UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-12074
STONE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 72-1235413
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
625 E. Kaliste Saloom Road 70508
Lafayette, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (318) 237-0410
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
As of November 9, 1998, there were 15,070,408 shares of the Registrant's
Common Stock, par value $.01 per share, outstanding.
TABLE OF CONTENTS
Page
PART I
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet
as of September 30, 1998 and December 31, 1997..... 1
Condensed Consolidated Statement of Operations
for the Three- and Nine-Month Periods Ended
September 30, 1998 and 1997.................. 2
Condensed Consolidated Statement of Cash Flows
for the Nine Months Ended September 30, 1998
and 1997........................................... 3
Notes to Condensed Consolidated Financial
Statements......................................... 4
Auditors' Review Report.............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
PART II
Item 6. Exhibits and Reports on Form 8-K....................... 12
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STONE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
September 30, December 31,
Assets 1998 1997
-------------------- -----------------
(Unaudited)
Current assets:
Cash and cash equivalents.................................... $11,047 $10,304
Marketable securities, at market............................. 25,429 19,940
Accounts receivable.......................................... 17,277 22,731
Other current assets......................................... 435 176
-------------------- -----------------
Total current assets....................................... 54,188 53,151
Oil and gas properties, net:
Proved....................................................... 365,474 274,116
Unevaluated.................................................. 9,387 17,304
Building and land, net........................................... 3,488 3,538
Fixed assets, net................................................ 1,106 1,089
Other assets, net................................................ 3,563 4,946
-------------------- -----------------
Total assets............................................... $437,206 $354,144
==================== =================
Liabilities and Stockholders' Equity
Current liabilities - accounts payable and
accrued liabilities.......................................... $48,353 $44,823
Long-term loans.................................................. 201,959 132,024
Deferred tax liability........................................... 21,899 18,659
Other long-term liabilities...................................... 2,198 2,001
-------------------- -----------------
Total liabilities.......................................... 274,409 197,507
-------------------- -----------------
Common stock..................................................... 151 150
Additional paid in capital....................................... 119,167 118,883
Retained earnings................................................ 43,479 37,604
-------------------- -----------------
Total stockholders' equity................................. 162,797 156,637
-------------------- -----------------
Total liabilities and stockholders' equity................. $437,206 $354,144
==================== =================
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STONE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ----------- ------------ ------------
Revenues
Oil and gas production..................... $26,774 $15,603 $82,955 $44,608
Overhead reimbursements
and management fees..................... 158 119 468 374
Other income............................... 480 236 1,258 875
------------ ----------- ------------ ------------
Total revenues...................... 27,412 15,958 84,681 45,857
------------ ----------- ------------ ------------
Expenses
Normal lease operating expenses............ 4,513 2,420 12,422 6,782
Major maintenance expenses................. 460 130 1,229 616
Production taxes........................... 552 355 1,596 1,854
Depreciation, depletion and
amortization............................. 15,984 6,472 47,088 18,401
Interest................................... 3,518 1,448 9,243 2,551
Salaries, general and administrative....... 956 924 3,163 2,683
Incentive compensation plan................ 275 152 825 468
------------ ----------- ------------ ------------
Total expenses...................... 26,258 11,901 75,566 33,355
------------ ----------- ------------ ------------
Net income before income taxes............... 1,154 4,057 9,115 12,502
------------ ----------- ------------ ------------
Provision for income taxes
Current.................................... - - - 100
Deferred................................... 409 1,562 3,240 4,714
------------ ----------- ------------ ------------
409 1,562 3,240 4,814
------------ ----------- ------------ ------------
Net income $745 $2,495 $5,875 $7,688
============ =========== ============ ============
Earnings per common share (see Note 2):
Basic earnings per share ................. $0.05 $0.17 $0.39 $0.51
============ =========== ============ ============
Diluted earnings per share................ $0.05 $0.16 $0.38 $0.50
============ =========== ============ ============
Average shares outstanding................ 15,068 15,024 15,065 15,018
============ =========== ============ ============
Average shares outstanding assuming
dilution............................... 15,264 15,359 15,329 15,327
============ =========== ============ ============
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STONE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-----------------------------------------
1998 1997
----------------- ----------------
Cash flows from operating activities:
Net income.................................................... $5,875 $7,688
