Stone Energy Corporation Announces Second Quarter 2009 Results

LAFAYETTE, La., July 30 /PRNewswire-FirstCall/ -- Stone Energy Corporation
(NYSE: SGY) today announced net income of $27.2 million, or $0.65 per share,
on operating revenue of $170.3 million for the second quarter of 2009 compared
to net income of $82.8 million, or $2.88 per share, on operating revenue of
$263.0 million in the second quarter of 2008. For the six months ended June
30, 2009, a net loss of $198.7 million, or $4.92 per share, on operating
revenue of $312.5 million compared to net income of $145.1 million, or $5.08
per share, on operating revenue of $466.2 million during the comparable 2008
period. All per share amounts are on a diluted basis.

Discretionary cash flow was $113.7 million during the second quarter of 2009
compared to $180.5 million generated during the second quarter of 2008 and
$68.5 million during the first quarter of 2009. For the first six months of
2009, discretionary cash flow totaled $182.1 million compared to $330.8
million for the comparable 2008 period. Please see "Non-GAAP Financial
Measure" and the accompanying financial statements for a reconciliation of
discretionary cash flow, a non-GAAP financial measure, to net cash flow
provided by operating activities.

Net daily production volumes during the second quarter of 2009 averaged 209
million cubic feet of gas equivalent (MMcfe) per day, representing an 8%
increase over average daily production of 194 MMcfe per day for the first
quarter of 2009. For the six months ended June 30, 2009, net average daily
production volumes were 201 MMcfe per day compared to 190 MMcfe per day for
the six months ended June 30, 2008.

CEO David Welch stated, "The second quarter appears to be a positive
inflection point for Stone. Production continued to increase as we completed
our development program at Ewing Bank 305 and oil and gas volumes tied to
damaged third party pipelines came back on line late in the quarter. The
rerouted oil pipeline from Amberjack, our top field, has been completed on
schedule and below budget and we anticipate it to be operational in the third
quarter. Operating expenses declined as we substantially completed our
hurricane related repairs, captured merger synergies and rebid supplier and
service contracts. We also accelerated our Gulf of Mexico shelf hurricane
risk mitigation plan to improve the structural integrity of our offshore
facilities and to proactively plug targeted idle wells. We have approved a
four to five well drilling program to commence in the fourth quarter at
Amberjack and have begun modification of a rig to fit on the platform."

"In June, we announced our first deep water discovery at Pyrenees and are
currently drilling the first appraisal well. Importantly, we also raised over
$60 million from a secondary stock offering which, along with insurance
settlement proceeds relating to Hurricane Ike received in July, significantly
improved our liquidity and cash position. This allowed us to pay down some
bank debt and focus on the business of finding and producing reserves. We are
looking forward to the drilling of our portfolio of prospects we have captured
on the GOM shelf, in the deep water Gulf of Mexico and the Marcellus Shale of
Appalachia."

Prices realized during the second quarter of 2009 averaged $69.93 per barrel
(Bbl) of oil and $6.41 per thousand cubic feet (Mcf) of natural gas, which
represents a 39% decrease, on an Mcfe basis, over second quarter 2008 average
realized prices of $110.10 per Bbl of oil and $11.46 per Mcf of natural gas.
Average realized prices during the first six months of 2009 were $63.01per Bbl
of oil and $6.73 per Mcf of natural gas, representing a 37% decrease on a Mcfe
basis compared to $103.28 per Bbl of oil and $10.15 per Mcf of natural gas
realized during the first six months of 2008. All unit pricing amounts
include the cash settlement of effective hedging contracts as well as a
portion of the unwound hedges that were unwound in March 2009. Hedging
transactions in the second quarter of 2009 added $44.9 million to oil and gas
revenues, which included $37.3 million ($24.2 million after-tax) from the
accounting recognition of the hedges that were unwound in March 2009.

