Stone Energy Starts (SGY) Drilling At Rampart Deep Prospect
Zacks Investment Research | Jun 11, 2017 10:41PM ET
Stone Energy Corporation (NYSE:SGY) announced that drilling operations on its Rampart Deep Prospect in Mississippi Canyon Block 116 started on Jun 3, 2017.
The prospect will be drilled and operated by Deep Gulf Energy III, LLC, and is anticipated to be tied back to Stone Energy's 100% owned Pompano platform, if successful.
Located nine miles from the Pompano platform, the prospect targets the Miocene and is projected to take two months to drill. After divesting a portion of its position, Stone Energy holds a 40% working interest in the well and receives leasehold and other reimbursable costs. Other working interest owners are Deep Gulf Energy III, LLC and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) each having a stake of 30%.
In another development, the company announced its intention to lay off additional workforce with an aim to better align its employee base with current business needs. This initiative is expected to result in about 25% decrease in its salaries, general and administrative (SG&A) cash costs for the second half of 2017. This will correspond to expected quarterly cash SG&A expense, before capitalization, of about $11 million--$12 million per quarter, excluding non-recurring and non-cash items. Stone Energy estimates a total SG&A reduction of about 50% from 2016.
The Rampart Deep well forms an important part of Stone Energy's future plans. If successful, the test on the Rampart Deep Prospect could lead to a multi-well development program, further leveraging this facility. The company’s renewed focus on efficient use of capital and the reductions in SG&A reflect its continued commitment to manage costs to better itself to be competitive in the current commodity price environment
Investor confidence on the Stone Energy stock is reflected in its price chart. Shares of the company have gained 27.2% in the last three months, while the Zacks categorized Original post
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