Monday, Stone Energy Corp. (SGY) said it would publicly offer $250 million aggregate principal amount of Senior Notes due 2017 that would be fully and unconditionally guaranteed by Stone Energy Offshore, L.L.C. The company has also authorized a capital expenditure budget of $400 million for 2010.
The Senior Notes public offer would be fully and unconditionally guaranteed by Stone's subsidiary Stone Energy Offshore, L.L.C. Stone Energy intends to use net proceeds from the offering to fund its pending tender offer and consent solicitation for its existing 8-1/4% Senior Subordinated Notes due 2011 and for general corporate purposes.
Separately, Stone Energy said it commenced a cash tender offer and consent solicitation for any and all of its $200 million aggregate principal amount of 8-1/4% Senior Subordinated Notes due 2011. The offer is set to expire on February 9, 2010, unless extended by Stone.
Holders who validly tender their notes and consent to the proposed amendments of the indenture governing the notes will receive total consideration equal to $1002.50 per $1,000 principal amount of the notes, including a consent payment of $30.00 per $1,000 principal amount of the notes and any accrued or unpaid interest on them.
Stone expects to pay holders of validly tendered notes as early as January 26, 2010.
Holders who tender their notes after the consent expiration and prior to the expiration time will receive consideration equal to $972.50 per $1,000 principal amount of the notes and any accrued or unpaid interest on them.
On its capex spending, Stone said that its fiscal 2010 capital budget of $400 million, compares with a $300 million capital budget for 2009, and excludes material acquisitions and capitalized selling, general and administrative expenses and interest.
Of the total capital expenditure, 25% is to be spent on shelf exploitation, 15% for workover and re-completion projects and 15% for deep water and deep shelf expenditures in the Gulf of Mexico. Another 25% is expected to be spent on Appalachian drilling and acreage acquisition. The renaming budget is to be used for facilities, abandonment projects, and miscellaneous exploration projects.
In the Appalachian Basin, Stone has drilled six operated vertical wells in the Marcellus Shale Play in the third and fourth quarter; of which four wells tested at an initial rate between 0.5 and 2.0 million cubic feet of gas per day or MMcf/d. Stone plans to drill and complete 12 to 15 horizontal wells in 2010.
In the Mississippi Canyon Block, Stone mobilized the HP 206 Platform Rig to its Amberjack Field to drill four exploitation wells targeting oil reservoirs and incremental reserves. And at its Vermilion Block, Stone recently drilled two shelf exploitation wells; one of which will start production in the second quarter of 2010.
On overall production, Stone said that fourth quarter volumes are expected to be approximately 220 million cubic feet of gas equivalent or MMcfe per day, slightly below the previous guidance of 225 to 235 MMcfe per day provided in November 2009. The shortfall is due to unplanned shut-ins after Hurricane Ida, delay in re-completion projects and installation of a new platform rig at Amberjack.
However, Stone continues to expect full year 2009 average daily production to be in the range of its previous annual guidance of 210 to 220 MMcfe per day. The 2009 exit rate was approximately 215 to 220 MMcfe per day, with an approximate 50/50 split between oil and gas.
Stone has advised by Netherland Sewell & Associates that its estimated proved reserves will be approximately 410 billion cubic feet equivalents, with approximately 80% being proved developed reserves.
SGY closed Monday's regular trading at $19.05, down $0.35 or 1.80%, on a volume of 0.64 million shares on the NYSE.
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