In the second quarter of 2009, hedging increased the average realized price of
natural gas by $2.62 per Mcf, compared to a decrease in average realized
prices of $0.03 per Mcf of natural gas during the second quarter of 2008.
Hedging transactions in the second quarter of 2009 increased the realized oil
prices by $12.57 per Bbl, compared to a decrease in realized oil prices by
$14.63 per Bbl during the second quarter of 2008.

Lease operating expenses (LOE) incurred during the second quarter of 2009
totaled $41.1 million compared to $34.9 million for the comparable quarter in
2008, and $58.2 million in the first quarter of 2009. The first quarter 2009
included $13.0 million in hurricane related repair expenses while the second
quarter of 2009 had only $3.6 million in hurricane related expenses and a
lower base LOE due to cost savings. On a per unit basis, LOE was $2.17 per
Mcfe in the second quarter of 2009 versus $1.96 per Mcfe in the second quarter
of 2008 and $3.34 per Mcfe in the first quarter of 2009. For the six months
ended June 30, 2009 and 2008, lease operating expenses were $99.3 million and
$65.2 million, respectively. In the second quarter 2009, there was an other
operational charge of $2.4 million which related to the early cancellation of
a rig contract.

Depreciation, depletion and amortization (DD&A) on oil and gas properties for
the second quarter of 2009 totaled $55.6 million compared to $70.2 million for
the second quarter of 2008. DD&A expense on oil and gas properties for the
six months ended June 30, 2009 totaled $114.7 million compared to $132.9
million during the comparable period of 2008.

Salaries, general and administrative (SG&A) expenses for the second quarter of
2009 were $9.9 million compared to $11.3 million in the second quarter of
2008. For the six months ended June 30, 2009 and 2008, SG&A totaled $21.6
million and $21.5 million, respectively.

Stone had $325 million in borrowings outstanding at June 30, 2009 under its
bank credit facility with a borrowing base of $425 million, and letters of
credit totaling $69 million, resulting in $31 million of available borrowings
at June 30, 2009. In July, bank borrowings were further reduced to $313
million, leaving $43 million in availability under the facility, and our
projected cash position at July 31, 2009 is approximately $140 million. The
next borrowing base redetermination is expected by November 1, 2009.

Capital expenditures before capitalized SG&A and interest during the second
quarter of 2009 were approximately $59.4 million. The capital expenditure
amount includes $21.8 million of plugging and abandonment expenditures.
Additionally, $4.2 million of SG&A expenses and $6.5 million of interest were
capitalized during the quarter.

Public Stock Offering
As previously announced on June 10, 2009, Stone sold 8,050,000 shares of its
common stock in a public offering (including the overallotment) at a price of
$8.00 per share resulting in net proceeds of approximately $60.5 million after
deducting the underwriting discount and estimated offering expenses. The net
proceeds are being used for general corporate purposes, including the
repayment of borrowings under its bank credit facility.

Operational Update
Deepwater Gulf of Mexico, Pyrenees Discovery. In June 2009, Stone announced
a discovery on its deepwater Pyrenees Prospect on Garden Banks Block 293. The
discovery well encountered 125 feet of net hydrocarbon pay in three zones.
Stone and its partners are currently drilling a well to delineate the
discovery and expect to test both the shallow and deeper objectives. Stone
has a 15% working interest in Pyrenees and Newfield Exploration is the
operator.

Deepwater Gulf of Mexico, other Areas. Stone has a working interest in 64
deepwater leases and expects to participate in 4-6 wells in 2010. The
Blacktail Prospect in Garden Banks Block 78 may begin drilling in late 2009 or
early 2010. Stone has a 20% working interest in Blacktail and Anadarko
Petroleum is the operator. Stone's current working interest ranges between
11% and 33% in the other prospects planned for 2010.

