------- ----------------- Cash balance end of period.................................. $5,088 $6,686 ================= ================= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amount capitalized).................. $2,561 $2,343 Income taxes.......................................... 100 95 ----------------- ----------------- Total.................................................... $2,661 $2,438 ================= =================
-3- 6 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 September 30, 1997 and for the three- and nine-month periods 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, 1996. The results of operations for the three- and nine-month periods ended September 30, 1997 are not necessarily indicative of future financial results. NOTE 2 - EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128 ("SFAS No. 128 "), "Earnings Per Share," which simplifies the computation of earnings per share (EPS). SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997, and requires restatement for all prior period EPS data presented. Pro forma EPS and EPS assuming dilution calculated in accordance with SFAS No. 128 totaled $0.51 and $0.50 per share, respectively, for the nine months ended September 30, 1997, and $0.69 and $0.68 per share, respectively, for the nine months ended September 30, 1996. Pro forma EPS and EPS assuming dilution calculated in accordance with SFAS No. 128 totaled $0.17 and $0.16 per share, respectively, for the three months ended September 30, 1997, and $0.17 per share for the three months ended September 30, 1996. 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 closing 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. -4- 7 The Company's forward positions as of November 10, 1997, are summarized as follows: OIL GAS --------------------------------------------------- AVERAGE AVERAGE MBBLS PRICE BBTU PRICE ------------ ----------- ---------- ---------- Fourth quarter, 1997 73 $22.15 1,530 $3.198 First quarter, 1998 108 21.58 1,800 2.940 Second quarter, 1998 36 21.15 300 2.427 For the three- and nine-month periods ended September 30, 1997, net oil and gas hedging losses amounted to $26,133 and $752,168, respectively, and were recorded in the accompanying condensed consolidated statement of operations as a reduction of revenues from oil and gas production. NOTE 4 - LONG-TERM LOANS On September 16, 1997, the Company completed an offering of $100 million principal amount of its 8-3/4% Senior Subordinated Notes (the "Notes") due September 15, 2007 with interest payable semiannually commencing March 15, 1998. The Notes were sold at a discount for an aggregate price of $99.3 million and the net proceeds from the offering were used to repay amounts outstanding under the Company's bank credit facilities and for other general corporate purposes. There are no sinking fund requirements on the Notes and they are redeemable at the option of the Company, in whole or in part, at 104.375% of their principal amount beginning September 15, 2002, and thereafter at prices declining annually to 100% on and after 2005. Provisions of the Notes include, without limitation, restrictions on liens, indebtedness, asset sales and other restricted payments. On July 30, 1997, the Company executed its Third Amended and Restated Credit Agreement with NationsBank of Texas, N.A., as agent for a group of banks. The total facility amount of $150 million was originally comprised of a three-year revolving credit loan and a term loan due on January 1, 1999. However, the term loan of $50 million, which was established to finance the acquisition of the Vermilion Block 255 Field and certain development costs, was retired in September 1997 with proceeds generated from the Company's notes offering. Additionally, the borrowing base of its $100 million revolving credit facility was reduced to $55 million subsequent to the offering of the Notes. The current weighted average interest rate is 6.8% per annum. As of November 4, 1997, the total outstanding principal balance was $10 million and letters of credit totaling $6.5 million had been issued pursuant to the facility. -5- 8 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 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. SFAS No. 131 requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. SFAS Nos. 130 and 131 are effective for 1998. Adoption of these standards is not expected to have an effect on the Company's financial statements, financial position or results of operations. NOTE 6 - SUBSEQUENT EVENTS On October 30, 1997, the Company purchased Shell Offshore Inc.'s interest in Louisiana State Lease No. 14905 and the recently drilled SL 14905 No. 1 discovery well, for $4.1 million. The lease covers 820 acres and is located immediately west of the Company's South Timbalier Block 8 Field. The purchase of State Lease No. 14905 increases and consolidates the Company's ownership in this Field which now totals 3,552 acres. -6- 9 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 September 30, 1997 and the related condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 1997 and 1996, and the related condensed consolidated statements of cash flows for the nine-month periods ended September 30, 1997 and 1996. 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 the financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit 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, 1996, (not presented herein) and in our report dated February 28, 1997, 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, 1996, 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 October 31, 1997 -7- 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company was formed in March 1993 to become a holding company for The Stone Petroleum Corporation and its subsidiaries and certain interests in three of its managed partnerships. In July 1993, the Company sold for its account a total of 3,655,005 shares of newly issued Common Stock pursuant to its Initial Public Offering. In November 1996, the Company completed a secondary offering of an additional 3,221,159 shares of Common Stock. 