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, 1999

                                       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: (337) 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 10, 1999, there were  18,331,458  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, 1999 and December 31, 1998.................      1

         Condensed Consolidated Statement of Operations
          for the Three and Nine Month Periods Ended
           September 30, 1999 and 1998...................................      2

         Condensed Consolidated Statement of Cash Flows
          for the Nine Months Ended September 30, 1999 and 1998. ........      3

         Notes to Condensed Consolidated Financial Statements ...........      4

         Auditors' Review Report.........................................      6

Item 2.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations............................      7


                                     PART II

Item 6.  Exhibits and Reports on Form 8-K................................     11











                                              STONE ENERGY CORPORATION
                                        CONDENSED CONSOLIDATED BALANCE SHEET
                                                   (In thousands)






                                                                           September 30,         December 31,
                                Assets                                         1999                  1998
                                                                        ------------------     ----------------
                                                                            (Unaudited)
                                                                                                 
Current assets:
    Cash and cash equivalents....................................                 $22,511              $10,550
    Marketable securities, at market.............................                  19,322               16,853
    Accounts receivable..........................................                  30,111               26,803
    Other current assets.........................................                     430                  184
                                                                        ------------------     ----------------
      Total current assets.......................................                  72,374               54,390

Oil and gas properties, net:
    Proved.......................................................                 321,379              286,098
    Unevaluated..................................................                  18,040                7,726

Building and land, net...........................................                   3,852                3,559
Fixed assets, net................................................                   2,884                1,336
Other assets, net................................................                   3,168                3,460
Deferred tax asset...............................................                   1,518                9,821
                                                                        ------------------     ----------------
      Total assets...............................................                $423,215             $366,390
                                                                        ==================     ================

                 Liabilities and Stockholders' Equity

Current liabilities - accounts payable and
    accrued liabilities..........................................                 $44,906              $44,506
Long-term debt...................................................                 100,000              209,936
Production payment liabilities...................................                  18,829                    -
Other long-term liabilities......................................                   6,650                6,616
                                                                        ------------------     ----------------
      Total liabilities..........................................                 170,385              261,058
                                                                        ------------------     ----------------

Common stock.....................................................                     183                  151
Additional paid in capital.......................................                 251,295              119,208
Retained earnings (deficit)......................................                   1,352             (14,027)
                                                                        ------------------     ----------------
      Total stockholders' equity.................................                 252,830              105,332
                                                                        ------------------     ----------------
      Total liabilities and stockholders' equity.................                $423,215             $366,390
                                                                        ==================     ================






                            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,
                                                   ---------------------------          -----------------------------
                                                      1999            1998                 1999              1998
                                                   -----------     -----------          -----------       -----------
                                                                                                 
Revenues
  Oil and gas production.....................         $40,504         $26,774             $106,858           $82,955
  Overhead reimbursements
     and management fees.....................             161             158                  510               468
  Other income...............................             359             480                  851             1,258
                                                   -----------     -----------          -----------       -----------
         Total revenues......................          41,024          27,412              108,219            84,681
                                                   -----------     -----------          -----------       -----------
Expenses
  Normal lease operating expenses............           5,967           4,513               16,026            12,422
  Major maintenance expenses.................             437             460                  618             1,229
  Production taxes...........................             983             552                2,168             1,596
  Depreciation, depletion and
    amortization.............................          16,189          15,984               50,708            47,088
  Interest...................................           2,968           3,518               10,677             9,243
  Salaries, general and administrative.......           1,083             956                3,282             3,163
  Incentive compensation plan................             632             275                1,053               825
                                                   -----------     -----------          -----------       -----------
         Total expenses......................          28,259          26,258               84,532            75,566
                                                   -----------     -----------          -----------       -----------
Net income before income taxes...............          12,765           1,154               23,687             9,115
                                                   -----------     -----------          -----------       -----------
Provision for income taxes:
  Current....................................               -               -                    5                 -
  Deferred...................................           4,477             409                8,303             3,240
                                                   -----------     -----------          -----------       -----------
                                                        4,477             409                8,308             3,240
                                                   -----------     -----------          -----------       -----------
Net income...................................          $8,288            $745              $15,379            $5,875
                                                   ===========     ===========          ===========       ===========
Earnings per common share:
   Basic earnings per share .................           $0.48           $0.05                $0.97             $0.39
                                                   ===========     ===========          ===========       ===========
   Diluted earnings per share................           $0.47           $0.05                $0.95             $0.38
                                                   ===========     ===========          ===========       ===========
   Average shares outstanding................          17,332          15,068               15,841            15,065
                                                   ===========     ===========          ===========       ===========
   Average shares outstanding assuming
      dilution...............................          17,711          15,264               16,157            15,329
                                                   ===========     ===========          ===========       ===========









