Stone Energy Corporation reported its estimated year-end 2007 proved reserves were 403 Bcfe (billion cubic feet of natural gas equivalent), as compared with 591 Bcfe at year-end 2006 (408 Bcfe pro forma for the sale of its Rocky Mountain properties). This included proved developed reserves of 323 Bcfe and proved undeveloped reserves of 80 Bcfe, and the split between gas and oil reserves was 53% and 47%, respectively. The present value of the future net cash flows before income taxes, using a 10% discount rate, was approximately $2.0 billion and the after-tax standardized measure was approximately $1.5 billion using year-end prices of $94.72 per barrel of oil and $7.25 per million cubic foot (MMcf) of gas.
The changes from 2006 year-end estimated proved reserves to 2007 year-end estimated proved reserves included the sale of 192 Bcfe relating primarily to Stone's Rocky Mountain divestiture, approximately 82 Bcfe of production, and 86 Bcfe of drilling additions, extensions and net upward revisions. The 86 Bcfe includes 12 Bcfe of upward revisions due to higher oil and gas prices. All of Stone's 2007 year-end estimated proved reserves were independently engineered by Netherland Sewell & Associates. Capital expenditures on oil and gas properties for 2007 totaled $164 million, excluding capitalized SG&A and interest, and abandonment expenditures. Expenditures on normal plugging and abandonment projects (excluding hurricane-related abandonment expenditures) were approximately $29 million.
Stone estimates that average production for 2007 was 224 million cubic feet of natural gas equivalents (MMcfe) per day which exceeded the 211 MMcfe per day produced in 2006. Excluding the volumes from the divested Rocky Mountain properties, 2007 production would have averaged approximately 205 MMcfe/d.
In January 2008, Stone Energy substantially completed a small divesture of non-core Gulf of Mexico properties which totaled 18 Bcfe of reserves and a projected 9 MMcfe/d of production in 2008, for a consideration of approximately $20 million before closing adjustments. The properties that were sold had estimated abandonment costs of $33.5 million. These properties were mature, high cost properties with minimal exploitation or exploration opportunities.
After adjusting for the sale of the previously mentioned divested properties, Stone is currently projecting its 2008 net daily production to average between 175-200 MMcfe per day. During January 2008, production averaged approximately 185 MMcfe per day.
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