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- and nine-month periods ended September 30, 1997 and 1996.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- ------------------------ 1997 1996 1997 1996 ------- ------- --------- --------- Production: Oil (MBbls)............................... 416 361 1,109 1,023 Gas (MMcf)................................ 3,337 2,479 9,328 8,608 Oil and gas (MBOE)........................ 972 774 2,664 2,458 Sales data (in thousands): Total oil sales........................... $7,543 $7,232 $21,618 $20,323 Total gas sales........................... 8,060 5,625 22,990 20,925 Average sales prices: Oil (per Bbl)............................. $18.13 $20.03 $19.49 $19.87 Gas (per Mcf)............................. 2.42 2.27 2.46 2.43 Per BOE................................... 16.05 16.61 16.74 16.78 Average costs (per BOE): Normal lease operating expenses (a)........................... $2.49 $2.77 $2.55 $2.49 General and administrative................ 0.95 1.03 1.01 1.00 Depreciation, depletion and amortization....................... 6.51 6.58 6.75 6.23
(a) Excludes major maintenance expenses -8- 11 Net income for the quarter ended September 30, 1997 was $2.5 million, an increase of 23% over the net income reported for the third quarter of 1996 of $2.0 million. Net income per share for the third quarters of 1997 and 1996 was $0.16 and $0.17, respectively. For the first nine months of 1997, net income was $7.7 million, as compared to $8.1 million for the 1996 period. Total oil and gas revenues for the three months ended September 30, 1997 were $15.6 million, representing a 21% increase over the same period of 1996. For the quarter, gas production volumes increased 35% and oil production volumes increased 15% from 1996. The average oil price received in the third quarter of 1997 of $18.13 per barrel was 10% less than the comparable 1996 amount, while 1997's third quarter average gas price of $2.42 per Mcf was 7% more than year earlier levels. Operating expenses for the third quarters of 1997 and 1996 were $2.4 million and $2.1 million, respectively. Stated on a unit of production basis, such costs declined 10% to $2.49 per BOE for the quarter ended September 30, 1997, from $2.77 per BOE for the comparable 1996 period. For the quarter ended September 30, 1997, general and administrative expenses increased slightly in total but declined 8% per BOE to $0.95 from $1.03 per BOE for the quarter ended September 30, 1996. Interest expense increased to $1.5 million for the quarter ended September 30, 1997 from $1.0 million for the comparable 1996 period due to higher levels of debt. Depreciation, depletion and amortization expense increased to $18.0 million for the first nine months of 1997 from the $15.3 million reported for same period of 1996 primarily due to increased production rates and higher finding costs. LIQUIDITY AND CAPITAL RESOURCES WORKING CAPITAL AND CASH FLOW. Working capital at September 30, 1997 was $4.8 million. The Company believes that this capital plus the expected cash flow from operations and borrowings under its bank credit facility will be sufficient to fund its working capital needs for the foreseeable future. Net cash flow from operations before working capital changes for the third quarter of 1997 was $10.5 million or $0.69 per share, compared to $8.4 million or $0.70 per share for the third quarter of 1996. For the first nine months of 1997, net cash flow from operations before working capital changes totaled $30.8 million. During the third quarter and nine-month periods of 1997, the Company invested $68.3 and $118.7 million, respectively, in its oil and gas properties primarily in acquisition, drilling, completion and platform construction activities. During the respective 1996 periods, the Company invested $38.8 and $62.9 million in its oil and gas properties. The investments for the first nine months of 1997 include $1.9 million of capitalized general and administrative costs. -9- 12 LONG-TERM FINANCING. For the fourth quarter of 1997, the Company has budgeted capital expenditures of $33.7 million. Significant investments are planned for South Pelto Block 23, Eugene Island Block 243, Weeks Island and Clovelly fields. The planned development operations 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 revolver. On September 16, 1997, the Company completed an offering of $100 million principal amount of its 8-3/4% Senior Subordinated Notes (the "Notes") due September 15, 2007 with interest payable semiannually commencing March 15, 1998. The Notes were sold at a discount for an aggregate price of $99.3 million and the net proceeds from the offering were used to repay amounts outstanding under the Company's bank credit facilities and for other general corporate purposes. There are no sinking fund requirements on the Notes and they are redeemable at the option of the Company, in whole or in part, at 104.375% of their principal amount beginning September 15, 2002, and thereafter at prices declining annually to 100% on and after 2005. Provisions of the Notes include, without limitation, restrictions on liens, indebtedness, asset sales and other restricted payments. On July 30, 1997, the Company executed its Third Amended and Restated Credit Agreement with NationsBank of Texas, N.A., as agent for a group of banks. The total facility amount of $150 million was originally comprised of a three-year revolving credit loan and a term loan due on January 1, 1999. However, the term loan of $50 million, which was established to finance the acquisition of the Vermilion Block 255 Field and certain development costs, was retired in September 1997 with proceeds generated from the Company's notes offering. Additionally, the borrowing base of its $100 million revolving credit facility was reduced to $55 million subsequent to the offering of the Notes. The current weighted average interest rate is 6.8% per annum. As of November 4, 1997, the total outstanding principal balance was $10 million and letters of credit totaling $6.5 million had been issued pursuant to the facility. The Company has a number of outstanding bids for property acquisitions, and is in the process of evaluating a number of other opportunities to acquire reserves, 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, including an increase in its bank facility, nonrecourse financing, sales of non-strategic properties and joint venture financing. 