                            STONE ENERGY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)



                                                                                  Nine Months Ended
                                                                                    September 30,
                                                                         -------------------------------------
                                                                              1999                 1998
                                                                         ---------------      ----------------
                                                                                                
Cash flows from operating activities:
  Net income....................................................               $15,379                $5,875
    Adjustments to reconcile net income to net cash
         provided by operating activities:
          Depreciation, depletion and amortization..............                50,708                47,088
          Provision for deferred income taxes...................                 8,303                 3,240
          Non-cash effects of production payment liabilities....                (1,443)                   -
                                                                         ---------------      ----------------
                                                                                72,947                56,203

          Increase in marketable securities.....................                (2,469)               (5,488)
          (Increase) decrease in accounts receivable............                (3,308)                5,455
          Increase in other current assets......................                  (273)                 (321)
          Increase (decrease) in accounts payable...............                   829                (1,018)
          Increase (decrease) in accrued liabilities............                  (341)                4,543
          Other.................................................                    45                   198
                                                                         ---------------      ----------------
Net cash provided by operating activities.......................                67,430                59,572
                                                                         ---------------      ----------------
Cash flows from investing activities:
 Investment in oil and gas properties...........................               (75,135)             (129,905)
 Building additions and renovations.............................                  (367)                  (17)
 (Increase) decrease in other assets ...........................                (2,062)                1,029
                                                                         ---------------      ----------------
Net cash used in investing activities...........................               (77,564)             (128,893)
                                                                         ---------------      ----------------

Cash flows from financing activities:
   Proceeds from borrowings.....................................                13,000                70,000
   Repayment of debt............................................              (123,024)                  (60)
   Deferred financing costs.....................................                    -                   (160)
   Proceeds from stock offering.................................               131,139                    -
   Expenses for stock offering..................................                  (373)                   -
   Proceeds from the exercise of stock options..................                 1,353                   284
                                                                         ---------------      ----------------
Net cash provided by financing activities.......................                22,095                70,064
                                                                         ---------------      ----------------

Net increase in cash and cash equivalents.......................                11,961                   743

Cash and cash equivalents, beginning of period..................                10,550                10,304
                                                                         ---------------      ----------------
Cash and cash equivalents, end of period........................               $22,511               $11,047
                                                                         ===============      ================
Supplemental disclosures of cash flow information:
 Cash paid during the period for:
      Interest (net of amount capitalized)......................               $13,041               $11,265
      Income taxes..............................................                     5                    -











                            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, 1999 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 periods. 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, 1998.  The results of operations for the three- and
nine-month  periods ended September 30, 1999 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

     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  379,000 shares and 196,000
shares in the third quarter of 1999 and 1998,  respectively,  and 316,000 shares
and  264,000  shares in the first  nine  months of 1999 and 1998,  respectively.
Options which were  considered  antidilutive  because the exercise  price of the
options exceeded the average market price for the applicable  period totaled 274
shares and 50,000  shares in the third  quarter of 1999 and 1998,  respectively,
and 1,445  shares and 13,000  shares in the first nine  months of 1999 and 1998,
respectively.

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 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 the contract price and
the average NYMEX price for that month applied to the related contract  volumes.
Settlement  for gas swap  contracts  is based on the  average  closing  price of
either  the last  three days or last full month of trading on the NYMEX for each
month of the swap.

