<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-2
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1998
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)
State of incorporation: Delaware I.R.S. Employer Identification No.72-1235413
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ----------------------
Common Stock, Par Value $.01 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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.
[x] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $339,626,060 as of March 15, 1999 (based on
the last reported sale price of such stock on the New York Stock Exchange
Composite Tape).
As of March 15, 1999, the registrant had outstanding 15,080,408
shares of Common Stock, par value $.01 per share.
Document incorporated by reference: Proxy Statement of Stone Energy
Corporation relating to the Annual Meeting of Stockholders to be held on May
11, 1999, which is incorporated into Part III of this Form 10-K.
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TABLE OF CONTENTS
Page No.
---------
PART I
Item 2. Properties................................................... 1
<PAGE> 3
ITEM 2. PROPERTIES
The Company has grown principally through the acquisition and subsequent
development and exploitation of properties purchased from major oil companies.
The Company's proved oil and gas reserves at December 31, 1998 were
attributable to 15 properties, nine of which are in the Gulf of Mexico offshore
Louisiana, and six of which are onshore Louisiana. The Company currently
manages four partnerships formed prior to its Initial Public Offering, and less
than 5% of the Company's assets are owned through these entities.
Oil and Gas Reserves
The following table sets forth estimated net proved oil and gas reserves of
the Company and the present value of estimated future pre-tax net cash flows
related to such reserves as of December 31, 1998. Net revenue and net cash flow
amounts include the effects of hedging contracts. All information in this Form
10-K relating to estimated oil and gas reserves and the estimated future net
cash flows attributable thereto is based upon the reserve reports (the "Reserve
Reports") prepared by Atwater Consultants, Ltd. and Cawley, Gillespie &
Associates, Inc., both independent petroleum engineers, as of December 31,
1998. Using the information contained in the Reserve Reports, the average
product prices for all of the Company's properties were $10.68 per Bbl of oil
and $1.93 per Mcf of gas. All product pricing and cost estimates used in the
Reserve Reports are in accordance with the rules and regulations of the
Securities and Exchange Commission, and, except as otherwise indicated, the
reported amounts give no effect to federal or state income taxes otherwise
attributable to estimated future cash flows from the sale of oil and gas.
The present value of estimated future net cash flows has been calculated
using a discount factor of 10%.
<TABLE>
<CAPTION>
Proved Proved Total
Developed Undeveloped Proved
--------------- ---------------- ---------------
(Dollars in thousands)
<S> <C> <C> <C>
Oil (MBbls).......................................... 15,242 3,234 18,476
Gas (MMcf)........................................... 200,973 42,297 243,270
Total oil and gas (MMcfe)............................ 292,425 61,701 354,126
Estimated future net revenues before
income taxes..................................... $352,727 $35,714 $388,441
Present value of estimated future
pre-tax net cash flows........................... $267,560 $18,538 $286,098
</TABLE>
There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting future rates of production and the timing of
development expenditures, including many factors beyond the control of the
producer. The reserve data set forth herein represent only estimates. Reserve
engineering is a subjective process of estimating underground accumulations of
oil and gas that cannot be measured in an exact way, and the accuracy of any
reserve estimate is a function of the quality of available data and of
engineering and geological interpretation and judgment and the existence of
development plans. As a result, estimates of reserves made by different
engineers for the same property will often vary. Results of drilling, testing
and production subsequent to the date of an estimate may justify a revision of
such estimates. Accordingly, reserve estimates are generally different from the
quantities of oil and gas that are ultimately produced. Further, the estimated
future net revenues from proved reserves and the present value thereof are
based upon certain assumptions, including geological success, prices, future
production levels and costs that may not prove to be correct. Predictions about
prices and future production levels are subject to great uncertainty, and the
meaningfulness of such estimates depends on the accuracy of the assumptions
upon which they are based.
As an operator of domestic oil and gas properties, the Company has filed
Department of Energy Form EIA-23, "Annual Survey of Oil and Gas Reserves," as
required by Public Law 93-275. There are differences between the reserves as
reported on Form EIA-23 and as reported herein. The differences are
attributable to the fact that Form EIA-23 requires that an operator report on
the total reserves attributable to wells which are operated by it, without
regard to ownership (i.e., reserves are reported on a gross operated basis,
rather than on a net interest basis).
