LAFAYETTE, La., June 9, 2017 /PRNewswire/ — Stone Energy Corporation (NYSE: SGY) today announced that drilling operations on its Rampart Deep Prospect in Mississippi Canyon Block 116 were initiated on June 3, 2017. The Stone generated prospect will be drilled and operated by Deep Gulf Energy III, LLC, and is expected to be tied back to Stone’s 100% owned Pompano platform, if successful. The prospect, which targets the Miocene interval, is located nine miles from the Pompano platform and is estimated to take two months to drill. After a sell down of a portion of its position, Stone holds a 40% working interest in the well and received leasehold and other reimbursable costs. Additional working interest owners are Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.
Recently, Stone implemented additional workforce reductions in order to better align its employee base with current business needs. We expect this action to result in an approximate 25% decrease in our salaries, general and administrative cash costs for the second half of 2017, translating into an expected quarterly cash SG&A outlay, before capitalization, of approximately $11 million to $12 million per quarter, excluding non-recurring and non-cash items. We project an overall SG&A reduction of approximately 50% from 2016.
Interim Chief Executive Officer and President James M. Trimble stated, “The Rampart Deep well is an important step in Stone’s forward plans. A successful test of the Rampart Deep Prospect could lead to a multi-well development program, with a tie back to our Pompano platform further leveraging this facility. Partnering with Deep Gulf Energy and Ridgewood on this well reflects our renewed focus on efficient use of capital, and the reductions in SG&A reflect our continued commitment to manage our costs to better position Stone to be competitive in the current commodity price environment.”