         The Company's current forward positions are summarized as follows:




                                                     Oil                               Gas
                                       --------------------------------   ------------------------------
                                                           Average                           Average
                                           MBbls            Price             Bbtu            Price
                                       -------------   ----------------   ------------    --------------
                                                                                   
          Fourth quarter, 1999            368.0             $19.30            4,600            $2.450

          First quarter, 2000             409.5              19.31            4,550             2.528

          Second quarter, 2000            409.5              19.31            1,820             2.518

          Third quarter, 2000             230.0              19.21            1,840             2.518

          Fourth quarter, 2000            230.0              19.21            1,840             2.518






     For the three- and nine-month periods ended September 30, 1999, the Company
recognized  net hedging  losses of $3.8 million and $1.2 million,  respectively,
which were  recorded in the  accompanying  condensed  consolidated  statement of
operations as reductions to revenues from oil and gas production.  Third quarter
and  nine-month  1998 oil and gas revenues  included  net hedging  gains of $1.4
million and $3.9 million, respectively.

Note 4 - LONG-TERM DEBT

     On August 3, 1999,  the Company used a portion of the net proceeds from its
recent  stock  offering  to repay the  outstanding  borrowings  under its credit
facility reducing  long-term debt to $100.0 million,  representing the Company's
Senior  Subordinated Notes. At September 30, 1999, the Company's borrowing base,
which had no outstanding borrowings, was $140.0 million with outstanding letters
of credit totaling $7.5 million issued  pursuant to the facility.  The borrowing
base limitation is based on a borrowing base amount established by the banks for
the Company's oil and gas properties.

Note 5 - PRODUCTION PAYMENT LIABILITIES

     In June 1999, the Company  acquired a 100% working  interest in the Lafitte
Field by executing an agreement  that included a  dollar-denominated  production
payment  to be  satisfied  through  the sale of  production  from the  purchased
property.  At that time, the Company recorded a production  payment liability of
$4.6 million  representing the estimated  discounted present value of production
payments to be made. As provided for in a separate  agreement,  on September 23,
1999, Goodrich Petroleum Company, L.L.C. exercised its option to participate for
a 49% working  interest in the Lafitte  Field  resulting  in a reduction  of the
Company's production payment liability to $2.3 million at September 30, 1999.

     In July 1999, the Company  acquired an additional  working interest in East
Cameron  Block 64 and a 100%  working  interest  in West  Cameron  Block  176 in
exchange for a volumetric  production payment.  This agreement requires that 7.3
Mmcf of gas per day be  delivered to the seller from the  Company's  South Pelto
Block 23 until 8 Bcf of gas have been distributed.  At the transaction date, the
Company  recorded a volumetric  production  payment  liability of $18.0  million
representing  the estimated  discounted  cash flow  associated with the specific
production  volumes to be delivered.  In accordance with Securities and Exchange
Commission  rules  and  regulations,   the  Company   amortizes  the  volumetric
production  payment  liability  as specified  deliveries  of gas are made to the
seller and recognizes  non-cash revenue in the form of gas production  revenues.
At September 30, 1999, the  volumetric  production  payment  liability was $16.5
million and $1.5 million had been  recognized  as gas  revenue.  The Company has
recognized the underlying  gas volumes  produced,  the per unit price effect and
the  resulting  gas  revenues  related  to  this  agreement  in  all  disclosure
schedules, unless otherwise indicated.

Note 6 - INCENTIVE COMPENSATION PLAN

     Due to the Company's  performance during the first nine months of 1999, the
employee  incentive  compensation  accrual was  re-evaluated  resulting in third
quarter 1999 expense of $0.6 million and nine-month 1999 expense of $1.1 million
compared to $0.3 million and $0.8 million for the respective periods in 1998.

Note 7 - PUBLIC OFFERING OF COMMON STOCK

     On July 28, 1999, the Company  completed an offering of 3.16 million shares
of its common  stock at a price to the public of $43.75 per share  resulting  in
net  proceeds of $130.7  million  which were  reflected  in the common stock and
additional  paid in capital  accounts of the  Company's  condensed  consolidated
balance sheet at September 30, 1999.