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization............... 47,088 18,401
Provision for deferred income taxes.................... 3,240 4,714
----------------- ----------------
56,203 30,803
Increase in marketable securities...................... (5,488) (16,009)
Decrease (increase) in accounts receivable............. 5,455 (977)
Increase in other current assets....................... (321) (258)
Increase (decrease) in accrued liabilities............. 4,543 (1,685)
Other.................................................. 198 1,914
----------------- ----------------
Net cash provided by operating activities........................ 60,590 13,788
----------------- ----------------
Cash flows from investing activities:
Investment in oil and gas properties.......................... (130,923) (102,647)
Building additions and renovations............................ (17) -
Sale of oil and gas properties................................ - 825
Decrease (increase) in other assets .......................... 1,029 (674)
----------------- ----------------
Net cash used in investing activities............................ (129,911) (102,496)
----------------- ----------------
Cash flows from financing activities:
Proceeds from borrowings...................................... 70,000 59,000
Repayment of debt............................................. (60) (72,123)
Issuance of 8-3/4% Senior Subordinated Notes ................. - 100,000
Deferred financing costs...................................... (160) (3,128)
Expenses for common stock offering............................ - (104)
Exercise of stock options..................................... 284 287
----------------- ----------------
Net cash provided by financing activities........................ 70,064 83,932
----------------- ----------------
Net increase (decrease) in cash.................................. 743 (4,776)
Cash balance beginning of period................................. 10,304 9,864
----------------- ----------------
Cash balance end of period....................................... $11,047 $5,088
================= ================
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest (net of amount capitalized)....................... $11,265 $2,561
Income taxes............................................... - 100
----------------- ----------------
$11,265 $2,661
================= ================
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STONE ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Interim Financial Statements
The condensed consolidated financial statements of Stone Energy
Corporation (the "Company") at September 30, 1998 and for the three- and
nine-month periods then ended are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim period. The condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. The results of
operations for the three- and nine-month periods ended September 30, 1998 are
not necessarily indicative of future financial results. Certain prior period
amounts have been reclassified to conform to current period presentation.
Note 2 - Earnings Per Share
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings
Per Share," which simplifies the computation of earnings per share ("EPS"). The
Company adopted SFAS No. 128 in the fourth quarter of 1997 and restated prior
periods' EPS data as required by SFAS No. 128. All EPS data in the financial
statements and accompanying footnotes reflects the adoption of SFAS No. 128.
Basic net income per share of common stock was calculated by dividing
net income applicable to common stock by the weighted-average number of common
shares outstanding during the period. Diluted net income per share of common
stock was calculated by dividing net income applicable to common stock by the
weighted-average number of common shares outstanding during the period plus the
weighted-average number of dilutive stock options granted to outside directors
and certain employees which totaled approximately 196,000 shares and 335,000
shares in the third quarter of 1998 and 1997, respectively, and 264,000 shares
and 309,000 shares in the first nine months of 1998 and 1997, respectively.
Options which were considered antidilutive as a result of the exercise price of
the options exceeding the average price for the applicable period totaled
approximately 50,000 shares and 13,000 shares during the third quarter and nine
month periods of 1998, respectively and were immaterial during the respective
1997 periods.
Note 3 - Hedging Activities
In order to reduce its exposure to the possibility of declining oil and
gas prices, from time to time the Company hedges with third parties certain of
its crude oil and natural gas production in
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various swap agreement contracts. The crude oil contracts are tied to the price
of NYMEX light sweet crude oil futures and are settled monthly based on the
differences between contract prices and the average NYMEX prices for that month
applied to the related contract volumes. Settlement for gas swap contracts is
based on the average closing prices of either the last three days or last full
month of trading on the NYMEX for each month of the swap.
The Company's forward positions as of November 9, 1998, are summarized
as follows:
Gas
----------------------------------------
Average
Bbtu Price/Btu
----------------- --------------
Fourth quarter, 1998............ 3,680 $2.286
First quarter, 1999............. 3,600 $2.535
Second quarter, 1999............ 3,640 $2.195
Third quarter, 1999............. 3,680 $2.177
For the three- and nine-month periods ended September 30, 1998, the
Company recognized net hedging gains of $1.4 million and $3.9 million,
respectively, which were recorded in the accompanying condensed consolidated
statement of operations as additions to revenues from oil and gas production.
Third quarter and nine month 1997 oil and gas revenues included net hedging
losses of approximately $26,000 and $0.8 million, respectively.
