The following table sets forth the calculation of basic and diluted weighted average shares outstanding and earnings per share for the indicated periods:

All outstanding stock options were considered antidilutive during the three and nine months ended September 30, 2015March 31, 2016 (approximately 145,000129,000 shares) and during the three months ended September 30, 2014March 31, 2015 (approximately 205,000204,000 shares) because we had a net losslosses for such periods. Stock options that were considered antidilutive because the exercise price of the options exceeded the average price of our common stock totaled approximately 116,000 shares during the nine months ended September 30, 2014.

During the three months ended September 30,March 31, 2016 and 2015, and 2014, approximately 19,000504,000 shares and 10,000370,000 shares of our common stock, respectively, were issued from authorized shares upon the lapsing of forfeiture restrictions of restricted stock byfor employees and nonemployee directors. During the nine months ended September 30, 2015 and 2014, approximately 418,000 shares and 382,000 shares of our common stock, respectively, were issued from authorized shares upon the lapsing of forfeiture restrictions of restricted stock by employees and nonemployee directors. In May 2014, 5,750,000 shares of our common stock were issued in a public offering.

Our hedging strategy is designed to protect our near and intermediate term cash flows from future declines in oil and natural gas prices. This protection is essential to capital budget planning, which is sensitive to expenditures that must be committed to in advance, such as rig contracts and the purchase of tubular goods. We enter into derivative transactions to secure a commodity price for a portion of our expected future production that is acceptable at the time of the transaction. These derivatives are generally designated as cash flow hedges upon entering into the contracts. We do not enter into derivative transactions for trading purposes. We have no fair value hedges.

The nature of a derivative instrument must be evaluated to determine if it qualifies as a hedging instrument. If the instrument qualifies as a hedging instrument, it is recorded as either an asset or liability measured at fair value and subsequent changes in the derivative’s fair value are recognized in stockholders’ equity through other comprehensive income (loss), net of related taxes, to the extent the hedge is considered effective. Monthly settlements of effective hedges are reflected in revenue from oil and natural gas production and cash flows from operating activities. Instruments not qualifying as hedging instruments are recorded in our balance sheet at fair value and subsequent changes in fair value are recognized in earnings through derivative expense (income). Monthly settlements of ineffective hedges and derivative instruments not qualifying as hedging instruments are recognized in earnings through derivative expense (income) and cash flows from operating activities.

We have entered into fixed-price swaps and costless collars with various counterparties for a portion of our expected 2015 and 2016 oil and natural gas production from the Gulf Coast Basin. Our fixed-price oil swap settlements and oil collar settlements are based on an average of the New York Mercantile Exchange (“NYMEX”) closing price for West Texas Intermediate crude oil during the entire calendar month. Our fixed-price gas swap settlements are based on the NYMEX price for the last day of a respective contract month. Swaps typically provide for monthly payments by us if prices rise above the swap price or monthly payments to us if prices fall below the swap price. Collar contracts typically require payments by us if the NYMEX average closing price is above the ceiling price or payments to us if the NYMEX average closing price is below the floor price. Our fixed-price swap contracts are with The Toronto-Dominion Bank, Barclays Bank PLC, The Bank of Nova Scotia Bank of America and Natixis. Our oil collar contract is with The Bank of Nova Scotia.

The following tables disclose the location and fair value amounts of derivatives qualifying as hedging instruments, as reported in our balance sheet, at September 30, 2015March 31, 2016 and December 31, 2014:2015:

The following tables disclosetable discloses the before tax effect of derivatives qualifying as hedging instruments, as reported in the statement of operations, for the three month periods ended March 31, 2016 and nine months ended September 30, 2015 and 2014:2015:

Gains or losses related to changes in fair value and cash settlements for derivatives not qualifying as hedging instruments are recorded as derivative income (expense) in the statement of operations. The following table discloses the before tax effect of our derivatives not qualifying as hedging instruments on the statement of operations, for the three month periods ended March 31, 2016 and nine months ended September 30, 2015 and 2014.2015.

Our derivative contracts are subject to netting arrangements. It is our policy to not offset our derivative contracts in presenting the fair value of these contracts as assets and liabilities in our balance sheet. The following table presents the potential impact of the offset rights associated with our recognized assets and liabilities at September 30, 2015 (in millions):

The borrowing base under the bank credit facility is redetermined semi-annually, typically inby May and November, by the lenders, taking into consideration the estimated loan value of our oil and gas properties and those of our subsidiaries that guarantee the bank credit facility in accordance with the lenders’ customary practices for oil and gas loans. In addition, we and the lenders each have discretion at any time, but not more than two additional times in any calendar year, to have the borrowing base redetermined. If a reduction inOn April 13, 2016, we received notice that our borrowing base were to fall below any outstanding balances under the bank credit facility plus anywas reduced from $500 million to $300 million. On that date, we had $457 million of outstanding borrowings and $18.3 million of outstanding letters of credit, ouror $175.3 million in excess of the redetermined borrowing base (referred to as a borrowing base deficiency). Our agreement with the banks allows us one or moreprovides that within 30 days after notification of three optionsa borrowing base deficiency, we must elect to cure the borrowing base deficiency. We maydeficiency through any combination of the following actions: (1) repay amounts outstanding sufficient to cure the deficiency within 10 days after our written election to do so; (2) add additional oil