Note 8 - NEW ACCOUNTING STANDARDS

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments and Hedging  Activities."  The Company expects to adopt SFAS No. 133
during  the first  quarter  of 2001.  Because  of the  nature  of the  Company's
derivative instruments,  the Company does not expect that the adoption will have
a material impact on the Company's results of operations.  However, the adoption
may create volatility in equity through changes in other comprehensive income.




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



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, 1999, and
the related condensed consolidated  statements of operations for the three-month
and  nine-month  periods ended  September  30, 1999 and 1998,  and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 1999 and 1998.  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, 1998
(not presented herein),  and, in our report dated March 2, 1999, 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,
1998, 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
November 1, 1999





                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

     Stone Energy  Corporation is an independent  oil and gas company engaged in
the  acquisition,   exploration,  development  and  operation  of  oil  and  gas
properties onshore and in shallow waters offshore Louisiana. The Company and its
predecessors  have  been  active in the Gulf  Coast  Basin  since  1973 and have
established 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.  Since implementing its current business strategy in 1989,
the Company  has  acquired  interests  in 18 fields in the Gulf Coast Basin from
major and large  independent oil and gas companies.  The Company operates all of
its  properties,  which  enables  the  Company  to better  control  the  timing,
selection  and costs of its  drilling  and  production  activities.  The Company
believes that there will  continue to be numerous  attractive  opportunities  to
acquire  properties in the Gulf Coast Basin due to the increased  focus by major
and large  independent  companies  on projects  in deeper  waters and in foreign
countries.

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, 1999 and 1998.



                                                                   Three Months Ended             Nine Months Ended
                                                                      September 30,                 September 30,
                                                                 ------------------------     --------------------------
                                                                   1999          1998            1999           1998
                                                                 ----------    ----------     ------------    ----------
                                                                                                       
Production:
  Oil (MBbls)...............................................           925           700            2,631         2,012
  Gas (MMcf):
    Produced excluding volumetric production payment........         8,970         7,926           28,463        23,127
    Volumetric production payment...........................           667            -               667            -
                                                                 ----------    ----------     ------------    ----------
    Total gas volumes produced..............................         9,637         7,926           29,130        23,127

  Oil and gas (MMcfe):
    Produced excluding volumetric production payment........        14,520        12,126           44,249        35,199
    Volumetric production payment...........................           667            -               667            -
                                                                 ----------    ----------     ------------    ----------
    Total volumes produced..................................        15,187        12,126           44,916        35,199

Sales data (in thousands) (a):
  Oil                                                              $16,042        $8,986          $39,396       $28,402
  Gas:
    Gas sales excluding volumetric production payment......         22,968        17,788           65,968        54,553
    Volumetric production payment..........................          1,494            -             1,494            -
                                                                 ----------    ----------     ------------    ----------
    Total gas sales........................................         24,462        17,788           67,462        54,553

Average sales prices (a):
  Oil (per Bbl)............................................         $17.34        $12.84           $14.97        $14.12
  Gas (per Mcf):
    Price excluding volumetric production payment..........           2.56          2.24             2.32          2.36
    Volumetric production payment..........................           2.24            -              2.24             -
    Net average price......................................           2.54          2.24             2.32          2.36

  Oil and gas (per Mcfe):
    Price excluding volumetric production payment..........           2.69          2.21             2.38          2.36
    Volumetric production payment..........................           2.24            -              2.24             -
    Net average price .....................................           2.67          2.21             2.38          2.36








                                                               Three Months Ended            Nine Months Ended
                                                                  September 30,                September 30,
                                                             ------------------------    ---------------------------
                                                               1999          1998          1999             1998
                                                             ----------    ----------    ---------        ----------
                                                                                                  
Expenses (per Mcfe):
  Normal lease operating expenses (b)......................      $0.39         $0.37        $0.36             $0.35
  Salaries, general and administrative.....................       0.07          0.08         0.07              0.09
  DD&A on oil and gas properties...........................       1.05          1.30         1.11              1.32