Note 4 - Long-Term Loans
During the first quarter of 1998, the Company and its bank group
increased the size of the Company's revolving credit facility (the "Revolver")
to $150 million, increased the borrowing base under the facility to $120 million
and extended the term of the Revolver to July 30, 2001. The borrowing base
amount is established by the bank group and is based on their evaluation of the
Company's oil and gas properties. Interest under the Revolver is payable
quarterly, and currently the weighted average interest rate of the facility is
6.4% per annum. At September 30, 1998, the total outstanding principal balance
was $99 million and letters of credit totaling $7.5 million have been issued
pursuant to the facility.
Note 5 - New Accounting Standards
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income in the financial statements. Comprehensive
income is the total of net income and all other non-owner changes in
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equity. SFAS No. 131 requires that companies disclose segment data based on how
management makes decisions about allocating resources to segments and measuring
their performance. SFAS Nos. 130 and 131 are effective for 1998. The Company
adopted these standards in 1998 with no effect on the Company's financial
statements, financial position or results of operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards that require every derivative instrument (including certain
derivative instruments embedded in other contracts) to be recorded in the
balance sheet as either an asset or liability measured at its fair value and
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. The Company expects to adopt
SFAS No. 133 during the first quarter of 2000. Because of the nature of the
Company's only derivative instrument, the Company does not expect that the
adoption of SFAS No. 133 will have a material impact on the Company's results of
operations.
Note 6 -Stock Options
During the third quarter of 1998, the Company's Board of Directors
elected to reprice all non-Director employee stock options which had an exercise
price above the then market value of $26.00 per share. As a result, 265,000
stock options, which were granted to non-Director employees during 1997 and
1998, were repriced from a weighted average exercise price of $29.35 per share
to the then market value of $26.00 per share.
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AUDITORS' REVIEW REPORT
TO THE STOCKHOLDERS OF
STONE ENERGY CORPORATION:
We have reviewed the accompanying condensed consolidated balance sheet
of Stone Energy Corporation (a Delaware corporation) as of September 30, 1998,
and the related condensed consolidated statements of operations for the
three-month and nine-month periods ended September 30, 1998 and 1997, and the
condensed consolidated statements of cash flows for the nine-month periods ended
September 30, 1998 and 1997. These financial statements are the responsibility
of the Company's management.
We conducted our reviews in accordance with standards established by
the American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications
that should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of Stone Energy Corporation as of December
31, 1997 (not presented herein), and, in our report dated March 2, 1998, we
expressed an unqualified opinion on that statement. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1997, is fairly stated, in all material respects, in relation
to the balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
October 28, 1998
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Stone Energy Corporation is an independent oil and gas company engaged
in the development, exploration, acquisition and operation of oil and gas
properties onshore and offshore in the Gulf Coast Basin. The Company and its
predecessors have been active in the Gulf Coast Basin since 1973, which gives
the Company extensive geophysical, technical and operational expertise in this
area. The Company's business strategy is to increase production, cash flow and
reserves through the acquisition and development of mature properties located in
the Gulf Coast Basin.
RESULTS OF OPERATIONS
The following table sets forth certain operating information with
respect to the oil and gas operations of the Company for the three- and
nine-month periods ended September 30, 1998 and 1997.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
1998 1997 1998 1997
----------- ----------- ----------- ------------
Production:
Oil (MBbls)............................... 700 416 2,012 1,109
Gas (MMcf)................................ 7,926 3,337 23,127 9,328
Oil and gas (MBOE)........................ 2,021 972 5,867 2,664
Sales data (in thousands) (a):
Total oil sales........................... $8,986 $7,543 $28,402 $21,618
Total gas sales........................... 17,788 8,060 54,553 22,990
Average sales prices (a):
Oil (per Bbl)............................. $12.84 $18.13 $14.12 $19.49
Gas (per Mcf)............................. 2.24 2.42 2.36 2.46
Per BOE................................... 13.25 16.05 14.14 16.74
Average costs (per BOE):
Normal lease operating
expenses (b)........................... $2.23 $2.49 $2.12 $2.55
General and administrative................ 0.47 0.95 0.54 1.01
Depreciation, depletion
and amortization....................... 7.80 6.51 7.92 6.75
(a) Net of the effects of hedging
(b) Excludes major maintenance expense
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Net income for the quarter ended September 30, 1998 totaled $0.7
million or $0.05 per diluted share, as compared to net income of $2.5 million or
$0.16 per diluted share during the third quarter of 1997. Net income totaled
$5.9 million and $7.7 million for the first nine months of 1998 and 1997,
respectively.
