EXHIBIT 99
[Stone Energy Logo] [Basin Logo]
STONE ENERGY TO ACQUIRE BASIN EXPLORATION
IN STOCK-FOR-STOCK TRANSACTION
CREATES $1.5 BILLION COMPANY
Lafayette, LA and Denver, CO, October 30, 2000 -- Stone Energy Corporation
(NYSE: SGY) and Basin Exploration, Inc. (NASDAQ: BSNX) today announced that
their boards of directors have approved a definitive merger agreement to combine
the two companies in a tax-free, stock-for-stock transaction. Under the
agreement, Basin stockholders will receive 0.3974 shares of Stone for each Basin
share. Based upon Stone's closing price of $54.16 on Friday, October 27, 2000,
this represents $21.52 for each Basin share, a premium of 10%. The total equity
value of the transaction is approximately $410 million. In addition, Stone will
assume approximately $48 million of Basin debt. Stone's stockholders will own
approximately 71% of the combined company and Basin's stockholders will own
approximately 29%. The combination is expected to be accounted for as a pooling
of interests and is anticipated to be immediately accretive on a per share basis
to cash flow, earnings, and reserves. The companies expect the transaction to be
completed early in 2001.
The combined company, to be called Stone Energy Corporation, will be
headquartered in Lafayette, LA. It will have a total market capitalization of
approximately $1.5 billion ($1.4 billion in equity; $100 million in net debt)
and a 23% pro forma total debt-to-book capitalization.
On a pro forma basis, the merger is anticipated to:
Increase Stone's proved reserves by approximately 54% from 387.4 Bcfe to
596.9 Bcfe as of year end 1999;
Increase Stone's current daily production by 50% from approximately 200
Mmcfe per day to approximately 300 Mmcfe per day; and
Expand Stone's significant drilling prospect inventory by approximately 50%
and increase prospective undeveloped acreage from approximately 74,000 to
approximately 267,000 acres.
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D. Peter Canty, president and chief operating officer of Stone Energy
Corporation, said, "This transaction is consistent with Stone's growth
philosophy since we first became a public company in 1993. Basin will provide
Stone with identified reserves and significant, defined upside drilling
potential. We are confident that our combined cash flow, along with the enhanced
inventory of high quality drilling opportunities this combination creates, will
yield impressive growth. In addition, the combined company will have one of the
strongest balance sheets in the industry to support future development and
acquisition opportunities."
Mr. Canty continued, "We are also pleased to welcome Basin's employees to our
combined company. Their expertise will enhance our already solid platform for
continued profitable growth. The transaction will bring together Stone's focus
on detailed field analysis and exploration of mature fields with the new lease
prospect generation expertise of Basin, creating an entity with complementary
technical skills and a common appreciation for low-cost operations. This
integration of core talents will enable us to significantly enhance the value of
our combined current and prospective asset base. We believe the combination of
our respective strengths will create the premier Gulf of Mexico-focused E&P
company."
Additional benefits expected from the transaction:
Increase Stone's financial strength, critical mass and scope, which will
allow the company to aggressively compete for and secure future growth
opportunities in the Gulf of Mexico;
Expand Stone's existing high-impact prospect portfolio with a number of
geologically opportunistic, multiple-well targets distributed uniformly across
the Gulf of Mexico, an area where both companies have achieved high rates of
return;
Enhance Stone's growth reserve potential beyond its current prospect
inventory by adding 22 producing properties and 47 unexplored primary term lease
blocks in the Gulf of Mexico;
Provide predictable cash flows from a hedge program, locking in high
commodity prices on volume from existing producing properties, and from the
long-lived production from Basin's Rocky Mountain property base;
Leverage Stone's existing technical and operational expertise and
infrastructure across combined operations in the Gulf of Mexico; and
Utilize Basin's extensive inventory of 3-D seismic databases across the
Gulf of Mexico.
Michael S. Smith, chief executive officer of Basin Exploration, Inc., said,
"This transaction represents a compelling opportunity for our stockholders and
our employees alike. Stone is the right fit for us in every way, from the
location and the scope of their exploration projects, to their long-term
strategic objectives, and a corporate culture with values that we share. Our
combined drilling programs include several high-impact projects that are
currently underway. Through working together and drawing on Stone's operational
expertise and our enhanced reserve and production base, we will be better able
to commercialize these discoveries and accelerate our growth potential."
As previously announced, D. Peter Canty will become chief executive officer of
Stone effective January 2001. He will continue in that role in the combined
company. Upon completion of the transaction, Michael Smith, the chief executive
officer of Basin, will join Stone's board of directors.
Proved Reserves. The combined company had pro forma proved reserves of 596.9
Bcfe as of December 31, 1999. The pro forma proved reserves were comprised of
approximately 65% gas and 35% oil and were divided between the Gulf Coast Basin
and the Rocky Mountains, 87% and 13%, respectively.
Production. On a pro forma basis, the combined company produced 91 Bcfe for the
fiscal year ended December 31, 1999 and an estimated 73 Bcfe for the nine months
ended September 30, 2000. Based on the 1999 year-end pro forma proved reserves
and production, the pro forma combined company had a reserve life of
approximately 6.6 years, consistent with the high proportion of shorter-life
Gulf Coast basin reserves. In 2000, Stone estimates that the pro forma combined
company will produce approximately 101 Bcfe, or an 11% increase over pro forma
production in 1999. Stone expects to grow pro forma combined production by over
15% in 2001.
