Stone Energy Q2 Loss Wider than Expected, Revenues Slip

Zacks

Stone Energy Corp. SGY incurred second-quarter 2015 loss of 17 cents per share, wider than the Zacks Consensus Estimate of a loss of 10 cents. The reported loss showed massive deterioration from the year-earlier profit of 8 cents a share.

Total operating revenue decreased 27.1% year over year to $149.5 million in the quarter from approximately $205.0 million. This also came below the Zacks Consensus Estimate of $152.0 million.

Operational Highlights

During the quarter, production averaged 291.7 million cubic feet of gas equivalent per day (MMcfe/d), up 10.4% from the prior-year quarter level of 264.3 MMcfe/d. Of the total production, natural gas accounted for nearly 47%, oil constituted 35% and the remaining 18% was natural gas liquids (NGL).

Overall realization, on a per Mcfe basis, was $4.49 in the reported quarter against $8.91 in second-quarter 2014. Natural gas price of $1.82 per Mcf was below $4.03 per Mcf in the year-ago quarter, while natural gas liquids price came at $13.90 per barrel, down from $34.12 per barrel over the year-ago quarter. Oil price also decreased to $55.55 per barrel from $100.30 per barrel in the year-ago quarter.

On the cost front, unit lease operating expenses decreased to $1.03 per Mcfe (against $2.06 per Mcfe in the year-ago quarter). Depreciation, depletion and amortization was $2.89 per Mcfe (compared with $3.82 per Mcfe), while salaries, general and administrative expenses came in at 62 cents per Mcfe (against 69 cents per Mcfe).

Liquidity

At the end of the quarter, Stone Energy had approximately $141.7 million in cash and $1,538.5 million in long-term debt. Capital expenditures for the second quarter of 2015 were approximately $91.1 million, which included $18.8 million of plugging and abandonment expenditures, and the sale of a deep water lease block for $10.1 million.

Guidance

For the third quarter, the company expects net daily production of 234−246 MMcfe. For 2015, it anticipates total volume in the range of 252−264 MMcfe per day. Stone Energy expects capital outlay projection for 2015 at $450 million.

Zacks Rank

Stone Energy carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Seadrill Partners, LLC SDLP, CVR Refining, L.P. CVRR and Valero Energy Partners, L.P. VLP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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