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Stone Energy's (SGY) Rampart Deep Well Sees Drilling Success

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Stone Energy Corporation (SGY - Free Report) announced positive drilling results from Rampart Deep well at Mississippi Canyon Block 116.

The partners in the Rampart Deep well are Deep Gulf Energy III, LLC and entities managed by Ridgewood Energy Corporation, each holding 30% interests. The firms managed by Ridgewood Energy Corporation include Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC. The remaining 40% interet is held by Stone Energy.

Currently, Stone Energy owns a 100% working interest in the Derbio prospect. However, the Rampart Deep partners may choose to take a total working interest of 60% in the Derbio well, in proportion to their respective Rampart Deep working interests, while Stone Energy will hold the remaining 40%.  

Deep Gulf Energy III, the operator of the Rampart Deep well (the MC 116 #1 well), came across liquids-rich natural gas pay of about 130 net feet in three primary zones, as inferred by Stone Energy.

This well is vital as it provides important information that lowers the risk related to exploration operations at the Derbio prospect of Stone Energy. Near the Mississippi Canyon Block 72, Derbio well’s drilling plans will be evaluated by the Rampart Deep partners over the next three months.

Rampart Deep well’s completion is expected to be postponed till the partners assess related data. Later, it will be appraised again in conjunction with the drilling results obtained from Derbio in future. Production from the Rampart Deep/Derbio project depends on the success of drilling operations. If Derbio performs well, first production from the Rampart Deep/Derbio project is anticipated by late 2019 and will possibly be a multi-well tie back to Stone Energy’s 100% owned Pompano platform.

Rampart Deep Well Success

The success of Rampart Deep well will emphasize the company’s expertise in making discoveries that will add value to its portfolio as well as for shareholders. The new reserves will help the company to grow and  lower risks from other prospects in the area. Stone Energy will also benefit from leveraging its assets at its Pompano platform. This in turn will provide economies of production cost.

Price Movement

Stone Energy holds a favorable place in the industry with widespread high-yielding inventory. The company has an extensive capital project inventory. This positivity is reflected in its share price that has gained 6.7% against the industry’s decrease of 6.8% over the last three months amid the oil price volatility. However, growing exploration exposure to the mature, low reserve life and capital intensive Gulf of Mexico shelf is expected to aggravate Stone Energy’s risk profile.



Zacks Rank & Key Picks

Currently, Stone Energy carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are TransCanada Corporation (TRP - Free Report) , Transmontaigne Partners LP (TLP - Free Report) and Range Resources Corporation (RRC - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Headquartered in Calgary, Canada, TransCanada is a midstream energy firm in North America. The company delivered an average positive earnings surprise of 4.06% over the last four quarters.

Transmontaigne, headquartered in Denver, CO, involves in transporting and storing refined petroleum products. The firm delivered an average positive earnings surprise of 6.60% over the last four quarters.

Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. The company’s 2017 earnings are estimated to grow 1587.17%.

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