Exploration. The merger combines exploration projects underway in a number of
high potential areas in the Gulf of Mexico. These include over 179 identified
prospects on the combined company's lease hold, or a 47% increase in Stone's
prospect inventory. These prospects are located on 43 producing properties and
52 unexplored primary term lease blocks. The combined company will have cash
flow beyond that necessary to drill these prospects.
Development. Stone recently announced an important discovery at Eugene Island
Block 243 on the Narwhal Prospect, which is expected to be brought on full
production in May 2001. In addition, Stone announced the development of
discoveries at Weeks Island, West Cameron Block 176 and East Cameron Block 64,
which are expected to begin production before year-end, and a discovery at
Vermilion Block 267, which is part of a multi-well exploratory drilling program.
Basin has logged pay in new wells at West Delta Block 58, South Marsh Island
Block 235, South Timbalier Block 107, and Vermilion Block 329, all of which are
expected to begin producing by the first quarter of 2001.
Pro Forma Cash Flow. On a pro forma basis, the combined company generated $153
million of discretionary cash flow for the fiscal year ended December 31, 1999
and an estimated $204 million for the nine months ended September 30, 2000.
Stone estimates that if the companies were combined for the year 2000, total
discretionary cash flow would be in excess of $300 million (approximately $11.50
per pro forma share outstanding). The companies each plan to implement a hedging
program to lock in the cash flow value associated with approximately 25%-30% of
the combined production from total proved reserves over the next two years. In
2001, based on the current outlook for commodity prices and the security
provided by these hedges, the combined company is expected to generate a growth
rate in discretionary cash flow in excess of 20%.
The transaction is conditioned, among other things, upon the approval of the
stockholders of both companies and customary regulatory approvals. James H.
Stone, chairman and chief executive officer of Stone Energy Corporation, who
beneficially owns 8% of the outstanding shares of Stone, has agreed to vote his
shares in favor of the transaction. Michael S. Smith, chief executive officer of
Basin Exploration, Inc., who beneficially owns 15% of the outstanding shares of
Basin, has agreed to vote his shares in favor of the transaction.
Merrill Lynch & Co. acted as financial advisor and provided a fairness
opinion to Stone and Vinson & Elkins, LLP served as legal advisors. Goldman,
Sachs & Co. acted as financial advisor to Basin and Brobeck, Phleger & Harrison,
LLP provided legal counsel to Basin.
Basin is engaged in the exploration, acquisition, and development of oil and gas
properties in the United States, both onshore and in the Gulf of Mexico.
Stone is an independent oil and gas company headquartered in Lafayette, LA, and
is engaged in the acquisition, exploitation and operation of oil and gas
properties located in the Gulf Coast Basin.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
Except for the historical and present factual information contained herein, the
matters set forth in this press release, including statements as to the expected
benefits of the merger such as efficiencies, cost savings, market profile and
financial strength, and the competitive ability and position of the combined
company, and other statements identified by words such as "expects," "projects,"
"plans," and similar expressions are forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including the
possibility that the anticipated benefits from the merger cannot be fully
realized, the possibility that costs or difficulties related to the integration
of our businesses will be greater than expected, the impact of competition and
other risk factors relating to our industry as detailed from time to time in
each of Stone's and Basin's reports filed with the SEC. Stone and Basin disclaim
any responsibility to update these forward-looking statements.
ADDITIONAL INFORMATION
Stone and Basin will file a proxy statement/prospectus and other relevant
documents concerning the proposed merger transaction with the SEC. INVESTORS ARE
URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. You will be able to obtain the documents free of charge at the
website maintained by the SEC at www.sec.gov. In addition, you may obtain
documents filed with the SEC by Stone free of charge by requesting them in
writing from Stone Energy Corporation, 625 East Kaliste Saloom Road, Lafayette,
Louisiana 70508, Attention: Corporate Secretary, or by telephone at (337)
237-0410. You may obtain documents filed with the SEC by Basin free of charge by
requesting them in writing from Basin Exploration, Inc., 1670 Broadway, Suite
2800, Denver, Colorado, 80202, or by telephone, (303) 685-8000.
Stone and Basin, and their respective directors and executive officers, many be
deemed to be participants in the solicitation of proxies from the stockholders
of Stone and Basin in connection with the merger. Information about the
directors and executive officers of Stone and their ownership of Stone stock is
set forth in the proxy statement for Stone's 2000 Annual Meeting of
stockholders. Information about the directors and executive officers of Basin
and their ownership of Basin stock is set forth in the proxy statement for
Basin's 2000 Annual Meeting of stockholders. Investors may obtain additional
information regarding the interests of such participants by reading the proxy
statement/prospectus when it becomes available.
Investors should read the proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions.
There will be a financial analyst teleconference call on Monday, October
30, 2000 at 9:45 AM EST. Domestic callers may participate by dialing (888)
849-9214 and requesting the Stone/Basin conference call; international callers
may dial (212) 271-4559. The call can also be monitored via the World Wide Web
at www.stoneenergy.com and www.streetfusion.com.
Note to Editors: Today's news release, along with other news about Stone and
Basin, is available on the Internet at www.stoneenergy.com.
Contact for Stone: Contact for Basin:
Jim Prince Neil Stenbuck
Vice President Vice President
and Chief Financial Officer and Chief Financial Officer
(318) 237-0410 (303) 685-8000
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