Appalachian Basin (Marcellus Shale Play). Stone currently has more than
30,000 net acres leased in the Marcellus Shale Play. Stone is producing from
three vertical Marcellus wells in West Virginia and three additional vertical
development wells in West Virginia have been drilled and expect to be
completed, hydraulically fractured, and tested through existing gathering
systems within the next few months. Stone expects to drill another 4 or 5
wells in West Virginia during the remainder of this year as well as 2 or 3
wells in Pennsylvania. Stone is permitting a number of additional wells in
the Marcellus Shale Play and expects to ramp up drilling activity in 2010.
The Company is also engaged in activities to enhance its current leasehold.
Stone is designated operator on most of its leasehold and currently owns at
least a 50% working interest in all leases.

Mississippi Canyon 109 - Amberjack Field. Daily oil production at
Amberjack re-started during the second quarter as Stone began barging in April
in advance of the damaged oil pipeline being rerouted. Net oil volumes
averaged approximately 2,400 bbl per day for the quarter. Amberjack
production is expected to begin flowing through the new pipeline later in the
third quarter. Including gas volumes, the net production is expected to be
approximately 30 MMcfe per day (80% oil, 20% gas split) once the pipeline is
put into service. In the fourth quarter, Stone expects to begin drilling the
first of 4 or 5 wells at Amberjack with a platform rig, which should continue
into 2010. Stone operates Amberjack and owns 100% working interest.

Gulf of Mexico, Shelf Production. Production from a number of fields was
restored in the second quarter as third-party pipeline systems damaged by last
year's hurricanes were brought back into service. By the end of the quarter,
Stone's net production increased approximately 30-40 MMcfe per day from these
restored fields. Two more Stone-operated fields (Vermilion 255 and West
Cameron 45) have been brought back onto production since the end of the second
quarter and should contribute another 10-15 MMcfe per day of net production.
Stone is also undertaking a workover program in several fields in an effort to
boost production. For example, a proposed workover program at South Pass 38
is expected to add 10 MMcfe per day in production later this quarter.

Gulf of Mexico, Risk Mitigation. Stone has also accelerated spending on its
hurricane risk mitigation program which calls for proactively plugging and
abandoning idle wells and addressing the structural integrity of its
platforms. Stone expects to spend approximately $40 million on this
initiative this year.

Updated 2009 Guidance
Estimates for Stone's future production volumes are based on assumptions of
capital expenditure levels and the assumption that market demand and prices
for oil and gas will continue at levels that allow for economic production of
these products. The production, transportation and marketing of oil and gas
are subject to disruption due to transportation and processing availability,
mechanical failure, human error, hurricanes, and numerous other factors.
Stone's estimates are based on certain other assumptions, such as well
performance, which may vary significantly from those assumed. Lease operating
expenses, which include major maintenance costs, vary in response to changes
in prices of services and materials used in the operation of our properties
and the amount of maintenance activity required. Estimates of DD&A rates can
vary according to reserve additions, capital expenditures, future development
costs, and other factors. Therefore, we can give no assurance that our future
production volumes, lease operating expenses or DD&A rate will be as
estimated. The following guidance is subject to all of the cautionary
statements and limitations described in this press release below, under the
heading "Forward-Looking Statements." The following guidance supersedes the
previous guidance provided in the May 5, 2009 press release.

Capital Expenditure Budget. The current Board authorized 2009 capital
expenditure budget is $300 million, which excludes acquisitions, and
capitalized interest and SG&A. Although the Board has authorized a capital
expenditure budget of $300 million, management has targeted a lesser amount of
approximately $250 million given the lower commodity price environment and the
focus on liquidity. The remaining $50 million will remain as discretionary
and uncommitted.

Production. For the third quarter of 2009, Stone expects net daily production
to average between 215-235 MMcfe. Stone still expects full year 2009 average
daily production to be in the range of 205-225 MMcfe per day.

Lease Operating Expenses. Stone expects lease operating costs, excluding
production taxes, to range between $190-$210 million for 2009 based upon
current operating conditions and budgeted maintenance activities. The first
and second quarter 2009 lease operating expenses included hurricane related
major maintenance costs of approximately $13.0 million and $3.6 million,
respectively.

