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Stone Energy (SGY) Closes the Sale of Appalachia Properties

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Stone Energy Corporation recently announced the closure of the sale of its Appalachia properties.

On Feb 27, 2017, Stone Energy concluded its earlier announced divestment of about 86,000 net acres in the Appalachian regions of Pennsylvania and West Virginia. The assets were sold to EQT Corporation (EQT - Free Report) , through its wholly owned subsidiary EQT Production Company, for a total cash consideration of $527 million. The sale is subject to customary purchase price adjustments and an upward adjustment to the purchase price of up to $16 million in an amount equal to certain downward adjustments

The sale of the properties was concluded in accordance with the terms of a purchase and sale agreement (“PSA”), dated Feb 9, 2017, between Stone Energy and EQT Corp.  Under the PSA, the sale of the assets had an effective date of Jun 1, 2016.  

Stone Energy intends to utilize the sale proceeds to fund its cash payment obligations under its Second Amended Joint Prepackaged Plan of Reorganization, dated Dec 28, 2016, which was confirmed on Feb 15, 2017 by the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.  

Currently, the company expects the plan to become effective on Feb 28, 2017, at which point Stone Energy and its debtor affiliates will emerge from bankruptcy. However, there can be no guarantee that the plan will become effective on the particular date, or at all.

Upon the closure of the sale of its properties to EQT Corp., Stone Energy terminated the PSA with TH Exploration III, LLC, an affiliate of Tug Hill, Inc. The company used a percentage of the cash consideration received to pay Tug Hill a break-up fee of $10.8 million.

Stone Energy’s price chart reveals that it has outperformed the Zacks sub industry Oil & Gas- U.S. Exploration and Production Market, in the last three months. While the broader market decreased by 1.9%, Stone Energy shares gained 70.7%, in the same period.



Stone Energy carries a Zacks Rank #2 (Buy). Other well-ranked players in the same space include Delek Logistics Partners, LP (DKL - Free Report) and Sunrun Inc. (RUN - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek Logistics Partners posted a negative earnings surprise of 25.45% in the preceding quarter. It had an average negative earnings surprise of 11.32% in the four trailing quarters.

Sunrun posted a positive earnings surprise of 137.21% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 134.71%.

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