JP Morgan Global High Yield and Leveraged Finance Conference

Transcription

1 Stone Energy JP Morgan Global High Yield and Leveraged Finance Conference March 2, 2010

2 Disclosure Forward-Looking Statements. This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Certain statements in this presentation are forward-looking and are based upon the current belief of Stone Energy Corporation ("Stone") 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 and other risk factors 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.

3 Company Statistics Equity Market Value (1) Public Sub Notes Bank Debt Outstanding (2) Cash (2) Liquidity (3) Enterprise Value (1)(2) Trailing 12-month EBITDA (4) Est. Proved Reserves (5) Proved Reserves per Share (5) Net Debt per Proved Mcfe (2)(5) $738 Million $475 Million $125 Million $69 Million $276 Million $1.3 Billion $504 Million 411 Bcfe (68 MMboe) 9.3 Mcfe/sh (1.6 boe/sh) $1.28 / Mcfe ($7.72/boe) 1. As of closing share price of $16.80 on 2/22/10 2. Cash and debt as of 12/31/09. Does not include $63 Million of letters of credit outstanding 3. Borrowing base of $395 - $125 $63 = $207 + $69 Cash = $276 Million of Liquidity 4. See reconciliation to US GAAP in appendix 5. Represents 2009 YE estimated proved reserves which were engineered by Netherland Sewell & Associates 1

4 Enterprise Risk Management Focus Areas Actions Financial Stability Strengthen balance sheet Protect liquidity Generate excess cash flow vs. capex Mitigate oil / gas price volatility Hurricane Risk Mitigation Extensive structural assessment Proactive decommissioning initiative Diversify onshore Stable Production and Reserve Growth Maintain Shelf production Deepwater / Deep Shelf Marcellus Onshore oil opportunities 2

5 Strengthening Balance Sheet and Maintaining Liquidity Total Debt ($MM) $1,000 $800 $600 $825 $800 $725 $650 $575 $400 $200 $0 12/31/08 3/31/09 6/30/09 9/30/09 12/31/09 Total Liquidity ($MM) $400 $300 $200 $222 $286 $140 $204 $256 $100 $0 12/31/08 3/31/09 6/30/09 9/30/09 12/31/09 Note: Borrowing Base at 12/31/08 and 3/31/09 was $625 MM, and was $425 MM for the subsequent quarters. 3

6 Revenue per $/Mcfe $14.00 $12.00 Cash Margin (Includes Hedges) $12.48 Cash Margin Current Taxes Interest Expense Production Taxes G&A LOE $10.00 $8.00 $9.23 $8.63 $9.05 $6.00 $5.25 $5.68 $4.00 $2.00 $

7 Price Volatility Mitigation Approximate Percentage Hedged Oil Gas Total % 45% 46% % 9% 15% Oil Natural Gas Daily Volume (Bbl/d) Collar Daily Volume (MBtu/d) Collar Floor Ceiling Floor Ceiling ,000 $63.00 Swap Contract 20,000 $6.97 Swap Contract ,000 $64.05 Swap Contract 20,000 $6.50 Swap Contract ,000 $60.20 Swap Contract 10,000 $6.50 Swap Contract ,000 $75.00 Swap Contract ,000 $75.25 Swap Contract ,000* $73.65 Swap Contract ,000** $80.10 Swap Contract * Jan March ** April December ,000 $70.05 Swap Contract 10,000 $6.83 Swap Contract ,000 $78.20 Swap Contract ,000 $83.00 Swap Contract ,000 $83.05 Swap Contract 5

8 Enterprise Risk Management Focus Areas Actions Financial Stability Strengthen balance sheet Protect liquidity Generate excess cash flow vs. capex Mitigate oil / gas price volatility Hurricane Risk Mitigation Extensive structural assessment Proactive decommissioning initiative Diversify onshore Stable Production and Reserve Growth Maintain Shelf production Deepwater / Deep Shelf Marcellus Onshore oil opportunities 6

9 Abandonment Equipment Comparison Typical Platform Abandonment $300,000 per well Submerged Abandonment $5MM per well 7

10 Risk Mitigation Process Develop Formula for Risk Ranking Platforms and Wells Operational Risk Factors: Platform age Water depth Deck height Orientation Well density reduction Current utility Financial Factors Lifetime Revenue Submerged Mitigation Cost Standing Mitigation Cost 8

11 Decommissioning Program # Wells Plugged and Abandoned

12 Enterprise Risk Management Focus Areas Actions Financial Stability Strengthen balance sheet Protect liquidity Generate excess cashflow vs. capex Mitigate oil / gas price volatility Hurricane Risk Mitigation Extensive structural assessment Proactive decommissioning initiative Diversify onshore Stable Production and Reserve Growth Maintain Shelf production Deepwater / Deep Shelf Marcellus Onshore oil opportunities 10