Depreciation, Depletion & Amortization. Stone now expects its DD&A rate to
range between $2.80 -$3.00 per Mcfe during 2009. The decrease from 2008 is
due to the 2008 year-end and first quarter 2009 ceiling test write-downs,
which reduced the carrying value of the full cost pool for our oil and gas
properties. The increase from the previous guidance in May 2009 is primarily
due to an increase in estimated future development costs.

Salaries, General & Administrative Expenses. Stone now expects its SG&A
expenses (excluding incentive compensation expense) to range between $43-$48
million during 2009, down slightly from previous guidance.

Corporate Tax Rate. For 2009, Stone expects its corporate tax rate to be
approximately 35%.

Hedge Position
The following tables illustrate Stone's derivative positions for calendar
years 2009, 2010, and 2011 as of July 30, 2009. This table excludes the oil
and gas hedges unwound in the first quarter resulting in proceeds of $113
million.

Zero-Premium Collars
--------------------------------
Natural Gas
--------------------------------
Daily
Volume Floor Ceiling
(MMBtus/d) Price Price
----------- ----- -----

2009 20,000 $8.00 $14.30

Fixed-Price Swaps
---------------------------------------------
Natural Gas Oil
----------------------- --------------------
Daily Daily
Volume Swap Volume Swap
(MMBtus/d) Price (Bbls/d) Price
----------- ----- ----------- -----

2009 20,000* $4.24 3,000** $50.00
2009 20,000** 5.00 2,000** 50.45
2009 20,000** 5.13 4,000** 71.25
------------------------------------------------------
2010 20,000 6.97 2,000 63.00
2010 20,000 6.50 1,000 64.05
2010 10,000 6.50 1,000 60.20
2010 1,000 75.00
2010 1,000 75.25
2010 4,000*** 73.65
------------------------------------------------------
2011 10,000 6.83 1,000 70.05
2011 1,000 78.20

* July - September
** October - December
*** January - March

Other Information
Stone Energy has planned a conference call for 10:00 a.m. Central Time on
Friday, July 31, 2009 to discuss the operational and financial results for the
second quarter of 2009. Anyone wishing to participate should visit our website
at www.StoneEnergy.com for a live web cast or dial 1-877-228-3598 and request
the "Stone Energy Call." If you are unable to participate in the original
conference call, a replay will be available immediately following the
completion of the call on Stone Energy's website. The replay will be
available for one month.

Non-GAAP Financial Measures
In this press release, we refer to a non-GAAP financial measure we call
"discretionary cash flow." Management believes discretionary cash flow is a
financial indicator of our company's ability to internally fund capital
expenditures and service debt. Management also believes this non-GAAP
financial measure of cash flow is useful information to investors because it
is widely used by professional research analysts in the valuation, comparison,
rating and investment recommendations of companies within the oil and gas
exploration and production industry. Discretionary cash flow should not be
considered an alternative to net cash provided by operating activities or net
income, as defined by GAAP. Please see the "Reconciliation of Non-GAAP
Financial Measure" for a reconciliation of discretionary cash flow to cash
flow provided by operating activities.

Forward Looking Statement
Certain statements in this press release are forward-looking and are based
upon Stone's current belief as to the outcome and timing of future events. All
statements, other than statements of historical facts, that address activities
that Stone plans, expects, believes, projects, estimates or anticipates will,
should or may occur in the future, including future production of oil and gas,
future capital expenditures and drilling of wells and future financial or
operating results are forward-looking statements. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements herein include the timing and extent of changes in commodity prices
for oil and gas, operating risks, liquidity risks, and other risk factors and
known trends and uncertainties as described in Stone's Annual Report on Form
10-K and Quarterly Reports on Form 10-Q as filed with the Securities and
Exchange Commission ("SEC"). Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove incorrect, Stone's
actual results and plans could differ materially from those expressed in the
forward-looking statements.

Stone Energy is an independent oil and natural gas company headquartered in
Lafayette, Louisiana, and is engaged in the acquisition, exploration,
exploitation, development and operation of oil and gas properties located
primarily in the Gulf of Mexico. Stone is also active in the Appalachia
region. For additional information, contact Kenneth H. Beer, Chief Financial
Officer, at 337-521-2210-phone, 337-521-9880 fax or via e-mail at
CFO@StoneEnergy.com.