Production volumes reached record levels during the third quarter of
1998 despite the short-term production interruptions experienced as a result of
recent storms in the Gulf of Mexico. On a barrel of oil equivalent (BOE) basis,
third quarter 1998 production volumes increased 108% over third quarter 1997
production volumes, totaling approximately 700,000 barrels of oil and 7.9
billion cubic feet of gas. Production volumes of both oil and gas for the first
nine months of 1998, compared to the 1997 period, rose 81% and 148%
respectively, totaling 2,012,000 barrels of oil and 23.1 billion cubic feet of
gas.
Oil and gas revenues during the third quarter of 1998 increased 72% to
$26.8 million, as compared to third quarter 1997 revenues of $15.6 million. For
the first nine months of 1998, oil and gas revenues increased 86% to $83.0
million, compared to oil and gas revenues of $44.6 million during the 1997
period. Prices received during the third quarter of 1998 averaged $12.84 per
barrel of oil and $2.24 per Mcf of gas, as compared to averages of $18.13 per
barrel and $2.42 per Mcf received in the 1997 period. Stated on a BOE basis,
unit prices received during the third quarter and first nine months of 1998 were
18% and 16% lower, respectively, than the prices received during the comparable
1997 periods. Both total and unit revenue amounts include the effects of hedging
transactions.
Normal operating costs for the third quarter of 1998 increased in total
to $4.5 million from $2.4 million during the third quarter of 1997 due to an
increase in the number of properties and significantly higher production rates.
Stated on a unit of production basis, however, such costs declined 10% to $2.23
per BOE for the three-month period ended September 30, 1998, from $2.49 per BOE
for the third quarter of 1997. The Company did not experience any significant
increases in operating costs as a result of storms during the third quarter of
1998.
General and administrative expenses during the third quarter of 1998
totaled $1.0 million as compared to expenses of $0.9 million during the 1997
quarter. On a unit basis, these costs declined 51% during the 1998 quarter to
$0.47 per BOE, as compared with $0.95 per BOE during the 1997 quarter.
Depreciation, depletion and amortization expense increased to $16.0 million
during the third quarter of 1998, compared to $6.5 million for the 1997 period
because of higher production rates, increased investments in the properties and
lower quarter-end oil and gas prices. As a result of the Company's increased
borrowings under its bank credit facility and the bond offering closed in
September 1997, interest expense for the three-month period ended September 30,
1998, increased to $3.5 million, as compared to $1.4 million for the 1997
period.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AND CASH FLOW. Working capital at September 30, 1998
was $5.8 million. The Company believes that this capital plus the expected cash
flow from its increased operations and borrowings under its bank credit facility
will be sufficient to fund its working capital needs for the foreseeable future.
Net cash flow from operations before working capital changes for the third
quarter of 1998 increased 63% to $17.1 million or $1.12 per diluted share,
compared to $10.5 million or $0.69 per diluted share for 1997's third quarter.
For the first nine months of 1998, net cash flow from operations before working
capital changes totaled $56.2 million, as compared to $30.8 million during the
1997 period.
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During the third quarter of 1998, the Company invested $34.6 million in
its oil and gas properties primarily in drilling, completion and platform
construction activities. The Company has invested $129.9 million in its oil and
gas properties during the first nine months of 1998, as compared to investments
of $118.7 million during the nine-month 1997 period. The investments for the
first nine months of 1998 included $3.2 million of capitalized general and
administrative costs.
During the third quarter of 1998, the Company entered into a hedging
contract to reduce its exposure against future declines in natural gas prices.
The Company has hedged 3,680 Bbtu's at an average price of $2.29 per Btu for the
fourth quarter of 1998 and 10,920 Bbtu's at an average price of $2.30 per Btu
for the first nine months of 1999.
LONG-TERM FINANCING. During the first quarter of 1998, the Company and
its bank group increased the size of the Company's revolving credit facility to
$150 million, increased the borrowing base to $120 million and extended the term
of the Revolver to July 30, 2001. The borrowing base amount is established by
the bank group and is based on their evaluation of the Company's oil and gas
properties. Interest under the Revolver is payable quarterly, and currently the
weighted average interest rate of the facility is 6.4% per annum. At September
30, 1998, the total outstanding principal balance was $99 million and letters of
credit totaling $7.5 million have been issued pursuant to the facility.
The Company has budgeted approximately $25 million for the fourth
quarter of 1998 for expenditures on oil and gas properties it now owns.
Significant investments are planned at the Vermilion Block 255, Clovelly, Eugene
Island Block 243 and South Pelto Block 23 Fields. The planned development
operations include projects which seek to increase cash flow from proved
reserves and provide additions to the Company's reserve base. It is anticipated
that these investments will be primarily funded from a combination of available
working capital, cash flow from operations and borrowings under the bank credit
facility.