13 Capital Expenditure Summary 2009 Capital Expenditures 2010E Capital Expenditure Budget GOM Shelf P&A/Facilities Other 2% Appalachia Deepwater / 7% 8% Deep Shelf 32% 16% GOM Shelf Recompletions/WO 35% GOM Shelf Exploitation Total: $276MM Conserve cash for liquidity/debt reduction, minimal drilling Focus on GOM shelf development/recompletions add rate Substantial capex commitment to proactive hurricane risk mitigation program Add Marcellus acreage, open Morgantown office, begin vertical drilling effort Successful initial deep water well (Pyrenees) GOM Shelf P&A/Facilities GOM Shelf Recompletions/WO 15% Other 14% 6% 24% GOM Shelf Exploitation 26% 16% Total: $400MM Increase capex by $100+MM Higher % of capital into drilling Appalachia Deepwater / Deep Shelf Maintain production from GOM shelf activity (oil focus) Increased Marcellus activity 14 gross wells, primarily horizontals Drill 4-6 gross Deepwater/Deep Shelf wells (10%-20% working interest) 11

14 Maintain GOM Shelf Production Oil Focus Estimated Proved Reserves (As of 12/31/09) Ewing Bank 305 PUD /09 Drilling program 2012/2013 PDNP 182 PDP 137 Mississippi Canyon Drilling program (4-5 wells) 2013/2014 Total = 411 Bcfe 2010 Production Guidance MMcfe/d Ship Shoal /11 Drilling program 2012/2013/

15 Shelf & South Louisiana Prospect Inventory Jabberwocky Trafalger Alley Cat Tomcat Oreole La Posada Pintail Rodeo Bronco W. Weeks Island Weeks Island Pinehurst Cut Off Barracuda Clovelly Jug HE 1 HE 2 Double Dip Merlin Osprey Harrier Beck Squeeze Play Gen. Longstreet Ping 2 Stumpknocker RedEar Uncle Charlie Gapper Nitrogen Herbert Asimov Heinlein Virgil Roy Bean Butch Cassidy Gallenas Cherokee Toucan Ping 1 Big Bird Tx Leager Cockatoo Multi-year project/prospect inventory Deep shelf option 13

16 Deep Shelf Opportunities La Posada Davey Jones Gen. Longstreet SS 113 Blackbeard Hickory Thunderhorse Knotty Head Tahiti SGY Prospects or Leads Industry Discovery 14

17 Deep Water Exploration Prospects Blocks 2007/ Blocks Total 64 Blocks Choctaw Cherokee Stetson/Liberator Twenty One Sherwood Nelson Fiji Maurader Pyrenees Blacktail Battowia Discovery Red Dog Ace In The Hole Manta Ray Shadowcat Woodall Expected Drill Floyd/Invader 2010 Blackwidow Aries Resolution Phoenix Covington Andros Prospects Lamprey Nurse Farm-In Opportunity Phinisi Enterprise Leases Lease WI Operator GB 293 Pyrenees WR 675 Phinisi --Stetson/Liberator --Farm-In 15% 20% TBD 10-20% Newfield ENI ENI TBD 15

18 GOM Deepwater Prospects Floyd/Invader SGY 16% WI GC 451 Enterprise SGY 20% WI Miocene Play - Green Canyon Area Working Interest SGY 20% ENI (Op) 40% Other 40% Drill Well Phinisi SGY 20% WI Other Bidders Phinisi Field Jack St. Malo Stones Chinook Cascade Source: MMS Petrobras Am Chevron Statoil ExxonMobil EUR 400 MMBOE 350 MMBOE 100 MMBOE 100 MMBOE 270 MMBOE Lower Tertiary Play Walker Ridge Area Source: Petrobras, Offshore Journal 16

19 Marcellus Shale Estimated pretax IRR s assuming $4-8/MMBtu NYMEX gas pricing 16% 70% 12% 73% 6% 50% Stone Marcellus Position Two core areas WV and NE PA 4% 3% 41% 52% Strategic land position of over 40,000 acres 1% 41% Continuing to add judiciously around core areas Estimated NYMEX price required for 10% pretax IRR Drilled 6 vertical wells in 2H09 Transitioning to horizontal program in 2010 Initial 2010 capex allocation of $100MM Source: Company Data, Deutsche Bank estimates 17

20 Marcellus Shale: Stone Focus Areas SGY Acreage Industry Activity Andie, Josie, Katie ~ ~13,000 Acres Christine ~6,000 Acres ~ Marcellus Fairway 30 MM Acres Heather, Buddy, Mary ~ ~24,000 Acres 18

21 2010 Game Plan GOM shelf generates free cash flow to fund growth projects Appalachia to provide reserve growth in 2010, production impact in 2011/2012 Deep Water/Deep Shelf prospects provide material reserve exposure Test organic onshore oil projects/prospects GOM shelf gas prospects provide an option on gas prices Maintain financial flexibility 19

22 Stone Energy JP Morgan Global High Yield and Leveraged Finance Conference March 2,

23 Appendix - EBITDA Reconciliation (In Thousands) Net Loss Interest expense Income taxes DD&A Write-down of oil & gas properties Inventory impairment Accretion EBITDA For 12 Months Ending, 12/31/09 ($211,708) 21,361 (113,010) 259, ,140 9,398 33,016 $503,836 * EBITDA is defined as net earnings plus interest expense, income taxes, DD&A, property write-down and accretion. 21

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