    (a)  Includes the effects of hedging
    (b)  Excludes major maintenance expenses

     For the third  quarter of 1999,  the Company  reported net income  totaling
$8.3 million or $0.47 per share,  compared to net income  reported for the third
quarter of 1998 of $0.7  million,  or $0.05 per share.  Net income for the first
nine  months  of  1999  and  1998  totaled   $15.4  million  and  $5.9  million,
respectively.  The favorable  results in net income were due to  improvements in
the following components:

     PRODUCTION.  Production  volumes of oil and gas during the third quarter of
1999,  compared to the 1998 quarter,  rose 32% and 22%,  respectively,  totaling
approximately  925,000  barrels of oil and 9.6  billion  cubic feet of gas. On a
thousand cubic feet of gas  equivalent  (Mcfe) basis,  production  rates for the
third  quarter  of 1999  were 25%  higher  than  the  comparative  1998  period.
Year-to-date  production  volumes  totaled 2.6  million  barrels of oil and 29.1
billion  cubic  feet of gas,  increases  of 31% and 26%,  respectively  over the
nine-month 1998 period.

     The  increase  in 1999  production  rates,  as  compared  to 1998,  was due
primarily to  increases at three of the  Company's  fields.  First,  the Company
successfully  executed an  aggressive  exploration  and  development  program at
Vermilion  Block 255 by completing and placing on production  three  exploratory
wells and two  development  wells.  At the end of last year,  the Company  began
producing  two high  pressured  gas wells at the South Pelto Block 23 E Platform
which have  significantly  contributed  to 1999's  favorable  production  rates.
Finally,  in May 1999,  the Company  increased its  interest,  and therefore its
share of  production,  at its Weeks Island Field through the  acquisition  of an
additional 32% working interest in 11 producing wells.

     PRICES.  Average  realized  prices  during  the third  quarter of 1999 were
$17.34  per  barrel of oil and $2.54 per Mcf of gas,  compared  to  averages  of
$12.84 per barrel and $2.24 per Mcf realized in the 1998 period,  including  the
effects of hedging.  From time to time,  the Company  enters into  various  swap
agreement  contracts  in order to reduce  its  exposure  to the  possibility  of
declining  oil and gas prices.  For the third quarter of 1999,  hedging  reduced
realized  prices by $2.85 per barrel of oil and $0.12 per Mcf of gas as compared
to a net increase of $0.18 per Mcf of gas for the comparable period in 1998.

     OIL AND GAS  REVENUES.  Despite a $3.8  million  reduction in revenues as a
result of the Company's third quarter 1999 hedging  transactions,  the favorable
increases  in oil and gas  production  rates  combined  with higher  commodities
prices  resulted  in oil and  gas  revenues  increasing  51% to  $40.5  million,
compared to third  quarter 1998 oil and gas revenues of $26.8  million.  For the
first nine months of 1999, oil and gas revenues increased 29% to $106.9 million,
including a $1.2 million  year-to-date  net  reduction in revenues  from hedging
transactions, compared to oil and gas revenues of $83.0 million during the first
nine months of 1998. For the three- and nine-month  periods of 1998, oil and gas
revenues included positive revenue adjustments from hedging transactions of $1.4
million and $3.9 million, respectively.

     EXPENSES. Normal operating costs during the third quarter of 1999 increased
to $6.0 million,  compared to $4.5 million during the 1998 period.  On a unit of
production  basis,  third  quarter 1999  operating  costs were $0.39 per Mcfe as
compared  to $0.37 per Mcfe for the  third  quarter  of 1998.  The  increase  in
operating  costs was due  primarily to a 31% increase in the number of producing
wells  operated  by the Company as a result of the  acquisitions  of the Lafitte
Field and West  Cameron  Block 176, the  increases  in working  interest at East
Cameron Block 64, Eugene Island Block 243 and Weeks Island Field and discoveries
at many of the Company's fields including Vermilion Block 255, South Pelto Block
23, Vermilion Block 131 and Eugene Island Block 243.







