Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2011

Acquisitions and Divestitures [Abstract]

ACQUISITIONS AND DIVESTITURES:

NOTE 5 — ACQUISITIONS AND DIVESTITURES:

Acquisitions

On December 28, 2011, we completed the acquisition of BP’s 75% operated working interest in the five block deep water Pompano field in Mississippi Canyon, a 51% operated working interest in the adjacent Mississippi Canyon block 29, a 50% non-operated working interest in the Mica field which ties back to the Pompano platform and a 75% interest in 23 deep water exploration leases located in the vicinity of the Pompano field. The acquisition was accounted for according to the guidance provided in ASC 805, Business Combinations, which requires application of the acquisition method. This methodology requires the recordation of net assets acquired and consideration transferred at fair value (see Note 8—Fair Value Measurements). Differences between the net fair value of assets acquired and consideration transferred are recorded as goodwill or a bargain purchase gain. The following represents the allocation of the recorded value of net assets acquired in the transaction. Consideration transferred in the transaction was $167,631 in cash, resulting in no goodwill or bargain purchase gain.

Proved oil and gas properties.	$	208,680
Unevaluated oil and gas properties.		17,314
Asset retirement obligations.		(58,363	)
Total fair value of net assets.	$	167,631

The following unaudited summary pro forma combined statement of operations data of Stone for the years ended December 31, 2011 and 2010 has been prepared to give effect to the acquisition of the deep water assets from BP as if it had occurred on January 1, 2010. The pro forma financial information is not necessarily indicative of the results that might have occurred had the transaction taken place on January 1, 2010 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma financial information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities, and other factors.

	Year Ended December 31,
	2011		2010
	(Unaudited)
Revenues	$	1,007,376	$	799,461
Income from operations		392,054		243,387
Net income		242,118		141,763
Basic earnings per share	$	4.95	$	2.93
Diluted earnings per share	$	4.95	$	2.92

In January 2011, we completed the acquisition of an additional 15% working interest in the Pyrenees project at a cost of approximately $14,974, bringing our ownership up to a 30% working interest. In December 2011, we completed the acquisition of a 25% non-operated working interest in the deep water Wideberth development project at a cost of approximately $31,000 and the assumption of approximately $1,078 of asset retirement obligations.

During the second half of 2011, we added approximately 10,000 net acres to our West Virginia leasehold position, including the acquisition of over 6,700 net acres from a single entity at a cost of approximately $19,000. During 2010, we acquired an approximate 26,000 net acre leasehold position in Appalachia from various landowners at a cost of approximately $74,334.

Divestitures

In the fourth quarter of 2011, we completed the sale of our non-operated interest in the Main Pass Block 296 and 311 fields to two separate parties for total cash consideration of approximately $80,381 and the assumption by the third parties of the associated asset retirement obligation of approximately $10,900. In April 2010, we divested our leasehold interest in approximately 7,000 acres in the Marcellus Shale for approximately $30,315. In the fourth quarter of 2010, we completed the sale of our interest in the Main Pass Block 41 Field for cash consideration of approximately $5,500. The estimated asset retirement obligation for this field was $632. The sales of these properties were accounted for as an adjustment of net capitalized costs with no gain or loss recognized.