Stone Energy Prices Stock Offering - Analyst Blog

Stone Energy Corporation SGY priced a registered underwritten public offering of 5,000,000 shares of its common stock at a price of $41.00 per share to the public. Stone has granted the underwriters a 30-day option to purchase 750,000 additional shares of its common stock. The offering is expected to close on or about May 14, subject to customary closing conditions.
 
Stone intends to use the net proceeds from the offering for general corporate purposes, which may include development of the Amethyst discovery, drilling of a second well at Cardona South, Utica Shale development and the acquisition of additional Appalachian acreage.
 
Lafayette, LA-based Stone Energy is an independent oil and gas exploration and production company engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties, located primarily in the Gulf of Mexico (GoM).
 
Currently, the company is well positioned in the industry, with widespread high-yielding inventory. Notably, it boasts an extensive capital project line-up. Moreover, Stone Energy is generating surplus cash flow with no bank debt. Although the company aims to apportion the capital across its portfolio, its focus will be on the GoM and Marcellus region.
 
However, as is the case with independent exploration and production companies, results of Stone Energy are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces.
 
For the second quarter the company expects net daily production of 261−273 MMcfe. For full-year 2014, it anticipates total volume of 258−282 MMcfe per day. Stone Energy's capital outlay projection for full-year 2014 is $825 million.
 
At present, Stone Energy has a Zacks Rank #3 (Hold). Investors interested in the oil and gas sector could consider stocks like Athlon Energy Inc. ATHL, Callon Petroleum Co. CPE and Pembina Pipeline Corp. PBA. All these carry a Zacks Rank #1 (Strong Buy).

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