     General and administrative expenses for the third quarter of 1999 increased
in total to $1.1  million from $1.0  million  during the third  quarter of 1998.
However,  on a unit basis,  these costs  declined 13% during the 1999 quarter to
$0.07 per Mcfe,  compared to $0.08 per Mcfe during the 1998  period.  Due to the
Company's  performance  during  the  first  nine  months of 1999,  the  employee
incentive  compensation accrual was re-evaluated resulting in third quarter 1999
expense of $0.6 million and nine month 1999 expense of $1.1 million  compared to
$0.3 million and $0.8 million for the respective periods in 1998.

     Depreciation,  depletion and  amortization  (DD&A) expense on the Company's
oil and gas  properties  increased to $15.9 million  during the third quarter of
1999,  compared to $15.8  million for the 1998  period.  However,  on a per unit
basis,  DD&A expense for 1999's third quarter  declined to $1.05 per Mcfe versus
$1.30 per Mcfe for the comparable 1998 period.

     As a result of the July 1999 stock offering and the subsequent repayment of
all outstanding  borrowings under the Company's bank credit  facility,  interest
expense during the three-month period ended September 30, 1999 decreased to $3.0
million, compared to $3.5 million during the 1998 period.

LIQUIDITY AND CAPITAL RESOURCES

     CASH FLOW AND WORKING  CAPITAL.  Pending the use of proceeds from the stock
offering,  in August 1999 the Company retired all of the outstanding  borrowings
under its revolving credit facility. Based upon the Company's outlook on oil and
gas prices and production  rates,  the Company  believes that its cash flow from
operations  will be  sufficient  to fund  the  current  1999  and  2000  capital
expenditures  budget.  If oil and gas prices or production  rates fall below the
Company's  current  expectations,   the  Company  believes  that  the  available
borrowings under its bank credit facility will be sufficient to fund the capital
expenditures  in excess of operating  cash flow.  Net cash flow from  operations
before  working  capital  changes for the third quarter and first nine months of
1999 was $27.5 million  ($1.55 per share) and $72.9  million  ($4.51 per share),
compared to $17.1 million  ($1.12 per share) and $56.2 million ($3.67 per share)
reported for the same  periods of 1998.  Working  capital at September  30, 1999
totaled $27.5 million.

     CAPITAL EXPENDITURES. Capital expenditures during the third quarter of 1999
totaled $36.0 million and primarily  consisted of  exploration  and  development
expenditures at the Pylos, Triggerfish,  Skate, and Orca 2 Prospects in addition
to acquisition  costs for an additional  interest in East Cameron Block 64 and a
100% working  interest in West Cameron  Block 176.  The Company  acquired  these
additional  interests  through a non-cash  volumetric  production  payment.  The
accounting for this volumetric  production  payment resulted in the recording of
an $18.0 million asset based upon the estimated  discounted cash flow associated
with the  specific  production  volumes to be  delivered.  Capital  expenditures
during  the first  nine  months  of 1999  totaled  $95.4  million,  compared  to
expenditures of $129.9 million during the 1998 period.  Capital expenditures for
the third quarter and nine-month  periods of 1999 included $2.0 million and $4.9
million,  respectively, of capitalized general and administrative costs and $0.1
million  and  $0.3  million,   respectively,   of  capitalized  interest.  These
investments  were  financed  by a  combination  of cash  flow  from  operations,
production payment obligations and borrowings under the Company's bank revolver.

