Drill Down into Stone Energy’s 3Q16 Production

For 3Q16, Stone Energy (SGY) reported total production of 39.1 Mboe (thousand barrels of oil equivalent) per day, which is above its 3Q16 production guidance range of 35–37 Mboe per day.

Although Stone Energy beat its own production guidance, its 3Q16 production is ~2% lower than its 3Q15 production of 39.8 Mboe per day. However, Stone Energy’s 3Q16 production is ~35% higher sequentially when compared with 2Q16.

For 3Q16, Stone Energy’s production mix contained ~43% crude oil, ~19% natural gas liquids, and ~38% natural gas. In June 2016, higher natural gas prices led Stone Energy to resume production from the Mary field, which was shut down in 3Q15 due to lower margins.

In 3Q16, production from the Mary field averaged over 90 MMcfe (million cubic feet equivalent) per day.

For 4Q16, Stone Energy expects total production to range from 41–43 Mboe per day, a midpoint increase of ~75% when compared with its 4Q15 production.

For 2016, Stone Energy now expects full-year production to range from 35–37 Mboe per day, a midpoint increase of ~2 Mboe per day (or ~6%) from its previous guidance of ~34 Mboe per day.

On October 20, 2016, Stone Energy entered into a purchase and sale agreement with TH Exploration III, an affiliate of Tug Hill, for the sale of the Appalachia assets for $360 million in cash, subject to the customary purchase price adjustments.

These assets produced ~10.3 Bcfe (billion cubic feet equivalent) in 3Q16. The sale has an effective date of June 1, 2016, and is expected to close by February 25, 2017. This sale is an important component of SGY’s restructuring support agreement, which is discussed in Part 6 of this series.

Recently, several S&P 500 (SPY) upstream companies such as ConocoPhillips (COP), Southwestern Energy (SWN), and Pioneer Natural Resources (PXD) have also increased their fiscal 2016 production guidance.