STONE ENERGY CORPORATION
SUMMARY STATISTICS
(In thousands, except per share/unit amounts)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
FINANCIAL RESULTS
Net income (loss) $27,168 $82,811 ($198,698) $145,053
Net income (loss) per
share $0.65 $2.88 ($4.92) $5.08

PRODUCTION QUANTITIES
Oil (MBbls) 1,544 1,422 2,838 2,704
Gas (MMcf) 9,723 9,284 19,382 18,417
Oil and gas (MMcfe) 18,987 17,816 36,410 34,641

AVERAGE DAILY PRODUCTION
Oil (MBbls) 17 16 16 15
Gas (MMcf) 107 102 107 101
Oil and gas (MMcfe) 209 196 201 190

REVENUE DATA (1)
Oil revenue $107,972 $156,569 $178,826 $279,276
Gas revenue 62,340 106,393 130,490 186,919
-------- -------- -------- --------
Total oil and gas
revenue $170,312 $262,962 $309,316 $466,195

AVERAGE PRICES (1)
Oil (per Bbl) $69.93 $110.10 $63.01 $103.28
Gas (per Mcf) 6.41 11.46 6.73 10.15
Per Mcfe 8.97 14.76 8.50 13.46

COST DATA
Lease operating expenses $41,122 $34,900 $99,276 $65,153
Salaries, general and
administrative expenses 9,922 11,278 21,583 21,534
DD&A expense on oil and
gas properties 55,558 70,172 114,730 132,879

AVERAGE COSTS (per Mcfe)
Lease operating expenses $2.17 $1.96 $2.73 $1.88
Salaries, general and
administrative expenses 0.52 0.63 0.59 0.62
DD&A expense on oil and
gas properties 2.93 3.94 3.15 3.84

AVERAGE SHARES OUTSTANDING
- Diluted 41,338 28,459 40,365 28,260

(1) Includes the cash settlement of effective hedging contracts.

STONE ENERGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ------------------------
2009 2008 2009* 2008
------- ------- --------- --------

Operating
revenue:
Oil
production $107,972 $156,569 $178,826 $279,276
Gas
production 62,340 106,393 130,490 186,919
Derivative
income,
net - - 3,196 -
------- ------- --------- --------
Total
operating
revenue 170,312 262,962 312,512 466,195
------- ------- --------- --------

Operating
expenses:
Lease
operating
expenses 41,122 34,900 99,276 65,153
Other
operational
expense 2,400 - 2,400 -
Production
taxes 2,565 3,503 3,840 4,903
Depreciation,
depletion
and
amortization 57,052 70,831 117,670 134,218
Write-down
of oil and
gas
properties - 10,100 340,083 10,100
Accretion
expense 8,376 3,853 16,753 8,221
Incentive
compensation
expense 1,197 882 1,417 1,900
Salaries,
general
and
administrative
expenses 9,922 11,278 21,583 21,534
Derivative
expenses,
net 743 3,353 - 3,612
Impairment
of
inventory 1,256 - 7,179 -
------- ------- --------- --------
Total
operating
expenses 124,633 138,700 610,201 249,641
------- ------- --------- --------

Income
(loss)
from
operations 45,679 124,262 (297,689) 216,554
------- ------- --------- --------

Other
(income)
expenses:
Interest
expense 4,788 3,633 9,954 7,492
Interest
income (146) (3,432) (282) (8,346)
Other
income,
net (851) (1,313) (1,825) (2,354)
------- ------- --------- --------
Total other
(income)
expenses 3,791 (1,112) 7,847 (3,208)
------- ------- --------- --------

Income
(loss)
before
taxes 41,888 125,374 (305,536) 219,762
------- ------- --------- --------

Provision
for income
taxes:
Deferred 14,720 9,535 (106,888) 27,731
Current - 33,028 23 46,978
------- ------- --------- --------
Total
income
taxes 14,720 42,563 (106,865) 74,709
------- ------- --------- --------
Non-controlling
interest - - (27) -
------- ------- --------- --------
Net income
(loss) $27,168 $82,811 ($198,698) $145,053
======= ======= ========= ========

*Includes a $10.3 million adjustment ($6.7 million after tax) for
under-accrual of revenues in the first quarter of 2009.