     ACQUISITION COSTS. During 1999, the Company acquired  additional  interests
in three of its existing fields and completed the acquisition of two new fields.
In May 1999,  the Company  acquired  an  additional  32%  working  interest in a
portion of the Weeks Island Field for $5.7  million.  In June 1999,  the Company
acquired a majority  interest and control of operations in the Lafitte Field for
$6.1 million in cash and a production  payment to be satisfied  through the sale
of production  from the purchased  property.  During  September  1999,  Goodrich
Petroleum Company,  L.L.C. exercised its option to participate for a 49% working
interest in the Lafitte Field resulting in a cash  reimbursement  to the Company
of  approximately  $3.0 million and a  proportional  reduction in the production
payment liability. In June 1999, the Company acquired from a co-owner a residual
interest,  relative to a farmin  interest,  on a 29% working interest and 24.24%
net revenue  interest in the Eugene Island Block 243 Field for $0.1 million.  In
July 1999,  the Company  acquired a 62.5%  working  interest in the East Cameron
Block 64 Field and a 100% working  interest in the West Cameron Block 176 Field,
as well as control of operations  for both fields,  in exchange for a volumetric
production payment of 8 Bcf of gas to be delivered over a three-year period from
the South  Pelto  Block 23 Field.  With the 1999  acquisitions,  the Company now
serves as operator on all of its 18 properties.

     DEVELOPMENT COSTS. During 1999, the Company completed numerous  development
drilling,  workover and recompletion operations and facilities  installations in
an  effort to  develop  its  property  base and to  increase  cash flow from the
Company's proved reserves. During the first nine months of 1999, the development
drilling  program  achieved a 100% success rate  consisting of the Eugene Island
Block 243 No.  D-1 Well,  the OCS-G 1152 No. H-5 and OCS-G 1153 No. D-3 wells at
Vermilion  Block 255, the Clovelly  Corporation  No. 41 and Dereda  Thomas No. 1
wells at Clovelly  Field and the OCS-G 0775 No. 18 Well at Vermilion  Block 131.
The year's most significant  workover projects include the OCS-G 0079 No. 1 Well
at Vermilion  Block 46 and the OCS-G 0089 No. 7 Well at East  Cameron  Block 64,
one of which was  successful.  The Company also  installed  saltwater  injection
equipment at the Dereda Thomas No. 2 SWD Well at Clovelly Field and upgraded the
production  facilities  at Eugene  Island Block 243 to  accommodate  current oil
production  from the D-1 Well and any  future  oil  production  from  additional
discoveries in the field.

     EXPLORATORY  COSTS.  In an effort to  provide  additions  to the  Company's
existing  oil and gas reserve  base,  during  1999,  the  Company has  completed
drilling  operations on six exploratory  wells,  five of which were  successful.
These five wells  include the OCS-G 1152 No. H-4 Well at  Vermilion  Block 255's
Slide  Prospect,  the OCS-G 1152 No. A-7 STK at  Vermilion  Block  255's  Bubble
Prospect,  the OCS-G 14519 No. 1 Well at South Timbalier Block 71's  Triggerfish
Prospect,  the OCS-G 3135 No. 2 Well at Vermilion Block 255's Pylos Prospect and
the OCS-G 0775 No. 19 Well at Vermilion Block 131's Skate Prospect. In the third
quarter,  the Company spudded the OCS-G 2899 No. A-7 Well at Eugene Island Block
243's Orca 2  Prospect  and the Myles  Salt No. 1 Well at Weeks  Island  Field's
Iberia-Myles Salt No. 1 ITW Prospect.

     BUDGETED  CAPITAL  EXPENDITURES.  The  Company  has a capital  expenditures
budget of  approximately  $32.2 million for the fourth  quarter of 1999 bringing
the 1999 annual budget to a total of $127.6 million,  including $28.6 million in
acquisition  costs  incurred  during the first nine months of 1999. For the year
2000,  the Company's  budget totals $117.8 million for oil and gas properties it
now owns. The Company is currently  evaluating a significant number of potential
acquisitions,  although  no  future  acquisitions  can be  assured.  Significant
investments  are budgeted at East Cameron  Block 64,  Lafitte  Field,  Vermilion
Block 255,  South  Timbalier  Block 8, Eugene  Island Block 243 and Weeks Island
Field for the remainder of 1999 with significant  projects budgeted at Vermilion
Block 255, Eugene Island Block 243, Weeks Island Field,  West Cameron Block 176,
Clovelly  Field  and Lake  Hermitage  Field  for the  year  2000.  The  budgeted
activities  include  projects  which  seek to  increase  cash flow  from  proved
reserves and provide additions to the Company's reserve base.

