<PAGE> 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.
<PAGE> 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
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<PAGE> 3
STONE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
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
================== =================
</TABLE>
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<PAGE> 4
STONE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
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
============ ============= ============ ============
</TABLE>
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<PAGE> 5
STONE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------
1997 1996
----------------- -----------------
<S> <C> <C>
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
================= =================
</TABLE>
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<PAGE> 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.
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<PAGE> 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-
<PAGE> 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-
<PAGE> 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
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<PAGE> 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.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------------
1997 1996 1997 1996
------- ------- --------- ---------
<S> <C> <C> <C> <C>
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
</TABLE>
(a) Excludes major maintenance expenses
-8-
<PAGE> 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.
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<PAGE> 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
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<PAGE> 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
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<PAGE> 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.
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<PAGE> 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)
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<PAGE> 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.
<PAGE> 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,008
<SECURITIES> 26,340
<RECEIVABLES> 13,913
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,668
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0
0
<COMMON> 150
<OTHER-SE> 152,162
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<SALES> 44,608
<TOTAL-REVENUES> 45,857
<CGS> 0
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<INCOME-TAX> 4,814
<INCOME-CONTINUING> 7,688
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<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
</TABLE>
