Stone Energy Shuts-in Natural Gas Production Due to Katrina

Stone Energy reports that due to the adverse weather conditions associated with Hurricane Katrina, all offshore drilling and production activities in the Gulf of Mexico were suspended as of Sunday, August 28th. Stone safely evacuated all employee and contract personnel prior to the arrival of the storm. Net daily production of approximately 240 million cubic feet of natural gas equivalent was shut-in as a result of the hurricane.

The extent of damages to pipelines, rigs, facilities and wells has yet to be determined although Stone will be conducting a fly-over today for an initial assessment of damages. It may be days before information is received on properties operated by others and pipelines owned by third parties. Stone's properties and facilities are insured after a minimal deductible; however, Stone does not maintain coverage for business interruption.

Plans are being made to return personnel to our western Gulf fields today which may be brought on line within the next 24 to 48 hours. About 70% of Stone's GOM production is in the central and eastern Gulf, where it may take longer to restore production. Approximately 10% of Stone's overall production comes from outside the Gulf Coast Basin and is still on line.