Stone Energy Corp., Lafayette, La., shut-in production from Mary field in Appalachia on Sept. 1, citing “unacceptable” operating margins caused by low commodity pricing—including negative differentials in the region—along with fees for transportation, processing, and gathering.
The shut-in results in production curtailment of 100-110 MMcfd of gas equivalent, leaving 25 MMcfed producing from Heather and Buddy fields in Appalachia.
Despite being above production guidance for the first 2 months of the third quarter, company production for the quarter is now expected to be below the previously stated guidance range of 39-41,000 boe/d, or 234-246 MMcfed, and is being revised to 37.5-38,500 boe/d, or 225-231 MMcfed.
If Mary field remains shut-in, the annual guidance of 42-44,000 million boe/d, or 252-264 MMcfed, will need to be adjusted to account for the curtailed volumes. Given the low margins in Appalachia, the cash flow impact from the curtailed volumes is not expected to be material for the third quarter, Stone says.
Meanwhile, the company reports that higher margin Gulf of Mexico volumes experienced minimal downtime in the third quarter. The Ensco 8503 deepwater drilling rig has completed its scheduled maintenance and has been outfitted with mooring capabilities.
Stone expects to resume rig operations before Oct. 1, and the rig will be mobilized to Mississippi Canyon Block 26 to finish the completion of the Amethyst discovery in which Stone holds 100% working interest. Amethyst will be tied back to the Pompano platform (OGJ Online, Jan. 27, 2015), where production is expected to start early in first-quarter 2016.
After the Amethyst completion, the rig is projected to drill the Cardona No. 7 development well, followed by the Lamprey and Derbio deepwater exploration prospects.
The Vernaccia exploration well, which targets the Miocene interval in a four-way structure, is projected to spud by early October. After a recent sell down of a portion of its position, Stone now has 4% working interest in the drilling cost of the well and will have 22% working interest ownership thereafter. The well is estimated to take three months to drill. Eni SPA is operator.