The bank credit facility is collateralized by substantially all of our assets and the assets of Stone and itsour material subsidiaries. TheyWe are required to mortgage, and grant a security interest in, theirour oil and natural gas reserves representing at least 80% of the discounted present value of the future net cash flows from theirour proved oil and natural gas reserves reviewed in determining the borrowing base. Interest on loans under the bank credit facility is calculated using the London Interbank Offering (“LIBOR”) rate or the base rate, at the election of Stone.our election. The margin for loans at the LIBOR rate is determined based on borrowing base utilization and ranges from 1.500% to 2.500%. The

The 2017 Convertible Notes will be due on March 1, 2017, unless earlier converted or repurchased by us at the option of the holder(s)., and interest is payable on the 2017 Convertible Notes each March 1and September 1. On the maturity date, each holder will be entitled to receive $1,000 in cash for each $1,000 in principal amount of 2017 Convertible Notes, together with any accrued and unpaid interest to, but excluding, the maturity date.

In connection with the offering, we entered into convertible note hedge transactions with respect to our common stock (the “Purchased Call Options”) with Barclays Capital Inc., acting as agent for Barclays Bank PLC and Bank of America, N.A. (the “Dealers”). We paid an aggregate amount of approximately $70.8 million to the Dealers for the Purchased Call Options. The Purchased Call Options cover, subject to customary antidilution adjustments, approximately 7,033,470 shares of our common stock at a strike price that corresponds to the initial conversion price of the 2017 Convertible Notes, also subject to adjustment, and are exercisable upon conversion of the 2017 Convertible Notes.

We also entered into separate warrant transactions whereby, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act, we sold to the Dealers warrants to acquire, subject to customary antidilution adjustments, approximately 7,033,470 shares of our common stock (the “Sold Warrants”) at a strike price of $55.91 per share of our common stock. We received aggregate proceeds of approximately $40.1 million from the sale of the Sold Warrants to the Dealers. If, upon expiration of the Sold Warrants, the price per share of our common stock, as measured under the Sold Warrants, is greater than the strike price of the Sold Warrants, we will be required to issue, without further consideration, under each Sold Warrant a number of shares of our common stock with a value equal to the amount of such difference.

As of September 30, 2015,March 31, 2016, the carrying amount of the liability component of the 2017 Convertible Notes of $283.5 million was $277.2 million.classified as a current liability. During the three and nine months ended September 30, 2015,March 31, 2016, we recognized $3.8$3.9 million and $11.1 million, respectively, of interest expense for the amortization of the discount and $0.4 million and $1.1 million, respectively, of interest expense for the amortization of deferred financing costs related to the 2017 Convertible Notes. During the three and nine months ended September 30, 2014,March 31, 2015, we recognized $3.5$3.6 million and $10.4 million, respectively, of interest expense for the amortization of the discount and $0.3 million and $1.0 million, respectively, of interest expense for the amortization of deferred financing costs related to the 2017 Convertible Notes. During each of the three and nine monthsmonth periods ended September 30,March 31, 2016 and 2015, we recognized $1.3 million and $3.9 million, respectively, of interest expense related to the contractual interest coupon on the 2017 Convertible Notes. During the three and nine months ended September 30, 2014, we recognized $1.3 million and $3.9 million, respectively, of interest expense related to the contractual interest coupon on the 2017 Convertible Notes.

Under the full cost method of accounting, we compare, at the end of each financial reporting period, the present value of estimated future net cash flows from proved reserves (adjusted for hedges and excluding cash flows related to estimated abandonment costs) to the net capitalized costs of proved oil and gas properties, net of related deferred taxes. We refer to this comparison as a ceiling test. If the net capitalized costs of proved oil and gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write down the value of our oil and gas properties to the value of the discounted cash flows. At September 30, 2015,March 31, 2016, our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $295.7$128.9 million based on twelve-month average prices, net of applicable differentials, of $57.76$46.72 per barrelBbl of oil, $2.44$2.01 per Mcf of natural gas and $23.04$13.65 per barrelBbl of natural gas liquids ("NGLs"). The write-down at September 30,, as compared to December 31, 2015 was decreased by $42.7 million as a result of hedges. At June 30, 2015, our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $179.1 million based on twelve-month average prices, net of applicable differentials, of $68.68$51.16 per barrelBbl of oil, $2.47$2.19 per Mcf of natural gas and $29.13$16.40 per barrelBbl of NGLs. The write-down at June 30, 2015 was decreased by $47.8 million as a result of hedges. At March 31, 2015, our ceiling test computation resulted in a2016, the write-down of our U.S. oil and gas properties of $491.4also included $0.3 million based on twelve-month average prices, net of applicable differentials, of $78.99 per barrel of oil, $2.96 per Mcf of natural gas and $28.82 per barrel of NGLs. The write-down at March 31, 2015 was decreased by $28.7 million as a result of hedges.related

Our Guarantor Subsidiaries, including Stone Offshore, SEO A LLC and SEO B LLC, are unconditional guarantors of the 2017 Convertible Notes and the 2022 Notes. Our other subsidiaries (the “Non-Guarantor Subsidiaries”) have not provided guarantees. The following presents unaudited condensed consolidating financial information as of September 30, 2015March 31, 2016 and December 31, 20142015 and for the three and nine month periods ended September 30,March 31, 2016 and 2015 and 2014 on an issuer (parent company), Guarantor Subsidiaries, Non-Guarantor Subsidiaries and consolidated basis. Elimination entries presented are necessary to combine the entities.