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Stone Energy’s 2018 Capital Program: What to Expect

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Apr. 12 2018, Updated 8:03 a.m. ET

Stone Energy’s 2018 capex

In this part, we’ll discuss Stone Energy (SGY)—the final company in the top-five lineup of upstream companies with the highest forecast capex (capital expenditure) growth in 2018 compared to the levels in 2017. Stone Energy’s management forecast a capex of $212 million in 2018 compared to $154 million spent in 2017, which is ~38% growth.

The forecast capex doesn’t include the effect of the potential Talos combination. In November 2017, Stone Energy announced its decision to combine with Talos Energy LLC. Under the agreement terms, Talos Energy LLC and Stone Energy will both become wholly-owned subsidiaries of a new holding company, which will become a publicly traded entity. The combined company will be named “Talos Energy.” At closing, Talos shareholders will own 63% of the new combined company, while Stone Energy shareholders will own 37%.

The only update provided is that the combination is “progressing.” The all-stock transaction is expected to close during 2Q18. As you can see in the above chart on the right, the combined capex is expected to be $440 million.

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2018 capex plans

Around 36% of Stone Energy’s 2018 capex is allocated to exploration, 27% is allocated to development, and 37% is allocated to plugging and abandonment expenditures. In a press release, Stone Energy said, “The allocation of capital across the various areas is subject to change based on several factors, including permitting times, rig availability, non-operator decisions, farm-in opportunities, and commodity pricing.”

2018 production growth forecast

The combined company’s production is expected to average ~48.5 Mboe/d in 2018. Stone Energy’s fiscal 2017 production was 21.9 Mboe/d.

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