Stone Energy Corp. (SGY, Financial) filed Quarterly Report for the period ended 2010-03-31.
Stone Energy Corp. has a market cap of $756.5 million; its shares were traded at around $15.61 with a P/E ratio of 6.4 and P/S ratio of 1.1. Stone Energy Corp. had an annual average earning growth of 9% over the past 10 years.SGY is in the portfolios of Westport Asset Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, George Soros of Soros Fund Management LLC, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.
Bank Credit Facility. On August 28, 2008, we entered into an amended and restated revolving credit facility totaling $700 million, maturing on July 1, 2011, with a syndicated bank group. Our borrowing base under the credit facility is currently set at $395 million. At March 31, 2010, we had $100 million in borrowings under our bank credit facility, letters of credit totaling $63.1 million had been issued pursuant to the facility, and the weighted average interest rate under our bank credit facility was approximately 2.7%. As of May 5, 2010, we had $75 million of outstanding borrowings under our bank credit facility, letters of credit totaling $63.1 million had been issued pursuant to the facility, leaving $256.9 million of availability under the facility. The facility is guaranteed by all of our material direct and indirect subsidiaries, including Stone Energy Offshore, L.L.C. (Stone Offshore), a wholly owned subsidiary of Stone.
Derivative Income/Expense. During the first quarters of 2010 and 2009, certain of our derivative contracts were determined to be partially ineffective because of differences in the relationship between the fixed price in the derivative contract and actual prices realized. Net derivative income for the quarter ended March 31, 2010, totaled $1.2 million, consisting of $0.3 million of cash settlements on the ineffective portion of derivative contracts, plus $0.9 million of changes in the fair market value of the ineffective portion of derivative contracts. Net derivative income for the quarter ended March 31, 2009, totaled $3.9 million, consisting of $3.3 million of cash settlements on the ineffective derivative contracts, plus $0.6 million of changes in the fair market value of the ineffective portion of derivative contracts.
Expenses. Lease operating expenses during the first quarter of 2010 totaled $38.7 million compared to $58.2 million for the first quarter of 2009. Lease operating expenses during the first quarter of 2009 included approximately $13 million of repairs in excess of estimated insurance recoveries related to damage from Hurricanes Gustav and Ike. On a unit of production basis, lease operating expenses were $2.02 per Mcfe and $3.34 per Mcfe for the three months ended March 31, 2010 and 2009, respectively.
We had long-term debt outstanding of $575 million at March 31, 2010, of which $475 million, or approximately 83%, bears interest at fixed rates. The $475 million of fixed-rate debt is comprised of $275 million of 8.625% Senior Notes due 2017 and $200 million of 63/4% Senior Subordinated Notes due 2014. At March 31, 2010, the remaining $100 million of our outstanding long-term debt bears interest at a floating rate and consists of borrowings outstanding under our bank credit facility. At March 31, 2010, the weighted average interest rate under our bank credit facility was approximately 2.73% per annum. We currently have no interest rate hedge positions in place to reduce our exposure to changes in interest rates.
Franchise Tax Action. On December 30, 2004, Stone was served with two petitions (civil action numbers 2004-6227 and 2004-6228) filed by the Louisiana Department of Revenue (LDR) in the 15th Judicial District Court (Parish of Lafayette, Louisiana) claiming additional franchise taxes due. In one case, the LDR is seeking additional franchise taxes from Stone in the amount of $640,000, plus accrued interest of $352,000 (calculated through December 15, 2004), for the franchise tax year 2001. In the other case, the LDR is seeking additional franchise taxes from Stone (as successor to Basin Exploration, Inc.) in the amount of $274,000, plus accrued interest of $159,000 (calculated through December 15, 2004), for the franchise tax years 1999, 2000 and 2001. On December 29, 2005, the LDR filed another petition in the 15th Judicial District Court claiming additional franchise taxes due for the taxable years ended December 31, 2002 and 2003 in the amount of $2.6 million plus accrued interest calculated through December 15, 2005 in the amount of $1.2 million. Also, on January 2, 2008, Stone was served with a petition (civil action number 2007-6754) claiming $1.5 million of additional franchise taxes due for the 2004 franchise tax year, plus accrued interest of $800,000 calculated through November 30, 2007. Further, on January 7, 2009, Stone was served with a petition (civil action number 2008-7193) claiming additional franchise taxes due for the taxable years ended December 31, 2005 and 2006 in the amount of $4.0 million plus accrued interest calculated through October 21, 2008 in the amount of $1.7 million. These assessments all relate to the LDRs assertion that sales of crude oil and natural gas from properties located on the Outer Continental Shelf, which are transported through the State of Louisiana, should be sourced to the State of Louisiana for purposes of computing the Louisiana franchise tax apportionment ratio. The Company disagrees with these contentions and intends to vigorously defend itself against these claims. The franchise tax years 2007 through 2009 for Stone and franchise tax years 2006 through 2008 for a subsidiary remain subject to examination.
