Stone Lowers Capex Budget by $55M

Stone Energy Corp. on Tuesday announced its 2007 capital budget of $320 million, which excludes approximately $188 million in property acquisition expenditures and approximately $36 million in non-reimbursable hurricane related expenditures.

Stone expects to spend approximately 47% of the 2007 capital budget on its Gulf of Mexico (GOM) exploitation program, another 11% on operated GOM facilities and plug and abandonment projects, and an estimated 27% in the Rocky Mountains and Williston Basin. Stone has allocated the remaining 15% of the 2007 budget primarily to Stone's exploration venture in Bohai Bay and the purchase of additional deep water seismic. Stone currently has one rig drilling in the GOM and two rigs operating in its Rocky Mountain region. Stone expects to spud a well in Bohai Bay in the first quarter of 2007.

Stone estimates production for 2006 was 211 million cubic feet of natural gas equivalents (MMcfe) per day, including 229 MMcfe per day in the fourth quarter. Stone is currently projecting its 2007 net daily production to average between 200-225 MMcfe per day. During January 2007, production averaged approximately 225 MMcfe per day.

Stone estimates its year-end 2006 proved reserves were 591 Bcfe (billion cubic feet of natural gas equivalent), as compared with 593 Bcfe at year-end 2005. The changes from 2005 year-end estimated proved reserves to 2006 year- end estimated proved reserves included 77 Bcfe of production, 74 Bcfe of net downward revisions, 90 Bcfe of drilling additions and extensions, and 59 Bcfe of acquired reserves. All of Stone's 2006 year-end estimated proved reserves were independently engineered by nationally recognized engineering firms.

The following table illustrates Stone's derivative positions for calendar years 2007 and 2008.

                                      Zero-Premium Collars
                          Natural Gas                         Oil
              -------------------------------  ------------------------------
              Daily Volume                     Daily Volume
               (MMBtus/d)    Floor    Ceiling    (Bbls/d)    Floor    Ceiling
              ------------   -----    -------  ------------  -----    -------
    2007         20,000      $7.50     $10.40      3,000    $60.00     $78.35
    2007         60,000*      7.00       9.40      3,000     60.00      93.05
    2008                                           3,000     60.00      90.20
     * March - December

At December 31, 2006, Stone had $172 million drawn, $53 million of letters of credit issued and $100 million available to borrow on its $325 million credit facility and had a cash balance of approximately $59 million.

As previously announced, Stone plans to divest properties in 2007 to materially reduce its debt. Merrill Lynch Petrie Divestiture Advisors will be advising Stone in the possible divestiture of some or all of its Rocky Mountain properties. Stone also expects to divest selected GOM and Gulf Coast properties.

Stone plans to release its year-end results on Monday, February 26, 2007 after the close of the market, and will hold its year-end conference call on Tuesday, February 27, 2007 at 10:00 a.m. CST. Anyone wishing to participate should visit our website at for a live web cast or dial 1-877-228-3598 and request the "Stone Energy Call."

In addition, Stone announced that it will hold its 2007 Annual Meeting of Stockholders on Thursday, May 17, 2007, at 10:00 a.m., CDT, at the Windsor Court Hotel, 300 Gravier Street, New Orleans, Louisiana. Stone proposes to elect four directors to serve until the Annual Meeting of Stockholders in the year 2010, to ratify the selection of Ernst & Young LLP as its independent public accountants for the fiscal year ending December 31, 2007, and to transact such other business as may properly come before the meeting. The close of business on March 21, 2007 has been fixed as the record date for determination of stockholders entitled to receive notification of and to vote at the Annual Meeting.

Stone Energy is an independent oil and natural gas company headquartered in Lafayette, Louisiana, and is engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located in the conventional shelf of the Gulf of Mexico, the deep shelf of the Gulf of Mexico, the deepwater of the Gulf of Mexico, the Rocky Mountain region and the Williston Basin. Stone is also engaged in an exploratory joint venture in Bohai Bay, China.