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 bank 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 a financing if the amount of capital needed for its acquisition and development activities increased significantly or if total bank debt reached -10- 13 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. FORWARD-LOOKING STATEMENTS. The foregoing discussion of Liquidity and Capital Resources includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. 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, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulations and the ability of the Company to meet its stated business goals. PART II ITEM 5. OTHER INFORMATION The following is a summary of certain of the Company's recent activities: On September 15, 1997, the Company announced that the C-1 Well located in Eugene Island Block 224 had been recompleted and placed on production at the daily rates of approximately 25 million cubic feet of gas and 1,600 barrels of oil. The Company owns an approximate 43% working interest and a 35% net revenue interest in the well. The Company operates and owns an interest in Eugene Island Block 243, which is immediately south of Amoco's Block 224. The C-1 Well, which was announced in April 1997, is located approximately 650 feet from the lease line. The joint development and sharing arrangement between Amoco and Stone Energy, which includes portions of both blocks, was structured in part to minimize the total investments in potentially competitive reservoirs. On October 1, 1997, the Company announced that its Goodrich Cocke No. 5 Well had been drilled and placed on production. At the time of the announcement, the well was producing at a daily rate of 4.2 million cubic feet of gas and 70 barrels of oil. The well, located onshore in Iberia Parish, Louisiana, was evaluated to a total measured depth of 9,200 feet and encountered 110 net feet of pay interval. The Company owns a 98% working interest and a 64% net revenue interest in the No. 5 Well before payout, and, after the completion of unitization proceedings and well payout, expects to have a 74% working interest and a 51% net revenue interest. On October 30, 1997, the Company purchased Shell Offshore Inc.'s interest in Louisiana State Lease No. 14905 and the recently drilled SL 14905 No. 1 discovery well, for $4.1 million. The lease covers 820 acres and is located immediately west of the Company's South Timbalier Block 8 Field. The Company plans to complete and test the deepest of two productive sands in November -11- 14 where analyses of electric logs and core samples indicate the No. 1 Well encountered 39 net feet of pay interval between 13,918 feet and 14,070 feet. First production is expected in January 1998 following installation of production facilities and the tie-in to Block 8 Field. The purchase of State Lease No. 14905 increases and consolidates the Company's ownership in this Field which now totals 3,552 acres. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 15 - Consent of Arthur Andersen LLP dated November 7, 1997 regarding interim financial statements. (b) Exhibit 27 - Financial Data Schedule. (c) The Company filed a Current Report on Form 8-K and on Form 8-K/A under Items 2 and 7 dated August 15, 1997 that discussed the Company's acquisition of the Vermilion Block 255 Field. -12- 15 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: November 12, 1997 By: /s/ Michael L. Finch ---------------------- Michael L. Finch Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer) -13- 16 EXHIBIT INDEX (a) Exhibit 15 - Consent of Arthur Andersen LLP dated November 7, 1997 regarding interim financial statements. (b) Exhibit 27 - Financial Data Schedule. (c) The Company filed a Current Report on Form 8-K and on Form 8-K/A under Items 2 and 7 dated August 15, 1997 that discussed the Company's acquisition of the Vermilion Block 255 Field. EX-15 2 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 15 November 7, 1997 Stone Energy Corporation Post Office Box 52807 Lafayette, LA 70505 Gentlemen: We are aware that Stone Energy Corporation has incorporated by reference in its Registration Statements (File Nos. 33-62362, 33-72236, 33-67332) its Form 10-Q for the quarter ended September 30, 1997, which includes our report dated October 31, 1997 covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1993 (the Act), this report is not considered a "part" of the registration statements prepared or certified by our firm or a "report" prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, ARTHUR ANDERSEN LLP EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET OF STONE ENERGY CORPORATION (THE "COMPANY") AS OF SEPTEMBER 30, 1997 AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 5,008 26,340 13,913 0 0 45,668 10,724 2,524 325,142 40,905 100,000 0 0 150 152,162 325,142 44,608 45,857 0 27,653 3,151 0 2,551 12,502 4,814 7,688 0 0 0 7,688 0.49 0.49
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