S&P affirms Stone Energy

Standard & Poor's said it affirmed the ratings, including the B+ corporate credit rating, on Stone Energy Corp. and removed the ratings from CreditWatch, where they had been listed with negative implications since June 28.

The outlook is negative.

The agency said that the affirmation followed a full review of the company and its announced strategic initiatives after its recent completion of the sale of substantially all of its Rocky Mountain properties to Newfield Exploration Co.

S&P added that the ratings on Stone reflect its small, geographically concentrated reserve base, the short, less-than-five-years' life of its proved developed producing reserves, very high F&D costs in core areas of operations and participation in the highly cyclical and capital-intensive E&P segment of the oil and gas industry.

Concerns are partially mitigated by enhanced near-term liquidity, favorable oil price trends, a two- to three-year inventory of low-risk exploitation projects from which to cull additional production, improved leverage metrics and favorable cash margins, the agency noted.

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