Stone Energy Appoints Special Liaison, Inches Toward Bankruptcy?

Stone EnergyThere’s no way to sugarcoat the fact that Stone Energy–an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana that drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 75,000 acres of leases–is inching toward a bankruptcy filing. That’s our take anyway. Last week Stone issued an update for 1Q16 in which they disclose their line of credit with the banks has been reduced from $500 million to $300 million (see Stone Energy 1Q16: Most Marcellus Production Still Closed Down). That’s a big hairy problem, because there is now a “borrowing base deficiency” of $175.3 million–meaning the company may go into default on its loans. Stone outlined various repayment options last week, none of them good. So it was no surprise that yesterday Stone announced one of its board members is becoming a “Special Liaison” to management to help the company “with assessing strategic alternatives and restructuring alternatives.” The word “restructuring,” as we’ve seen with other producers, is a euphemism for bankruptcy…

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