STONE ENERGY CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(In thousands)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ------------------------
2009 2008 2009 2008
------- -------- -------- --------

Net income (loss)
as reported $27,168 $82,811 ($198,671) $145,053

Reconciling items:
Depreciation,
depletion and
amortization 57,052 70,831 117,670 134,218
Write-down of
oil and gas
properties - 10,100 340,083 10,100
Non-cash
write-down of
tubular inventory 1,256 - 7,179 -
Deferred income
tax provision
(benefit) 14,720 9,535 (106,888) 27,731
Accretion expense 8,376 3,853 16,753 8,221
Stock compensation
expense 1,193 2,185 3,159 4,322
Other 3,889 1,167 2,825 1,132
------- -------- -------- --------
Discretionary
cash flow 113,654 180,482 182,110 330,777

Changes in
current income
taxes 3,027 (3,581) 30,435 (47,131)
Unwinding of
derivative
contracts (41,160) - 71,662 -
Settlement of
asset
retirement
obligations (21,787) (15,004) (28,249) (33,651)
Investment in put
contracts - (1,914) - (1,914)
Other working
capital changes 4,698 (32,908) 17,585 (8,692)
------- -------- -------- --------
Net cash
provided by
operating
activities $58,432 $127,075 $273,543 $239,389
======= ======== ======== ========

STONE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)

June 30, December 31,
2009 2008
---------- ----------
Assets
------
Current assets:
Cash and cash equivalents $109,339 $68,137
Accounts receivable 136,742 151,641
Inventory 12,546 35,675
Other current assets 1,109 1,413
Current income tax receivable 748 31,183
Fair value of hedging contracts 22,714 136,072
---------- ----------
Total current assets 283,198 424,121

Oil and gas properties - United States
Proved, net 857,972 1,130,583
Unevaluated 454,657 493,738
Building and land, net 5,537 5,615
Fixed assets, net 4,373 5,326
Other assets, net 47,484 46,620
Fair value of hedging contracts 3,307 -
---------- ----------
Total assets $1,656,528 $2,106,003
========== ==========

Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable to vendors $114,228 $144,016
Deferred taxes 13,629 32,416
Undistributed oil and gas proceeds 15,555 37,882
Other current liabilities 10,322 15,759
Asset retirement obligations 62,284 70,709
Fair value of hedging contracts 17,711 -
---------- ----------
Total current liabilities 233,729 300,782

Bank debt 325,000 425,000
8 1/4% Senior Subordinated Notes due 2011 200,000 200,000
6 3/4% Senior Subordinated Notes due 2014 200,000 200,000
Deferred taxes 85,729 193,924
Other long-term liabilities 12,428 11,751
Asset retirement obligations 177,135 186,146
Fair value of hedging contracts 11,661 1,221
---------- ----------
Total liabilities 1,245,682 1,518,824
---------- ----------

Common stock 475 394
Additional paid-in capital 1,320,384 1,257,633
Accumulated deficit (953,685) (754,987)
Treasury stock (860) (860)
Accumulated other comprehensive income 44,532 84,912
---------- ----------
Total Stone Energy Corporation
stockholders' equity 410,846 587,092
---------- ----------
Non-controlling interest - 87
---------- ----------
Total stockholders' equity 410,846 587,179
---------- ----------
Total liabilities and stockholders'
equity $1,656,528 $2,106,003
========== ==========

SOURCE Stone Energy Corporation

Kenneth H. Beer, Chief Financial Officer of Stone Energy Corporation,
+1-337-521-2210, fax, +1-337-521-9880, CFO@StoneEnergy.com