Stone Energy Corp. (SGY) Tops Q1 EPS by 12c

Stone Energy Corp. (NYSE: SGY) reported Q1 EPS of $0.52, $0.12 better than the analyst estimate of $0.40. Revenue for the quarter came in at $222.6 million versus the consensus estimate of $218.26 million.

Operational Update

Mississippi Canyon 29 – Cardona South (Deep Water). The Cardona South well (MC 29 #5 well) encountered over 275 feet of net oil pay in three separate sections of the well. The Cardona South success extends the productive zone of the Mississippi Canyon 29 TB-9 well to the adjacent fault block to the south and sets up a potential second and third well in the fault block. Plans are to flow the Cardona South well and the previously announced Cardona discovery to the Stone owned and operated Pompano platform with first production expected in early 2015. Stone holds a 65% working interest in the project and is the operator.

Mississippi Canyon 29 – Cardona (Deep Water). The Cardona well (MC 29 #4 well) was estimated to have approximately 84 feet of net pay upon initial discovery. After further evaluation of the discovery, the estimated pay zone is now expected to be approximately 96 feet, although the deeper exploration target was deemed non-commercial. The Cardona success extends the productive zone in Stone's Mississippi Canyon 29 TB-9 well to the adjacent fault block to the north. Plans are to flow the Cardona and the Cardona South wells to the Stone owned and operated Pompano platform with first production expected in early 2015. Stone holds a 65% working interest in the project and is the operator.

Mississippi Canyon 211 - Mica Deep (Deep Water). The Mica Deep exploration well has reached total depth without encountering commercial hydrocarbons. Stone holds a 50% working interest in the prospect.

Mississippi Canyon 26 – Amethyst (Deep Water). The Amethyst exploration well (100% working interest) encountered approximately 90 feet of net hydrocarbon pay in one interval which suggests a commercial discovery. Analysis of logging, coring and fluid data confirmed the existence of natural gas, condensate and natural gas liquids in the pay zone (an estimated yield of 60-80 barrels of liquids per million cubic foot of natural gas). The interval has been placed safely behind pipe for a future completion. A full evaluation, including seismic and subsurface data integration, is needed before hydrocarbon quantities can be estimated and a specific development plan is sanctioned. A single or multi-well tie-back to Stone's 100 percent owned and operated Pompano platform, located less than five miles from the discovery, is a likely development option.

Amberjack Development Drilling Program. Stone expects to secure a platform rig for its Amberjack (Mississippi Canyon 109) drill program. It is anticipated that the rig will become available in the fourth quarter of 2014. The program is expected to consist of four to six development wells.

Pompano Development Drilling Program. Stone expects to secure a platform rig for its Pompano (Viosca Knoll 989) drill program. It is anticipated that the rig will become available by mid-2015. The program is expected to consist of four to five development wells.

Walker Ridge 89 - Goodfellow (Deep Water). The Goodfellow exploration well targets the Lower Tertiary and is projected to spud in late 2014. Stone currently holds an approximate 13% working interest in the prospect, which is operated by Eni. The well is estimated to take five months to drill.

Mississippi Canyon 118 - Harrier (Deep Water). The Harrier exploration well targets the Miocene interval and is projected to spud in late 2014 or early 2015. Stone currently holds an approximate 37% working interest in the prospect, which is operated by ConocoPhillips. The well is estimated to take four months to drill.

West Cameron 176 - Tomcat (Deep Gas). The Tomcat exploration well (100% working interest) encountered approximately 30 feet of net hydrocarbon pay in the Camerina interval. Based on well log analysis, combined with offset Camerina production history, we believe that the zone may produce liquids rich natural gas with approximately 40-60 barrels of condensate per Mcf of natural gas as well as additional natural gas liquids volumes. The well is currently being tied back to the nearby Stone operated East Cameron 64 production platform with production estimated to commence in June 2014.

Cayenne (Deep Gas). The Cayenne exploration well, located in Iberia parish, is expected to spud in late 2014 or the first half of 2015. Stone holds a 50% working interest in the project and is also the operator. The well is estimated to take three months to drill.

Appalachian Basin - Marcellus Shale (Drilling Program Update). Stone drilled nine Marcellus shale wells and began completions on 14 wells during the first quarter of 2014. By year-end 2014, Stone expects to drill 28 to 32 wells and to complete 30 to 34 wells in the Marcellus shale.

Appalachian Basin - Marcellus Shale (Production Update). During the first quarter of 2014, Stone averaged approximately 87 MMcfe per day (62 MMcf per day of gas and 4,200 barrels per day of liquids) from Stone's Marcellus shale position. During the first quarter of 2014, two wells in the Heather field were brought online. Stone expects to bring an additional four wells in the Heather field online during the second quarter of 2014. Additionally, it is projected that 18 new wells in the Mary field will be brought on production in third quarter of 2014.

Appalachian Basin – Utica Shale Test. Stone expects to spud a Utica shale test well late in the secon

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