Acquisition, Production and Drilling Activity
Acquisition and Development Costs. The following table sets forth certain
information regarding the costs incurred by the Company in its development and
acquisition activities during the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1998 1997 1996
--------------- ---------------- -------------
(In thousands)
<S> <C> <C> <C>
Acquisition costs.................................... $17,748 $43,791 $26,650
Development costs.................................... 54,889 43,762 24,090
Exploratory costs.................................... 81,765 57,770 26,339
--------------- ---------------- -------------
Subtotal........................................... 154,402 145,323 77,079
Capitalized general and administrative costs and
interest, net of fees and reimbursements........... 4,480 3,457 2,325
--------------- ---------------- -------------
Total costs incurred................................. $158,882 $148,780 $79,404
=============== ================ =============
</TABLE>
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Productive Well and Acreage Data. The following table sets forth certain
statistics for the Company regarding the number of productive wells and
developed and undeveloped acreage as of December 31, 1998.
<TABLE>
<CAPTION>
Gross Net
------------- --------------
<S> <C> <C>
Productive Wells:
Oil (1)............................. 50.00 38.40
Gas (2).............................. 60.00 44.98
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Total............................ 110.00 83.38
============= ==============
Developed Acres:
Onshore Louisiana..................... 2,433.43 2,122.45
Offshore Louisiana.................... 9,170.31 6,303.17
------------- --------------
Total............................. 11,603.74 8,425.62
============= ==============
Undeveloped Acres (3):
Onshore Louisiana..................... 15,608.82 13,116.91
Offshore Louisiana.................... 52,296.94 36,642.77
------------- --------------
Total............................. 67,905.76 49,759.68
============= ==============
</TABLE>
__________
(1) 4 gross wells each have dual completions.
(2) 10 gross wells each have dual completions.
(3) Leases covering approximately 1% of the Company's undeveloped acreage
will expire in 1999, 1% in 2000, 8% in 2001, 0% in 2002 and 1% in 2003.
Leases covering the remainder of the Company's undeveloped gross acreage
(89%) are held by production.
Drilling Activity. The following table sets forth the Company's drilling
activity for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------
1998 1997 1996
------------------------- -------------------------- ---------------------------
Gross Net Gross Net Gross Net
--------- --------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Exploratory Wells:
Productive.................. 6.00 5.21 10.00 8.70 1.00 0.93
Nonproductive............... 4.00 3.35 - - 3.00 2.75
Development Wells:
Productive.................. 5.00 4.57 2.00 1.26 4.00 3.60
Nonproductive............... 1.00 0.98 - - 1.00 0.76
</TABLE>
Title to Properties
The Company believes it has satisfactory title on substantially all of its
producing properties in accordance with standards generally accepted in the oil
and gas industry. The Company's properties are subject to customary royalty
interests, liens for current taxes and other burdens which the Company believes
do not materially interfere with the use of or affect the value of such
properties. The title investigation performed by the Company prior to acquiring
undeveloped properties is thorough but less vigorous than that conducted prior
to drilling, consistent with standard practice in the oil and gas industry.
Prior to the commencement of drilling operations, a thorough title examination
is conducted and curative work is performed with respect to significant defects
before proceeding with operations. A thorough title examination has been
performed with respect to substantially all producing properties owned by the
Company.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, as
amended, the Registrant has duly caused this Form 10-K/A-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lafayette,
State of Louisiana, on the 9th day of July, 1999.
STONE ENERGY CORPORATION
By: /s/ JAMES H. STONE
--------------------------
James H. Stone
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act, this Form
10-K/A-2 has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------------- ------------ --------
/s/ JAMES H. STONE Chief Executive Officer and July 9, 1999
-------------------------- Chairman of the Board
James H. Stone (Principal Executive Officer)
/s/ D. PETER CANTY President, Chief Operating July 9, 1999
-------------------------- Officer and Director
D. Peter Canty
/s/ JAMES H. PRINCE Vice President, Chief Accounting July 9, 1999
-------------------------- Officer and Controller
James H. Prince (Principal Accounting Officer)
/s/ JOE R. KLUTTS Director and Vice Chairman of July 9, 1999
-------------------------- the Board
Joe R. Klutts
Director July 9, 1999
--------------------------
David R. Voelker
/s/ JOHN P. LABORDE Director July 9, 1999
--------------------------
John P. Laborde
Director July 9, 1999
--------------------------
Robert A. Bernhard
Director July 9, 1999
--------------------------
Raymond B. Gary
/s/ B.J. DUPLANTIS Director July 9, 1999
--------------------------
B.J. Duplantis