     LONG-TERM FINANCING. On July 28, 1999, the Company completed an offering of
3.16  million  shares of its common stock at a price to the public of $43.75 per
share.  After payment of the  underwriting  discount and  expenses,  the Company
received net proceeds of $130.7  million.  On August 3, 1999, the Company used a
portion of the net  proceeds  from its stock  offering to repay the  outstanding
borrowings of $120.0 million under its credit facility.  This reduced  long-term
debt to $100.0 million,  representing the Company's Senior  Subordinated  Notes.
The  proceeds  from  the  stock  offering  will   ultimately  be  used  to  fund
specifically  identified  exploration  and  development  activities,  to finance
potential property acquisitions and for other general corporate purposes.

     The Company  has a $150  million  credit  facility  with a  borrowing  base
limitation of $140 million due July 30, 2001. At September 30, 1999, the Company
had no  outstanding  borrowings  under its  borrowing  base and had  outstanding
letters of credit totaling $7.5 million.  The borrowing base limitation is based
on a borrowing  base amount  established  by the banks for the Company's oil and
gas properties.

     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 from and after January 1, 2000 without critical  systems  failure.  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 critical  Information  Technology  ("IT") Systems and Non-IT Systems will be
Y2K  compliant.  The  Company,  with  the  assistance  of  outside  consultants,
completed  the  evaluation  of its IT  Systems  for  Y2K  compliance  and  began
replacing or modifying  non-compliant  systems during the first quarter of 1999.
The  Company  believes  that its  critical  non-compliant  IT Systems  have been
replaced or modified to Y2K compliant systems.

     Regarding the Company's Non-IT Systems,  which primarily consist of systems
with  embedded  technology,  the Company has  completed  its  assessment  of all
date-sensitive  components  and  believes  that it has  replaced or modified all
critical  non-compliant Non-IT Systems. Costs incurred as of September 30, 1999,
and estimated  remaining  costs related to Y2K  compliance  total  approximately
$15,000.  In  addition  to  the  expensed  Y2K  compliance  costs,  the  Company
capitalized  a total of $1.6 million of costs  related to computer  hardware and
software upgrades during the fourth quarter of 1998 and the first nine months of
1999. The upgrades were  necessary due to the growth in the Company's  number of
employees and level of operations over the past 24 months.  The Company does not
separately track internal  payroll costs incurred for employees  involved in the
Y2K compliance effort.

     Based on 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.
Based on the Company's assessment of the Y2K risk associated with third parties'
systems,  the Company  believes  that the  probability  of the  occurrence  of a
disruption  is low.  The Company  will  develop  specific  contingency  plans to
address  certain  risk  areas,  as needed.  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 Company's financial position,  the assessment of
the  Company's  Year 2000  compliance,  business  strategy  and other  plans and
objectives for future operations, 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 those in the  forward-looking  statements herein include
the timing and extent of changes in commodity prices for oil and gas,  operating
risks and other factors as disclosed  under "Risk  Factors" and elsewhere in the
Company's  1998  Annual  Report on Form 10-K as filed  with the  Securities  and
Exchange  Commission.  Should one or more of these risks or uncertainties occur,
or should underlying  assumptions prove incorrect,  the Company's actual results
and plans for 1999 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)      Exhibits
           *15.1 - Letter from Arthur Andersen LLP dated November 8, 1999,
                    regarding unaudited interim financial information.
           *27.1 - Financial Data Schedule
           *27.2 - Financial Data Schedule-Restated

(b)      Reports on Form 8-K
           The following reports were filed after June 30, 1999:

                  Date of Report            Item Reported
                  --------------            -------------
                  July 28, 1999             Items 5 and 7

           *  Filed with this report.






                                    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 10, 1999                     By:     /s/James H. Prince
                                               ---------------------------------
                                                       James H. Prince
                                                Vice President, Chief Financial
                                                     Officer and Treasurer
                                                 (Principal Financial Officer)