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Stone Energy Corp. has a market cap of $756.5 million; its shares were traded at around $15.61 with a P/E ratio of 6.4 and P/S ratio of 1.1. Stone Energy Corp. had an annual average earning growth of 9% over the past 10 years.SGY is in the portfolios of Westport Asset Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, George Soros of Soros Fund Management LLC, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Net cash flow used in financing activities totaled $11.1 million for the three months ended March 31, 2010, which primarily represents repayments of borrowings under our bank credit facility of $75 million, the redemption of our 8 1/4% Senior Subordinated Notes due 2011 of $200.5 million, net of proceeds from the public offering of our 8.625% Senior Notes due 2017 of approximately $275 million less $9.7 million of deferred financing costs. Net cash flow used in financing activities totaled $25.7 million for the three months ended March 31, 2009, which primarily represents repayments of borrowings under our bank credit facility.Bank Credit Facility. On August 28, 2008, we entered into an amended and restated revolving credit facility totaling $700 million, maturing on July 1, 2011, with a syndicated bank group. Our borrowing base under the credit facility is currently set at $395 million. At March 31, 2010, we had $100 million in borrowings under our bank credit facility, letters of credit totaling $63.1 million had been issued pursuant to the facility, and the weighted average interest rate under our bank credit facility was approximately 2.7%. As of May 5, 2010, we had $75 million of outstanding borrowings under our bank credit facility, letters of credit totaling $63.1 million had been issued pursuant to the facility, leaving $256.9 million of availability under the facility. The facility is guaranteed by all of our material direct and indirect subsidiaries, including Stone Energy Offshore, L.L.C. (Stone Offshore), a wholly owned subsidiary of Stone.
Derivative Income/Expense. During the first quarters of 2010 and 2009, certain of our derivative contracts were determined to be partially ineffective because of differences in the relationship between the fixed price in the derivative contract and actual prices realized. Net derivative income for the quarter ended March 31, 2010, totaled $1.2 million, consisting of $0.3 million of cash settlements on the ineffective portion of derivative contracts, plus $0.9 million of changes in the fair market value of the ineffective portion of derivative contracts. Net derivative income for the quarter ended March 31, 2009, totaled $3.9 million, consisting of $3.3 million of cash settlements on the ineffective derivative contracts, plus $0.6 million of changes in the fair market value of the ineffective portion of derivative contracts.
Expenses. Lease operating expenses during the first quarter of 2010 totaled $38.7 million compared to $58.2 million for the first quarter of 2009. Lease operating expenses during the first quarter of 2009 included approximately $13 million of repairs in excess of estimated insurance recoveries related to damage from Hurricanes Gustav and Ike. On a unit of production basis, lease operating expenses were $2.02 per Mcfe and $3.34 per Mcfe for the three months ended March 31, 2010 and 2009, respectively.
We had long-term debt outstanding of $575 million at March 31, 2010, of which $475 million, or approximately 83%, bears interest at fixed rates. The $475 million of fixed-rate debt is comprised of $275 million of 8.625% Senior Notes due 2017 and $200 million of 63/4% Senior Subordinated Notes due 2014. At March 31, 2010, the remaining $100 million of our outstanding long-term debt bears interest at a floating rate and consists of borrowings outstanding under our bank credit facility. At March 31, 2010, the weighted average interest rate under our bank credit facility was approximately 2.73% per annum. We currently have no interest rate hedge positions in place to reduce our exposure to changes in interest rates.
Franchise Tax Action. On December 30, 2004, Stone was served with two petitions (civil action numbers 2004-6227 and 2004-6228) filed by the Louisiana Department of Revenue (LDR) in the 15th Judicial District Court (Parish of Lafayette, Louisiana) claiming additional franchise taxes due. In one case, the LDR is seeking additional franchise taxes from Stone in the amount of $640,000, plus accrued interest of $352,000 (calculated through December 15, 2004), for the franchise tax year 2001. In the other case, the LDR is seeking additional franchise taxes from Stone (as successor to Basin Exploration, Inc.) in the amount of $274,000, plus accrued interest of $159,000 (calculated through December 15, 2004), for the franchise tax years 1999, 2000 and 2001. On December 29, 2005, the LDR filed another petition in the 15th Judicial District Court claiming additional franchise taxes due for the taxable years ended December 31, 2002 and 2003 in the amount of $2.6 million plus accrued interest calculated through December 15, 2005 in the amount of $1.2 million. Also, on January 2, 2008, Stone was served with a petition (civil action number 2007-6754) claiming $1.5 million of additional franchise taxes due for the 2004 franchise tax year, plus accrued interest of $800,000 calculated through November 30, 2007. Further, on January 7, 2009, Stone was served with a petition (civil action number 2008-7193) claiming additional franchise taxes due for the taxable years ended December 31, 2005 and 2006 in the amount of $4.0 million plus accrued interest calculated through October 21, 2008 in the amount of $1.7 million. These assessments all relate to the LDRs assertion that sales of crude oil and natural gas from properties located on the Outer Continental Shelf, which are transported through the State of Louisiana, should be sourced to the State of Louisiana for purposes of computing the Louisiana franchise tax apportionment ratio. The Company disagrees with these contentions and intends to vigorously defend itself against these claims. The franchise tax years 2007 through 2009 for Stone and franchise tax years 2006 through 2008 for a subsidiary remain subject to examination.
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