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Lafayette, Louisiana-based Stone Energy Corporation (SGY - Analyst Report) announced a well discovery at its LaPosada Prospect (also called La Cantera) –– an oil and gas field sprawling over 2899 acres. The asset is located in Vermilion Parish, Louisiana.

The well uncovered by Stone has a depth of 18,550 feet and recorded 176 feet of highly resistive sand within the primary Cris R Massive objective. Stone expects production from the field to commence by early 2012.

PetroQuest Energy Inc. (PQ - Snapshot Report) –– the operator of the well –– was only able to gather porosity information from the upper portion of the logged sands, which established 37 feet of net commercial pay. It was unable to collect information from the lower portion because of a pipe that was stuck at the bottom of the well at a depth of 550 feet. With the intention to completely assess the entire sand package and test deeper objectives, the operator is planning to side track the wellbore.

LaPosada is the find by Stone in the Deep Gas play of south Louisiana following South Erath during the first quarter of 2011. Stone is also involved in another onshore Deep Gas exploratory test at Lighthouse Bayou in Cameron Parish, Louisiana. The company is currently drilling at a depth of 20,000 feet, and plans to go 5,000 feet deeper.

Stone is the third largest lease owner in the Gulf of Mexico (GoM) shelf, where it has recognized Deep Gas prospects and plans to drill these in 2012 and 2013.

Stone has a multi-year inventory of drilling prospects but its growing exploration exposure to the mature, low reserve life and capital intensive GoM shelf is expected to aggravate its risk profile.

Stone has a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.  We reaffirm a Neutral rating on the stock for the longer term and expect it to perform in line with the broader market indices.

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