According to its CEO, Stone Energy Corporation has been working hard as a company to create value for is investors by focusing on selective deep-sea drilling expeditions creating potential for strong cash flows for the firm. The recent activities include the exploration of Mt. Providence Well along with The Derbio Well that will promote strong valuation results for the year ahead.
The December quarter end results reflect a net income of USD17.1 Million which is 22% of the revenue generated in that same period. The fourth quarter average production was around 17.6 thousand Boe – Barrel of Equivalents which is highly effective keeping in view the 5-day down time caused by Hurricane Nate and a shut-down of one of the platforms due to compressor engine replacement.
Merger of Stone Energy with Talos Energy LLC
The announcement came in November of 2017 when the Board of Director of both companies approved the all-stock transaction creating the merged entity as the premier off-shore exploration and drilling company under the banner of Talos Energy Inc. The new ticker symbol for the merged entity would be TALO and it would be listed on NYSE.
The TP&G (Transport, processing and Gathering) expense for the year totaled to USD11 Million while Depreciation and Depletion along with Amortization expense came out to be USD133.8 Million. The SG&A Expense including Salaries, General and Administrative expenses for the year 2017 added up to a total of USD54.7 Million which is reduction of 2.55% from 2016 yearend figure of USD58.9 Million.
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The SG&A expense includes the restructuring costs associated with employee reductions that occurred in 2017 giving rise to the workforce severance costs. There was an increase in Net Derivative expenses from 2016 to 2017 with figures of USD 0.8 Million and USD15.2 Million respectively. The major contributor to this increase was the company policy to designate its 2017-2019 commodity derivative as cash flow hedges in 2017.
Update on Company Operations and Liquidity
As discussed earlier, the Derbio Deep Water Well is a stone generated prospect which was announced in December 2017. If successful this project will create a 100% tieback to an existing stone-owned platform.
The Rampart (Deep water) Well also previously announced, shows vertical depth of 107 feet filled with rich natural gas. Another project which has already been announced as Mt. Providence Deep Water Well exceeded the company’s initial expectations providing around 153 net feet of prime quality oil pay.
On the liquidity side, the company has an undrawn capacity of USD87.4 Million on the revolving line of credit and around USD263.5 Million of cash in hand. Another USD18.7 Million has been kept in restrictive accounts to cater to near term operating expenses. As of yearend 2017, Stone Energy has an outstanding debt of USD235.9 Million. Further to that, the company has no outstanding borrowing.