Stone Energy Corporation (NYSE:SGY) recently provided an operational update on its Amethyst well. Stone Energy’s price chart reveals that it has lagged the Zacks sub industry Oil & Gas- U.S. Exploration and Production Market, year to date. While the broader market has increased by 47.1%, Stone Energy stock has lost 82.4%. The impact of the aforesaid announcement on the stock price remains to be seen.
Production from Stone Energy's Amethyst well was discontinued in late Apr 2016 to facilitate a technical evaluation, as earlier reported. The company conducted an acid stimulation work and intermittently flowed the well in November. During observation and appraisal of the well's performance, it was flowed at a rate of 10–15 million cubic feet of gas per day.
On Nov 30, 2016, the company executed a routine shut in of the well to record pressures. Concurrently, the company concluded that pressure communication exists between the production tubing and production casing strings due to a suspected tubing leak.Currently, the company is analyzing the pressure information in order to define the most likely failure points. Stone Energy anticipates a better understanding of the matter within one to two weeks.
To date, Stone Energy has communicated its findings to the Bureau of Safety and Environmental Enforcement ("BSEE") and will be working with BSEE in deciding its subsequent steps. The company will appraise its options to restore production from the well along with all possible impacts on its estimated proved oil and gas reserves, which it expects will continue for at least several months.
As of year-end 2015, the estimated proved reserves related with the Amethyst well were about 79 billion cubic feet of gas equivalent. Stone Energy refused to guarantee that it will be able to restore the well's production to earlier levels, or at all.
The company also gave no assurance on whether a replacement or sidetrack well would be economic, or if it would have sufficient liquidity in case substantial capital is needed to restore the well's production.
Stone Energy currently has a Zacks Rank #3 (Hold). Some better-ranked players in the same sector include SunCoke Energy Inc. (NYSE:SXC) , Suncor Energy, Inc. (NYSE:SU) and Futurefuel Corp. (NYSE:FF) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 177.78% in the last reported quarter. It reported a positive earnings surprise in three of the four preceding quarters.
Suncor Energy posted a positive earnings surprise of 300.00% in the preceding quarter. It reported an average earnings surprise of 40.55% for the four preceding quarters.
Futurefuel Corp. posted a positive earnings surprise of 20.83% in the last reported quarter. It reported a positive earnings surprise in all of the four preceding quarters.
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