The Company is in the process of evaluating a number of opportunities
to acquire reserves, although no future acquisitions can be assured. One or a
combination of certain of these possible transactions could fully utilize the
sources of capital currently available to the Company. If these opportunities
materialize, the Company intends to explore a variety of options to finance
these new projects, including nonrecourse financing, sales of non-strategic
properties and joint venture financing.
In attempting to maximize stockholder value, the Company will continue
to contrast and compare the cost of debt financing with the potential dilution
of equity offerings. The Company's goal is to maintain a relatively low level of
bank debt because of the volatility of oil and gas prices.
Although the Company has no current plans to access the public markets
for purposes of entering into an underwritten financing, it would consider such
funding sources if the amount of capital needed for its acquisition and
development activities increased significantly or if its bank debt reached an
unacceptable level. Availability of these sources of capital and the Company's
ability to access new opportunities will depend upon a number of factors, some
of which are beyond the control of the Company.
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YEAR 2000 COMPLIANCE. The Year 2000 ("Y2K") issue is the result of
computerized systems being written to store and process the year portion of
dates using two digits rather than four. Date-sensitive systems may fail or
produce erroneous results on or before January 1, 2000 because the year 2000
will be interpreted as the year 1900. During 1998, the Company's executive
management and Board of Directors implemented a program to identify, evaluate
and address the Company's Y2K risks to ensure that its Information Technology
("IT") Systems and Non-IT Systems will be able to process dates from and after
January 1, 2000 without critical systems failure. In addition to evaluating its
own systems, the Company is attempting to assess the Y2K risks associated with
its significant customers and suppliers.
The Company is currently evaluating its IT Systems for Y2K compliance.
As part of this evaluation, the Company has contracted outside consultants to
assist in the identification and replacement of non-compliant IT Systems. The
Company's non-compliant IT Systems are currently scheduled for replacement or
modification to Y2K Compliant Systems by the first quarter of 1999.
Regarding the Company's Non-IT Systems, which primarily consist of
systems with embedded technology, the Company is in the process of completing
its preliminary assessment of all date-sensitive components. The Company has
completed its evaluation of the date-sensitive components of the infrastructure
assets within its Lafayette, Louisiana office building and has determined there
will be minimal modification required to become Y2K compliant. Upon completion
of its assessment, the Company will replace or modify other non-compliant Non-IT
Systems as necessary.
The Company has not incurred significant costs related to Y2K
compliance as of September 30, 1998 and does not expect that the cost to modify
or replace its non-compliant IT and Non-IT Systems will be material to its
financial condition or results of operations. The costs of these projects and
the dates on which the Company plans to complete modifications and replacements
are based on managements' best estimates, the estimates of outside specialists
assisting the Company, the modification plans of third parties and other
factors.
Based on preliminary risk assessments, the Company believes the most
likely Y2K related failure would be a temporary disruption in certain materials
and services provided by third parties, which would not be expected to have a
material adverse effect on the Company's financial condition or results of
operations. As part of its assessment of the Y2K risk associated with third
parties' systems, the Company has contacted its material suppliers and customers
to determine their level of Y2K compliance. The Company has scheduled to
complete its assessment during the first quarter of 1999. While the Company
believes that the probability of the occurance of a disruption is low, the
Company will develop specific contingency plans to address certain risk areas,
as needed, beginning in the first quarter of 1999. There can be no assurance
that the Company will not be materially adversely affected by Y2K problems or
related costs.
FORWARD-LOOKING STATEMENTS. Certain of the statements in this Form 10-Q
are "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All statements other than statements of historical
facts included in this Form 10-Q, regarding budgeted capital expenditures,
increases in oil and gas production, the assessment of the Company's Y2K
compliance, the Company's financial position, business strategy and other plans
and objectives for future operations,
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are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed under "Risk Factors" and elsewhere in the
Company's 1997 Form 10-K. Should one or more of these risks or uncertainties
occur, or should underlying assumptions prove incorrect, the Company's actual
results and plans for the remainder of 1998 and beyond could differ materially
from those expressed in forward-looking statements. All subsequent written and
oral forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by such factors.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.1- Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three months
ended September 30, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STONE ENERGY CORPORATION
Date: November 12, 1998 By:/s/ Michael L. Finch
---------------------------
Michael L. Finch
Executive Vice President and
Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)
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